# 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 June 30, 2005

OR

o        
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM

COMMISSION FILE NUMBER 1-5005

|INTRICON CORPORATION                                                              
|----------------------------------------------------------------------------------
|                                                                                  
|(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)                            
|                                                                                  
|PENNSYLVANIA                                                                      
|                                                                                  
|(STATE OR OTHER JURISDICTION OF                                                   
|INCORPORATION OR ORGANIZATION)                                                    
|                                                                                  
|1260 RED FOX ROAD, ARDEN HILLS, MINNESOTA                                         
|                                                                                  
|(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                          
|                                                                                  
|(651) 636-9770                                                                    
|                                                                                  
|(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE)                              
|                                                                                  
|                                                                                  
|                                                                                  
|(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.

xYESoNO

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED
FILER (AS DEFINED BY RULE 12B-2 OF THE EXCHANGE ACT)

oYESxNO

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUERS
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

|COMMON SHARES, $1.00 PAR VALUE |  | 5,129,214 (exclusive of 515,754 | 
|------------------------------ |  | ------------------------------- | 
|CLASS                          |  | treasury shares)                | 
|                               |  | OUTSTANDING AT August 12, 2005  | 





---

# INTRICON CORPORATION

# I N D E X

|                                                                                                              | PageNumbers
|------------------------------------------------------------------------------------------------------------- | -----------
|PART I:     FINANCIAL INFORMATION                                                                            
|                                                                                                             
|Item 1.     Financial Statements                                                                              |            
|                                                                                                             
|Consolidated Condensed (Unaudited) Balance Sheets as of June 30, 2005 and December 31, 2004                   |            
|                                                                                                             
|Consolidated Condensed (Unaudited) Statements of Operations for the Three Months Ended June 30, 2005 and 2004 |            
|                                                                                                             
|Consolidated Condensed (Unaudited) Statements of Operations for the Six Months Ended June 30, 2005 and 2004   |            
|                                                                                                             
|Consolidated Condensed (Unaudited) Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004   |            
|                                                                                                             
|Notes to Consolidated Condensed (Unaudited) Financial Statements                                              |            
|                                                                                                             
|Item 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations             |            
|                                                                                                             
|Item 3.     Quantitative and Qualitative Disclosures About Market Risk                                        |            
|                                                                                                             
|Item 4.     Controls and Procedures                                                                           |            
|                                                                                                             
|PART II:     OTHER INFORMATION                                                                               
|                                                                                                             
|Item 1.     Legal Proceedings                                                                                 |            
|                                                                                                             
|Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds                                       |            
|                                                                                                             
|Item 3.     Defaults Upon Senior Securities                                                                   |            
|                                                                                                             
|Item 4.     Submission of Matters to a Vote of Security Holders                                               |            
|                                                                                                             
|Item 5.     Other Information                                                                                 |            
|                                                                                                             
|Item 6.     Exhibits                                                                                          |            

2

---

# PART I:   FINANCIAL INFORMATION

# ITEM 1.    Financial Statements

# INTRICON CORPORATION
Consolidated Condensed Balance Sheets
Assets
(Unaudited)

|                                                                      | June 30,2005 |  | December 31,2004(Restated)
|--------------------------------------------------------------------- | ------------ |  | --------------------------
|Current assets:                                                       |              |  |                           
|                                                                     
|Cash                                                                  |              |  | $                         
|                                                                     
|Restricted cash                                                       |              |  |                           
|                                                                     
|Accounts receivable (less allowance for doubtful accounts of $178,000 |              | 
|in 2005 and $177,000 in 2004)                                         |              |  |                           
|                                                                     
|Inventories                                                           |              |  |                           
|                                                                     
|Refundable income tax                                                 |              |  |                           
|                                                                     
|Other current assets                                                  |              |  |                           
|                                                                     
|Assets of discontinued operations                                     |              |  |                           
|                                                                      |              |  |                           
|                                                                     
|Total current assets                                                  |              |  |                           
|                                                                     
|Property, plant and equipment:                                        |              | 
|                                                                     
|Land                                                                  |              |  |                           
|Buildings                                                             |              |  |                           
|Machinery and equipment                                               |              |  |                           
|                                                                      |              |  |                           
|                                                                     
|                                                                      |              |  |                           
|                                                                     
|Less:  Accumulated depreciation                                       |              |  |                           
|                                                                      |              |  |                           
|                                                                     
|Net property, plant and equipment                                     |              |  |                           
|                                                                     
|Note receivable from sale of discontinued operations                  |              |  |                           
|                                                                     
|Goodwill                                                              |              |  |                           
|                                                                     
|Other assets, net                                                     |              |  |                           
|                                                                      |              |  |                           
|                                                                     
|                                                                      |              |  | $                         
|                                                                      |              |  |                           

(See accompanying notes to the consolidated condensed financial statements)

3

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# INTRICON CORPORATION
Consolidated Condensed Balance Sheets
Liabilities and Shareholders Equity
(Unaudited)

|                                                | June 30,2005 |  | December 31,2004(Restated)
|----------------------------------------------- | ------------ |  | --------------------------
|Current liabilities:                            |              |  |                           
|                                               
|Notes payable                                   |              |  | $                         
|                                               
|Checks written in excess of cash                |              |  |                           
|                                               
|Current maturities of long-term debt            |              |  |                           
|                                               
|Accounts payable                                |              |  |                           
|                                               
|Income taxes payable                            |              |  |                           
|                                               
|Customers advance payments on contracts        |              |  |                           
|                                               
|Liabilities of discontinued operations          |              |  |                           
|                                               
|Other accrued liabilities                       |              |  |                           
|                                                |              |  |                           
|                                               
|Total current liabilities                       |              |  |                           
|                                               
|Long term debt, less current maturities         |              |  |                           
|                                               
|Other postretirement benefit obligations        |              |  |                           
|                                               
|Deferred income taxes                           |              |  |                           
|                                               
|Accrued pension liabilities                     |              |  |                           
|                                               
|                                               
|Commitments and contingencies (Notes 11 and 12)
|                                               
|Shareholders equity:                           |              | 
|                                               
|Common shares, $1 par; 10,000,000 shares       
|authorized; 5,644,968 shares issued             |              |  |                           
|                                               
|Additional paid-in capital                      |              |  |                           
|                                               
|Accumulated deficit                             |              |  |                           
|                                               
|Accumulated other comprehensive loss            |              |  |                           
|Less: 515,754 common shares held               
|in treasury, at cost                            |              |  |                           
|                                                |              |  |                           
|                                               
|Total shareholders equity                      |              |  |                           
|                                                |              |  |                           
|                                               
|                                                |              |  | $                         
|                                                |              |  |                           

