----

----

| (X) | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----|-----------------------------------------------------------------------------------------|

| (  ) | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|----------------|------------------------------------------------------------------------------------------|

| Delaware                        | 95-3863205          |
|---------------------------------|---------------------|
| (State or other jurisdiction of | (I.R.S. Employer    |
| incorporation or organization)  | Identification No.) |

| 402 West County Road D, St. Paul, Minnesota | 55112      |
|---------------------------------------------|------------|
| (Address of principal executive offices)    | (Zip Code) |

| Class                                   |   | Outstanding at July 15, 2010 |      |
|-----------------------------------------|--------|------------------------------|-----------|
| Common Stock, $0.15 par value per share |   |                         | 8,717,314 |   |

----

|    |                   |                                                        |  Page |
|---------|------------------------|-------------------------------------------------------------|------------|
| Part I  | Financial Information: |                                                        |
|    |                   |                                                        |       |
|    | Item 1:                | Financial Statements (Unaudited)                            |       |
|    |                   |                                                        |       |
|    |                   | Consolidated Statements of Income – Three and Six     |       |
|    |                   | Months Ended June 30, 2010 and 2009                         | 3          |
|    |                   |                                                        |       |
|    |                   | Consolidated Balance Sheets – June 30, 2010           |       |
|    |                   | and December 31, 2009                                       | 4          |
|    |                   |                                                        |       |
|    |                   | Consolidated Statements of Cash Flows – Six Months    |       |
|    |                   | Ended June 30, 2010 and 2009                                | 5          |
|    |                   |                                                        |       |
|    |                   | Notes to Consolidated Financial Statements                  | 6          |
|    |                   |                                                        |       |
|    | Item 2:                | Management's Discussion and Analysis of                     |       |
|    |                   | Financial Condition and Results of Operations               | 10         |
|    |                   |                                                        |       |
|    | Item 3:                | Quantitative and Qualitative Disclosures                    |       |
|    |                   | About Market Risk                                           | 20         |
|    |                   |                                                        |       |
|    | Item 4:                | Controls and Procedures                                     | 20         |
|    |                   |                                                        |       |
| Part II | Other Information      | 21                                                          |
|    |                   |                                                        |       |
|    | Item 1A:               | Risk Factors                                                | 21         |
|    |                   |                                                        |       |
|    | Item 2:                | Unregistered Sales of Equity Securities and Use of Proceeds | 21         |
|    |                   |                                                        |       |
|    | Item 5:                | Other Information                                           | 21         |
|    |                   |                                                        |       |
|    | Item 6:                | Exhibits                                                    | 21         |
|    |                   |                                                        |       |
|    |                   | Signatures                                                  | 22         |
|    |                   |                                                        |       |
|    |                   | Exhibit Index                                               | 23         |

