<PAGE>

                                  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 quarterly period ended AUGUST 31, 2003

                                       OR

( )      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934
                 For the transition period from          to
                                                --------    -------

                         Commission file number 0-19095

                             SOMANETICS CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                 <C>
                           MICHIGAN                                               38-2394784
(State or other jurisdiction of incorporation or organization)      (I.R.S. Employer Identification No.)
</TABLE>

                              1653 EAST MAPLE ROAD,
                                 TROY, MICHIGAN
                                   48083-4208
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (248) 689-3050
              (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                          No        X
                                ----------------            ----------------

       Number of common shares outstanding at October 1, 2003: 9,158,634

<PAGE>

                          PART I FINANCIAL INFORMATION

                             SOMANETICS CORPORATION

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                              August 31,         November 30,
                                                                                 2003               2002
                                                                            -------------       -------------
                                                                             (Unaudited)          (Audited)
<S>                                                                         <C>                 <C>
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents..........................................     $   1,905,941       $   2,381,808
    Accounts receivable................................................         1,400,118           1,227,785
    Inventory..........................................................         1,172,421           1,004,305
    Prepaid expenses...................................................           104,398              96,308
                                                                            -------------       -------------
       Total current assets............................................         4,582,878           4,710,206
                                                                            -------------       -------------
PROPERTY AND EQUIPMENT (at cost):
    Machinery and equipment............................................         2,005,029           1,861,679
    Furniture and fixtures.............................................           248,657             241,295
    Leasehold improvements.............................................           171,882             171,882
                                                                            -------------       -------------
       Total...........................................................         2,425,568           2,274,856
    Less accumulated depreciation and amortization.....................        (1,772,307)         (1,757,781)
                                                                            -------------       -------------
       Net property and equipment......................................           653,261             517,075
                                                                            -------------       -------------
OTHER ASSETS:
    Intangible assets, net.............................................           961,566             921,957
    Other..............................................................            15,000              15,000
                                                                            -------------       -------------
       Total other assets..............................................           976,566             936,957
                                                                            -------------       -------------
TOTAL ASSETS...........................................................     $   6,212,705       $   6,164,238
                                                                            =============       =============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts payable...................................................     $     553,099       $     470,880
    Accrued liabilities................................................           188,640             192,766
                                                                            -------------       -------------
       Total current liabilities.......................................           741,739             663,646
                                                                            -------------       -------------
COMMITMENTS AND CONTINGENCIES..........................................
SHAREHOLDERS' EQUITY:
    Preferred shares; authorized, 1,000,000 shares of $.01 par value;
       no shares issued or outstanding.................................                 -                   -
    Common shares; authorized, 20,000,000 shares of $.01 par value;
       issued and outstanding, 9,152,034 shares at August 31, 2003,
       and 9,077,863 shares at November 30, 2002.......................            91,520              90,779
    Additional paid-in capital.........................................        59,290,123          59,071,122
    Accumulated deficit................................................       (53,910,677)        (53,661,309)
                                                                            -------------       -------------
       Total shareholders' equity......................................         5,470,966           5,500,592
                                                                            -------------       -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................     $   6,212,705       $   6,164,238
                                                                            =============       =============
</TABLE>

                        See notes to financial statements

                                       2

<PAGE>

                             SOMANETICS CORPORATION

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 Three Months                  Nine Months
                                                                                Ended August 31,             Ended August 31,
                                                                          --------------------------   ---------------------------
                                                                             2003           2002          2003            2002
                                                                          -----------   ------------   ------------   ------------
<S>                                                                       <C>           <C>            <C>            <C>
NET REVENUES..........................................................    $ 2,303,880   $ 1,432,826    $ 6,458,268    $ 4,684,252
COST OF SALES.........................................................        519,545       409,076      1,530,937      1,445,082
                                                                          -----------   -----------    -----------    -----------
GROSS MARGIN..........................................................      1,784,335     1,023,750      4,927,331      3,239,170
                                                                          -----------   -----------    -----------    -----------

OPERATING EXPENSES:
     Research, development and engineering............................         85,435       147,902        328,214        431,344
     Selling, general and administrative..............................      1,628,322     1,267,691      4,867,270      3,968,698
                                                                          -----------   -----------    -----------    -----------
          Total operating expenses....................................      1,713,757     1,415,593      5,195,484      4,400,042
                                                                          -----------   -----------    -----------    -----------

OPERATING INCOME (LOSS)...............................................         70,578      (391,843)      (268,153)    (1,160,872)
                                                                          -----------   -----------    -----------    -----------
OTHER INCOME (EXPENSE):
     Interest expense.................................................             --            --             --           (794)
     Interest income..................................................          4,876        14,801         18,785         40,863
                                                                          -----------   -----------    -----------    -----------
          Total other income..........................................          4,876        14,801         18,785         40,069
                                                                          -----------   -----------    -----------    -----------
NET INCOME (LOSS).....................................................    $    75,454   $  (377,042)   $  (249,368)   $(1,120,803)
                                                                          -----------   -----------    -----------    -----------