(See accompanying notes to the consolidated condensed financial statements)

4

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# INTRICON CORPORATION
Consolidated Condensed Statements of Operations
(Unaudited)

|                                            | Three Months Ended
|------------------------------------------- | ------------------
|
|Sales, net                                  |                   
|                                           
|Cost of sales                               |                   
|                                            |                   
|Gross margin                                |                   
|                                           
|Operating expenses:                         |                   
|                                           
|Selling expense                             |                   
|General and administrative expense          |                   
|Research and development expense            |                   
|                                            |                   
|                                           
|Total operating expenses                    |                   
|                                           
|Gain on sale of asset held for sale         |                   
|                                           
|Operating income                            |                   
|                                           
|Interest expense                            |                   
|Interest income                             |                   
|Other income, net                           |                   
|                                            |                   
|                                           
|Income from continuing operations           |                   
|before income taxes                         |                   
|                                           
|Income tax expense                          |                   
|                                            |                   
|                                           
|Income from continuing operations           |                   
|                                           
|Income (loss) from discontinued operations,
|net of income tax expense                   |                   
|                                            |                   
|                                           
|Net income                                  |                   
|                                            |                   
|                                           
|Income (loss) per share:                   
|Basic:                                      |                   
|Continuing operations                       |                   
|Discontinued operations                     |                   
|                                            |                   
|                                            |                   
|                                            |                   
|Diluted:                                    |                   
|Continuing operations                       |                   
|Discontinued operations                     |                   
|                                            |                   
|                                            |                   
|                                            |                   
|                                           
|Average shares outstanding:                 |                   
|                                           
|Basic                                       |                   
|Diluted                                     |                   

(See accompanying notes to the consolidated condensed financial statements)

5

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# INTRICON CORPORATION
Consolidated Condensed Statements of Operations
(Unaudited)

|                                                               | Six Months Ended
|-------------------------------------------------------------- | ----------------
|
|Sales, net                                                     |                 
|                                                              
|Cost of sales                                                  |                 
|                                                               |                 
|Gross margin                                                   |                 
|                                                              
|Operating expenses:                                            |                 
|                                                              
|Selling expense                                                |                 
|General and administrative expense                             |                 
|Research and development expense                               |                 
|                                                               |                 
|                                                              
|Total operating expenses                                       |                 
|                                                              
|Gain on sale of asset held for sale                            |                 
|                                                              
|Operating income                                               |                 
|                                                              
|Interest expense                                               |                 
|Interest income                                                |                 
|Other income, net                                              |                 
|                                                               |                 
|                                                              
|Income from continuing operations                              |                 
|before income taxes                                            |                 
|                                                              
|Income tax expense                                             |                 
|                                                               |                 
|                                                              
|Incoming from continuing operations                            |                 
|                                                              
|Income from discontinued operations, net of income tax expense |                 
|                                                               |                 
|                                                              
|Net income                                                     |                 
|                                                               |                 
|                                                              
|Income per share:                                             
|Basic:                                                         |                 
|Continuing operations                                          |                 
|Discontinued operations                                        |                 
|                                                               |                 
|                                                               |                 
|                                                               |                 
|Diluted:                                                       |                 
|Continuing operations                                          |                 
|Discontinued operations                                        |                 
|                                                               |                 
|                                                               |                 
|                                                               |                 
|                                                              
|Average shares outstanding:                                    |                 
|                                                              
|Basic                                                          |                 
|Diluted                                                        |                 

(See accompanying notes to the consolidated condensed financial statements)

6

---

# INTRICON CORPORATION
Consolidated Condensed Statements of Cash Flows
(Unaudited)

|                                                     | Six Months Ended
|---------------------------------------------------- | ----------------
|
|Cash flows from operating activities:                |                 
|Net income                                           |                 
|Adjustments to reconcile net income to net          
|cash provided (used) by operating activities:       
|Income from discontinued operations                  |                 
|Depreciation and amortization                        |                 
|Provision for deferred income taxes                  |                 
|Gain on disposition of property                      |                 
|Gain on sale of asset held for sale                  |                 
|Changes in operating assets and liabilities:        
|Accounts receivable                                  |                 
|Inventories                                          |                 
|Other assets                                         |                 
|Accounts payable                                     |                 
|Accrued expenses                                     |                 
|Customer advances                                    |                 
|Other liabilities                                    |                 
|                                                     |                 
|Net cash used by continuing operations               |                 
|Net cash provided by discontinued operations         |                 
|                                                     |                 
|Net cash provided (used) by operating activities     |                 
|                                                    
|Cash flows from investing activities:                |                 
|Proceeds from sale of assets                         |                 
|Proceeds from sale of asset held for sale            |                 
|Purchases of property, plant and equipment           |                 
|                                                     |                 
|Net cash provided (used) by investing activities     |                 
|Net cash used by discontinued operations             |                 
|                                                     |                 
|Net cash provided (used) by investing activities     |                 
|                                                    
|Cash flows from financing activities:               
|(Repayment) Proceeds from bank borrowings            |                 
|Repayments of short-term bank borrowings             |                 
|Proceeds from long term borrowings                   |                 
|Change in checks written in excess of cash           |                 
|Change in restricted cash                            |                 
|Repayments of long-term debt                         |                 
|                                                     |                 
|Net cash used by financing activities                |                 
|                                                    
|Effect of exchange rate changes on cash              |                 
|                                                     |                 
|                                                    
|Net increase (decrease) in cash and cash equivalents |                 
|Cash and cash equivalents, beginning of period       |                 
|                                                     |                 
|                                                    
|Cash and cash equivalents, end of period             |                 
|                                                     |                 

(See accompanying notes to the consolidated condensed financial statements)