----

|                                                                         |   | Three Months Ended |      |   | Six Months Ended |   |
|------------------------------------------------------------------------------|--------|--------------------|-----------|--------|------------------|--------|
|                                                                         |   | June 30, 2010      |      |   | June 30, 2009    |   |   | June 30, 2010 |   |   | June 30, 2009 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |
| REVENUES:                                                                    |   |               |      |   |             |   |   |   |   |   |   |   |
|    Laboratory services:                                       |   |               |      |   |             |   |   |   |   |   |   |   |
|       Drugs-of-abuse testing services          |   | $                  | 10,160    |   |             | $      | 9,618 |   |   | $ | 18,956 |   |   | $ | 18,064 |   |
|       Clinical & other laboratory services |   |               | 7,578     |   |             |   | 5,377 |   |   |   | 14,468 |   |   |   | 10,774 |   |
|       Clinical trial services                  |   |               | 2,037     |   |             |   | 1,592 |   |   |   | 2,870 |   |   |   | 3,907 |   |
|    Product sales                                              |   |               | 5,410     |   |             |   | 4,745 |   |   |   | 10,052 |   |   |   | 9,245 |   |
|                                                                         |   |               | 25,185    |   |             |   | 21,332 |   |   |   | 46,346 |   |   |   | 41,990 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| COST OF REVENUES:                                                            |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   Cost of services                                                 |   |               | 12,551    |   |             |   | 11,634 |   |   |   | 23,584 |   |   |   | 22,751 |   |
|   Cost of sales                                                    |   |               | 2,293     |   |             |   | 2,032 |   |   |   | 4,321 |   |   |   | 3,930 |   |
|                                                                         |   |               | 14,844    |   |             |   | 13,666 |   |   |   | 27,905 |   |   |   | 26,681 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| GROSS PROFIT                                                                 |   |               | 10,341    |   |             |   | 7,666 |   |   |   | 18,441 |   |   |   | 15,309 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES:                                                          |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    Selling, general and administrative                        |   |               | 8,231     |   |             |   | 6,521 |   |   |   | 15,664 |   |   |   | 12,742 |   |
|    Research and development                                   |   |               | 573       |   |             |   | 589 |   |   |   | 1,122 |   |   |   | 1,159 |   |
|                                                                         |   |               | 8,804     |   |             |   | 7,110 |   |   |   | 16,786 |   |   |   | 13,901 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| INCOME FROM OPERATIONS                                                       |   |               | 1,537     |   |             |   | 556 |   |   |   | 1,655 |   |   |   | 1,408 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE):                                                      |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    Interest expense                                           |   |               | -         |   |             |   | (5 | ) |   |   | (1 | ) |   |   | (11 | ) |
|    Other income (expense)                                     |   |               | 56        |   |             |   | (62 | ) |   |   | 61 |   |   |   | (246 | ) |
|                                                                         |   |               | 56        |   |             |   | (67 | ) |   |   | 60 |   |   |   | (257 | ) |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                                             |   |               | 1,593     |   |             |   | 489 |   |   |   | 1,715 |   |   |   | 1,151 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX EXPENSE                                                           |   |               | (581      | )      |             |   | (178 | ) |   |   | (626 | ) |   |   | (420 | ) |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME                                                                   |   | $                  | 1,012     |   |             | $      | 311 |   |   | $ | 1,089 |   |   | $ | 731 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| BASIC EARNINGS PER COMMON SHARE                                              |   | $                  | 0.12      |   |             | $      | 0.04 |   |   | $ | 0.13 |   |   | $ | 0.09 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED EARNINGS PER COMMON SHARE                                            |   | $                  | 0.11      |   |             | $      | 0.04 |   |   | $ | 0.12 |   |   | $ | 0.08 |   |
|                                                                         |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:                               |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
|           Basic            |   |               | 8,700,838 |   |             |   | 8,538,965 |   |   |   | 8,669,326 |   |   |   | 8,518,524 |   |
|           Diluted          |   |               | 8,963,870 |   |             |   | 8,816,645 |   |   |   | 8,907,773 |   |   |   | 8,759,333 |   |

