FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended March 31, 1998

                                       OR

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

For the transition period                             to

Commission file number  1-11394

                             MEDTOX SCIENTIFIC, INC.

             (Exact name of registrant as specified in its charter)

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

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

Registrant's telephone number including area code:        (612)636-7466
-----------------------------------------------------------------------------

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

                               Yes  X      No

The number of shares of Common Stock,  $.15 par value,  outstanding  as of April
30, 1998 was 57,936,275.

<PAGE>


                             MEDTOX SCIENTIFIC, INC.

                                      INDEX

                                                                         Page

Part I    Financial Information:

          Item 1:

               Consolidated  Balance Sheets - March 31, 1998 (Unaudited)
               and December 31, 1997 ..................................... 3

               Consolidated Statements of Operations - Three Months
               Ended March 31, 1998 and 1997 (Unaudited) ................. 5

               Consolidated Statements of Cash Flows - Three Months
               Ended March 31, 1998 and 1997 (Unaudited) ................. 6

               Notes to Consolidated Financial Statements................. 7

          Item 2:

               Management's Discussion and Analysis of
               Financial Condition and Results of Operations ............ 10

Part II   Other Information ............................................. 13
               Signatures ............................................... 14

<PAGE>

                             MEDTOX SCIENTIFIC, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
<TABLE>

<CAPTION>
                                                  March 31       December 31 
                                                    1998            1997
                                                  Unaudited      
<S>                                              <C>            <C>
                                                 
                   
Assets
Current assets
     Cash and cash equivalents                   $    317       $     58
     Accounts receivable:
          Trade, less allowance for doubtful
               accounts (1998--$330;  1997--$514)   5,867          5,443
          Other                                        87            110
                                                 -----------------------------
                                                    5,954          5,553

     Inventories:
          Raw materials                               496            414
          Work in process                             129            134
          Finished goods                              468            594
                                                 -----------------------------
                                                    1,093          1,142

     Prepaid expenses and other                       499            415
                                                 -----------------------------

          Total current assets                      7,863          7,168

Equipment and improvements:
     Furniture and equipment                       11,283         10,669
     Leasehold improvements                         1,003          1,243
                                                 -----------------------------
                                                   12,286         11,912
     Less accumulated depreciation
          and amortization                         (9,018)        (8,946)
                                                 -----------------------------

                                                    3,268          2,966
Goodwill, net of accumulated amortization of
     $2,480 in 1998 and $2,273 in 1997             14,619         14,747

                                                 -----------------------------

Total assets                                     $ 25,750       $ 24,881
                                                 =============================
</TABLE>
                                                 
<PAGE>
                                    

                            MEDTOX SCIENTIFIC, INC.
                     CONSOLIDATED BALANCE SHEETS (Continued)
                                 (In thousands)

<TABLE>

<CAPTION>
                                                  March 31       December 31
                                                    1998            1997
                                                  Unaudited
<S>                                              <C>            <C>


Liabilities and stockholders' equity
Current liabilities
     Line of credit                              $  2,816       $  3,572
     Accounts payable                               3,854          3,768
     Accrued expenses                               1,384          1,326
     Current portion of restructuring accrual         451            521
     Current portion of long-term debt              1,390          1,451
     Current portion of capital leases                132            112
                                                 -----------------------------

          Total current liabilities                10,027         10,750

Long-term portion of restructuring accrual            265            265
Long-term portion of debt obligations               1,505             -
Capital lease obligations                             297            295

Stockholders' equity
     Preferred Stock, $1.00 par value:
          Authorized - 1,000,000 shares;
          Issued and outstanding -
          0 shares in 1998 and 4 in 1997               -              -
     Common Stock, $.15 par value:
          Authorized - 60,000,000 shares;
          Issued and outstanding -
          57,928,101 shares in 1998 and
          56,828,173 shares in 1997                 8,690          8,525
    Additional paid-in capital                     51,515         51,673
          Accumulated deficit                     (46,373)       (46,451)
                                                 -----------------------------

                                                   13,832         13,747

          Less:  Treasury Stock                      (176)          (176)
                                                 -----------------------------

               Total stockholders' equity          13,656         13,571

Total liabilities and stockholders' equity       $ 25,750       $ 24,881
                                                 =============================
</TABLE>
<PAGE>
                         
                             MEDTOX SCIENTIFIC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands except per share amounts)
<TABLE>

<CAPTION>

                                                  Three Months Ended
                                                       March 31             
                                                   1998         1997
                                                 Unaudited    Unaudited
<S>                                              <C>           <C>

Revenues
 
     Laboratory service revenues                 $  6,547      $  6,143
     Product sales                                    532           660
                                                ------------------------------
Total revenues                                      7,079         6,803

Cost of services                                    4,288         3,985
Cost of sales                                         352           439
                                                ------------------------------
                                                    4,640         4,424

                                                ------------------------------
          Gross profit                              2,439         2,379

Operating expenses
     Selling, general and administrative            1,914         2,026
     Research and development                         307           206
                                                ------------------------------
                                                    2,221         2,232

Other income (expenses)
     Interest and finance costs, net                  140           116
                                                ------------------------------

     Net income                                  $     78      $     31
                                                ==============================

     Net income per share                        $   0.00      $   0.00
                                                ==============================

Weighted average number of
     common shares outstanding                 57,603,921    46,541,154
                                             =================================
</TABLE>
<PAGE>
                                           