7

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# INTRICON CORPORATION

Notes to ConsolidatedCondensed Financial Statements (Unaudited)

|1. |  | General
|-- |  | -------

| | In the opinion of management, the accompanying consolidated
condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly
IntriCon Corporations consolidated financial position as of June 30, 2005 and December 31, 2004, and the consolidated
results of its operations for the three and six months ended June 30, 2005 and 2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | Restatement of Prior Year Financial Statements
|-- |  | ----------------------------------------------

| | We have restated our consolidated financial statements for the
years 2000 through 2004 (the Restatement). The determination to restate these financial statements was made after
errors were discovered in May, 2005. In addition, certain disclosures in other notes to our consolidated financial statements have
been restated to reflect the Restatement adjustments. In the Restatement, we have:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Corrected the accounting for certain research and development
expenditures that were erroneously capitalized on the balance sheet by recording charges to the statement of operations.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Reversed amortization expense related to the erroneously
capitalized research and development expenditures.
| | - |  | -----------------------------------------------------------------------------------------------------------

| |  |  | Adjusted income tax reserves as a function of the impact on
pre-tax income relating to the correction of accounting for certain research and development expenditures noted above.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Further information regarding the impact of these adjustments is
provided in note 2 of the consolidated financial statements in Form 10-K/A for the year ended December 31, 2004.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | New Accounting Pronouncements
|-- |  | -----------------------------

| | In December 2004, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard (SFAS) No. 123R, Share-Based Compensation, which supersedes Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance.
SFAS No. 123R focuses primarily on accounting for transactions in which an entity obtains employee services through share-based
payment transactions. SFAS No. 123R requires a public entity to measure the cost of employee services received in exchange for the
award of equity investments based on the fair value of the award at the date of grant. The cost will be recognized over the period
during which an employee is required to provide services in exchange for the award. On April 14, 2005, the Securities and Exchange
Commission issued a release announcing the adoption of a new rule delaying the required implementation of SFAS No. 123R. Under
this new rule, SFAS No. 123R is effective as of the beginning of the first annual reporting period that begins after June 15,
2005. The impact on net earnings as a result of the adoption of SFAS No. 123R, from a historical perspective, can be found in Note
9 to the Consolidated Financial Statements in this Quarterly Report and in Note 1 to the Consolidated Financial Statements
contained in our 2004 Annual Report. We are currently evaluating the provisions of SFAS No. 123R and will adopt it in the first
quarter of 2006, as required.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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|4. |  | Discontinued Operations
|-- |  | -----------------------

| | Burners and Components Business  In 2003, the Company
initiated its plan to sell the remainder of its Heat Technology segment. This segment, which was sold on March 31, 2005, consisted
of the operating assets of Selas Corporation of America, located in Dresher, Pennsylvania, Nippon Selas located in Tokyo, Japan
and Selas Waermetechnik located in Ratingen, Germany. This business generated sales of $2.1 million, and $1.6 million and net
income of $107,000 and $603,000 for the six months ended June 30, 2005 and 2004, respectively. The net income for the six months
ended June 30, 2005, included a gain on the sale of the operations of $184,000. The total purchase price was approximately $3.7
million, subject to adjustment, of which approximately $2.8 million was paid in cash on April 1, 2005, and $900,000 was paid in
the form of a subordinated promissory note. An adjustment to the purchase price of approximately $352,000 was recorded in the
quarter ended June 30, 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The consolidated condensed financial statements reflect the
Companys presentation of discontinued operations. A recap of discontinued operations for the three and six months ended June
30 is as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | Three Months Ended June30, |  | Six Months Ended June 30,
|----------------------------- | -------------------------- |  | -------------------------
|
|Income (loss) from operations |                            |  |                          
|Gain from Sale of             |                            | 
|Discontinued operations       |                            |  | $                        
|Small furnace                 |                            |  |                          
|Burners and components        |                            |  |                          
|                              |                            |  |                          
|                             
|                              |                            |  | $                        
|                              |                            |  |                          

|5. |  | Business Segment Information
|-- |  | ----------------------------

| | The Company has made a strategic decision to focus its future on
the Precision Miniature Medical and Electronics business. The Company sold the remaining operations of its Heat Technology segment
of the Burners and Components business on March 31, 2005. As a result of this decision and other divestures the Company has made
over the past three years, the Company now operates in only one segment.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | Inventories consist of the following at:
|-- |  | ----------------------------------------

|                                 | June 30,2005 |  | December 31,2004
|-------------------------------- | ------------ |  | ----------------
|Raw material                     |              |  | $               
|Work-in-process                  |              |  |                 
|Finished products and components |              |  |                 
|                                 |              |  |                 
|                                
|                                 |              |  | $               
|                                 |              |  |                 

9

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|7. |  | Long term debt
|-- |  | --------------

| | Notes payable at June 30, 2005 and December 31, 2004 are
summarized below:
| | --------------------------------------------------------------------------

|                                | June 30,2005 |  | December 31,2004
|------------------------------- | ------------ |  | ----------------
|Notes payable:                  |              |  |                 
|Short term borrowings, domestic |              |  | $               
|Short term borrowings, Asia     |              |  |                 
|                                |              |  |                 
|                               
|Total notes payable             |              |  | $               
|                                |              |  |                 

| | The Company and its domestic subsidiaries have a revolving credit
loan facility which expires April 1, 2006. This loan facility, which originally had a maximum limit of $4,500,000, was reduced to
a maximum limit of $4,000,000 after the completion of the sale of the burners and components business. This facility had
outstanding borrowings of approximately $2,743,000 as of June 30, 2005 bearing an interest rate of 9.25% (Prime plus 3.0%). This
facility carries a commitment fee of .25% per annum, payable on the unborrowed portion of the line.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At June 30, 2005 the Company was in compliance with all the
financial covenants contained in its credit facility.
| | -----------------------------------------------------------------------------------------------------------------

| | In addition, the Companys operation in Singapore maintains
an overdraft and letter of credit facility which as of June 30, 2005, had outstanding borrowings of approximately $479,000.
Remaining availability under this facility as of June 30, 2005 was $587,000.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Long-term debt at June 30, 2005 and December 31, 2004 is
summarized below:
| | --------------------------------------------------------------------------

|                         | June 30,2005 |  | December 31,2004
|------------------------ | ------------ |  | ----------------
|Long Term Debt:          |              |  |                 
|Term loan, domestic      |              |  | $               
|Equipment leases         |              |  |                 
|                         |              |  |                 
|                         |              |  |                 
|Less: current maturities |              |  |                 
|                         |              |  |                 
|                         |              |  | $               
|                         |              |  |                 