----

|                                                                                                                              |   | June 30,2010 |    |   | December 31,2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
| ASSETS                                                                                                                            |   |         |    |   |             |   |
| CURRENT ASSETS:                                                                                                                   |   |         |    |   |             |   |
|    Cash and cash equivalents                                                                                       |   | $            | 4,946   |   |             | $      | 4,165 |   |
|    Accounts receivable:                                                                                            |   |         |    |   |             |   |   |   |
|          Trade, less allowance for doubtful accounts ($718 in 2010 and $529 in 2009) |   |         | 19,370  |   |             |   | 14,916 |   |
|          Other                                                                       |   |         | 1,219   |   |             |   | 1,257 |   |
|              Total accounts receivable                           |   |         | 20,589  |   |             |   | 16,173 |   |
|    Inventories                                                                                                     |   |         | 3,547   |   |             |   | 3,593 |   |
|    Prepaid expenses and other                                                                                      |   |         | 1,501   |   |             |   | 1,429 |   |
|    Deferred income taxes                                                                                           |   |         | 2,977   |   |             |   | 3,603 |   |
|              Total current assets                                |   |         | 33,560  |   |             |   | 28,963 |   |
| BUILDING, EQUIPMENT AND IMPROVEMENTS, net                                                                                         |   |         | 28,696  |   |             |   | 29,509 |   |
| GOODWILL                                                                                                                          |   |         | 15,967  |   |             |   | 15,967 |   |
| INTANGIBLE ASSETS, net                                                                                                            |   |         | 236     |   |             |   | 273 |   |
| OTHER ASSETS                                                                                                                      |   |         | 1,017   |   |             |   | 1,405 |   |
| TOTAL ASSETS                                                                                                                      |   | $            | 79,476  |   |             | $      | 76,117 |   |
|                                                                                                                              |   |         |    |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                        |   |         |    |   |             |   |   |   |
| CURRENT LIABILITIES:                                                                                                              |   |         |    |   |             |   |   |   |
|    Accounts payable                                                                                                |   | $            | 4,066   |   |             | $      | 4,143 |   |
|    Accrued expenses                                                                                                |   |         | 6,827   |   |             |   | 4,670 |   |
|    Current portion of long-term debt                                                                               |   |         | -       |   |             |   | 302 |   |
|              Total current liabilities                           |   |         | 10,893  |   |             |   | 9,115 |   |
| OTHER LONG-TERM LIABILITIES                                                                                                       |   |         | 3,287   |   |             |   | 3,224 |   |
| DEFERRED INCOME TAXES, net                                                                                                        |   |         | 2,346   |   |             |   | 2,346 |   |
|                                                                                                                              |   |         |    |   |             |   |   |   |
| STOCKHOLDERS' EQUITY:                                                                                                             |   |         |    |   |             |   |   |   |
|    Preferred stock, $1.00 par value; authorized shares, 50,000; none issued and outstanding                        |   |         | -       |   |             |   | - |   |
|    Common stock, $0.15 par value; authorized shares, 28,000,000; issued shares, 8,820,745 in                       |   |         |    |   |             |   |   |   |
|         2010 and 8,675,510  in 2009                                             |   |         | 1,323   |   |             |   | 1,301 |   |
|    Additional paid-in capital                                                                                      |   |         | 88,729  |   |             |   | 88,078 |   |
|    Accumulated deficit                                                                                             |   |         | (21,834 | )      |             |   | (22,923 | ) |
|    Common stock held in trust, at cost, 388,531 shares in 2010 and 367,911 shares in 2009                          |   |         | (4,268  | )      |             |   | (4,024 | ) |
|    Treasury stock, at cost, 103,431 shares in 2010 and 2009                                                        |   |         | (1,000  | )      |             |   | (1,000 | ) |
|              Total stockholders' equity                          |   |         | 62,950  |   |             |   | 61,432 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                  |   | $            | 79,476  |   |             | $      | 76,117 |   |

