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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 September 30, 2005March 31, 2006

OR

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

FOR THE TRANSITION PERIOD FROM ________________ to ________________

COMMISSION FILE NUMBER 1-5005

INTRICON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)Exact Name of Registrant as Specified in its Charter)

Not Applicable

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d)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.

xYES     oNO

Indicate by check mark whether the Registrantregistrant is a large accelerated filer, an accelerated filer, (as defined byor a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act)Act (check one):

oYESxNO

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

oYES     xNO

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date.

INTRICON CORPORATION

I N D E X

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PART I:FINANCIAL INFORMATION

ITEM 1.    Financial Statements

INTRICON CORPORATION
Consolidated Condensed Balance Sheets
Assets

(See accompanying notes to the consolidated condensed financial statements)

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INTRICON CORPORATION
Consolidated Condensed Balance Sheets
Liabilities and Shareholders’ Equity

(See accompanying notes to the consolidated condensed financial statements)

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INTRICON CORPORATION
Consolidated CondensedStatements of Operations
(Unaudited)

(See accompanying notes to the consolidated condensed financial statements)

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INTRICON CORPORATION
Consolidated CondensedStatements of OperationsCash Flows
(Unaudited)

(See accompanying notes to the consolidated condensed financial statements)

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INTRICON CORPORATION
Consolidated CondensedStatements of Cash Flows
(Unaudited)

(See accompanying notes to the consolidated condensed financial statements)

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INTRICON CORPORATION

Notes toConsolidated Condensed Financial Statements (Unaudited)

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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 43 and 54 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 March 31, 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 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 52%47% of net sales for the Company’s precision miniature medical and electronic products business in the first ninethree months of fiscal 2005.2006.

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.

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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 nine months of fiscal 2005. The balance of sales represents 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.

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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'sCompany’s business and growth 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;

  
  
  

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• changes in the mix of products sold;

• 
  

  ability to meet increasing demand;

  
  

  changes in customer requirements;

  
  

  timing and extent of research and development expenses;

  
  

  acceptance of the Company'sCompany’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;

• manner and develop products that are inexpensive to manufacture;
  
  

  ability to pay debt when it comes due;

  
  

  the loss of one or more of our major customers;

  
  

  ability to identify and

• integrate acquisitions;
  
  

  effects of legislation;

  
  

  effects of foreign operations;

  
  

  ability to recruit and retain engineering and technical personnel;

  
  

  loss of members of our senior management team;

  
  

  our ability and the ability of our customers to protect intellectual property; and

  
  

  risks associated with terrorist attacks, war and threats of attacks.

Under the modified prospective approach, SFAS 123R applies to new awards and to awards that were outstanding on January 1, 2006 that are subsequently modified, repurchased or cancelled. Under the modified prospective approach, compensation cost recognized for the first quarter of fiscal 2006 includes compensation cost for all share-based payments granted prior to, but not yet vested on, January 1, 2006, based on the grant-date fair value estimated 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 evaluatingaccordance with the provisions of SFAS No. 123R, and will adopt itcompensation cost for all shared-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the first quarterprovisions of SFAS 123R. Prior periods were not restated to reflect the impact of adopting the new standard. As a result of adopting SFAS 123R on January 1, 2006, as required.the net loss and net loss per share for the three months ended March 31, 2006, were $44,000 and $0.01 lower, respectively, than if the Company had continued to account for stock-based compensation under APB Opinion No. 25.

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The Company calculates expected volatility for stock options and awards using both historical volatility as well as the average volatility of our peer competitors. The Company currently estimates a zero percent forfeiture rate for stock options but will continue to review in future periods.

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/A10-K for the year ended December 31, 2004.2005.

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.

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ITEM 3.    Quantitative and QualitativeTable of ContentsDisclosures 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/A10-K for the year ended December 31, 2004.2005. There have been no material changes in the Company’s portfolio of financial instruments or market risk exposures which have occurred since December 31, 2004.2005.

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:

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• 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 September 30, 2005March 31, 2006 (the “Disclosure Controls Evaluation”). Based uponon 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 specifiedspecific time periods in the Securities and Exchange Commission’s rules and forms. Officers of the Companycompany have concluded that the disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act are accumulated and communicated to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure, all in accordance with Exchange Act Rule 13a-15(e).

Other than disclosed above, there were no changes in ourThe Company’s management, with the participation of the Company’s chief executive officer and chief financial officer, also conducted an evaluation of the Company’s internal controlscontrol over financial reporting, as defined in Exchange Act Rule 13a-15(f), to determine whether any changes occurred during the quarter ended September 30, 2005March 31, 2006 that hashave materially affected, or isare reasonably likely to materially affect, ourthe Company’s internal control over financial reporting. Based on that evaluation, there was no such change during the quarter ended March 31, 2006.

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.

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PART II–OTHER INFORMATION

ITEM 1.    Legal Proceedings

The information contained in Notes 1211 and 1413 to the Consolidated Condensed Financial Statements in part 1 of this quarterly report is incorporated by reference herein.

ITEM 2.    Unregistered Sales

ITEM 1A.

Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2005, which could materially affect our business, financial condition or future results. The risk factors in our Annual Report on Form 10 — K have not materially changed. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2.

UnregisteredSales of Equity Securities and Use of Proceeds

None.

ITEM 3.

Defaultsupon Senior Securities

None.

ITEM 4.

Submissionof Matters to a Vote of Security Holders

At the 2006 Annual Meeting of Shareholders of the Company held on April 22, 2006:

Mr. Nicholas A. Giordano was re-elected as director of the Board of Directors of the Company for terms expiring at the 2006 Annual Meeting. In the election, 4,188,251 votes were cast for Mr. Giordano. Under Pennsylvania law, votes cannot be cast against a candidate. Proxies filed at the 2006 Annual Meeting by the holders of 526,458 shares withheld authority to vote for Mr. Giordano. The terms of the following directors continued after the Annual Meeting: Michael J. McKenna, Robert N. Masucci, and Mark S. Gorder.

The 2006 Equity SecuritiesIncentive Plan was also approved. In the election, 1,997,390 votes were cast in favor of approval, while 774,333 were cast opposing approval, and Useholders of Proceeds

None.

ITEM 3.    Defaults uponSenior Securities

None.

ITEM 4.    Submission of Matters7,823 shares withheld authority to a Vote of Security Holders

None.vote.

ITEM 5.    Other Information

None.

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ITEM 6.    Exhibits

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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.

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EXHIBIT INDEX

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