| | The terms of the domestic term loan agreement required quarterly
principal payments of $300,000 beginning in March 2005 through March 2006, with a balloon payment due at the end of the loan. The
loan also required proceeds from the sale of certain assets be applied against the loan. The term loan was paid in full on April
1, 2005, upon receipt of the proceeds from the sale of discontinued operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our ability to pay the principal and interest on our indebtedness
as it comes due will depend upon our current and future performance. Our performance is affected by general economic conditions
and by financial, competitive, political, business and other factors. Many of these factors are beyond our control.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We believe that funds expected to be generated from operations,
the available borrowing capacity through our revolving credit loan facilities, and the control of capital spending will be
sufficient to meet our anticipated cash requirements for operating needs through June 30, 2006. If, however, we do not generate
sufficient cash from operations, or if we incur additional liabilities as a result of the Selas SAS insolvency (note 12), we may
be required to seek additional financing or sell equity on terms which may not be as favorable as we could have otherwise
obtained. No assurance can be given that any refinancing, additional borrowing or sale of equity will be possible when needed or
that we will be able to negotiate acceptable terms. In addition, our access to capital is affected by prevailing conditions in the
financial and equity capital markets, as well as our own financial condition. While management believes that the Company will meet
its liquidity needs through June 30, 2006, no assurance can be given that the Company will be able to do so.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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|8. |  | Income Taxes
|-- |  | ------------

| | Income taxes for the three and six months ended June 30, 2005 were
$193,000 and $288,000 respectively, compared to $979,000 and $1.1 million for the same periods in 2004. The effective tax rates
for the three and six months ended June 30, 2005 were 22.2% and 40.7% respectively, compared to 41.8% and 62.9% for the same
periods in 2004. The higher effective rate for the three and six months ended June 30, 2004 was primarily due to the elimination
of the deferred tax asset of $890,230. The effective rate in 2005 was primarily due to foreign taxes on German and Singapore
operations. The Company is in a net operating loss position for Federal income tax purposes and, consequently, no expense from the
current period domestic operating income was recognized.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. |  | Stockholders Equity and Stock-based Compensation
|-- |  | -------------------------------------------------

| | The Company has adopted the disclosure provision of Statement of
Financial Accounting Principles Board Opinion (SFAS) No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure. SFAS No. 148 amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The following table presents a reconciliation of the denominators
used in the computation of basic and diluted earnings per share related to the Companys employee stock option plan:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      | Three months endedJune 30, |  | Six months endedJune 30,
|------------------------------------- | -------------------------- |  | ------------------------
|
|Basic  weighted shares outstanding   |                            |  |                         
|Weighted shares assumed upon exercise |                            | 
|of stock options                      |                            |  |                         
|                                      |                            |  |                         
|Diluted  weighted shares outstanding |                            |  |                         

| | The dilutive impact summarized above relates to the periods when
the average market price of Company stock exceeded the exercise price of the potentially dilutive option securities granted. For
the three and six months ended June 30, 2005 the average market price was below the exercise price for all outstanding options.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company applies Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock option plans.
Therefore no compensation expense has been recognized for the stock option plans. SFAS No. 123 Accounting for Stock-Based
Compensation, amended by SFAS No. 148 Accounting for Stock-Based Compensation Transition and Disclosure,
requires the Company to disclose pro forma net earnings and pro forma net earnings per share amounts as if compensation expense
was recognized for all options granted (note 3). The proforma amounts are as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  | Three months endedJune 30, |  | Six months endedJune 30,
|------------------------------------------------- | -------------------------- |  | ------------------------
|
|Reported net income                               |                            |  | $                       
|Stock-based employee compensation                 |                            | 
|expense, net of related tax effects               |                            |  |                         
|                                                  |                            |  |                         
|Pro forma net income                              |                            |  | $                       
|                                                 
|Reported basic and diluted  net income per share  |                            |  | $                       
|Pro forma basic and diluted  net income per share |                            |  | $                       

11

---

|10. |  | Income (Loss) Per Share
|--- |  | -----------------------

| | Excluded from the computation of diluted earnings per share at
June 30, 2005 were options to purchase approximately 690,000 common shares, with an average exercise price of $4.18, because the
effect would have been anti-dilutive. Excluded from the computation of diluted earnings per share at June 30, 2004 were options to
purchase approximately 277,000 common shares, with an average exercise price of $7.01, because the effect would have been
anti-dilutive.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. |  | Legal Proceedings
|--- |  | -----------------

| | The Company is a defendant along with a number of other parties in
approximately 123 lawsuits as of June 30, 2005(approximately 123 lawsuits as of December 31, 2004)alleging that plaintiffs have or
may have contracted asbestos-related diseases as a result of exposure to asbestos products or equipment containing asbestos sold
by one or more named defendants. Due to the noninformative nature of the complaints, the Company does not know whether any of
the complaints state valid claims against the Company.  The lead insurance carrier has informed the Company that the primary
policy for the period July 1, 1972  July 1, 1975 has been exhausted and that the lead carrier will no longer provide a
defense under that policy.  The Company has requested that the lead carrier substantiate its position.  The Company has
contacted representatives of the Companys excess insurance carrier for some or all of this period.  The Company does
not believe that the asserted exhaustion of the primary insurance coverage for this period will have a material adverse effect on
the financial condition, liquidity, or results of operations of the Company.  Management believes that the number of
insurance carriers involved in the defense of the suits and the significant number of policy years and policy limits to which
these insurance carriers are insuring the Company, make the ultimate disposition of these lawsuits not material to the
Companys consolidated financial position or results of operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As more fully described in Note 12, the Companys wholly
owned French subsidiary, Selas SAS filed insolvency in France and is being managed by a court appointed judiciary administrator.
The Company may be subject to additional litigation or liabilities as a result of the French insolvency.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company is also involved in other lawsuits arising in the
ordinary course of business. While it is not possible to predict with certainty the outcome of these matters, management is of the
opinion that the disposition of these lawsuits and claims will not materially affect the Companys consolidated financial
position, liquidity, or results of operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12. |  | Subsidiary Insolvency
|--- |  | ---------------------

| | On August 4, 2003 the Companys wholly owned French
subsidiary, Selas SAS, filed insolvency in the Commercial Court of Nanterre, France and is being managed through a court appointed
judiciary administrator. Historical financial information has been restated to include this European operation in discontinued
operations. In addition, the Company may be subject to additional litigation or liabilities as a result of the French insolvency.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13. |  | Statements of Cash Flows
|--- |  | ------------------------

| | Supplemental disclosures of cash flow information:
| | --------------------------------------------------

|                  | Six months Ended
|----------------- | ----------------
|
|Interest received |                 
|Interest paid     |                 
|Income taxes paid |                 