----

|                                                                                                                                      |   | Six Months Ended |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                                                                                      |   | June 30, 2010    |   |   | June 30, 2009 |   |
| CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:                                                                                              |   |             |   |   |   |   |
|    Net income                                                                                                              |   | $                | 1,089  |   |   | $ | 731 |   |
|    Adjustments to reconcile net income to net cash provided by                                                             |   |             |   |   |   |   |   |   |
|            operating activities:                                                   |   |             |   |   |   |   |   |   |
|       Depreciation and amortization                                                                         |   |             | 2,840  |   |   |   | 2,641 |   |
|       Provision for losses on accounts receivable                                                           |   |             | 582    |   |   |   | 310 |   |
|       Loss on sale of equipment                                                                             |   |             | 6      |   |   |   | 13 |   |
|       Deferred and stock-based compensation                                                                 |   |             | 541    |   |   |   | 378 |   |
|       Deferred income taxes                                                                                 |   |             | 626    |   |   |   | 420 |   |
|       Changes in operating assets and liabilities:                                                          |   |             |   |   |   |   |   |   |
|          Accounts receivable                                                                 |   |             | (4,998 | ) |   |   | (1,851 | ) |
|          Inventories                                                                         |   |             | 46     |   |   |   | 171 |   |
|          Prepaid expenses and other current assets                                           |   |             | (72    | ) |   |   | 191 |   |
|          Other assets                                                                        |   |             | (45    | ) |   |   | (153 | ) |
|          Accounts payable and accrued expenses                                               |   |             | 2,497  |   |   |   | (1,003 | ) |
|                 Net cash provided by operating activities |   |             | 3,112  |   |   |   | 1,848 |   |
|                                                                                                                                      |   |             |   |   |   |   |   |   |
| CASH FLOWS USED IN INVESTING ACTIVITIES:                                                                                                  |   |             |   |   |   |   |   |   |
|     Purchase of building, equipment and improvements                                                                  |   |             | (2,413 | ) |   |   | (2,144 | ) |
|                 Net cash used in investing activities     |   |             | (2,413 | ) |   |   | (2,144 | ) |
|                                                                                                                                      |   |             |   |   |   |   |   |   |
| CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:                                                                                    |   |             |   |   |   |   |   |   |
|     Principal payments on long-term debt                                                                              |   |             | (302   | ) |   |   | (339 | ) |
|     Purchase of common stock for incentive plan                                                                       |   |             | (289   | ) |   |   | (410 | ) |
|     Net proceeds from the exercise of stock options                                                                   |   |             | 673    |   |   |   | 236 |   |
|               Net cash provided by (used in) financing activities   |   |             | 82     |   |   |   | (513 | ) |
|                                                                                                                                      |   |             |   |   |   |   |   |   |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                                          |   |             | 781    |   |   |   | (809 | ) |
|                                                                                                                                      |   |             |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                                                          |   |             | 4,165  |   |   |   | 4,069 |   |
|                                                                                                                                      |   |             |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                                                                |   | $                | 4,946  |   |   | $ | 3,260 |   |
|                                                                                                                                      |   |             |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                                        |   |             |   |   |   |   |   |   |
|    Cash paid for:                                                                                                          |   |             |   |   |   |   |   |   |
|           Interest                                                                      |   | $                | 2      |   |   | $ | 12 |   |
|           Income taxes                                                                  |   |             | 25     |   |   |   | 31 |   |
|                                                                                                                                      |   |             |   |   |   |   |   |   |
| Supplemental noncash activities:                                                                                                          |   |             |   |   |   |   |   |   |
|           Asset additions and related obligations in payables                           |   |             | 822    |   |   |   | 656 |   |

----

----

| (In thousands)                                      |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|-----------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|      Laboratory Services:       |   |                       |   |   |                     |   |   |   |   |   |   |   |
|   Revenues                                |   | $                          | 19,775 |   |                     | $      | 16,587 |   |   | $ | 36,294 |   |   | $ | 32,745 |   |
|   Depreciation and amortization           |   |                       | 1,218  |   |                     |   | 1,172 |   |   |   | 2,441 |   |   |   | 2,323 |   |
|   Income (loss) from operations           |   |                       | 495    |   |                     |   | (297 | ) |   |   | (66 | ) |   |   | (223 | ) |
|   Capital expenditures for segment assets |   |                       | 1,267  |   |                     |   | 1,348 |   |   |   | 2,268 |   |   |   | 1,971 |   |
|                                                |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|      Product Sales:        |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   Revenues                                |   | $                          | 5,410  |   |                     | $      | 4,745 |   |   | $ | 10,052 |   |   | $ | 9,245 |   |
|   Depreciation and amortization           |   |                       | 202    |   |                     |   | 170 |   |   |   | 399 |   |   |   | 318 |   |
|   Income from operations                  |   |                       | 1,042  |   |                     |   | 853 |   |   |   | 1,721 |   |   |   | 1,631 |   |
|   Capital expenditures for segment assets |   |                       | 98     |   |                     |   | 76 |   |   |   | 145 |   |   |   | 173 |   |
|                                                |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|      Corporate (unallocated):   |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   Other income (expense)                  |   | $                          | 56     |   |                     | $      | (67 | ) |   | $ | 60 |   |   | $ | (257 | ) |
|                                                |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|     Company:                    |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   Revenues                                |   | $                          | 25,185 |   |                     | $      | 21,332 |   |   | $ | 46,346 |   |   | $ | 41,990 |   |
|   Depreciation and amortization           |   |                       | 1,420  |   |                     |   | 1,342 |   |   |   | 2,840 |   |   |   | 2,641 |   |
|   Income from operations                  |   |                       | 1,537  |   |                     |   | 556 |   |   |   | 1,655 |   |   |   | 1,408 |   |
|   Other income (expense)                  |   |                       | 56     |   |                     |   | (67 | ) |   |   | 60 |   |   |   | (257 | ) |
|   Income before income tax expense        |   |                       | 1,593  |   |                     |   | 489 |   |   |   | 1,715 |   |   |   | 1,151 |   |
|   Capital expenditures for assets         |   |                       | 1,365  |   |                     |   | 1,424 |   |   |   | 2,413 |   |   |   | 2,144 |   |

