<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 FEBRUARY 28, 2006

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             (I.R.S. Employer Identification No.)
 incorporation or organization)
</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)

                                       N/A
         (Former name, former address and former fiscal year, if changed
                               since last report)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [ ]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

     Number of common shares outstanding at March 31, 2006: 13,019,885

<PAGE>

                          PART I FINANCIAL INFORMATION

                             SOMANETICS CORPORATION

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                            FEBRUARY 28,   NOVEMBER 30,
                                                                                2006           2005
                                                                            ------------   ------------
                                                                             (Unaudited)     (Audited)
<S>                                                                         <C>            <C>
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents............................................    $ 14,395,224   $ 13,148,237
   Accounts receivable..................................................       2,968,919      3,531,740
   Inventory............................................................       1,184,044      1,058,101
   Prepaid expenses.....................................................         314,427        623,303
   Deferred tax asset - current.........................................       1,675,011      1,561,322
                                                                            ------------   ------------
      Total current assets..............................................      20,537,625     19,922,703
                                                                            ------------   ------------
PROPERTY AND EQUIPMENT (at cost):
   Demonstration and no capital cost sales equipment at customers.......       2,040,906      1,916,655
   Machinery and equipment..............................................       1,118,118        768,992
   Furniture and fixtures...............................................         295,906        289,397
   Leasehold improvements...............................................         192,615        187,135
                                                                            ------------   ------------
      Total.............................................................       3,647,545      3,162,179
   Less accumulated depreciation and amortization.......................      (1,944,237)    (1,836,438)
                                                                            ------------   ------------
      Net property and equipment........................................       1,703,308      1,325,741
                                                                            ------------   ------------
OTHER ASSETS:
   Deferred tax asset - non-current.....................................       7,815,871      8,438,678
   Other................................................................         244,412         15,000
   Intangible assets, net...............................................          15,193         16,921
                                                                            ------------   ------------
      Total other assets................................................       8,075,476      8,470,599
                                                                            ------------   ------------
TOTAL ASSETS.............................................................   $ 30,316,409   $ 29,719,043
                                                                            ============   ============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable.....................................................    $    955,795   $    712,796
   Accrued liabilities..................................................         531,673      1,165,594
                                                                            ------------   ------------
      Total current liabilities.........................................       1,487,468      1,878,390
                                                                            ------------   ------------
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, 10,715,885 shares at February 28, 2006,
      and 10,715,885 shares at November 30, 2005.........................        107,159        107,159
   Additional paid-in capital............................................     64,864,554     64,864,554
   Accumulated deficit...................................................    (36,142,772)   (37,131,060)
                                                                            ------------   ------------
      Total shareholders' equity.........................................     28,828,941     27,840,653
                                                                            ------------   ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...............................   $ 30,316,409   $ 29,719,043
                                                                            ============   ============
</TABLE>

                        See notes to financial statements


                                        2

<PAGE>

                             SOMANETICS CORPORATION

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                        FOR THE THREE-MONTH
                                                           PERIODS ENDED
                                                    ---------------------------
                                                    FEBRUARY 28,   FEBRUARY 28,
                                                        2006           2005
                                                    ------------   ------------
<S>                                                 <C>            <C>
NET REVENUES ....................................    $ 5,753,715    $ 4,032,617
COST OF SALES ...................................        710,499        550,149
                                                     -----------    -----------
   Gross Margin .................................      5,043,216      3,482,468
                                                     -----------    -----------

OPERATING EXPENSES:
   Research, development and engineering ........        178,066         95,802
   Selling, general and administrative ..........      3,507,881      2,576,136
                                                     -----------    -----------
      Total operating expenses ..................      3,685,947      2,671,938
                                                     -----------    -----------

OPERATING INCOME ................................      1,357,269        810,530
                                                     -----------    -----------

OTHER INCOME:
   Interest income ..............................        140,136         43,903
                                                     -----------    -----------
      Total other income ........................        140,136         43,903
                                                     -----------    -----------
NET INCOME BEFORE INCOME TAXES ..................      1,497,405        854,433
                                                     -----------    -----------
INCOME TAX PROVISION ............................       (509,118)      (290,507)
                                                     -----------    -----------
NET INCOME ......................................    $   988,287    $   563,926
                                                     ===========    ===========
NET INCOME PER COMMON SHARE - BASIC .............    $       .09    $       .06
                                                     ===========    ===========
NET INCOME PER COMMON SHARE - DILUTED ...........    $       .08    $       .05
                                                     ===========    ===========
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC .....     10,715,885     10,140,015
                                                     ===========    ===========
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED ...     12,323,704     11,840,093
                                                     ===========    ===========
</TABLE>

