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 THESECURITIESEXCHANGEACT OF1934.  For the Period Ended September 30, 2004 [     ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIESEXCHANGEACT OF1934.


Commission File Number: 0  16612




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

|Delaware                       | 41-1580270         
|------------------------------ | -------------------
|(State or other jurisdiction o | (I.R.S. Employer   
|incorporation or organization) | Identification 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 October 29, 2004, the Company had outstanding 13,953,024 shares
of common stock, $.01 par value per share.

---

CNS, Inc.
FORM 10-Q
For the Period Ended September 30, 2004
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

> Item 1.     Legal Proceedings
> 
> Item 2.     Change in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
> 
> Item 3.     Defaults Upon Senior Securities
> 
> Item 4.     Submission of Matters to a Vote of Securities HoldersItem 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 STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)

|                                      | Three Months EndedSeptember 30, |  | Six Months EndedSeptember 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.

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

|                                                            | September 30,2004 |  | March 31,2004
|----------------------------------------------------------- | ----------------- |  | -------------
|ASSETS                                                      |                   |  |              
|Current assets:                                             |                   | 
|Cash and cash equivalents                                   |                   |  | $            
|Marketable securities                                       |                   |  |              
|Accounts receivable, net                                    |                   |  |              
|Inventories                                                 |                   |  |              
|Deferred income taxes                                       |                   |  |              
|Prepaid expenses and other current assets                   |                   |  |              
|                                                            |                   |  |              
|Total current assets                                        |                   |  |              
|Property and equipment, net                                 |                   |  |              
|Product rights, net                                         |                   |  |              
|Deferred income taxes                                       |                   |  |              
|                                                            |                   |  |              
|                                                            |                   |  | $            
|                                                            |                   |  |              
|LIABILITIES AND STOCKHOLDERS EQUITY                        |                   | 
|Current liabilities:                                        |                   | 
|Accounts payable and accrued expenses                       |                   |  | $            
|                                                            |                   |  |              
|Total current liabilities                                   |                   |  |              
|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 13,943 shares at         
|September 30, 2004 and 13,783 shares at March 31, 2004      |                   |  |              
|Additional paid-in capital                                  |                   |  |              
|Treasury shares  at cost;  5,352 at September 30, 2004 and
|5,512 at March 31, 2004                                     |                   |  |              
|Retained earnings                                           |                   |  |              
|Accumulated other comprehensive income                      |                   |  |              
|                                                            |                   |  |              
|Total stockholders equity                                  |                   |  |              
|                                                            |                   |  |              
|                                                            |                   |  | $            
|                                                            |                   |  |              

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

---

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                      |                              
|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 consolidated financial statements and notes thereto
included in the Companys Annual Report on Form 10-K for the year ended March 31, 2004.

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, 2004. 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):

|                                      | For the Three Months EndedSeptember 30, |  | For the Six Months EndedSeptember 30,
|------------------------------------- | --------------------------------------- |  | -------------------------------------
|
|Net income, as reported               |                                         |  | $                                    
|Deduct:   Total stock-based           |                                         | 
|compensation expense determined under |                                         | 
|the fair value based method for       |                                         | 
|all awards, net of tax effects        |                                         |  |                                      
|                                      |                                        
|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 and 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):

|                                  | September 30,2004 |  | March 31,2004
|--------------------------------- | ----------------- |  | -------------
|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 EndedSeptember 30, |  | Six Months EndedSeptember 30,
|--------------- | ------------------------------- |  | -----------------------------
|                |                                
|
|                |                                
|Domestic        |                                 |  |                              
|Breathe Right   |                                 |  | $                            
|FiberChoice     |                                 |  |                              
|Other           |                                 |  |                              
|                |                                
|Domestic Total  |                                 |  |                              
|International   |                                 |  |                              
|                |                                
|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 potential common shares outstanding is as follows (in thousands):

|                                           | Three Months EndedSeptember 30, |  | Six Months EndedSeptember 30,
|------------------------------------------ | ------------------------------- |  | -----------------------------
|                                           |                                
|
|                                           |                                
|Average common shares outstanding          |                                 |  |                              
|Potential common shares                    |                                 |  |                              
|                                           |                                
|Average common and potential common shares |                                 |  |                              
|                                           |                                