| (In thousands)                 |   | June 30, 2010 |   |   | December 31, 2009 |   |
|--------------------------------|--------|---------------|--------|--------|-------------------|--------|
|     Assets:     |   |          |   |   |              |   |
|   Laboratory Services     |   | $             | 62,365 |   |              | $      | 60,630 |   |
|   Product Sales           |   |          | 14,134 |   |              |   | 11,884 |   |
|   Corporate (unallocated) |   |          | 2,977  |   |              |   | 3,603 |   |
|   Company                 |   | $             | 79,476 |   |              | $      | 76,117 |   |

| (In thousands)                  |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|---------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                            |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|                            |   |                       |   |   |                     |   |   |   |   |   |   |   |
| POC on-site testing products    |   | $                          | 4,682  |   |                     | $      | 4,316 |   |   | $ | 8,791 |   |   | $ | 8,341 |   |
| Contract manufacturing services |   |                       | 553    |   |                     |   | 327 |   |   |   | 948 |   |   |   | 705 |   |
| Other diagnostic products       |   |                       | 175    |   |                     |   | 102 |   |   |   | 313 |   |   |   | 199 |   |
|                            |   | $                          | 5,410  |   |                     | $      | 4,745 |   |   | $ | 10,052 |   |   | $ | 9,245 |   |

----

| (In thousands)                         |   | June 30, 2010 |   |   | December 31, 2009 |   |
|----------------------------------------|--------|---------------|--------|--------|-------------------|--------|
|                                   |   |          |   |   |              |   |
| Raw materials                          |   | $             | 691    |   |              | $      | 653 |   |
| Work in process                        |   |          | 396    |   |              |   | 400 |   |
| Finished goods                         |   |          | 317    |   |              |   | 360 |   |
| Supplies, including off-site inventory |   |          | 2,143  |   |              |   | 2,180 |   |
|                                   |   | $             | 3,547  |   |              | $      | 3,593 |   |

| (In thousands, except share andper share data)                                          |   | Three Months EndedJune 30, |      |   | Six Months EndedJune 30, |   |
|-----------------------------------------------------------------------------------------|--------|----------------------------|-----------|--------|--------------------------|--------|
|                                                                                    |   | 2010                       |      |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|                                                                                    |   |                       |      |   |                     |   |   |   |   |   |   |   |
| Net income (A)                                                                          |   | $                          | 1,012     |   |                     | $      | 311 |   |   | $ | 1,089 |   |   | $ | 731 |   |
| Weighted average number of basic common shares outstanding (B)                          |   |                       | 8,700,838 |   |                     |   | 8,538,965 |   |   |   | 8,669,326 |   |   |   | 8,518,524 |   |
| Dilutive effect of stock options  computed based on the treasury stock method |   |                       | 263,032   |   |                     |   | 277,680 |   |   |   | 238,447 |   |   |   | 240,809 |   |
| Weighted average number of diluted common shares outstanding (C)                        |   |                       | 8,963,870 |   |                     |   | 8,816,645 |   |   |   | 8,907,773 |   |   |   | 8,759,333 |   |
| Basic earnings per common share (A/B)                                                   |   | $                          | 0.12      |   |                     | $      | 0.04 |   |   | $ | 0.13 |   |   | $ | 0.09 |   |
| Diluted earnings per common share (A/C)                                                 |   | $                          | 0.11      |   |                     | $      | 0.04 |   |   | $ | 0.12 |   |   | $ | 0.08 |   |