                        See notes to financial statements


                                        3

<PAGE>

                             SOMANETICS CORPORATION

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      FOR THE THREE-MONTH
                                                                                         PERIODS ENDED
                                                                                  ---------------------------
                                                                                  FEBRUARY 28,   FEBRUARY 28,
                                                                                      2006           2005
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income .................................................................   $   988,287     $  563,926
   Adjustments to reconcile net income to net cash provided by operations:
      Income tax provision ....................................................       509,118        290,507
      Depreciation and amortization ...........................................       119,749         82,563
      Changes in assets and liabilities:
         Accounts receivable (increase) decrease ..............................       562,821       (289,505)
         Inventory (increase) .................................................      (257,555)       (95,398)
         Prepaid expenses decrease ............................................       308,876         74,099
         Other assets (increase) ..............................................      (229,412)            --
         Accounts payable increase ............................................       242,999        168,299
         Accrued liabilities (decrease) .......................................      (633,921)      (399,905)
                                                                                  -----------     ----------
      Net cash provided by operating activities ...............................     1,610,962        394,586
                                                                                  -----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property and equipment (net) ................................      (363,975)       (24,594)
                                                                                  -----------     ----------
      Net cash (used in) investing activities .................................      (363,975)       (24,594)
                                                                                  -----------     ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of common shares due to exercise of stock options ...            --         62,972
                                                                                  -----------     ----------
      Net cash provided by financing activities ...............................            --         62,972
                                                                                  -----------     ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS .....................................     1,246,987        432,964

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................................    13,148,237      7,069,542
                                                                                  -----------     ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD ......................................   $14,395,224     $7,502,506
                                                                                  ===========     ==========

Supplemental Disclosure of Non cash investing activities:
   Demonstration and no capital cost sales equipment capitalized
      from inventory (Note 2) .................................................   $   131,612     $  114,329
</TABLE>

                        See notes to financial statements


                                        4
<PAGE>

                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                FEBRUARY 28, 2006

1.   FINANCIAL STATEMENT PRESENTATION

     We prepared our unaudited interim financial statements pursuant to the
Securities and Exchange Commission's rules. These interim financial statements
do not include all of the information and notes 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
three-month period ended February 28, 2006 do not necessarily indicate the
results that you should expect for the year ending November 30, 2006. You should
read the unaudited interim financial statements together with the financial
statements and related notes for the year ended November 30, 2005 included in
our Annual Report on Form 10-K for the fiscal year ended November 30, 2005.

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>
                         FEBRUARY 28,   NOVEMBER 30,
                             2006           2005
                         ------------   ------------
<S>                      <C>            <C>
Purchased components..    $  851,062     $  652,876
Finished goods........       265,033        352,560
Work in process.......        67,949         52,665
                          ----------     ----------
   Total..............    $1,184,044     $1,058,101
                          ==========     ==========
</TABLE>

     Property and Equipment are stated at cost. Depreciation and amortization
are computed using the straight-line method over the estimated useful lives of
the assets, which range from two to five years. Depreciation expense was
$118,021 and $80,835 for the quarters ended February 28, 2006 and February 28,
2005, respectively. We offer to our United States customers a no capital cost
sales program whereby we ship the INVOS System monitor to the customer at no
charge. The INVOS System monitors that are shipped to our customers are
classified as no capital cost sales equipment and are depreciated over five
years. As of February 28, 2006, we have capitalized $2,040,906 in costs for
INVOS System monitors being used as demonstration and no capital cost sales
equipment, and these assets had a net book value of $1,144,600. Property and
equipment are reviewed for impairment whenever events or changes in
circumstances indicate that the net book value of the asset may not be
recovered.

     Intangible Assets consist of patents and trademarks. 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 are as follows:

<TABLE>
<CAPTION>
                                   FEBRUARY 28,   NOVEMBER 30,
                                       2006           2005
                                   ------------   ------------
<S>                                <C>            <C>
Patents and trademarks..........     $111,733       $111,733
Less: accumulated amortization..      (96,540)       (94,812)
                                     --------       --------
   Total........................     $ 15,193       $ 16,921
                                     ========       ========
</TABLE>


                                        5

<PAGE>

                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                FEBRUARY 28, 2006

     Amortization expense for the three months ended February 28, 2006 and
February 28, 2005 was approximately $1,700. Amortization expense for each of the
next two fiscal years is expected to be approximately $6,900 per year, and
approximately $3,100 in fiscal 2008.

     Stock Options In October 1995, Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," was issued. In December
2004, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123 (revised), Share Based Payment. This Statement
revises Statement No. 123, "Accounting for Stock-Based Compensation," and
requires that compensation costs related to share-based payment transactions,
including stock options, restricted stock and restricted stock units be
recognized in the financial statements. This Statement became effective for our
fiscal quarter that began December 1, 2005.

     We previously accounted 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 were
measured as the excess, if any, of the market price of our stock at the date of
grant over the amount an employee must pay to acquired the stock. No
compensation expense has been charged against income for stock option grants to
employees for the quarter ended February 28, 2005.