NET INCOME (LOSS) PER COMMON
   SHARE-BASIC AND DILUTED............................................    $      0.01   $     (0.04)   $     (0.03)   $     (0.13)
                                                                          -----------   -----------    -----------    -----------

WEIGHTED AVERAGE SHARES
   OUTSTANDING-BASIC..................................................      9,101,397     9,077,863      9,086,613      8,909,221
                                                                          ===========   ===========    ===========    ===========

WEIGHTED AVERAGE SHARES
   OUTSTANDING-DILUTED ...............................................      9,700,387     9,077,863      9,086,613      8,909,221
                                                                          ===========   ===========    ===========    ===========
</TABLE>

                       See notes to financial statements

                                       3

<PAGE>

                             SOMANETICS CORPORATION

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              For the Nine Month
                                                                                 Periods Ended
                                                                          --------------------------
                                                                           August 31,     August 31,
                                                                             2003            2002
                                                                          -----------    -----------
<S>                                                                       <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss ............................................................   $  (249,368)   $(1,120,803)
  Adjustments to reconcile net loss to net cash used in
    operations:
      Depreciation and amortization ...................................       176,619        166,295
      Compensation expense for non-employee stock options .............         7,224          4,352
      Changes in assets and liabilities:
          Accounts receivable (increase) decrease .....................      (172,333)       533,829
          Inventory (increase) ........................................      (168,116)      (414,135)
          Prepaid expenses (increase) .................................        (8,090)       (42,286)
          Other assets decrease .......................................            --         12,078
          Accounts payable increase (decrease) ........................        82,219        (71,177)
          Accrued liabilities increase (decrease) .....................        (4,126)        28,686
                                                                          -----------    -----------
            Net cash (used in) operations .............................      (335,971)      (903,161)
                                                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment (net) .........................      (307,620)      (246,508)
                                                                          -----------    -----------
            Net cash (used in) investing activities ...................      (307,620)      (246,508)
                                                                          -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common shares .............................       167,724      3,689,101
                                                                          -----------    -----------
            Net cash provided by financing activities .................       167,724      3,689,101
                                                                          -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS .........................................................      (475,867)     2,539,432

CASH AND CASH EQUIVALENTS, BEGINNING
  OF PERIOD ...........................................................     2,381,808        167,873
                                                                          -----------    -----------

CASH AND CASH EQUIVALENTS, END
  OF PERIOD ...........................................................   $ 1,905,941    $ 2,707,305
                                                                          ===========    ===========

Supplemental Disclosure of Non cash investing activities:
   Issuance of warrants in connection with
       license acquisition (Note 2) ...................................   $    44,793
</TABLE>

                        See notes to financial statements

                                       4

<PAGE>

                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 AUGUST 31, 2003

1.       FINANCIAL STATEMENT PRESENTATION

         We prepared our unaudited interim financial statements pursuant to the
Securities and Exchange Commission's rules. Accordingly, they do not include all
of the information and footnotes normally included in our annual financial
statements prepared in accordance with generally accepted accounting principles.
We believe, however, that the disclosures are adequate to make the information
presented not misleading.

         The unaudited interim financial statements in this report reflect all
adjustments which are, in our opinion, necessary to a fair statement of the
results for the interim periods presented. All of these adjustments that are
material are of a normal recurring nature. Our operating results for the
nine-month period ended August 31, 2003 do not necessarily indicate the results
that you should expect for the year ending November 30, 2003. You should read
the unaudited interim financial statements together with the financial
statements and related footnotes for the year ended November 30, 2002 included
in our Annual Report on Form 10-K for the fiscal year ended November 30, 2002.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Inventory is stated at the lower of cost or market on a first-in,
first-out (FIFO) basis. Inventory consists of:

<TABLE>
<CAPTION>
                                      August 31, 2003      November 30, 2002
                                      ---------------      -----------------
<S>                                   <C>                  <C>
Finished goods...................     $       409,001      $         410,133
Work in process..................             282,285                154,816
Purchased components.............             481,135                439,356
                                      ---------------      -----------------
     Total.......................     $     1,172,421      $       1,004,305
                                      ===============      =================
</TABLE>

         Intangible Assets consist of patents and trademarks, and license
acquisition costs. Patents and trademarks are recorded at cost and are being
amortized on the straight-line method over 17 years. The carrying amount and
accumulated amortization of these patents and trademarks is as follows:

<TABLE>
<CAPTION>
                                      August 31, 2003      November 30, 2002
                                      ---------------      -----------------
<S>                                   <C>                  <C>
Patents and trademarks...........             111,733                111,733
  Less accumulated amortization..             (79,260)               (74,076)
                                      ---------------      -----------------
     Total.......................     $        32,473      $          37,657
                                      ===============      =================
</TABLE>

         Amortization expense for the three months ended August 31, 2003 and
August 31, 2002 was approximately $1,700. Amortization expense for the nine
months ended August 31, 2003 and August 31, 2002 was approximately $5,200.
Amortization expense for each of the next five fiscal years is expected to be
approximately $6,900 per year.