12

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# ITEM 2.    Managements Discussionand Analysis of Financial Condition and Results of Operations

Business Overview

Headquartered in Arden Hills, Minnesota, IntriCon Corporation (formerly Selas
Corporation of America) is an international firm that designs, develops, engineers and manufactures micro-miniature medical and
electronic products. The Company supplies micro-miniaturized components, systems and molded plastic parts, primarily to the
hearing instrument manufacturing industry, as well as the computer, electronics, telecommunications and medical equipment
industries. In addition to its Arden Hills headquarters, the Company has facilities in California, Singapore, and Germany. Within
discontinued operations, the Company had facilities in Pennsylvania, Japan and Germany. See also notes 4 and 5 to the Condensed
Consolidated Financial Statements.

Currently, the Company has one operating segment, its precision miniature
medical and electronics products segment. In the past the Company had operated three segments, precision miniature medical and
electronics products segment, heat technology segment, and tire holders, lifts and related products segment. In 2001, the Company
began focusing on its precision miniature medical and electronics products segment and developing plans to exit the businesses
that comprised the heat technology segment, and tire holders, lifts and related products segment. The Company exited the tire
holders, lifts and related products business in 2003 and exited the heat technology segment on June 30, 2005. The Company
classified its heat technology segment as discontinued operations in 2004.

With the completed sale of the burner and components business, the Company
has successfully completed the shift from its traditional business segments to the emerging prospects in its precision miniature
medical and electronic products business. To reflect the Companys redefined focus, it has changed its name to IntriCon
Corporation.

The Company manufactures micro-miniature components, systems and molded
plastic parts for hearing instruments, medical equipment, electronics, telecommunications and computer industry manufacturers.
These components consist of volume controls, microphones, trimmer potentiometers and switches. The Company also manufactures
hybrid amplifiers and integrated circuit components (hybrid amplifiers), along with faceplates for in-the-ear and
in-the-canal hearing instruments. Components are offered in a variety of sizes, colors and capacities in order to accommodate a
hearing manufacturers individualized specifications. Sales to hearing instrument manufacturers represented approximately 51%
of net sales for the Companys precision miniature medical and electronic products business in the first six months of fiscal
2005.

In the medical market, the Company is focused on sales of microelectronics,
micromechanical assemblies and high-precision plastic molded components to medical device manufacturers. Targeted customers
include medical product manufacturers of portable and lightweight battery powered devices, large AC-powered units often found in
clinics and hospitals, as well as a variety of sensors designed to connect a patient to an electronic device.

The medical industry is faced with pressures to reduce the costs of
healthcare. The Company offers medical manufacturers the capabilities to design, develop and manufacture components for medical
devices that are easier to use, measure with greater accuracy and provide more functions while reducing the costs to manufacture
these devices. Examples of the Companys products used by medical device manufacturers include components found in
intravenous fluid administration pumps that introduce drugs into the bloodstream, and bubble sensors and flow restrictors that
monitor and control the flow of fluid in an intravenous infusion system.

13

---

The Company also manufactures a family of safety needle products for an OEM
customer that utilizes the Companys insert and straight molding capabilities. These products are assembled using full
automation including built-in quality checks within the production lines. Other examples include sensors used to detect
pathologies in specific organs of the body and monitoring devices to detect cardiac and respiratory functions. The early and
accurate detection of pathologies allows for increased likelihood for successful treatment of chronic diseases and cancers.
Accurate monitoring of multiple functions of the body, such as heart rate and breathing, aids in generating more accurate
diagnosis and treatments for patients.

The Company has also expanded its micro-miniature components business through
the manufacture of thermistors and film capacitors. The Company manufactures and sells thermistors and thermistor assemblies,
which are solid state devices that produce precise changes in electrical resistance as a function of any change in absolute body
temperature. The Companys Surge-Gard TM product line, an inrush electric current limiting device used primarily in computer
power supplies, represented approximately 5% of the Companys sales in the first six months of fiscal 2005. The balance of
sales represent various industrial, commercial and military sales for thermistor and thermistor assemblies to domestic and
international markets.

Forward-Looking and Cautionary Statements

Certain statements included in this Quarterly Report on Form 10-Q or
documents the Company files with the Securities and Exchange Commission, which are not historical facts, are forward-looking
statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which are intended to be covered by the
safe harbors created thereby. These statements may include, but are not limited to:

| |  | statements in Managements Discussion and Analysis of
Financial Condition and Results of Operations such as, new digital products to gain market share, recovery of the
telecommunications market, potential growth in the Companys medical profits, future gross profit margins, future cost
savings, net operating loss carryforwards, the impact of future cash flows, the ability to maintain financial covenants, the
ability to meet working capital requirements, future level of funding of employee benefit plans, the ability to negotiate
extension on purchases, the impact of foreign currencies and litigation; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | statements in Notes to the Companys Condensed
Consolidated Financial Statements.
|- |  | -----------------------------------------------------------------------------------

Forward-looking statements also include, without limitation, statements as to
the Companys:

| |  | expected future results of operations and growth;
|- |  | -------------------------------------------------

| |  | ability to meet working capital requirements;
|- |  | ---------------------------------------------

| |  | business strategy;
|- |  | ------------------

| |  | expected benefits from staff reductions;
|- |  | ----------------------------------------

| |  | expected increases in operating efficiencies;
|- |  | ---------------------------------------------

| |  | anticipated trends in the hearing-health market; and
|- |  | ----------------------------------------------------

| |  | estimate of goodwill impairment and amortization expense of the intangible assets.
|- |  | ----------------------------------------------------------------------------------