     In November 2005, we approved the acceleration of vesting of all unvested
stock options as of November 30, 2005. The primary purpose of this accelerated
vesting was to eliminate compensation expense we would recognize in our results
of operations upon the adoption of SFAS 123(R), which became effective for our
fiscal quarter that began December 1, 2005. After the effects of the accelerated
vesting, the initial adoption of SFAS 123(R) was immaterial and resulted in no
compensation expense in the first quarter ended February 28, 2006. However, the
issuance of additional stock compensation under the 2005 Stock Incentive Plan in
the future will have an additional impact on our financial statements.

     Stock-based compensation of consultants and advisors is determined based on
the fair value of the options or warrants on the grant date pursuant to the
methodology of SFAS No. 123, estimated using the Black-Scholes model. The
resulting amount is recognized as compensation expense and an increase in
additional paid-in capital over the vesting period of the options or warrants.
We did not record any compensation expense, or any increase in additional paid
in capital, in the first quarters of fiscal 2006 or fiscal 2005.

     Had compensation expense for stock options that vested in the first quarter
of fiscal 2005 been determined based on the fair value of the options on the
grant date pursuant to the methodology of SFAS No. 123, our results of
operations, on a pro forma basis, would have been as follows:

                  FOR THE THREE MONTHS ENDED FEBRUARY 28, 2005

<TABLE>
<S>                                                                       <C>
Net income ............................................................   $ 563,926
Add: Stock-based employee compensation included in actual net income ..   $       0
Deduct: Total stock-based employee compensation, had fair value
   method been applied ................................................   $(197,268)
                                                                          ---------
Pro-forma net income ..................................................   $ 366,658
                                                                          =========
Net income per common share - diluted .................................   $     .05
Pro-forma net income (loss) per common share - diluted, had fair
   value method been applied ..........................................   $     .03
</TABLE>

     Net Income 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 quarters ended February
28, 2006 and 2005, include the potential dilution that could occur for common
stock issuable under stock options or warrants. As of February 28, 2006 and
2005, the difference between weighted average shares - diluted and weighted
average shares - basic is calculated as follows:


                                        6

<PAGE>

                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                FEBRUARY 28, 2006

<TABLE>
<CAPTION>
                                    February 28, 2006   February 28, 2005
                                    -----------------   -----------------
<S>                                 <C>                 <C>
Weighted average shares - basic         10,715,885          10,140,015
Add: effect of dilutive common
   shares and warrants                   1,607,819           1,700,078
                                        ----------          ----------
Weighted average shares - diluted       12,323,704          11,840,093
</TABLE>

     For the quarters ended February 28, 2006 and February 28, 2005, there were
500 stock options outstanding that were excluded from the computation of net
income per common share - diluted, as the exercise price of these options
exceeded the average price per share of our common stock. In addition, for both
periods, there were 2,100,000 warrants outstanding that were excluded from the
computation, as the warrants are contingent on achieving specified future sales
targets that we do not expect to achieve. As of February 28, 2006 we had
outstanding 4,014,232 warrants and options to purchase common shares, and as of
February 28, 2005 we had outstanding 4,426,815 warrants and options to purchase
common shares.

3.   ACCRUED LIABILITIES

     Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                           FEBRUARY 28,   NOVEMBER 30,
                               2006           2005
                           ------------   ------------
<S>                        <C>            <C>
Incentive Compensation..     $235,487      $  701,658
Professional Fees.......      134,604           5,625
Sales Commissions.......      101,829         352,459
Warranty................       17,350          16,850
Clinical Research.......       16,925          21,675
401(k) Match............       14,929          42,164
Royalty.................       10,549          13,788
Taxes...................           --          11,375
                             --------      ----------
   Total................     $531,673      $1,165,594
                             ========      ==========
</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.   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 98 percent of our net
revenues in the first quarter of fiscal 2006 were derived from our INVOS System
product line, compared to 97 percent of our net revenues in the first quarter of
fiscal 2005.

6.   SUBSEQUENT EVENTS

     On March 6, 2006, we completed a public offering of 2,300,000 of our
newly-issued common shares at a public offering price of $24.00 per share. The
estimated net proceeds, after deducting the underwriting discount and


                                        7

<PAGE>

                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                FEBRUARY 28, 2006

the estimated expense of the offering, were approximately $51,388,000. These
amounts include the exercise in full by the underwriters of an option to
purchase up to 300,000 shares to cover over-allotments. At completion of the
offering, we had 13,015,885 shares outstanding. We intend to use the net
proceeds from the offering for the expansion of our direct sales team and other
sales and marketing activities, to sponsor additional clinical trials, to expand
research and development efforts, and for working capital and general corporate
purposes, including potential acquisitions of complementary products,
technologies or businesses.