         License acquisition costs are related to our acquisition of exclusive,
worldwide, royalty-bearing licenses to specified rights relating to the
CorRestore(TM) System, and related products and accessories. The total carrying
amount of these license acquisition costs is as follows:

                                       5

<PAGE>



                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 AUGUST 31, 2003

<TABLE>
<CAPTION>
                                      August 31, 2003      November 30, 2002
                                      ---------------      -----------------
<S>                                   <C>                  <C>
License acquisition costs........     $       929,093      $         884,300
</TABLE>

         Effective April 25, 2003, in connection with our receipt of CE Mark
certification for the CorRestore System, an additional 50,000 warrants to
purchase common shares vested for CorRestore LLC and its agent, Wolfe & Company.
We estimated the value of these warrants as part of our license acquisition
costs using the Black-Scholes valuation model with the following assumptions:
expected volatility (the measure by which the stock price has fluctuated or is
expected to fluctuate during the period) 64.70%, risk-free interest rate of
2.0%, expected life of 25 months and dividend yield of 0%.

         License acquisition costs are intangible assets with indefinite lives
that are reviewed annually for impairment and whenever events or changes in
circumstances indicate that the carrying value of the asset may not be
recovered.

         Stock Options In October 1995, Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," was issued by the
Financial Accounting Standards Board. In addition, in December 2002, Statement
of Financial Accounting Standards No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," was issued by the Financial
Accounting Standards Board, and amends Statement No. 123. Statement No. 148
provides alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based compensation. In addition,
Statement No. 148 amends the disclosure requirements of Statement No. 123
regardless of the accounting method used to account for stock-based
compensation. We have chosen to continue to account for stock-based compensation
of employees using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretations. We have also adopted the enhanced disclosure provisions
as defined by Statement No. 148 beginning with our fiscal quarter ended February
28, 2003.

         During the first three quarters of fiscal 2003, we granted 471,000
stock options to our employees and directors, and two of our employees exercised
stock options to purchase 74,171 newly-issued common shares. During the first
three quarters of fiscal 2002 we granted 509,500 stock options to our employees
and directors, and one of our former employees exercised stock options to
purchase 2,833 newly-issued common shares.

<TABLE>
<CAPTION>
                                                 FOR THE NINE MONTHS ENDED AUGUST 31,
                                                        2003           2002
                                                    -----------      -----------
<S>                                                 <C>              <C>
Net loss .....................................      $   249,368      $ 1,120,803
Pro-forma net loss, had fair value method been
applied ......................................      $   777,428      $ 1,579,668
Net loss per common share-basic and
diluted ......................................             (.03)            (.13)
Pro-forma net loss per common share-basic
and diluted, had fair value method been
applied ......................................             (.09)            (.18)
Stock-based employee compensation included
in actual net loss ...........................      $     7,224      $     4,352
Pro-forma stock-based employee compensation,
had fair value method been applied ...........      $   535,284      $   463,217
</TABLE>


                                       6
<PAGE>

                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 AUGUST 31, 2003

         Net Income (Loss) Per Common Share - basic and diluted is computed
using the weighted average number of common shares outstanding during each
period. Weighted average shares outstanding - diluted, for the three month
period ended August 31, 2003, includes the potential dilution that could occur
for common stock issuable under stock options or warrants. Common shares
issuable under stock options and warrants have not been included in the
computation of the net loss per common share - diluted for the nine months ended
August 31, 2003, or for the three or nine month period ended August 31, 2002,
because such inclusion would be antidilutive. As of August 31, 2003 and August
31, 2002, we had outstanding warrants and options to purchase common shares of
5,509,502 and 5,163,050, respectively.

         Accounting Pronouncements During the first quarter of fiscal 2003, we
adopted Financial Accounting Standards Board Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." The adoption of this interpretation
statement had no impact on our financial statements.

3.       ACCRUED LIABILITIES

         Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                                                August 31, 2003     November 30, 2002
                                                ---------------     -----------------
<S>                                             <C>                 <C>
Incentive Compensation .................        $       108,909     $           8,000
Sales commissions ......................                 33,147                55,381
Clinical Research ......................                 20,000                21,450
Royalty ................................                 11,934                12,071
Professional fees ......................                  8,000                15,000
Warranty ...............................                  6,650                 6,400
Insurance ..............................                     --                34,464
Training ...............................                     --                40,000
                                                ---------------     -----------------
    Total ..............................        $       188,640     $         192,766
                                                ---------------     -----------------
</TABLE>

4.       COMMITMENTS AND CONTINGENCIES

         We may become subject to products liability claims by patients or
physicians, and may become a defendant in products liability or malpractice
litigation. We have obtained products liability insurance and an umbrella
policy. We might not be able to maintain such insurance or such insurance might
not be sufficient to protect us against products liability.

