<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 MAY 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)

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

                              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 July 2, 2003: 9,080,363

<PAGE>
                          PART I FINANCIAL INFORMATION

                             SOMANETICS CORPORATION



                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                    May 31,                November 30,
ASSETS                                                                               2003                      2002
                                                                                ---------------           ---------------
<S>                                                                             <C>                       <C>
CURRENT ASSETS:                                                                    (Unaudited)                 (Audited)
    Cash and cash equivalents..........................................         $     1,895,510           $     2,381,808
    Accounts receivable................................................               1,254,261                 1,227,785
    Inventory..........................................................               1,135,377                 1,004,305
    Prepaid expenses...................................................                 126,874                    96,308
                                                                                ---------------           ---------------
       Total current assets............................................               4,412,023                 4,710,206
                                                                                ---------------           ---------------
PROPERTY AND EQUIPMENT (at cost):
    Machinery and equipment............................................               1,893,554                 1,861,679
    Furniture and fixtures.............................................                 248,657                   241,295
    Leasehold improvements.............................................                 171,882                   171,882
                                                                                ---------------           ---------------
       Total...........................................................               2,314,093                 2,274,856
    Less accumulated depreciation and amortization.....................              (1,725,050)               (1,757,781)
                                                                                ---------------           ---------------
       Net property and equipment......................................                 589,043                   517,075
                                                                                ---------------           ---------------
OTHER ASSETS:
    Intangible assets, net.............................................                 963,294                   921,957
    Other..............................................................                  15,000                    15,000
                                                                                ---------------           ---------------
       Total other assets..............................................                 978,294                   936,957
                                                                                ---------------           ---------------
TOTAL ASSETS...........................................................         $     5,979,360           $     6,164,238
                                                                                ===============           ===============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts payable...................................................         $       571,198           $       470,880
    Accrued liabilities................................................                 181,507                   192,766
                                                                                ---------------           ---------------
       Total current liabilities.......................................                 752,705                   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, 9,080,363 shares at May 31, 2003,
       and 9,077,863 shares at November 30, 2002.......................                  90,804                    90,779
    Additional paid-in capital.........................................              59,121,982                59,071,122
    Accumulated deficit................................................             (53,986,131)              (53,661,309)
                                                                                ---------------           ---------------
       Total shareholders' equity......................................               5,226,655                 5,500,592
                                                                                ---------------           ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................         $     5,979,360           $     6,164,238
                                                                                ===============           ===============
</TABLE>


                        See notes to financial statements

                                       2
<PAGE>

                             SOMANETICS CORPORATION

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               Three Months                        Six Months
                                                               Ended May 31,                      Ended May 31,
                                                     -------------------------------    -------------------------------
                                                           2003             2002              2003            2002
                                                     -------------     -------------    --------------    -------------
<S>                                                 <C>                <C>              <C>               <C>
   NET REVENUES................................      $   2,203,442     $   1,659,606    $    4,154,388    $   3,251,426
   COST OF SALES...............................            561,196           542,616         1,011,393        1,036,006
                                                     -------------     -------------    --------------    -------------
   GROSS MARGIN................................          1,642,246         1,116,990         3,142,995        2,215,420
                                                     -------------     -------------    --------------    -------------

   OPERATING EXPENSES:
      Research, development and engineering....            133,607           103,839           242,779          283,442
      Selling, general and administrative......          1,644,016         1,422,685         3,238,948        2,701,007
                                                     -------------     -------------    --------------    -------------
          Total operating expenses.............          1,777,623         1,526,524         3,481,727        2,984,449
                                                     -------------     -------------    --------------    -------------

   OPERATING LOSS..............................           (135,377)         (409,534)         (338,732)        (769,029)
                                                     -------------     -------------    --------------    -------------

   OTHER INCOME (EXPENSE):
      Interest expense.........................               --                --                --               (794)
      Interest income..........................              6,004            20,281            13,909           26,062
                                                     -------------     -------------    --------------    -------------
          Total other income...................              6,004            20,281            13,909           25,268
                                                     -------------     -------------    --------------    -------------
   NET LOSS....................................      $    (129,373)    $    (389,253)   $     (324,823)   $    (743,761)
                                                     -------------     -------------    --------------    -------------