                                        8
<PAGE>

                             SOMANETICS CORPORATION

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

                                FEBRUARY 28, 2006

FORWARD-LOOKING STATEMENTS

          You should read the following discussion and analysis of our financial
condition and results of operations together with our financial statements and
the related notes and other financial data included elsewhere in this report.
Some of the information contained in this discussion and analysis or set forth
elsewhere in this report, including information with respect to our plans and
strategy for our business, includes forward-looking statements that involve
risks and uncertainties. You should review the "Risk Factors" section of our
Annual Report on Form 10-K for a discussion of important factors that could
cause actual results to differ materially from the results described in or
implied by the forward-looking statements contained in the following discussion
and analysis. See also "Forward-Looking Statements" in Item 1A of our Annual
Repot on Form 10-K.

     OVERVIEW

          We develop, manufacture and market the INVOS System, a non-invasive
patient monitoring system that continuously measures changes in blood oxygen
levels in the brain. In the first quarter of fiscal 2005, we initiated selling
and marketing efforts for the INVOS System in the pediatric intensive care unit,
or ICU. We plan to launch the product into the neonatal ICU in late 2006, after
completing development of a smaller SomaSensor. We are currently sponsoring a
clinical trial evaluating the use of the INVOS System on diabetic patients over
age 50. If the results of this trial are positive, we intend to target more
actively the sale of the INVOS System for use in diabetic patients undergoing
major surgeries, consistent with FDA requirements. We expect to begin this
marketing in 2008.

          In November 2005, we received 510(k) clearance from the FDA to market
our INVOS System to monitor changes in somatic tissue blood oxygen saturation in
regions of the body other than the brain in patients with or at risk for
restricted blood flow. Our next generation INVOS System monitor, which we expect
to launch in the first half of 2006, can display information from four
SomaSensors, which will allow for the simultaneous monitoring of changes in
blood oxygen saturation in the brain and, in patients with or at risk for
restricted blood flow, in somatic tissue.

          We also develop and market the CorRestore System for use in cardiac
repair and reconstruction. In September 2004, the European Economic Community
changed its regulations, limiting approval authority for animal tissue implant
products sold in Europe to some independent registration agencies that do not
include our registrar. Sales of CorRestore Systems represented two percent of
our first quarter fiscal 2006 net revenues. We expect that as sales of our INVOS
System increase, the CorRestore System will become an even less significant
component of our business.

     NET REVENUES AND COST OF SALES

          We derive our revenues from sales of INVOS Systems and CorRestore
Systems to hospitals in the United States through our direct sales team and
independent sales representative firms. Outside the United States, we have
distribution agreements with independent distributors for the INVOS System,
including Tyco Healthcare in Europe, Canada, the Middle East and Africa, and
Edwards Lifesciences Ltd. in Japan. Our cost of sales represent the cost of
producing monitors and disposable SomaSensors. Revenues from outside the United
States contributed 16 percent to our first quarter fiscal 2006 net revenues. As
a percentage of revenues, the gross margins from our international sales are
typically lower than gross margins from our U.S. sales, reflecting the
difference between the prices we receive from distributors and from direct
customers.

          We offer to our customers in the United States a no capital cost sales
program whereby we ship the INVOS System monitor to the customer at no charge.
Under this program, we do not recognize any revenue upon the shipment of the
monitor. We recognize SomaSensor revenue when we receive purchase orders and
ship the product


                                        9

<PAGE>

                             SOMANETICS CORPORATION

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

                                FEBRUARY 28, 2006

to the customer. At the time of shipment of the monitor, we capitalize the
monitor as an asset and depreciate this asset over five years, and this
depreciation is included in cost of goods sold.

     OPERATING EXPENSES

          Selling, general and administrative expenses generally consist of:

     -    salaries, wages and related expenses of our employees and consultants;

     -    sales and marketing expenses, such as employee sales commissions,
          commissions to independent sales representatives, travel,
          entertainment, advertising, education and training expenses,
          depreciation of demonstration monitors and attendance at selected
          medical conferences;

     -    clinical research expenses, such as costs of supporting clinical
          trials; and

     -    general and administrative expenses, such as the cost of corporate
          operations, professional services, insurance, warranty and royalty
          expenses, investor relations, depreciation and amortization,
          facilities expenses and other general operating expenses.

          We have increased the size of our direct sales team from 17 persons at
the end of the first quarter of fiscal 2005 to 26 persons at the end of the
first quarter of fiscal 2006. We expect to increase significantly the size of
our U.S. direct sales team in fiscal 2006 and are evaluating placing direct
salespersons and clinical specialists in Europe to support Tyco Healthcare. We
also expect our clinical research expenses to increase in fiscal 2006 as a
result of sponsoring a clinical trial evaluating the use of the INVOS System on
diabetic patients over age 50. As a result, we expect selling, general and
administrative expenses to increase in fiscal 2006.