5.       COMMON STOCK

         Effective January 23, 2003, we granted 10-year options under the 1997
Stock Option Plan to purchase 11,500 common shares, to two of our employees at
an exercise price of $1.70 per share (the closing sale price of the common
shares as of the date of grant).

         In February 2003, one of our employees exercised stock options to
purchase 2,500 newly-issued common shares.

                                        7

<PAGE>

                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 AUGUST 31, 2003

         Effective March 24, 2003, we granted 10-year options under the 1997
Stock Option Plan to purchase 10,000 common shares, to one of our employees at
an exercise price of $1.76 per share (the closing sale price of the common
shares as of the date of grant).

         On April 10, 2003, our shareholders approved an amendment to the
Somanetics Corporation 1997 Stock Option Plan to increase the number of common
shares reserved for issuance pursuant to the exercise of options granted under
the 1997 Plan by 450,000 shares, from 2,110,000 to 2,560,000 shares. In
addition, effective April 10, 2003, we granted to five of our directors, who are
not officers or employees, 10-year options under the 1997 Stock Option Plan to
purchase an aggregate of 17,500 common shares at an exercise price of $2.80 per
share (the closing sale price of the common shares as of the date of grant).

         In August 2003, one of our employees exercised stock options to
purchase 71,671 newly-issued common shares. In addition, effective August 13,
2003, we granted 10-year options under the 1997 Stock Option Plan to purchase
432,000 common shares, to 16 of our key employees (including officers) at an
exercise price of $3.89 per share (the closing sale price of the common shares
as of the date of grant).

6.       SEGMENT INFORMATION

         We operate our business in one reportable segment, the development,
manufacture and marketing of medical devices. Each of our two product lines have
similar characteristics, customers, distribution and marketing strategies, and
are subject to similar regulatory requirements. In addition, in making operating
and strategic decisions, our management evaluates net revenues based on the
worldwide net revenues of each major product line, and profitability on an
enterprise-wide basis due to shared costs. Approximately 91% of our net revenues
in the first three quarters of fiscal 2003 were derived from our INVOS Cerebral
Oximeter product line, compared to 97% of our net revenues in the first three
quarters of fiscal 2002.

7.       NOTES PAYABLE - BANK LINE OF CREDIT

         As of April 24, 2003, we amended our Loan and Security Agreement with
Crestmark Bank. Pursuant to the amendment, we paid a $5,000 renewal commitment
fee to continue our lending relationship for the remainder of 2003. We must
negotiate a new lending relationship if we would like to continue the lending
relationship into 2004. Pursuant to the amendment, we also agreed to give the
bank at least 30 days advance notice of any intended draw on our line of credit.

                                        8

<PAGE>

                             SOMANETICS CORPORATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                                 AUGUST 31, 2003

         Some of the statements in this report are forward-looking statements.
These forward-looking statements include statements relating to our performance
in this Management's Discussion and Analysis of Financial Condition and Results
of Operations. Forward-looking statements include statements regarding the
intent, belief or current expectations of us or our officers, including
statements preceded by, followed by or including forward-looking terminology
such as "may," "will," "should," "believe," "expect," "anticipate," "estimate,"
"continue," "predict" or similar expressions, with respect to various matters.

         Our actual results might differ materially from those projected in the
forward-looking statements depending on various important factors. These
important factors include our history of losses, our current dependence on the
Cerebral Oximeter and SomaSensor, the challenges associated with developing new
products, the uncertainty of acceptance of our products by the medical
community, the lengthy sales cycle for our products, competition in our markets,
our dependence on our distributors, and the other factors discussed under the
caption "Risk Factors" and elsewhere in our Registration Statement on Form S-1
(file no. 333-74788) effective January 11, 2002 and elsewhere in this report,
all of which constitute cautionary statements identifying important factors with
respect to the forward-looking statements, including risks and uncertainties,
that could cause actual results to differ materially from those in the
forward-looking statements.

         All forward-looking statements in this report are based on information
available to us on the date of this report. We do not undertake to update any
forward-looking statements that may be made by us or on our behalf in this
report or otherwise.

RESULTS OF OPERATIONS

OVERVIEW

         We develop, manufacture and market the INVOS Cerebral Oximeter, the
only non-invasive patient monitoring system commercially available in the United
States that continuously measures changes in the blood oxygen level in the
brain. We also develop and market the CorRestore System for use in cardiac
repair and reconstruction, including heart surgeries called surgical ventricular
restoration, or SVR.

         During fiscal 2002 and the first three quarters of fiscal 2003, our
primary activities consisted of sales and marketing of the Cerebral Oximeter,
the related disposable SomaSensor, and the CorRestore System.

         We derive our revenues from sales of Cerebral Oximeters and SomaSensors
to our distributors, and from sales of Cerebral Oximeters, SomaSensors and
CorRestore Systems to hospitals in the United States through our direct sales
employees and independent sales representatives. We offer to our customers a
no-cap sales program whereby we ship the Cerebral Oximeter to the customer at no
charge, in exchange for the customer agreeing to purchase at a premium a minimum
monthly quantity of SomaSensors. Payment terms are generally net 30 days for
United States sales and net 60 days or longer for international sales. Our
primary expenses, excluding the cost of our products, are selling, general and
administrative and research, development and engineering.