   NET LOSS PER COMMON SHARE-
      BASIC AND DILUTED........................      $       (0.01)    $       (0.04)   $        (0.04)   $       (0.08)
                                                     -------------     -------------    --------------    -------------

   WEIGHTED AVERAGE SHARES
       OUTSTANDING-BASIC AND DILUTED...........          9,080,363         9,077,863         9,079,140        8,823,974
                                                     =============     =============    ==============    =============
</TABLE>



                        See notes to financial statements

                                       3
<PAGE>




                             SOMANETICS CORPORATION

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                          For the Six Month
                                                                            Periods Ended
                                                                      --------------------------
                                                                        May 31,        May 31,
                                                                         2003           2002
                                                                      -----------    -----------
<S>                                                                   <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss ..............................................             $  (324,823)   $  (743,761)
  Adjustments to reconcile net loss to net cash used in
    operations:
      Depreciation and amortization .....................                 119,206        108,829
      Compensation expense for non-employee stock
        options..........................................                   2,492          3,104
      Changes in assets and liabilities:
          Accounts receivable (increase) decrease .......                 (26,476)       294,894
          Inventory (increase) ..........................                (131,072)      (332,140)
          Prepaid expenses (increase) ...................                 (30,566)
                                                                                         (22,745)
          Other assets decrease .........................                      --         12,078
          Accounts payable increase (decrease) ..........                 100,318         (9,395)
          Accrued liabilities increase (decrease) .......                 (11,259)        41,537
                                                                      -----------    -----------
            Net cash (used in) operations ...............                (302,180)      (647,599)
                                                                      -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment (net) ...........                (187,718)      (168,146)
                                                                      -----------    -----------
            Net cash (used in) investing activities .....                (187,718)      (168,146)
                                                                      -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common shares ...............                   3,600      3,689,101
                                                                      -----------    -----------
            Net cash provided by financing activities ...                   3,600      3,689,101
                                                                      -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS ...........................................                (486,298)     2,873,356

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

CASH AND CASH EQUIVALENTS, END
  OF PERIOD  ............................................             $ 1,895,510    $ 3,041,229
                                                                      ===========    ===========

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)

                                  MAY 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
six-month period ended May 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>
                                                  May 31, 2003              November 30, 2002
                                                  ------------              -----------------
<S>                                               <C>                       <C>
           Finished goods...................       $   321,258                  $   410,133
           Work in process..................           257,909                      154,816
           Purchased components.............           556,210                      439,356
                                                   -----------                  -----------
                Total.......................       $ 1,135,377                  $ 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>

                                    May 31, 2003   November 30, 2002
                                    ------------   -----------------
<S>                                 <C>            <C>
Patents and trademarks ............     111,733          111,733
  Less accumulated amortization ...     (77,532)         (74,076)
                                      ---------        ---------
     Total ........................   $  34,201        $  37,657
                                      =========        =========
</TABLE>

         Amortization expense for the three months ended May 31, 2003 and May
31, 2002 was approximately $1,700. Amortization expense for the six months ended
May 31, 2003 and May 31, 2002 was approximately $3,500. 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)

                                  MAY 31, 2003

<TABLE>
<CAPTION>

                                               May 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 two quarters of fiscal 2003, we granted 39,000 stock
options to our employees and directors, and one of our employees exercised stock
options to purchase 2,500 newly-issued common shares. During the first two
quarters of fiscal 2002 we granted 409,500 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 SIX MONTHS ENDED MAY 31,
                                                  2003           2002
                                               -----------    -----------
<S>                                          <C>             <C>
Net loss ...................................   $   324,823    $   743,761
Pro-forma net loss, had fair value method
been applied ...............................   $   614,127    $ 1,019,554
Net loss per common share-basic and
diluted ....................................          (.04)          (.08)
Pro-forma net loss per common share-basic
and diluted, had fair value method been
applied ....................................          (.07)          (.12)
Stock-based employee compensation included
in actual net loss .........................   $     2,492    $     3,104
Pro-forma stock-based employee compensation,
had fair value method been applied .........   $   289,304    $   275,793