          Research, development and engineering expenses consist of:

     -    salaries, wages and related expenses of our research and development
          personnel and consultants;

     -    costs of various development projects; and

     -    costs of preparing and processing applications for FDA clearance of
          new products.

RESULTS OF OPERATIONS

     THREE MONTHS ENDED FEBRUARY 28, 2006 COMPARED TO THREE MONTHS ENDED
FEBRUARY 28, 2005

          NET REVENUES. Our net revenues increased $1,721,098, or 43 percent,
from $4,032,617 in the three-month period ended February 28, 2005 to $5,753,715
in the three-month period ended February 28, 2006. The increase in net revenues
is primarily attributable to:

     -    an increase in U.S. sales of $1,471,081, or 44 percent, from
          $3,364,550 in the first quarter of fiscal 2005 to $4,835,631 in the
          first quarter of fiscal 2006. The increase in U.S. sales was primarily
          due to an increase in sales of the disposable SomaSensor of
          $1,191,370, or 41 percent, primarily as a result of a 33 percent
          increase in SomaSensor unit sales. In addition, sales of the INVOS
          System monitor in the United States increased $283,886, or 85 percent,
          primarily as a result of increased purchases by pediatric hospitals
          after the launch of our products into the pediatric ICU in the first
          quarter of fiscal 2005; and

     -    an increase in international sales of $250,017, or 37 percent, from
          $668,067 in the first quarter of fiscal 2005 to $918,084 in the first
          quarter of fiscal 2006. The increase in international sales was
          primarily due to increased purchases of the INVOS System monitor and
          disposable SomaSensor by Tyco Healthcare in Europe. In the first
          quarter of fiscal 2006, international sales represented 16 percent of
          our net revenues, compared to 17 percent of our net revenues in the
          first quarter of fiscal 2005. Purchases by Tyco Healthcare accounted
          for 11 percent of net revenues in the first quarter of fiscal 2006 and
          10 percent of net revenues in the first quarter of fiscal 2005.


                                       10

<PAGE>

                             SOMANETICS CORPORATION

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

                                FEBRUARY 28, 2006

          In the United States, we sold 44,150 SomaSensors in the first quarter
of fiscal 2006, and internationally, we sold 18,290 SomaSensors in the first
quarter of fiscal 2006. We placed 80 INVOS System monitors in the United States
and 56 internationally in the first quarter of fiscal 2006, and our installed
base of INVOS System monitors in the United States was approximately 1,180, in
523 hospitals, as of February 28, 2006.

          Sales of our products as a percentage of net revenues were as follows:

<TABLE>
<CAPTION>
                            THREE MONTHS ENDED FEBRUARY 28,
                            -------------------------------
PRODUCT                               2006   2005
-------                               ----   ----
<S>                         <C>              <C>
SomaSensors .............              79%    80%
INVOS System Monitors ...              19%    17%
                                      ---    ---
   Total INVOS System ...              98%    97%
CorRestore Systems ......               2%     3%
                                      ---    ---
   Total ................             100%   100%
                                      ===    ===
</TABLE>

          Effective December 1, 2005, we increased the suggested list price of
the adult SomaSensor and the pediatric SomaSensor in the United States to
$140.00 and $155.00, respectively. Although these prices may not apply to
existing customers or to any existing sales quotations issued before the price
increase was effective, we expect that the average selling price of SomaSensors
in the United States will increase in fiscal 2006, primarily as a result of the
addition of new customers at our suggested retail prices and increased sales of
our pediatric SomaSensor.

          GROSS MARGIN. Gross margin as a percentage of net revenues was 88
percent for the three months ended February 28, 2006 and 86 percent for the
three months ended February 28, 2005. The increase in gross margin as a
percentage of net revenues is primarily attributable to a six percent increase
in the average selling price of SomaSensors in the United States and increased
sales of the INVOS System monitors to pediatric hospitals in the United States.
This increase in our average selling prices is attributable to the addition of
new customers at our higher suggested retail prices and increased sales of our
pediatric SomaSensor, which sells for a higher price than the adult SomaSensor.

          RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSES. Our research,
development and engineering expenses increased $82,264, or 86 percent, from
$95,802 in the first quarter of fiscal 2005 to $178,066 in the first quarter of
fiscal 2006. The increase is primarily attributable to development costs
associated with our next generation INVOS System monitor, scheduled to be
launched in the first half of 2006. We expect our research, development and
engineering expenses to increase in fiscal 2006, primarily as a result of
development costs associated with our new smaller pediatric SomaSensor and our
hiring additional research and development personnel.

          SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $931,745, or 36 percent, from $2,576,136 for
the three months ended February 28, 2005 to $3,507,881 for the three months
ended February 28, 2006, primarily due to a 33 percent increase in our sales and
marketing expenses in the first quarter of fiscal 2006 because of our increased
sales personnel and our increased sales and marketing efforts. The increase in
selling, general and administrative expense is primarily attributable to:

     -    a $334,123 increase in salaries, wages and related expenses, primarily
          as a result of an increase in the number of employees, principally in
          sales and marketing (from an average of 37 employees for the three
          months ended February 28, 2005 to an average of 51 employees for the
          three months ended February 28, 2006);


                                       11

<PAGE>

                             SOMANETICS CORPORATION

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

                                FEBRUARY 28, 2006

     -    a $143,000 increase in employee sales commissions as a result of
          increased sales and increased sales personnel in the first quarter of
          fiscal 2006;

     -    a $90,000 increase in accrued incentive compensation expense due to
          our first quarter of fiscal 2006 financial performance, primarily
          increased sales and net income, in accordance with the 2006 Incentive
          Compensation Plan;

     -    an $80,132 increase in audit-related expenses, primarily as a result
          of costs associated with our first internal control assessment under
          Section 404 of the Sarbanes-Oxley Act and related regulations;

     -    a $62,168 increase in commissions paid to our independent sales
          representative firms as a result of increased sales;

     -    a $45,426 increase in trade show expenses as a result of our increased
          sales and marketing activities;

     -    a $43,610 increase in expenses associated with our national sales team
          meeting, primarily as a result of the increase in the size of our
          sales team; and

     -    a $42,022 increase in clinical research expenses as a result of the
          clinical trial we are sponsoring evaluating the use of the INVOS
          System on diabetic patients over age 50.

          We expect our selling, general and administrative expenses to increase
in fiscal 2006, primarily as a result of our hiring additional direct sales
personnel in fiscal 2005 and 2006, increased sales commissions payable to our
independent sales representative firms, increased clinical research expense, and
increased sales and marketing expenses.

          INCOME TAX PROVISION. During the first quarter of fiscal 2006, we
recognized income tax expense at an estimated effective tax rate of 34 percent
on our statement of operations, and we expect this to continue for future
periods.

LIQUIDITY AND CAPITAL RESOURCES

     GENERAL

          Our principal sources of operating funds have been the proceeds of
equity investments from sales of our common shares and cash provided by
operating activities.

          As of February 28, 2006, we did not have any outstanding or available
debt financing arrangements, we had working capital of $19.1 million and our
primary source of liquidity was $14.4 million of cash and cash equivalents.
Pending their ultimate use, we currently invest our available funds in bank
savings accounts.

          On March 6, 2006, we completed a public offering of 2,300,000 of our
newly-issued common shares at a public offering price of $24.00 per share. The
estimated net proceeds, after deducting the underwriting discount and the
estimated expense of the offering, were approximately $51,388,000. These amounts
include the exercise in full by the underwriters of an option to purchase up to
300,000 shares to cover over-allotments. At completion of the offering, we had
13,015,885 shares outstanding. We intend to use the net proceeds from the
offering for the expansion of our direct sales team and other sales and
marketing activities, to sponsor additional clinical trials, to expand research
and development efforts, and for working capital and general corporate purposes,
including potential acquisitions of complementary products, technologies or
businesses.

          We believe that cash and cash equivalents on hand at February 28, 2006
will be adequate to satisfy our operating and capital requirements for more than
the next twelve months.



                                       12

<PAGE>

                             SOMANETICS CORPORATION

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

                                FEBRUARY 28, 2006

     CASH FLOWS FROM OPERATING ACTIVITIES

          Net cash provided by operations during the first quarter of fiscal
2006 and 2005 was $1,610,962 and $394,586, respectively. In the first quarter of
fiscal 2006, cash was provided primarily by:

     -    $1,617,154 of net income before income taxes and non-cash depreciation
          and amortization expense;

     -    a $562,821 decrease in accounts receivable, primarily as a result of
          lower first quarter sales in fiscal 2006 than in the fourth quarter of
          fiscal 2005, and the timing of more of the sales in fiscal 2005
          towards the end of the fourth quarter;

     -    a $308,876 decrease in prepaid expenses, primarily because we
          capitalized to machinery and equipment tooling that was completed in
          the first quarter of fiscal 2006 for our next generation INVOS System
          monitor; and

     -    a $242,999 increase in accounts payable, primarily as a result of
          increased inventory and operating expenses, partially offset by more
          timely payments made to vendors.