                                        9
<PAGE>

                             SOMANETICS CORPORATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                                 AUGUST 31, 2003

THREE MONTHS ENDED AUGUST 31, 2003 COMPARED TO THREE MONTHS ENDED AUGUST 31,
2002

         Our net revenues increased approximately $871,000, or 61%, from
$1,432,826 in the three-month period ended August 31, 2002 to $2,303,880 in the
three-month period ended August 31, 2003. The increase in net revenues is
primarily attributable to:

         -    an increase in United States sales of approximately $549,000, from
              approximately $1,259,000 in the third quarter of fiscal 2002 to
              approximately $1,808,000 in the third quarter of fiscal 2003. This
              increase is primarily due to an increase in sales of the
              disposable SomaSensor of approximately $498,000, or 46%, and an
              increase in CorRestore System revenues of approximately $68,000,
              or 132%,

         -    a 14% increase in the average selling price of SomaSensors in the
              United States, primarily due to the increase in the suggested
              retail price of the SomaSensor effective December 1, 2002, the
              addition of new customers at the higher suggested retail prices,
              and increased sales of SomaSensors to larger U.S. hospitals at a
              premium price pursuant to our no-cap sales program, and

         -    an increase in international sales of approximately $321,000, or
              185%, from approximately $174,000 in the third quarter of fiscal
              2002 to approximately $495,000 in the third quarter of fiscal
              2003. This increase is primarily due to increased purchases by
              Tyco Healthcare.

         Approximately 21% of our net revenues in the third quarter of fiscal
2003 were export sales, compared to approximately 12% of our net revenues in the
third quarter of fiscal 2002. Sales of our products as a percentage of net
revenues were as follows:

<TABLE>
<CAPTION>
                                               PERCENT OF NET REVENUE
                                               THIRD QUARTER OF FISCAL
PRODUCT                                       2003                2002
-------                                       ----                ----
<S>                                           <C>                 <C>
SomaSensors.............................       73%                 82%
Cerebral Oximeters......................       22%                 14%
CorRestore Systems......................        5%                  4%
                                              ---                 ---
    Total...............................      100%                100%
                                              ===                 ===
</TABLE>

                  One international distributor accounted for approximately 17%
of net revenues for the three months ended August 31, 2003. The Company expects
net revenues to be between $9,000,000 and $10,000,000 for fiscal 2003.

                                       10

<PAGE>

                             SOMANETICS CORPORATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                                 AUGUST 31, 2003

         Gross margin as a percentage of net revenues was approximately 77% for
the quarter ended August 31, 2003 and approximately 71% for the quarter ended
August 31, 2002. The increase in gross margin as a percentage of net revenues is
primarily attributable to:

         -    the increase in the average selling price of SomaSensors described
              above,

         -    sales of our latest model SomaSensor, which is less costly to
              manufacture than the prior model SomaSensor sold in the third
              quarter of fiscal 2002, and

         -    sales of our latest model Cerebral Oximeter, which is less costly
              to manufacture than the prior model Cerebral Oximeter sold in the
              third quarter of fiscal 2002.

These increases in gross margin percentage were partially offset by increased
international sales, which have lower gross margins than sales in the United
States.

         Our research, development and engineering expenses decreased
approximately $62,000, or 42%, from $147,902 for the three months ended August
31, 2002 to $85,435 for the three months ended August 31, 2003. The decrease is
primarily attributable to approximately $39,000 in decreased costs associated
with our next generation Cerebral Oximeter launched in 2003, and $28,000 in
decreased development costs associated with the CorRestore System.

         Selling, general and administrative expenses increased approximately
$361,000, or 28%, from $1,267,691 for the three months ended August 31, 2002 to
$1,628,322 for the three months ended August 31, 2003. The increase in selling,
general and administrative expense is primarily attributable to:

         -    a $152,000 increase in commissions paid to our independent sales
              representatives as a result of increased sales,

         -    an $89,000 increase in salaries, wages, employee sales commissions
              and related expenses, primarily as a result of an increase in the
              number of employees, principally sales and marketing (from an
              average of 28 employees for the third quarter of fiscal 2002 to an
              average of 29 employees for the third quarter of fiscal 2003),
              increased salaries and increased employee insurance costs,

         -    a $57,000 increase in trade show, promotional, and selling-related
              expenses as a result of our increased sales and marketing
              activities, and

         -    a $43,000 increase in accrued incentive compensation expense,
              primarily due to our executive officers receiving awards under the
              2003 Incentive Compensation Plan after forgoing awards under the
              2002 Incentive Compensation Plan.

         For the three-month period ended August 31, 2003, we realized net
income of $.01 per share, compared to a loss per share of $.04 in the same
period in fiscal 2002. This is primarily attributable to:

         -    a 61% increase in net revenues, and

         -    a 6% increase in gross margin percentage.