</TABLE>




                                       6
<PAGE>




                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  MAY 31, 2003

         Loss Per Common Share - basic and diluted is computed using the
weighted average number of common shares outstanding during each period. Common
shares issuable under stock options and warrants have not been included in the
computation of the net loss per common share - diluted, because such inclusion
would be antidilutive. As of May 31, 2003 and May 31, 2002, we had outstanding
warrants and options to purchase common shares of 5,186,833 and 5,070,050,
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>
                                                         May 31, 2003              November 30, 2002
                                                         ------------              -----------------
<S>                                                     <C>                       <C>
         Incentive Compensation .................         $  99,367                   $    8,000
         Insurance ..............................            28,118                       34,464
         Sales commissions ......................            24,312                       55,381
         Royalty ................................            23,210                       12,071
         Warranty ...............................             6,500                        6,400
         Clinical Research ......................              --                         21,450
         Professional fees ......................              --                         15,000
         Training ...............................              --                         40,000
                                                           --------                     --------
                Total ...........................          $181,507                     $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.

         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).





                                       7
<PAGE>


                             SOMANETICS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                  MAY 31, 2003

         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).

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 89% of our net revenues
in the first two quarters of fiscal 2003 were derived from our INVOS Cerebral
Oximeter product line, compared to 97% of our net revenues in the first two
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

                                  MAY 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 and ability to continue as a
going concern, 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 two 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

                                  MAY 31, 2003

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

         Our net revenues increased approximately $544,000, or 33%, from
$1,659,606 in the three-month period ended May 31, 2002 to $2,203,442 in the
three-month period ended May 31, 2003. The increase in net revenues is primarily
attributable to:

         -    an increase in United States sales of approximately $516,000, from
              approximately $1,296,000 in the second quarter of fiscal 2002 to
              approximately $1,812,000 in the second quarter of fiscal 2003.
              This increase is primarily due to an increase in sales of the
              disposable SomaSensor of approximately $313,000, or 29%, and an
              increase in CorRestore System revenues of approximately $187,000,
              or 415%, and
         -    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. 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 $28,000, from
              approximately $363,000 in the second quarter of fiscal 2002 to
              approximately $391,000 in the second quarter of fiscal 2003. This
              increase is primarily due to increased purchases by Tyco
              Healthcare.

         Approximately 18% of our net revenues in the second quarter of fiscal
2003 were export sales, compared to approximately 22% of our net revenues in the
second quarter of fiscal 2002. Sales of our products as a percentage of net
revenues were as follows:
<TABLE>
<CAPTION>

                                                                     PERCENT OF NET REVENUE
                                                                    SECOND QUARTER OF FISCAL
              PRODUCT                                           2003                       2002
              -------                                     -----------------         -----------------
<S>                                                      <C>                        <C>
              SomaSensors........................                72%                        76%
              Cerebral Oximeters.................                17%                        21%
              CorRestore Systems.................                11%                         3%
                                                          -----------------         -----------------
                  Total..........................               100%                       100%
                                                          =================         =================
</TABLE>

              One international distributor accounted for approximately 15% of
net revenues for the three months ended May 31, 2003, and approximately 12% of
net revenues for the three months ended May 31, 2002.



                                       10
<PAGE>
                             SOMANETICS CORPORATION

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

                                  MAY 31, 2003


         Gross margin as a percentage of net revenues was approximately 75% for
the quarter ended May 31, 2003 and approximately 67% for the quarter ended May
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 second
                  quarter of fiscal 2002,
              -   a change in the sales mix to increased sales in the United
                  States, which have higher gross margins than international
                  sales, and
              -   a change in the sales mix to increased sales of CorRestore
                  Systems, which have higher gross margins than Cerebral
                  Oximeters.