----

----

| ·   | increased competition, including price competition |
|--------------------|----------------------------------------------------|

| ·   | changes in demand for our services and products by our customers |
|--------------------|------------------------------------------------------------------|

| ·   | changes in general economic and business conditions, both nationally and internationally, which can influence the level of job growth and, in turn, the level of pre-employment drug screening activity |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | technological or regulatory developments, or evolving industry standards, that could affect or delay the sale of our products |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | our ability to attract and retain experienced and qualified personnel |
|--------------------|-----------------------------------------------------------------------|

| ·   | risks and uncertainties with respect to our patents and proprietary rights, including: |
|--------------------|----------------------------------------------------------------------------------------|

| o   | other companies challenging our patents |
|---------------|-----------------------------------------|

| o   | patents issued to other companies that may harm our ability to do business |
|---------------|----------------------------------------------------------------------------|

| o   | other companies designing around technologies we have developed |
|---------------|-----------------------------------------------------------------|

| o   | our inability to obtain appropriate licenses from third parties |
|---------------|-----------------------------------------------------------------|

| o   | our inability to protect our trade secrets |
|---------------|--------------------------------------------|

| o   | risk of infringement upon the proprietary rights of others |
|---------------|------------------------------------------------------------|

| o   | our inability to prevent others from infringing on our proprietary rights |
|---------------|---------------------------------------------------------------------------|

| ·   | our inability to control the costs in our business |
|--------------------|----------------------------------------------------|

| ·   | our inability to obtain sufficient financing to continue to sustain or expand our operations |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | adverse results in litigation matters |
|--------------------|---------------------------------------|

| ·   | our inability to continue to develop innovative products and services |
|--------------------|-----------------------------------------------------------------------|

| ·   | our inability to provide our services in a timely manner |
|--------------------|----------------------------------------------------------|

| ·   | an unforeseen decrease in the acceptance of current new products and services, including in the market for clinical laboratory testing for physicians offices and patients |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | fluctuations in clinical trial activities |
|--------------------|-------------------------------------------|

| ·   | inaccurate information regarding market opportunities |
|--------------------|-------------------------------------------------------|

| ·   | failure to receive regulatory approvals and clearances |
|--------------------|--------------------------------------------------------|

| ·   | other factors, including those set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009 |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                       |   | Three Months Ended |   |   | Six Months Ended |   |
|--------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
| (In thousands, except percentages)         |   | June 30,2010       |   |   | June 30,2009     |   |   | $ Change |   |   | % Change |   |   | June 30,2010 |   |   | June 30,2009 |   |   | $ Change |   |   | % Change |   |
| Revenues:                                  |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Laboratory Services                        |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Drugs-of abuse testing  services |   | $                  | 10,160 |   |             | $      | 9,618 |   |   | $ | 542 |   |   |   | 6 | % |   | $ | 18,956 |   |   | $ | 18,064 |   |   | $ | 892 |   |   |   | 5 | % |
| Clinical & other laboratory services   |   |               | 7,578  |   |             |   | 5,377 |   |   |   | 2,201 |   |   |   | 41 | % |   |   | 14,468 |   |   |   | 10,774 |   |   |   | 3,694 |   |   |   | 34 | % |
| Clinical trial services                    |   |               | 2,037  |   |             |   | 1,592 |   |   |   | 445 |   |   |   | 28 | % |   |   | 2,870 |   |   |   | 3,907 |   |   |   | (1,037 | ) |   |   | (27 | )% |
|                                       |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Product Sales                              |   |               | 5,410  |   |             |   | 4,745 |   |   |   | 665 |   |   |   | 14 | % |   |   | 10,052 |   |   |   | 9,245 |   |   |   | 807 |   |   |   | 9 | % |
|                                       |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | $                  | 25,185 |   |             | $      | 21,332 |   |   | $ | 3,853 |   |   |   | 18 | % |   | $ | 46,346 |   |   | $ | 41,990 |   |   | $ | 4,356 |   |   |   | 10 | % |