14

---

In addition, forward-looking statements also include the effects of changes
in accounting pronouncements, the effects of litigation and the amount of insurance coverage, and statements as to trends or the
Companys or managements beliefs, expectations and opinions. Forward-looking statements are subject to risks and
uncertainties and may be affected by various factors that may cause actual results to differ materially from those in the
forward-looking statements. In addition to the factors discussed in this Quarterly Report on Form 10-Q, certain risks,
uncertainties and other factors can cause actual results and developments to be materially different from those expressed or
implied by such forward-looking statements, including, without limitation, the following:

| |  | the ability to implement the Companys business strategy;
|- |  | ---------------------------------------------------------

| |  | risks arising in connection with the insolvency of Selas SAS, and
potential liabilities and actions arising in connection therewith;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------

| |  | the volume and timing of orders received by the Company;
|- |  | --------------------------------------------------------

| |  | changes in estimated future cash flows;
|- |  | ---------------------------------------

| |  | foreign currency movements in markets the Company services;
|- |  | -----------------------------------------------------------

| |  | changes in the global economy and financial markets;
|- |  | ----------------------------------------------------

| |  | changes in the mix of products sold;
|- |  | ------------------------------------

| |  | acceptance of the Companys products;
|- |  | -------------------------------------

| |  | reliance on two customers in the Companys medical products business;
|- |  | ---------------------------------------------------------------------

| |  | competitive pricing pressures;
|- |  | ------------------------------

| |  | pending and potential future litigation;
|- |  | ----------------------------------------

| |  | availability of electronic components for the Companys products;
|- |  | -----------------------------------------------------------------

| |  | ability to create and market products in a timely manner;
|- |  | ---------------------------------------------------------

| |  | ability to pay debt when it comes due; and
|- |  | ------------------------------------------

| |  | the risks associated with terrorist attacks, war and threats of attacks.
|- |  | ------------------------------------------------------------------------

For a description of these and other risks see Risk Factors in
Part 1, Item 1: Business in the Companys Annual Report on Form 10-K for the year ended December 31, 2004, or in other
filings the Company makes from time to time with the Securities and Exchange Commission. The Company does not undertake to update
any forward-looking statement that may be made from time to time by or on behalf of the Company.

15

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2005 compared with 2004

# Sales, net

Consolidated net sales for the three and six months ended June 30, were as
follows (in thousands):

|                           |  | Change
|-------------------------- |  | ------
|
|Three months ended June 30 |  |       
|                          
|Six months ended June 30   |  |       

The Companys sales for both the three and six months ended June 30,
2005 increased for all four product sectors over the same periods in the prior year. For the quarter ended June 30, 2005 sales
increased by 123.8% for professional audio and military products, 75.9% for medical products, 28.3% for hearing health products,
and 4.9% for electronics products. For the six months ended June 30, 2005 sales increased by 12.1% for professional audio and
military products, 75.9% for medical products, 19.2% for hearing health products, and 5.5% for electronics products. The sales
increase for professional audio and military products was primarily due to sales of a new microphone to a specific customer; for
hearing health products the increase was primarily due to new product offerings in the Companys advance line of amplifier
assemblies and systems based on Digital Signal Processing (DSP). The sales increase for medical products was due to strengthened
orders for design and contract manufacturing with several medical OEM customers. The sales increase for electronics products was
primarily attributable to thermistor sales to a specific customer.

# Gross profit

Gross profit margins for the three and six months ended June 30 were as
follows (in thousands):

|                           | 2005 |  | Restated2004 |       | Change
|-------------------------- | ---- |  | ------------ | ----- | ------
|
|Three months ended June 30 |      |  | $            | 3,411 |       
|                          
|Six months ended June 30   |      |  | $            | 5,793 |       

The gross profit margin as a percentage of sales, improved over the three and
six month periods ended June 30, 2005 from the previous year periods due to higher sales and lower manufacturing costs for some
products which are now manufactured in Asia.

16

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# Selling, general and administrative expenses (SG&A)

Selling, general and administrative expenses (SG&A) for the three months
ended June 30 were as follows (in thousands):

|                           | 2005 |  | Restated2004 |       | Change
|-------------------------- | ---- |  | ------------ | ----- | ------
|
|Selling                    |      |  | $            | 884   |       
|General and administrative |      |  |              | 1,284 |       
|Research and development   |      |  |              | 359   |       

Selling, general and administrative expenses (SG&A) for the six months
ended June 30 were as follows (in thousands):

|                           | 2005 |  | Restated2004 |       | Change
|-------------------------- | ---- |  | ------------ | ----- | ------
|
|Selling                    |      |  | $            | 1,688 |       
|General and administrative |      |  |              | 2,537 |       
|Research and development   |      |  |              | 766   |       

The lower selling, administrative, and research and development expense for
the three and six month periods ended June 30, 2005 as compared to the prior year periods was the result of a reduction in
staffing that occurred in November 2004. The staffing adjustment was a combination of reductions due to the transfer of a portion
of manufacturing to an overseas operation and an effort to streamline administrative functions.

# Operating income

There was a decrease in operating income for the three and six months ended
June 30, 2005, of $1.6 million and $1.1 million, respectively, compared to the prior year periods because the three and six months
ended June 30, 2004 included a gain on sale of our Dresher property of approximately $3.1 million. This had been carried on the
balance sheet under the title, Asset held for sale.

# Interest expense

Interest expense for the three and six months ended June 30, 2005 was
$108,000 and $220,000 respectively, compared to $152,000 and $248,000 for the same periods in 2004, respectively. The decrease
from the prior years expense was due to the lower outstanding debt balance, partially offset by higher interest rates.

# Interest income

Interest income for the three and six months ended June 30, 2005 was $20,000
and $19,000, respectively, compared to $1,000 for the same periods in 2004. The increase in 2005 interest income was attributable
to interest on the note receivable from the buyer of the discontinued operations that were sold on March 31, 2005.

17

---

# Other income

Other income for the three and six months ended June 30, 2005 was $71,000 and
$107,000 respectively, compared to $4,000 and $99,000 for the same periods in 2004, respectively. The increase in other income in
2005 was attributable to the sale of securities the Company had received in settlement of an outstanding debt with one of its
former customers. The majority of the other income in 2004 was attributable to foreign exchange gain on a portion of the
Companys debt that was Euro denominated until its amendment in March 2004.