         Our research, development and engineering expenses increased
approximately $30,000, or 29%, from $103,839 for the three months ended May 31,
2002 to $133,607 for the three months ended May 31, 2003. The increase is
primarily attributable to approximately $47,000 in development costs associated
with the CorRestore System, partially offset by approximately $21,000 in
decreased costs associated with the Cerebral Oximeter.

         Selling, general and administrative expenses increased approximately
$221,000, or 16%, from $1,422,685 for the three months ended May 31, 2002 to
$1,644,016 for the three months ended May 31, 2003. The increase in selling,
general and administrative expense is primarily attributable to:

         -    a $59,000 increase in selling-related, promotional, and trade show
              expenses as a result of our increased sales and marketing
              activities,
         -    a $55,000 increase in accrued incentive compensation expense,
              primarily due to our executive officers participating in the 2003
              Incentive Compensation Plan after not participating in fiscal
              2002,
         -    a $51,000 increase in salaries, wages, 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 second quarter of fiscal 2002 to an average of
              30 employees for the second quarter of fiscal 2003),
         -    a $42,000 increase in commissions paid to our independent sales
              representatives as a result of increased sales,
         -    $26,000 in costs associated with our national sales meeting held
              in May 2003,
         -    a $22,000 increase in regulatory expenses as a result of our ISO
              9001 re-certification audit conducted in April 2003, and
         -    a $19,000 increase in royalty expense as a result of increased
              sales of the CorRestore System.

These increases were partially offset by a decrease in bad debts expense of
approximately $23,000.

         For the three-month period ended May 31, 2003, we realized a 67%
decrease in our net loss over the same period in fiscal 2002. The decrease is
primarily attributable to:

         -    a 33% increase in net revenues, and
         -    an 8% increase in gross margin percentage.

The reduction in our net loss was achieved despite a 16% increase in operating
expenses.


                                       11
<PAGE>
                             SOMANETICS CORPORATION

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

                                  MAY 31, 2003

SIX MONTHS ENDED MAY 31, 2003 COMPARED TO SIX MONTHS ENDED MAY 31, 2002

         Our net revenues increased approximately $903,000, or 28%, from
$3,251,426 in the six-month period ended May 31, 2002 to $4,154,388 in the
six-month period ended May 31, 2003. The increase in net revenues is primarily
attributable to:

         -    an increase in United States sales of approximately $951,000, from
              approximately $2,513,000 in the first two quarters of fiscal 2002
              to approximately $3,464,000 in the first two quarters of fiscal
              2003. This increase is primarily due to an increase in sales of
              the disposable SomaSensor of approximately $706,000, or 35%, and
              an increase in CorRestore System revenues of approximately
              $358,000, or 373%. This increase was partially offset by a
              decrease in sales of the Cerebral Oximeter of approximately
              $113,000, or 29%, primarily as a result of a preference by larger
              U.S. hospitals to acquire Cerebral Oximeters using our no-cap
              sales program, and
         -    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. This
              increase was partially offset by increased SomaSensor sales to
              international distributors, which have lower average selling
              prices.

The increase in net revenues was achieved despite a decrease in international
sales of approximately $48,000, from approximately $738,000 in the first two
quarters of fiscal 2002 to approximately $690,000 in the first two quarters of
fiscal 2003, primarily attributable to decreased purchases by Tyco Healthcare.

         Approximately 17% of our net revenues in the first two quarters of
fiscal 2003 were export sales, compared to approximately 23% of our net revenues
in the first two quarters of fiscal 2002. Sales of our products as a percentage
of net revenues were as follows:
<TABLE>
<CAPTION>

                                                                     PERCENT OF NET REVENUE
                                                                  FIRST TWO QUARTERS OF FISCAL
              PRODUCT                                           2003                       2002
              -------                                     -----------------         -----------------
<S>                                                      <C>                        <C>
              SomaSensors........................                74%                        71%
              Cerebral Oximeters.................                15%                        26%
              CorRestore Systems.................                11%                         3%
                                                          -----------------         -----------------
                  Total..........................               100%                       100%
                                                          =================         =================
</TABLE>


         One international distributor accounted for approximately 11% of net
revenues for the six months ended May 31, 2003, and approximately 12% of net
revenues for the six months ended May 31, 2002.