----

|                               |   | Three Months Ended |   |   | Quarter-over-Quarter |   |
|------------------------------------|--------|--------------------|--------|--------|----------------------|--------|
| (In thousands, except percentages) |   | June 30,2010       |   |   | % of Revenues        |   |   | June 30,2009 |   |   | % of Revenues |   |   | $ Change |   |   | %Change |   |
| Cost of Revenues:                  |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Services                   |   | $                  | 12,551 |   |                 |   | 63.5 | %* |   | $ | 11,634 |   |   |   | 70.1 | %* |   | $ | 917 |   |   |   | 8 | % |
|                               |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                      |   |               | 2,293  |   |                 |   | 42.4 | %** |   |   | 2,032 |   |   |   | 42.8 | %** |   |   | 261 |   |   |   | 13 | % |
|                               |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | $                  | 14,844 |   |                 |   | 58.9 | % |   | $ | 13,666 |   |   |   | 64.1 | % |   | $ | 1,178 |   |   |   | 9 | % |

|                               |   | Six Months Ended |   |   | Year-over-Year |   |
|------------------------------------|--------|------------------|--------|--------|----------------|--------|
| (In thousands, except percentages) |   | June 30,2010     |   |   | % of Revenues  |   |   | June 30,2009 |   |   | % of Revenues |   |   | $ Change |   |   | %Change |   |
| Cost of Revenues:                  |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Services                   |   | $                | 23,584 |   |           |   | 65.0 | %* |   | $ | 22,751 |   |   |   | 69.5 | %* |   | $ | 833 |   |   |   | 4 | % |
|                               |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                      |   |             | 4,321  |   |           |   | 43.0 | %** |   |   | 3,930 |   |   |   | 42.5 | %** |   |   | 391 |   |   |   | 10 | % |
|                               |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | $                | 27,905 |   |           |   | 60.2 | % |   | $ | 26,681 |   |   |   | 63.5 | % |   | $ | 1,224 |   |   |   | 5 | % |

----

|                                                 |   | Three Months Ended |   |   | Quarter-over-Quarter |   |
|------------------------------------------------------|--------|--------------------|--------|--------|----------------------|--------|
| (In thousands, except percentages)                   |   | June 30, 2010      |   |   | % of Revenues        |   |   | June 30, 2009 |   |   | % of Revenues |   |   | $ Change |   |   | % Change |   |
| Operating Expenses:                                  |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and   administrative |   | $                  | 8,231  |   |                 |   | 32.7 | % |   | $ | 6,521 |   |   |   | 30.6 | % |   | $ | 1,710 |   |   |   | 26 | % |
|                                                 |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research and   development            |   |               | 573    |   |                 |   | 2.3 | % |   |   | 589 |   |   |   | 2.8 | % |   |   | (16 | ) |   |   | (3 | )% |
|                                                 |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   | $                  | 8,804  |   |                 |   | 35.0 | % |   | $ | 7,110 |   |   |   | 33.3 | % |   | $ | 1,694 |   |   |   | 24 | % |

|                                                 |   | Six Months Ended |   |   | Year-over-Year |   |
|------------------------------------------------------|--------|------------------|--------|--------|----------------|--------|
| (In thousands, except percentages)                   |   | June 30, 2010    |   |   | % of Revenues  |   |   | June 30, 2009 |   |   | % of Revenues |   |   | $ Change |   |   | % Change |   |
| Operating Expenses:                                  |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and   administrative |   | $                | 15,664 |   |           |   | 33.8 | % |   | $ | 12,742 |   |   |   | 30.3 | % |   | $ | 2,922 |   |   |   | 23 | % |
|                                                 |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research and   development            |   |             | 1,122  |   |           |   | 2.4 | % |   |   | 1,159 |   |   |   | 2.8 | % |   |   | (37 | ) |   |   | (3 | )% |
|                                                 |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   | $                | 16,786 |   |           |   | 36.2 | % |   | $ | 13,901 |   |   |   | 33.1 | % |   | $ | 2,885 |   |   |   | 21 | % |