We achieved net income despite a 21% increase in operating expenses.

                                       11

<PAGE>

                             SOMANETICS CORPORATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                                 AUGUST 31, 2003

NINE MONTHS ENDED AUGUST 31, 2003 COMPARED TO NINE MONTHS ENDED AUGUST 31, 2002

         Our net revenues increased approximately $1,774,000, or 38%, from
$4,684,252 in the nine-month period ended August 31, 2002 to $6,458,268 in the
nine-month period ended August 31, 2003. The increase in net revenues is
primarily attributable to:

         -    an increase in United States sales of approximately $1,500,000,
              from approximately $3,772,000 in the first three quarters of
              fiscal 2002 to approximately $5,272,000 in the first three
              quarters of fiscal 2003. This increase is primarily due to an
              increase in sales of the disposable SomaSensor of approximately
              $1,204,000, or 39%, and an increase in CorRestore System revenues
              of approximately $426,000, or 289%. This increase was partially
              offset by a decrease in sales of the Cerebral Oximeter of
              approximately $129,000, or 25%, primarily as a result of a
              preference by larger U.S. hospitals to acquire Cerebral Oximeters
              using our no-cap sales program,

         -    a 13% increase in the average selling price of SomaSensors in the
              United States, primarily due to the increase in the suggested
              retail price of the SomaSensor effective December 1, 2002, the
              addition of new customers at the higher suggested retail prices,
              and increased sales of SomaSensors to larger U.S. hospitals at a
              premium price pursuant to our no-cap sales program. This increase
              was partially offset by increased SomaSensor sales to
              international distributors, which have lower average selling
              prices, and

         -    an increase in international sales of approximately $274,000, or
              30%, from approximately $912,000 in the first three quarters of
              fiscal 2002 to approximately $1,186,000 in the first three
              quarters of fiscal 2003, primarily attributable to increased
              purchases by Tyco Healthcare.

         Approximately 18% of our net revenues in the first three quarters of
fiscal 2003 were export sales, compared to approximately 19% of our net revenues
in the first three quarters of fiscal 2002. Sales of our products as a
percentage of net revenues were as follows:

<TABLE>
<CAPTION>
                                          PERCENT OF NET REVENUE
                                      FIRST THREE QUARTERS OF FISCAL
PRODUCT                               2003                      2002
-------                               ----                      ----
<S>                                   <C>                       <C>
SomaSensors........................    74%                       74%
Cerebral Oximeters.................    17%                       23%
CorRestore Systems.................     9%                        3%
                                      ---                       ---
    Total..........................   100%                      100%
                                      ===                       ===
</TABLE>

         One international distributor accounted for approximately 13% of net
revenues for the nine months ended August 31, 2003, and approximately 11% of net
revenues for the nine months ended August 31, 2002.

                                       12
<PAGE>

                             SOMANETICS CORPORATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                                 AUGUST 31, 2003

         Gross margin as a percentage of net revenues was approximately 76% for
the nine months ended August 31, 2003 and approximately 69% for the nine months
ended August 31, 2002. The increase in gross margin as a percentage of net
revenues is primarily attributable to:

              -   the increase in the average selling price of SomaSensors
                  described above,

              -   sales of our latest model SomaSensor, which is less costly to
                  manufacture than the prior model SomaSensor sold in the first
                  three quarters quarter of fiscal 2002, and

              -   sales of our latest model Cerebral Oximeter, which is less
                  costly to manufacture than the prior model Cerebral Oximeter
                  sold in the first three quarters quarter of fiscal 2002.

         Our research, development and engineering expenses decreased
approximately $103,000, or 24%, from $431,344 for the nine months ended August
31, 2002 to $328,214 for the nine months ended August 31, 2003. The decrease is
primarily attributable to approximately $73,000 in decreased costs associated
with the development of the CorRestore System, and $39,000 in decreased costs
associated with our next generation Cerebral Oximeter launched in 2003.

         Selling, general and administrative expenses increased approximately
$899,000, or 23%, from $3,968,698 for the nine months ended August 31, 2002 to
$4,867,270 for the nine months ended August 31, 2003. The increase in selling,
general and administrative expense is primarily attributable to:

         -    a $224,000 increase in commissions paid to our independent sales
              representatives as a result of increased sales,

         -    a $202,000 increase in salaries, wages, employee sales commissions
              and related expenses, primarily as a result of increased salaries,
              principally sales and marketing, and increased employee insurance
              costs,

         -    a $165,000 increase in trade show, promotional, and
              selling-related expenses as a result of our increased sales and
              marketing activities,

         -    a $152,000 increase in accrued incentive compensation expense,
              primarily due to our executive officers receiving awards under the
              2003 Incentive Compensation Plan after forgoing awards under the
              2002 Incentive Compensation Plan,

         -    an $82,000 increase in customer education expenses for the
              CorRestore System,

         -    a $43,000 increase in royalty expense as a result of increased
              sales of the CorRestore System, and

         -    a $37,000 increase in professional service fees primarily as a
              result of increased investor relations and public relations
              expenses.