For the three months ended September 30, 2004 and 2003 there were
321,320 and 0 options, respectively, that were not included in the calculation of potential common shares due to the
exercise price being higher than the quarter to date average market price. For the six months ended September 30, 2004
and 2003 there were 321,320 and 0 options, respectively, that were not included in the calculation of potential common
shares due to the exercise price being higher than the year to date average market price.

Note 8  Dividends
The Company declared a $.05 per share regular quarterly cash dividend on July 20, 2004 for shareholders of record as
of August 20, 2004 and paid on September 3, 2004. Total amount of dividends paid on September 3, 2004 was $700,000.
Total dividends paid for the six months ended September 30, 2004 were $1,390,000. There were no dividends paid for the
six months ended September 30, 2003.

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, 2004, 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.

Note 10  Contingent Gain
The Company has received notice of a favorable court decision relating to an import duty appeal that may result in
the refund of previously paid European Community import duties on Breathe Right nasal strips. The estimated amount of
the potential refund, payable in Euros, is approximately $1.0 million. Assuming satisfactory completion of audit
procedures performed by Dutch customs, the Company expects to receive the refund during the current fiscal year and will
recognize the refund at the time of receipt.

---

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

Managements Discussion and Analysis (MD&A) 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 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, 2004.

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 dietary 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 the Companys customers and distributors in anticipation of future demand by
consumers.

Results of Operations

Net sales for the quarter ended September 2004 were $20.0 million,
a decrease of 2.8% versus net sales of $20.6 million in the quarter ended September 2003. Net sales decreased to $36.6
million for the six month period ended September 2004 compared to $38.1 million for the same period last year. Net sales
for the six months ended September 2004 and September 2003 were favorably impacted by $333,000 and $1.1 million,
respectively, primarily relating to a reduction of estimated promotional spending liabilities.

Domestic net sales were $17.9 million for the September quarter of
2004 compared to $18.7 million for the same quarter of 2003, a decrease of 4.0%. Breathe Right brand sales decreased by
$1.1 million dollars primarily as the result of the 2003 comparable quarter including new product pipeline shipments of
Vapor Shot! personal vaporizer. FiberChoice chewable tablets grew 14.5% to $2.7 million versus $2.4 million for the same
quarter of 2003. For the six months ended September 2004, domestic net sales decreased 2.2% to $32.5 million compared to
$33.2 million for the same period of 2003. For the six months ended September 2004, domestic

---

Breathe Right net sales were $27.1 million, a decrease of 5.3%
versus $28.6 million in the prior year and FiberChoice net sales were $5.2 million, an increase of 18.8% from $4.4
million for the same period of 2003.

International net sales for the quarter ended September 2004 were
$2.1 million compared to $2.0 million for the quarter ended September 2003. The increase in international net sales for
the three months ended September 2004 reflects growth in several European markets offsetting a lack of product shipments
to the Companys distributor in Japan, which continues to work through excess inventory. The Company expects
shipments to Japan to resume in the fiscal fourth quarter. International net sales for the six months ended September
2004 of $4.1 million decreased 16.8% compared to net sales of $4.9 million for the same period of 2003.

Gross profit was $14.3 million for the September quarter of 2004
compared to $14.2 million for the same quarter of 2003 and was $25.5 million for the six months ended September 2004
compared to $26.2 million for the same period of 2003. Gross profit as a percentage of net sales increased to 69.6% for
the six months ended September 2004 compared to 68.7% for the same period of 2003. The higher gross profit percentage in
2004 resulted primarily from lower costs of goods sold as the result of changes in the product mix and decreased
operations costs.