                                       12
<PAGE>

                             SOMANETICS CORPORATION

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

                                  MAY 31, 2003

         Gross margin as a percentage of net revenues was approximately 76% for
the six months ended May 31, 2003 and approximately 68% for the six months ended
May 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
                  two quarters quarter of fiscal 2002,

              -   a change in the sales mix to increased sales of SomaSensors
                  and CorRestore Systems, which have higher gross margins than
                  Cerebral Oximeters, and

              -   a change in the sales mix to increased sales in the United
                  States, which have higher gross margins than international
                  sales.

         Our research, development and engineering expenses decreased
approximately $41,000, or 14%, from $283,442 for the six months ended May 31,
2002 to $242,779 for the six months ended May 31, 2003. The decrease is
primarily attributable to approximately $45,000 in decreased costs associated
with the development of the CorRestore System.

         Selling, general and administrative expenses increased approximately
$538,000, or 20%, from $2,701,007 for the six months ended May 31, 2002 to
$3,238,948 for the six months ended May 31, 2003. The increase in selling,
general and administrative expense is primarily attributable to:

         -    a $112,000 increase in salaries, wages, 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 six months ended May 31, 2002 to an average of
              29 employees for the six months ended May 31, 2003),
         -    a $109,000 increase in accrued incentive compensation expense,
              primarily due to our executive officers participating in the 2003
              Incentive Compensation Plan after not participating in fiscal
              2002,
         -    a $107,000 increase in selling-related, promotional, and trade
              show expenses as a result of our increased sales and marketing
              activities,
         -    a $105,000 increase in customer education expenses for the
              CorRestore System,
         -    a $73,000 increase in commissions paid to our independent sales
              representatives as a result of increased sales, and
         -    a $36,000 increase in royalty expense as a result of increased
              sales of the CorRestore System.

These increases were partially offset by a $31,000 decrease in insurance
expenses, primarily as a result of a policy premium refund for our 2002 products
liability insurance coverage.

         For the six-month period ended May 31, 2003, we realized a 56% decrease
in our net loss over the same period in fiscal 2002. The decrease is primarily
attributable to:

         -    a 28% increase in net revenues, and
         -    an 8% increase in gross margin percentage.

The reduction in our net loss was achieved despite a 17% increase in operating
expenses.



                                       13
<PAGE>

                             SOMANETICS CORPORATION

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

                                  MAY 31, 2003

LIQUIDITY AND CAPITAL RESOURCES

         Net cash used in operations during the six-month period ended May 31,
2003 was approximately $302,000. Cash was used primarily to:

         -    fund our net loss, primarily selling, general and administrative
              expenses and research, development and engineering expenses,
              totaling approximately $206,000, before depreciation and
              amortization expense,
         -    increase inventories by approximately $131,000, primarily as a
              result of the acquisition of components associated with our next
              generation Cerebral Oximeter,
         -    increase prepaid expenses by approximately $31,000, primarily due
              to the renewal of our products liability insurance coverage in
              December 2002,
         -    increase accounts receivable by approximately $26,000, primarily
              because of higher second quarter 2003 sales than fourth quarter
              2002 sales, partially offset by more timely collections in fiscal
              2003, and
         -    decrease accrued liabilities by approximately $11,000, primarily
              due to payments made in fiscal 2003 and reduced sales commissions,
              partially offset by increased accrued incentive compensation
              expense as a result of our executive officers participating in the
              2003 Incentive Compensation Plan after not participating in fiscal
              2002.

These uses of cash were partially offset by an increase in accounts payable of
approximately $100,000, primarily due to increased purchases of inventories.

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

         Capital expenditures in the first six months of fiscal 2003 were
approximately $188,000. These expenditures were primarily for Cerebral Oximeter
demonstration units and no-cap sales units.