Cash provided by operations in the first quarter of fiscal 2006 was partially
offset by:

     -    a $633,921 decrease in accrued liabilities, primarily as a result of
          the payment of year-end 2005 accrued incentive compensation, accrued
          401(k) Plan matching contributions and accrued sales commissions,
          partially offset by increased accrued professional fees;

     -    a $257,555 increase in inventories, primarily due to the acquisition
          of SomaSensors and components associated with our INVOS System monitor
          due to anticipated sales; inventories on our balance sheet increased
          less because we capitalized INVOS System monitors to property and
          equipment that are being used as demonstration units and no capital
          cost sales equipment, as described below; and

     -    a $229,412 increase in other assets as a result of deferred offering
          costs associated with our public offering of common shares.

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

          The increase in inventories described above is greater than shown on
our balance sheet because it includes INVOS System monitors that we capitalized
because they are being used as demonstration units and no capital cost sales
equipment. We capitalized $131,612 of costs from inventory for INVOS System
monitors being used as demonstration units and no capital cost sales equipment
at customers during the first quarter of fiscal 2006, compared to $114,329 in
the first quarter of fiscal 2005. As of February 28, 2006, we had capitalized
$2,040,906 in costs for INVOS System monitors being used as demonstration and no
capital cost sales equipment, and these assets had a net book value of
$1,144,600. We depreciate these assets over five years.

     CASH FLOWS FROM INVESTING ACTIVITIES

          Net cash used in investing activities in the first quarter of fiscal
2006 and 2005 was $363,975 and $24,594, respectively. In the first quarter of
fiscal 2006, these expenditures were primarily for tooling for the next
generation INVOS System monitor.

     CASH FLOWS FROM FINANCING ACTIVITIES

          There was no net cash provided by financing activities in the first
quarter of fiscal 2006, and $62,972 provided in the first quarter of fiscal 2005
as a result of the exercise of stock options. During the first quarter of fiscal
2005, we issued 9,500 common shares as a result of the exercise of stock
options, for proceeds of $62,972.


                                       13

<PAGE>

                             SOMANETICS CORPORATION

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

                                FEBRUARY 28, 2006

CONTRACTUAL OBLIGATIONS

          As of February 28, 2006, there have been no material changes outside
the ordinary course of business in the contractual obligations disclosed in our
Annual Report on Form 10-K for the fiscal year ended November 30, 2005 under the
caption "Contractual Obligations."

OFF-BALANCE SHEET ARRANGEMENTS

          We do not have any off-balance sheet arrangements or financing
activities.

NEW ACCOUNTING PRONOUNCEMENTS

          In December 2004, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 (revised), Share Based
Payment. This Statement revises Statement No. 123, "Accounting for Stock-Based
Compensation," and requires that compensation costs related to share-based
payment transactions, including stock options, be recognized in the financial
statements. In November 2005, we approved the acceleration of vesting of all
unvested stock options as of November 30, 2005. The primary purpose of this
accelerated vesting was to eliminate compensation expense we would recognize in
our results of operations upon the adoption of SFAS 123(R), which is effective
for our fiscal quarter that began December 1, 2005. After the effects of the
accelerated vesting, the initial adoption of SFAS 123(R) has been immaterial.
However, the issuance of additional stock compensation under the 2005 Stock
Incentive Plan in future years will have an additional impact on our financial
statements.

CRITICAL ACCOUNTING POLICIES

          We believe our most significant accounting policies relate to our
accounting treatment of stock options issued to employees, our accounting
treatment for income taxes, and our revenue recognition associated with our no
capital cost sales program.

     EMPLOYEE STOCK OPTIONS

          In December 2004, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 (revised), Share Based
Payment. This Statement requires that compensation costs related to share-based
payment transactions, including stock options, stock appreciation rights and
restricted stock be recognized in the financial statements. This Statement
became effective for our fiscal quarter that began December 1, 2005.

          We previously accounted 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 in the first
quarter of fiscal 2005 for stock option grants to employees because our stock
option grants are priced at the market value as of the date of grant.

          In November 2005, we approved the acceleration of vesting of all
unvested stock options as of November 30, 2005. The primary purpose of this
accelerated vesting was to eliminate compensation expense we would recognize in
our results of operations upon the adoption of SFAS 123(R), which became
effective for our fiscal quarter that began December 1, 2005. After the effects
of the accelerated vesting, the initial adoption of SFAS


                                       14

<PAGE>

                             SOMANETICS CORPORATION

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

                                FEBRUARY 28, 2006

123(R) has been immaterial. The issuance of additional stock compensation under
the 2005 Stock Incentive Plan in the future will have an additional impact on
our financial statements.

          Stock-based compensation of consultants and advisors is determined
based on the fair value of the options or warrants on the grant date pursuant to
the methodology of SFAS No. 123, estimated using the Black-Scholes model. The
resulting amount is recognized as compensation expense and an increase in
additional paid-in capital over the vesting period of the options or warrants.
We did not record any compensation expense for consultants and advisors in the
first quarter of fiscal 2006 or the first quarter of fiscal 2005.