The Company has received notice of a favorable court decision
relating to an import duty appeal that may result in the refund of previously paid European Community import duties on
Breathe Right nasal strips. The estimated amount of the potential refund, payable in Euros, is approximately $1.0
million. Assuming satisfactory completion of audit procedures performed by Dutch customs, the Company expects to receive
the refund during the current fiscal year and will recognize the refund at the time of receipt.

Advertising and promotion expense for the September quarter of 2004
was $5.7 million compared to $4.2 million for the same period of 2003. For the six months ended September 2004,
advertising and promotion expense was $10.8 million compared to $8.7 million for the previous comparable period. The
$2.1 million increase in advertising and promotion expense for the six month period reflects a planned shift of
advertising and promotion expense to earlier in the fiscal year to support greater allergy usage of nasal strips and the
relaunch of Clear nasal strips in September 2004.

Selling, general and administrative expenses were $3.5 million for
the September quarter of 2004 compared to $3.4 million for the same quarter of 2003, and were $7.1 million for the six
months ended September 2004 compared to $6.8 million for the same period of 2003. The year to date increase relates
primarily to higher legal expenses related to regulatory compliance and defense of the Companys intellectual
properties.

Operating income for the September quarter of 2004 was $5.2 million
compared to $6.5 million for the same quarter of 2003. For the six months ended September 2004, operating income was
$7.6 million compared to $10.8 million for the same period of 2003. Operating profit as a percentage of net sales
decreased to 20.1% for the six months ended September 2004 compared to 28.2% for the same period of 2003. The decline in
operating income as a percentage of sales

---

was caused by the phasing of advertising and promotion programs and
hence the related expense to earlier in the fiscal year, partially offset by improved gross margins.

Investment income was $200,000 for the September quarter of 2004
compared to $183,000 for the same quarter of 2003. Investment income for the six months ended September 2004 was
$414,000 compared to $377,000 for the comparable period of 2003. The increase was primarily the result of higher
balances of interest bearing assets. The Company continues to increase the percentage of the portfolio invested in
tax-exempt securities that provide a higher after-tax return.

Net income for the September quarter of 2004 was $3.5 million
compared to $4.2 million for the same quarter of 2003. Income tax expense was $1.9 million or 34.9% of income before
taxes for the September quarter of 2004 compared to $2.5 million or 37.0% of income before taxes for the same quarter of
2003. Income tax expense for the quarter ended September 2004 reflects a federal tax refund of $70,000 relating to
amendments to previous tax filings. For the six month period ended September 2004, net income was $5.2 million compared
to $7.0 million for the comparable period of 2003. Income tax expense for the six months ended September 2004 was $2.8
million or 35.4% of income before taxes compared to $4.1 million or 37.0% for the same period of 2003.

Seasonality

The Company believes that the majority of Breathe Right nasal strip
consumer usage 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 cold/flu season.

Liquidity and Capital Resources

At September 30, 2004, the Company had cash, cash equivalents and
marketable securities of $52.0 million, an increase of $2.6 million during the six month period ended September 2004.
The Companys working capital increased by $4.2 million during the six months ended September 2004 to $59.1
million.

|                                                                           | Six Months EndedSeptember 30,(in thousands)
|-------------------------------------------------------------------------- | -------------------------------------------
|
|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                                         |                                            
|                                                                           |                                            

---

Net cash of $4.1 million was provided from operating activities
during the six month period ended September 2004 compared with net cash used in operating activities of $427,000 for the
same period of 2003. Net cash from operating activities for the six months ending September 2004 was impacted by lower
net income of $1.9 million compared to the prior year period. The Company utilized $3.2 million of deferred tax assets
in the prior year period associated with federal and state net operating loss carry forwards which positively impacted
cash from operating activities. Changes in operating assets and liabilities for the six months ended September 2004 used
$1.5 million of cash from operations compared to cash usage of $11.1 million in the prior year period. Lower sales and
the timing of sales in the current year resulted in the lower usage of cash by accounts receivable. The lack of a new
product launch in the current fiscal year provided a lower usage of cash by inventory. Current year timing of the
Companys purchases of inventory and advertising and promotional spending provided the lower usage of cash by
accounts payable and accrued expenses.