# Income taxes

Income taxes for the three and six months ended June 30, 2005 were $193,000
and $288,000, respectively, compared to $979,000 and $1.1 million for the same periods in 2004, respectively. The effective tax
rates for the three and six months ended June 30, 2005 were 22.2% and 40.7% respectively, compared to 41.8% and 62.9% for the same
periods in 2004. The higher effective rate for the three and six months ended June 30, 2004 was primarily due to the elimination
of the deferred tax asset of $890,230. The effective rate in 2005 was primarily due to foreign taxes on German and Singapore
operations. The Company is in a net operating loss position for Federal income tax purposes and, consequently, no expense from the
current period domestic operating income was recognized.

# Income (loss) from continuing operations

For the three and six months ended June 30, 2005, the net income from
continuing operations was $673,000 and $420,000, respectively, compared with a net income of $1.4 million and $645,000 for the
same periods in 2004, respectively. The net income from continuing operations in 2004 was attributable to a gain of $3.1 million
on an asset held for sale.

# Discontinued Operations

Discontinued operations generated a net loss of $356,000 for the three months
ended June 30, 2005 and net income of $107,000 for the six months ended June 30, 2005, compared to a net income of $609,000 and
$530,000 for the three and six months ended June 30, 2004, respectively. The loss for the three months ended June 30, 2005 was a
result of a purchase price adjustment related to the sale of the discontinued operations that were sold on March 31, 2005. As of
this date no additional purchase price adjustments regarding the sale of the discontinued operations are expected. The income for
the six months ended June 30, 2005 included a gain on the sale of these operations of $184,000. See note 4 of the Consolidated
Condensed Financial Statements.

Liquidity and Capital Resources

Consolidated net working capital increased $400,000 to approximately $2.5
million at June 30, 2005 compared to $2.1 million December 31, 2004. The increase was mainly attributable to the sales of the
discontinued operations and the pay down of debt from the proceeds. Other factors included increases in inventory, accounts
receivable and accounts payable related to the increase in sales for the quarter.

18

---

The Companys cash flows from operating, investing and financing
activities, as reflected in the statement of cash flows, are summarized as follows (in thousands):

|                                                                             | Six months Ended
|---------------------------------------------------------------------------- | ----------------
|
|Cash provided (used) by:                                                     |                 
|Continuing operations                                                        |                 
|Discontinued operations *                                                    |                 
|Investing activities                                                         |                 
|Financing activities                                                         |                 
|Effect of exchange rate changes on cash                                      |                 
|                                                                             |                 
|Increase (decrease) in cash                                                  |                 
|                                                                             |                 
|                                                                            
|*Includes proceeds from the sale of discontinued operations of $2.8 million.

The Company had the following bank arrangements (in thousands):

|                                                 | June 30,2005 |  | December 31,2004
|------------------------------------------------ | ------------ |  | ----------------
|Total availability under existing facilities     |              |  | $               
|                                                 |              |  |                 
|                                                
|Borrowings and commitments:                      |              | 
|Notes payable                                    |              |  |                 
|Current maturities of long-term debt             |              |  |                 
|                                                 |              |  |                 
|                                                
|Total outstanding borrowings and commitments     |              |  |                 
|                                                 |              |  |                 
|                                                
|Remaining availability under existing facilities |              |  | $               
|                                                 |              |  |                 

Borrowings under the majority of the Companys credit facilities bear
interest at prime plus 3%. See Note 7 of the Consolidated Condensed Financial Statements.

In March 2005, the Company and its domestic subsidiaries entered into an
amended and restated revolving credit loan facility maturing April 1, 2006 for which borrowings of $4,500,000 could be outstanding
at any one time. The Company had borrowings of approximately $2,743,000 as of June 30, 2005 bearing an interest rate of 9.25%
(prime plus 3.0%). The loan carries a commitment fee of .25% per annum, payable on the unborrowed portion of the line. After the
Companys discontinued operations were sold on June 30, 2005 the maximum outstanding balance of the facility was reduced to
$4,000,000, representing a permanent reduction in the Companys availability under the facility.

In addition, the Companys operation in Singapore maintains an overdraft
and letter of credit facility which as of June 30, 2005, had outstanding borrowings of approximately $479,000, bearing an interest
rate of 6.0%. Remaining availability under this facility as of June 30, 2005 was $586,000.

The Company and its domestic subsidiaries entered into a $1,458,470 note
scheduled to mature April 1, 2006. This facility required quarterly principal payments of $300,000 commencing March 31, 2004 and
bore interest of 8.75% (prime plus 3.0%). Proceeds from the sale the Companys burner and components business which was sold
on March 31, 2005, were used to payoff the loan on April 1, 2005, representing a permanent reduction in the Companys
availability under the facility.

19

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IntriCon believes that funds expected to be generated from operations, the
available borrowing capacity through its revolving credit loan facilities, curtailment of the dividend payment and control of
capital spending will be sufficient to meet its anticipated cash requirements for operating needs through April 1, 2006. However,
the Companys ability to pay the principal and interest on its indebtedness as it comes due will depend upon current and
future performance. Performance is affected by general economic conditions and by financial, competitive, political, business and
other factors. Many of these factors are beyond the Companys control. If, however, the Company does not generate sufficient
cash or complete such financings on a timely basis, it may be required to seek additional financing or sell equity on terms, which
may not be as favorable as it could have otherwise obtained. No assurance can be given that any refinancing, additional borrowing
or sale of equity will be possible when needed, or that IntriCon will be able to negotiate acceptable terms. In addition, access
to capital is affected by prevailing conditions in the financial and equity capital markets, as well as the Companys
financial condition.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 123R, Share-Based Compensation, which supersedes Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance.
SFAS No. 123R focuses primarily on accounting for transactions in which an entity obtains employee services through share-based
payment transactions. SFAS No. 123R requires a public entity to measure the cost of employee services received in exchange for the
award of equity investments based on the fair value of the award at the date of grant. The cost will be recognized over the period
during which an employee is required to provide services in exchange for the award. On April 14, 2005, the Securities and Exchange
Commission issued a release announcing the adoption of a new rule delaying the required implementation of SFAS No. 123R. Under
this new rule, SFAS No. 123R is effective as of the beginning of the first annual reporting period that begins after June 15,
2005. The impact on net earnings as a result of the adoption of SFAS No. 123R, from a historical perspective, can be found in Note
9 to the Consolidated Financial Statements in this Quarterly Report and in Note 1 to the Consolidated Financial Statements
contained in our 2004 Annual Report. We are currently evaluating the provisions of SFAS No. 123R and will adopt it in the first
quarter of 2006, as required.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue
and expense during the reporting period.