         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 June 30, 2003) plus 2% plus a 2.4% service fee.
As of June 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 May 31, 2003, we had working capital of $3,659,318, cash and cash
equivalents of $1,895,510, total current liabilities of $752,705 and
shareholder's equity of $5,226,655. We had an accumulated deficit of $53,986,131
through May 31, 2003.

         We believe that the cash and cash equivalents on hand at May 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

                                  MAY 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

                                  MAY 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
two quarters of fiscal 2003, we granted 39,000 stock options to our employees
and directors.

         Had we recognized compensation expense for stock options granted to
employees in the first six 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 $289,000, or $.03 per common share. Had we recognized
compensation expense for our stock options granted to employees in the first six
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
$276,000, or $.04 per common share.





                                       16
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       Not applicable.








                                       17
<PAGE>

ITEM 4.  CONTROLS AND PROCEDURES

         The Company, under the supervision and with the participation of our
management, including our principal executive officer and principal financial
officer, has evaluated the effectiveness of the design and operation of our
disclosure controls and procedures within 90 days of the filing date of this
quarterly report, and, based on their evaluation, our principal executive
officer and principal financial officer have concluded that these controls and
procedures are effective. There were no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.

         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 under the Exchange Act is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.









                                       18
<PAGE>

PART II OTHER INFORMATION

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

         Our Annual Meeting of Shareholders was held on April 10, 2003. At the
Annual Meeting, Daniel S. Follis and Robert R. Henry were elected as directors
and the terms of office of Bruce J. Barrett, A. Brean Murray, Dr. James I.
Ausman, and Joe B. Wolfe as directors continued after the meeting. H. Raymond
Wallace retired from our Board as of the Annual Meeting date. 8,074,911 votes
were cast for Mr. Follis' election and 168,383 votes were withheld from Mr.
Follis' election, and 8,072,211 votes were cast for Mr. Henry's election and
171,083 votes were withheld from Mr. Henry's election. There were no abstentions
or broker non-votes in connection with the election of the directors at the
Annual Meeting.

         In addition, at the Annual Meeting of Shareholders, the 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. 7,318,371 votes were cast in favor of this
proposal, 807,732 votes were cast against this proposal, and 117,191 votes
abstained on this proposal. There were no broker non-votes in connection with
the amendment to the 1997 Stock Option plan at the Annual Meeting.


Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

                  10.1     Amendment to Crestmark Loan and Security Agreement,
                           dated April 24, 2003.

                  99.1     Certification of Chief Executive Officer Pursuant to
                           18 U.S.C. Section 1350, as Adopted Pursuant to
                           Section 906 of the Sarbanes-Oxley Act of 2002.

                  99.2     Certification of 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.


                                       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: July 2, 2003                    By:/s/ William M. Iacona
      ------------------                 -----------------------
                                      William M. Iacona
                                      Vice President, Finance, Controller, and
                                      Treasurer (Duly Authorized and Principal
                                      Financial Officer)






                                       20
<PAGE>

                                 CERTIFICATIONS

I, Bruce J. Barrett, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Somanetics Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  July 2, 2003


                                           /s/ Bruce J. Barrett
                                           -----------------------------------
                                           Bruce J. Barrett, President and
                                           Chief Executive Officer





                                       21
<PAGE>

                                 CERTIFICATIONS

I, William M. Iacona, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Somanetics Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  July 2, 2003


                                        /s/ William M. Iacona
                                        -----------------------------------
                                        William M. Iacona, Vice
                                        President, Finance, Controller,
                                        and Treasurer




                                       22
<PAGE>

                                  EXHIBIT INDEX

Exhibit                          Description

10.1              Amendment to Crestmark Loan and Security Agreement, dated
                  April 24, 2003.

99.1              Certification of Chief Executive Officer Pursuant to 18 U.S.C.
                  Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

99.2              Certification of Chief Financial Officer Pursuant to 18 U.S.C.
                  Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.







                                       23