----

| ·   | Tangible Net Worth not less than $40,000,000 at any time, with “Tangible Net Worth” defined as the aggregate of total stockholders’ equity plus subordinated debt less any intangible assets. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Current Ratio not less than 1.3 to 1.0 at each month end, with “Current Ratio” defined as total current assets divided by total current liabilities. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Total Liabilities divided by Tangible Net Worth not greater than 1.75 to 1.0 at any time, with “Total Liabilities” defined as the aggregate of current liabilities and non-current liabilities less subordinated debt, and with “Tangible Net Worth” as defined above. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A Debt Service Coverage Ratio not less than 1.5 to 1.0 as of each fiscal quarter end, determined on a rolling four-quarter basis, with “Debt Service Coverage Ratio” defined as the aggregate of net income before non-cash tax expense plus depreciation expense and amortization expense, divided by the aggregate of the current maturity of long-term debt for the previous four fiscal quarters plus current capital lease obligations for the previous four fiscal quarters. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Period                        |   | Total Number of Shares Purchased (a) |   |   | Average Price Paid per Share |   |   | Total Number of Shares Purchased as part of Publicly Announced Plans or Programs |   |   | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |   |
|-------------------------------|--------|--------------------------------------|--------|--------|------------------------------|--------|--------|----------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|
|                          |   |                                 |   |   |                         |   |   |                                                                             |   |   |                                                                           |   |
| April 1 - 30                  |   |                                 | 23,259 |   |                         | $      | 12.37  |                                                                             |   |   | -                                                                              |   |   |   | - |   |
| May 1 - 31                    |   |                                 | -      |   |                         |   | -      |                                                                             |   |   | -                                                                              |   |   |   | - |   |
| June 1 - 30                   |   |                                 | 31     |   |                         |   | 12.81  |                                                                             |   |   | -                                                                              |   |   |   | - |   |
|     Total |   |                                 | 23,290 |   |                         | $      | 12.37  |                                                                             |   |   | -                                                                              |   |   |   | - |   |
|                          |   |                                 |   |   |                         |   |   |                                                                             |   |   |                                                                           |   |   |   |   |   |

| ITEM 6 | EXHIBITS.  See Exhibit Index on page following signature page |
|--------|-------------------------------------------------------------------------|

----

| Signature            | Title                                                            | Date          |
|----------------------|------------------------------------------------------------------|---------------|
| /s/ Richard J. Braun | President, Chief Executive Officer, and                          | July 29, 2010 |
| Richard J. Braun     | Chairman of the Board of Directors (Principal Executive Officer) |          |
|                 |                                                             |          |
| /s/ Kevin J. Wiersma | Vice President and Chief Financial Officer                       | July 29, 2010 |
| Kevin J. Wiersma     | (Principal Financial Officer)                                    |          |
|                 |                                                             |          |
| /s/ Angela M. Lacis  | Corporate Controller                                             | July 29, 2010 |
| Angela M. Lacis      | (Principal Accounting Officer)                                   |          |
|                 |                                                             |          |

----

|   |   |
|--------|--------|

|   | 10.1 | MEDTOX Scientific, Inc. 2010 Stock Incentive Plan |
|--------|------|---------------------------------------------------|

|   | 31.1   | Section 302 Certification |
|--------|------------------|---------------------------|

|   | 31.2   | Section 302 Certification |
|--------|------------------|---------------------------|

|   | 32.1 | Section 906 Certification of Chief Executive Officer pursuant to the Sarbanes-Oxley Act of 2002. |
|--------|------|--------------------------------------------------------------------------------------------------|

|   | 32.2 | Section 906 Certification of Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002. |
|--------|------|--------------------------------------------------------------------------------------------------|

----

----