Certain accounting estimates and assumptions are particularly sensitive
because their significance to the consolidated condensed financial statements and the possibility that future events affecting
them may differ markedly. The accounting policies of the Company with significant estimates and assumptions include the
Companys revenue recognition, accounts receivable reserves, inventory reserves, discontinued operations, goodwill,
long-lived assets and deferred taxes policies. These and other significant accounting policies, except for revenue recognition
which is described in the paragraphs below, are described in and incorporated by reference from Managements Discussion
and Analysis of Financial Condition and Results of Operations, and Note 1 to the financial statements contained in or
incorporated by reference in the Companys Annual Report on Form 10-K/A for the year ended December 31, 2004.

20

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The Companys continuing operations recognizes revenue when products are
shipped and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive
evidence of an arrangement exists and the sales price is fixed or determinable. Under contractual terms shipments are generally
FOB shipment point.

Customers have 30 days to notify the Company if the product is damaged or
defective. Beyond that, there are no significant obligations that remain after shipping other than warranty obligations. Contracts
with customers do not include product return rights, however, the Company may elect in certain circumstances to accept returns for
product. The Company records revenue for product sales net of returns. Net sales also include amounts billed to customers for shipping
and handling, if applicable. The corresponding shipping and handling costs are included in the cost of sales.

In general, the Company warrants its products to be free from defects in
material and workmanship and will fully conform to and perform to specifications for a period of one year.
While the Companys warranty costs have historically been within its expectations, the Company cannot guarantee that it will
continue to experience the same warranty return rates or repair costs that it has experienced in the past.

# ITEM 3.    Quantitative and QualitativeDisclosures About Market Risk

For information regarding the Companys exposure to certain market
risks, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the Companys Annual Report on Form 10-K/A
for the year ended December 31, 2004. There have been no material changes in the Companys portfolio of financial instruments
or market risk exposures which have occurred since December 31, 2004.

21

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# ITEM 4.    Controls and Procedures

On May 31, 2005, the Company concluded, after discussions among the Audit
Committee of the Board of Directors of the Company and management, that it would restate financial results for the years 2000
through 2004 in order to correct the accounting for certain research and development expenditures that were erroneously
capitalized on the balance sheet instead of being recorded as charges on the statement of operations. The methodology for
accounting for the Companys research and development expenses was corrected prior to the end of the quarter covered by this
report and the Company initiated the policies and procedures described below:

| |  | The Company implemented education programs within the Company to
ensure that all finance and accounting employees are adequately trained and supervised in the application of US GAAP.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company created stronger communication protocols and
relationships between the Companys management and its finance and accounting personnel to ensure for proper accounting
analysis and treatment.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company added internal review controls to insure that
capitalized projects appearing on the balance sheet are reviewed and approved by management on a quarterly basis.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company also restated its financial statements and corrected its
accounting practices as further described in Note 2 of the Notes to Consolidated Condensed Financial Statements.

The Companys management, with the participation of its chief executive
officer and chief financial officer, conducted an evaluation of the effectiveness of the Companys disclosure controls and
procedures, as defined in Exchange Act Rule 13a-15(e), as of June 30, 2005 (the Disclosure Controls Evaluation). Based
upon the Disclosure Controls Evaluation, the Companys chief executive officer and chief financial officer concluded that the
Companys disclosure controls and procedures were effective to provide a reasonable level of assurance that information
required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is recorded, processed,
summarized and reported within the specified time periods in the Securities and Exchange Commissions rules and forms.

Other than disclosed above, there were no changes in our internal controls
over financial reporting during the quarter ended June 30, 2005 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and not be detected.

22

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PART II  OTHER INFORMATION

ITEM 1.    Legal Proceedings

The information contained in Notes 11 and 12 to the Consolidated Condensed
Financial Statements in part 1 of this quarterly report is incorporated by reference herein.

ITEM 2.    Unregistered Salesof Equity Securities and Use of Proceeds

None.

ITEM 3.    Defaults upon Senior Securities

None.

ITEM 4.    Submission of Mattersto a Vote of Security Holders

The 2005 Annual Meeting of Shareholders of the Company was held on May 4,
2005, adjourned to and reconvened May 18, 2005.

At the 2005 Annual Meeting on May 18, 2005:

Mr. Robert N. Masucci was elected to the Board of Directors of the
Company for terms expiring at the 2008 Annual Meeting. In the election, 2,191,725 votes were cast for Mr. Masucci. Under
Pennsylvania law, votes cannot be cast against a candidate. Proxies filed at the 2005 Annual Meeting by the holders of 2,706
shares withheld authority to vote for Mr. Masucci. The terms of the following directors continued after the Annual Meeting:
Michael J. McKenna, Nicholas A. Giordano, and Mark S. Gorder.

ITEM 5.    Other Information

None.

23

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ITEM 6.    Exhibits and Reportson Form 8-K

| | (a) |  | Exhibits
| | --- |  | --------

| |  | 31.1 |  | Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| |  | ---- |  | ------------------------------------------------------------------------------------------------------

| |  | 31.2 |  | Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| |  | ---- |  | ------------------------------------------------------------------------------------------------------

| |  | 32.1 |  | Certification of principal executive officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |  | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 32.2 |  | Certification of principal financial officer to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |  | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------

24

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INTRICON CORPORATION

SIGNATURE

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.

|                        | INTRICON CORPORATION(Registrant)                                                
|----------------------- | --------------------------------------------------------------------------------
|                       
|                       
|Date:   August 12, 2005 | By:                                                                             
|                        |                                                                                 
|                        | Mark S. GorderPresident and Chief Executive Officer(principal executive officer)

25

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EXHIBIT INDEX

| |  |  | 
| |  |  | 

| | 31.1 |  | Certification of principal executive officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
| | ---- |  | ------------------------------------------------------------------------------------------------------

| | 31.2 |  | Certification of principal financial officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
| | ---- |  | ------------------------------------------------------------------------------------------------------

| | 32.1 |  | Certification of principal executive officer pursuant to U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.2 |  | Certification of principal financial officer pursuant to U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

26

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