     Had we recognized compensation expense for our stock options that vested in
the first quarter of fiscal 2005 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, we would have recorded $197,268 in compensation expense and
realized pro forma net income of $366,658, or $.03 per diluted common share.

     INCOME TAXES

          We have performed the required assessment of positive and negative
evidence regarding realization of our deferred tax assets in accordance with
SFAS No. 109, including our past operating results, the existence of cumulative
losses over our history up to the most recent three fiscal years, and our
forecast for future net income. Our assessment of our deferred tax assets, and
the reversal of part of our valuation allowance, included assuming that our net
revenues and pre-tax income will grow in future years consistent with the growth
guidance given for fiscal 2006 and making allowance for the uncertainties
surrounding, among other things, our future rate of growth in net revenues, the
rate of adoption of our products in the marketplace, and the potential for
competition to enter the marketplace. In reversing a portion of our valuation
allowance, in fiscal 2005 and fiscal 2004, we have concluded that it is more
likely than not that approximately $10,000,000 of such assets will be realized.

          During fiscal 2004, we adjusted our deferred tax asset valuation
allowance resulting in the recognition of a deferred tax asset of $6,700,000
related to the expected future benefits of our net operating loss carryforwards,
in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." During fiscal 2005, we further adjusted our
deferred tax asset valuation allowance resulting in the recognition of an
additional net deferred tax asset of $3,300,000.

          The effect of recognizing this asset on our balance sheet, and
associated tax benefit on our statement of operations, is to increase our net
income for fiscal 2005 to $7,751,087, or $0.66 per diluted common share, and to
increase our net income for fiscal 2004 to $8,706,576, or $0.77 per diluted
common share. Given the assumptions inherent in our financial plans, it is
possible to calculate a different value for our deferred tax asset by changing
one or more of the variables in our assessment. However, we believe that our
evaluation of our financial plans was reasonable, and that the judgments and
assumptions that we made at the time of developing the plan were appropriate.

     NO CAPITAL COST SALES REVENUE RECOGNITION

          We offer to our customers in the United States a no capital cost sales
program whereby we ship the INVOS System monitor to the customer at no charge.
Under this program, we do not recognize any revenue upon the shipment of the
INVOS System monitor. We recognize SomaSensor revenue when we receive purchase
orders and ship the product to the customer. At the time of shipment of the
monitor, we capitalize the INVOS System monitor as an asset and depreciate this
asset over five years. We believe this is consistent with our stated revenue
recognition policy, which is compliant with Staff Accounting Bulletin No. 104
and Emerging Issues Task Force No. 00-21, "Revenue Arrangements with Multiple
Deliverables."


                                       15

<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not applicable.


                                       16

<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 February 28, 2006 and any change in our internal
control over financial reporting that occurred during our first fiscal quarter
ended February 28, 2006 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting. Based on their
evaluation, our principal executive and principal financial officers have
concluded that these controls and procedures are effective as of February 28,
2006. There was no change in our internal control over financial reporting
identified in connection with such evaluation that occurred during our first
fiscal quarter ended February 28, 2006 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.

     Internal control over financial reporting is a process designed by, or
under the supervision of, our principal executive and principal financial
officers, and effected by our board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that: (1) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect our transactions
and dispositions of assets, (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of our
management and directors, and (3) and provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.


                                       17

<PAGE>

                            PART II OTHER INFORMATION

ITEM 6. EXHIBITS

     10.1 Somanetics Corporation 2006 Incentive Compensation Plan, incorporated
          by reference to Exhibit 10.1 to the Somanetics Corporation Current
          Report on Form 8-K, dated March 24, 2006 and filed March 30, 2006.

     10.2 Summary of Dominic Spadafore Fiscal 2006 Commission Arrangement,
          incorporated by reference to the last two paragraphs of Item 1.01 of
          the Somanetics Corporation Current Report on Form 8-K, dated March 24,
          2006 and filed March 30, 2006.

     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.


                                       18

<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: March 31, 2006                    By: /s/ William M. Iacona
                                            ------------------------------------
                                            William M. Iacona
                                            Vice President and Chief Financial
                                            Officer, Controller and Treasurer
                                            (Duly Authorized and Principal
                                            Financial Officer)


                                       19

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit                                 Description
-------                                 -----------
<S>       <C>
  10.1    Somanetics Corporation 2006 Incentive Compensation Plan, incorporated
          by reference to Exhibit 10.1 to the Somanetics Corporation Current
          Report on Form 8-K, dated March 24, 2006 and filed March 30, 2006.

  10.2    Summary of Dominic Spadafore Fiscal 2006 Commission Arrangement,
          incorporated by reference to the last two paragraphs of Item 1.01 of
          the Somanetics Corporation Current Report on Form 8-K, dated March 24,
          2006 and filed March 30, 2006.

  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.
</TABLE>


                                       20