The Company had net purchases of $5.2 million of marketable
securities during the six month period ended September 2004 compared to net purchases of $10.3 million for the same
period of 2003.

The Company issued 171,721 shares of common stock for $668,000
during the six months ended September 2004 under its Employee Stock Purchase Plan and shareholder approved equity
compensation plans. The Company also issued 50,000 shares of common stock for $172,000 pursuant to the exercise of
outstanding warrants during the six month period ended September 2004.

The Company repurchased 61,200 shares of common stock for $584,000
during the six months ended September 2004. The Company has authority to repurchase up to 470,400 additional shares of
its common stock in connection with the repurchase program that has been authorized by the board of directors.

The Company declared a $.05 per share regular cash dividend on July
20, 2004 for shareholders of record as of August 20, 2004. The amount of this dividend payment, paid on September 3,
2004, was $700,000. The Company has paid dividends of $1.4 million during the six month period ended September 2004. No
dividends were paid during the six months ended September 30, 2003.

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
judgment 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, 2004. 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 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 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 its nasal strip products from different contract manufacturers that obtain key
raw materials from a single supplier.

---

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, 2004. See Item 7A of the Companys Annual Report on
Form 10-K for the year ended March 31, 2004.

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.

---

PART II  OTHER INFORMATION

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

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

|Item 2. |  | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
|------- |  | --------------------------------------------------------------------------------

| | 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
|-------------------------------------
|                                     
|
|                                     
|July 1  July 31, 2004               
|                                     
|August 1  August 31, 2004           
|                                     
|September 1  September 30, 2004     
|                                     
|Total                                
|                                     

|(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.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

| | On August 25, 2004, CNS, Inc. held its Annual Meeting of
Stockholders. Of the 13,954,224 shares of common stock entitled to vote, 13,184,827 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 Withh | eld
|---------------------- |  | ---------- |  | ----------- | ---
|Daniel E. Cohen        |  | 13,087,552 |  | 97,275      |    
|Karen T. Beckwith      |  | 13,146,627 |  | 38,200      |    
|Patrick Delaney        |  | 11,381,992 |  | 1,802,835   |    
|Andrew J. Greenshields |  | 13,103,626 |  | 81,201      |    
|H. Robert Hawthorne    |  | 13,104,877 |  | 79,950      |    
|Marti Morfitt          |  | 13,081,434 |  | 103,393     |    
|Richard Perkins        |  | 11,978,174 |  | 1,206,653   |    
|Morris J. Siegel       |  | 13,105,656 |  | 79,171      |    

|2. | 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 | 
|---------- |  | ------------- |  | ------------- |  | --------------- | 
|13,083,753 |  | 92,715        |  | 8,359         |  |                | 

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

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

|Item 6. |  | Exhibits and Reports on 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. §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 21, 2004 reporting, under Item 5, a quarterly dividend and reporting
under Item 12, the disclosure of information regarding its results of operations for its quarter ended June 30, 2004,
and attaching as exhibits, under Item 7, a press release relating to the dividend and a press release relating to the
results of operations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

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 4, 2004 |                                                                                         | By:       |  | /s/   Marti Morfitt           | 
|                                |                                                                                         |          
|                                | Marti MorfittPresident & Chief Executive Officer                                        |          
|Date:          November 4, 2004 |                                                                                         | By:       |  | /s/   Samuel E. Reinkensmeyer | 
|                                |                                                                                         |          
|                                | Samuel E. ReinkensmeyerVice President of Finance, Chief Financial Officer and Treasurer |          

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