These increases were partially offset by a $30,000 decrease in corporate general
insurance expenses, primarily as a result of a policy premium refund received in
2003 relating to our 2002 products liability insurance coverage.

         For the nine-month period ended August 31, 2003, we realized a 78%
decrease in our net loss over the same period in fiscal 2002. The decrease is
primarily attributable to:

         -    a 38% increase in net revenues, and

         -    a 7% increase in gross margin percentage.

The reduction in our net loss was achieved despite a 18% increase in operating
expenses.

                                       13
<PAGE>

                             SOMANETICS CORPORATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                                 AUGUST 31, 2003

LIQUIDITY AND CAPITAL RESOURCES

         Net cash used in operations during the nine-month period ended August
31, 2003 was approximately $336,000. Cash was used primarily to:

         -    fund our net loss, primarily selling, general and administrative
              expenses and research, development and engineering expenses,
              totaling approximately $73,000, before depreciation and
              amortization expense,

         -    increase accounts receivable by approximately $172,000, primarily
              because of higher third quarter 2003 sales than fourth quarter
              2002 sales, and

         -    increase inventories by approximately $168,000, primarily as a
              result of the acquisition of components associated with our
              SomaSensor and Cerebral Oximeter due to increased sales.

These uses of cash were partially offset by an increase in accounts payable of
approximately $82,000, primarily due to increased purchases of inventories.

         We expect our working capital requirements to increase if sales
increase.

         Capital expenditures in the first nine months of fiscal 2003 were
approximately $308,000. These expenditures were primarily for Cerebral Oximeter
demonstration units and no-cap sales units. We expect our capital expenditures
for fiscal 2003 to be approximately $400,000.

         We have a Loan and Security Agreement with Crestmark Bank for a working
capital line of credit for up to $750,000, collateralized by all of our assets.
Under the agreement, Crestmark Bank may, but is not obligated to, lend us
amounts we request from time to time, up to $750,000, if no default exists. The
loans are limited by a borrowing base based on qualifying accounts receivable
and lender reserves. The loan is payable on demand, and our collections of our
receivables are directed to Crestmark Bank in payment of any outstanding balance
of the loan. The principal amount outstanding bears interest, payable monthly,
at the prime rate (4.00% as of September 30, 2003) plus 2% plus a 2.4% service
fee. As of September 30, 2003, we had no outstanding principal loan balance and
approximately $750,000 was available for borrowing, at Crestmark's discretion,
under the facility. Effective April 24, 2003, we amended our Loan and Security
Agreement with Crestmark Bank. Pursuant to the amendment, we paid a $5,000
renewal commitment fee to continue our lending relationship for the remainder of
2003. We must negotiate a new lending relationship if we would like to continue
the lending relationship into 2004. Pursuant to the amendment, we also agreed to
give the bank at least 30 days advance notice of any intended draw on our line
of credit.

         As of August 31, 2003, we had working capital of $3,841,139, cash and
cash equivalents of $1,905,941, total current liabilities of $741,739 and
shareholder's equity of $5,470,966. We had an accumulated deficit of $53,910,677
through August 31, 2003.

         We believe that the cash and cash equivalents on hand at August 31,
2003, together with the estimated net borrowings available under the Crestmark
Bank Loan and Security Agreement, will be adequate to satisfy our operating and
capital requirements for more than the next twelve months.

                                       14
<PAGE>

                             SOMANETICS CORPORATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                                 AUGUST 31, 2003

         The estimated length of time current cash, cash equivalents and
available borrowings will sustain our operations is based on estimates and
assumptions we have made. These estimates and assumptions are subject to change
as a result of actual experience. Actual capital requirements necessary to
market the Cerebral Oximeter and SomaSensor, to develop and market the
CorRestore System, to undertake other product development activities, and for
working capital might be substantially greater than current estimates.

CRITICAL ACCOUNTING POLICIES

         We believe our most significant accounting policies relate to the
recording of an intangible asset for license acquisition costs related to our
acquisition of exclusive, worldwide, royalty-bearing licenses to specified
rights relating to the CorRestore System and related products and accessories,
and our accounting treatment of stock options issued to employees.

         In fiscal years 2000, 2001 and 2003, we recorded an intangible asset
related to our acquisition of exclusive, worldwide, royalty-bearing licenses to
specified rights relating to the CorRestore System and related products and
accessories. License acquisition costs included our estimate of the fair value
of ten-year vested stock options to purchase common shares granted to one of our
directors in connection with negotiating and assisting us in completing the
transaction, and our estimate of the fair value of the vested portion of
five-year warrants to purchase common shares issued in the transaction.

         We estimated the value of the stock options to purchase common shares
and the warrants to purchase common shares using the Black-Scholes valuation
model. The Black-Scholes valuation model requires the following assumptions:
expected life period of the security, expected volatility of our stock price
during the period, risk-free interest rate, and dividend yield. Given the
assumptions inherent in the Black-Scholes valuation model, it would have been
possible to calculate a different value for our intangible asset by changing one
or more of the valuation model variables or by using a different valuation
model. However, we believe that the model is appropriate, that the judgments and
assumptions that we made at the time of valuation were also appropriate, and
that the reported results would not have been materially different had one or
more of the variables been different or had a different valuation model been
used.

         We have adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets." This statement establishes accounting
and reporting standards for goodwill and other intangible assets. The effect of
adopting this Statement has been to discontinue amortizing our license
acquisition costs related to our acquisition of exclusive, worldwide,
royalty-bearing licenses to specified rights relating to the CorRestore System
and related products and accessories described above because we believe these
licenses have an indefinite life. Therefore, no amortization expense has been
recorded related to these license acquisition costs since December 1, 2001, the
date we adopted Statement No. 142.

                                       15
<PAGE>

                             SOMANETICS CORPORATION

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                                 AUGUST 31, 2003

         In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," was issued by the Financial
Accounting Standards Board. In addition, in December 2002, Statement of
Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation
- Transition and Disclosure," was issued by the Financial Accounting Standards
Board, and amends Statement No. 123. We have chosen to continue to account for
stock-based compensation of employees using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations. Accordingly, compensation
costs for stock options granted to employees are measured as the excess, if any,
of the market price of our stock at the date of the grant over the amount an
employee must pay to acquire the stock. No compensation expense has been charged
against income for stock option grants to employees because our stock option
grants are priced at the market value as of the date of grant. During the first
three quarters of fiscal 2003, we granted 471,000 stock options to our employees
and directors.

         Had we recognized compensation expense for stock options granted to
employees in the first nine months of fiscal 2003, using the fair value method
of accounting based on the fair value of the options on the grant date using the
Black-Scholes valuation model, our net loss, on a pro forma basis, would have
increased by approximately $528,000, or $.06 per common share. Had we recognized
compensation expense for our stock options granted to employees in the first
nine months of fiscal 2002, using the fair value method of accounting based on
the fair value of the options on the grant date using the Black-Scholes
valuation model, our net loss, on a pro forma basis, would have increased by
approximately $459,000, or $.05 per common share.

                                       16
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.

                                       17
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

         Our management has evaluated, with the participation of our principal
executive and principal financial officers, the effectiveness of our disclosure
controls and procedures as of August 31, 2003, and, based on their evaluation,
our principal executive and principal financial officers have concluded that
these controls and procedures are effective as of August 31, 2003. There was no
change in our internal control over financial reporting identified in connection
with such evaluation that occurred during our fiscal quarter ended August 31,
2003 that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.

         Disclosure controls and procedures are our controls and other
procedures that are designed to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our
management, including our principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.

                                       18

<PAGE>

PART II OTHER INFORMATION

Item 5. Other Information

         Effective April 10, 2003, at our annual board meeting following our
Annual Meeting of Shareholders, Mr. Robert R. Henry, Mr. Daniel S. Follis and
Dr. James I. Ausman were elected as members of the Audit Committee.

Item 6. Exhibits and Reports on Form 8-K

        (a)       Exhibits

                      31.1     Certifications of Chief Executive Officer
                               Pursuant to Rule 13a-14(a), as Adopted Pursuant
                               to Section 302 of the Sarbanes-Oxley Act of 2002.

                      31.2     Certifications of Chief Financial Officer
                               Pursuant to Rule 13a-14(a), as Adopted Pursuant
                               to Section 302 of the Sarbanes-Oxley Act of 2002.

                      32.1     Certifications of Chief Executive Officer and
                               Chief Financial Officer Pursuant to 18 U.S.C.
                               Section 1350, as Adopted Pursuant to Section 906
                               of the Sarbanes-Oxley Act of 2002.

        (b)       Reports on Form 8-K

                  No reports on Form 8-K were filed by us during the quarter for
                  which this report is filed. We furnished a Current Report on
                  Form 8-K on June 20, 2003, reporting under Item 9 the
                  information required by Item 12 - Results of Operations and
                  Financial Condition in connection with our press release
                  regarding second quarter 2003 results. No financial statements
                  were filed, although we furnished the financial information
                  included in the press release furnished with the Form 8-K.

                                       19

<PAGE>

                                   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.

                                       Somanetics Corporation
                                       ----------------------------------------
                                       (Registrant)

Date: October 1, 2003                  By: /s/ William M. Iacona
      ---------------                      ------------------------------------
                                       William M. Iacona
                                       Vice President, Finance, Controller, and
                                       Treasurer (Duly Authorized and Principal
                                       Financial Officer)

                                       20

<PAGE>

                  EXHIBIT INDEX

Exhibit                                 Description
-------                                 -----------

31.1              Certifications of Chief Executive Officer Pursuant to Rule
                  13a-14(a), as Adopted Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

31.2              Certifications of Chief Financial Officer Pursuant to Rule
                  13a-14(a), as Adopted Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

32.1              Certifications of Chief Executive Officer and Chief Financial
                  Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                       21