                             MEDTOX SCIENTIFIC, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>

<CAPTION>

                                                         Three Months Ended
                                                             March 31
                                                        1998            1997
                                                     Unaudited       Unaudited
<S>                                                   <C>            <C>
                                                                                         

Operating activities
Net income                                            $    78        $    31
 Adjustments to reconcile net income to net cash
 used in operating activities:
   Depreciation and amortization                          484            470
   Write-off goodwill and other assets                     -              -
   Gain on sale or retirement of equipment                 -              -
   Provision for losses on accounts receivable             -             (19)
   Provision for obsolete inventory                        -             (69)
   Changes in operating assets and liabilities,
     net of acquisition:
     Accounts receivable                                 (401)          (419)
     Inventories                                           49             12
     Prepaid expenses and other                           (84)          (233)
     Accounts payable, accrued expenses and other         146            149
     Restructuring accruals                               (70)          (212)
                                                     --------------------------
Net cash used in operating activities                     202           (290)

Investing activities
 Purchases of equipment and improvements                 (522)          (237)
                                                     --------------------------
Net cash used in investing activities                    (522)          (237)

Financing activities
 Proceeds from sale of equipment                           -              -
 Net proceeds from sale of preferred stock                 -              -
 Net proceeds (costs) from sale of common stock             7            (53)
 Net proceeds from line of credit, term loans 
   and notes payable                                    5,387            921
 Principal payments on capital lease obligations          (36)            -
 Principal payments on term loans and notes payable    (4,779)          (335)
                                                     --------------------------
Net cash provided by financing activities                 579            533

Increase in cash and cash equivalents                     259              6
Cash and cash equivalents at beginning of period           58             82
                                                     --------------------------

Cash and cash equivalents at end of period           $    317        $    88
                                                    ===========================

Supplemental noncash activities
During 1998, the Company entered into capital lease obligations of $58,300 to 
purchase equipment.  
During 1997, the Company entered into capital lease obligations of $133,000 to
purchase equipment.
During 1997, the Company converted 229 shares of preferred stock into 21,112,342
shares of common stock.
</TABLE>
<PAGE>



                             MEDTOX SCIENTIFIC, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 1998

NOTE A -- BASIS OF PRESENTATION

The  accompanying   unaudited   consolidated   financial  statements  of  MEDTOX
Scientific, Inc. (the "Company") have been prepared in accordance with generally
accepted  accounting  principles for interim financial  information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting principles. In the opinion of management, all adjustments (consisting
of normal recurring  accruals)  considered  necessary for a fair presentation of
financial  condition and results of  operations  have been  included.  Operating
results for the three  month  period  ended  March 31, 1998 are not  necessarily
indicative of the results that may be attained for the entire year.  For further
information, refer to the financial statements and footnotes thereto included in
the  Company's  Annual  Report on Form 10-K, for the year ended
December 31, 1997.

Net  Income  Per  Share:  Net  income  per share  amounts  are based on the
weighted    average   number   of   shares   of   common   stock    outstanding.

Reclassifications:   Certain  reclassifications  have  been  made  to  the  1997
Financial Statements to conform with the 1998 presentation. 

NOTE B -- ACQUISITION OF MEDTOX LABORATORIES, INC. ("MEDTOX")

On January 30,  1996,  the Company  acquired  MEDTOX,  a  toxicology  laboratory
located in St.  Paul,  Minnesota.  The  purchase  price was $24  million,  which
included $19 million cash and the issuance of 2,517,306  shares of common stock.
The  acquisition  was  accounted  for under the  purchase  method of  accounting
wherein the  Company  recognized  approximately  $22  million in  goodwill.  The
goodwill is being amortized over a period of 20 years. Utilizing an undiscounted
cash  flow  analysis,  the  Company  concluded  that the  carrying  value of the
remaining goodwill associated with the MEDTOX acquisition exceeded the estimated
future cash flows.  Accordingly,  the Company recorded a write-off of $6,016,000
at December 31, 1996.

The Company  financed  the  acquisition  by issuing  $19 million of  convertible
preferred  stock and  borrowing $4 million  under two $2 million term loans.  In
connection  with the  acquisition,  the Company entered into a revolving line of
credit of up to $7 million for working capital purposes.



<PAGE>


NOTE C -- DEBT

On January 14, 1998,  the Company  entered into a Credit and Security  Agreement
(the "Credit  Agreement") with Norwest Business Credit  ("Norwest").  The Credit
Agreement consists of (i) a term loan of $2,125,000 which matures on January 15,
2001,  (ii) a term loan of $700,000  which matures on January 15, 1999,  (iii) a
revolving line of credit based upon the balance of the Company's  trade accounts
receivable,  and (iv) a note of up to  $1,200,000  for the  purchase  of capital
equipment for 1998.  The term loan of $2,125,000  carries an interest rate equal
to  1.25%  above  the  publicly  announced  rate of  interest  by  Norwest  Bank
Minnesota,  N.A. (the "Base Rate",  8.5% at March 31, 1998) as does the note for
capital expenditures. The $700,000 term loan has an interest rate equal to 3.00%
above the Base Rate.  The revolving line of credit has an interest rate of 1.00%
above the Base Rate. The Company utilized $4.5 million of the proceeds  received
from Norwest to pay off the outstanding loan balances owed to its former lender.


NOTE D -- CONTINGENCIES

The Company is a defendant to claims of patent  infringement  asserted on August
20, 1996. It is alleged the Company infringes two patents allegedly owned by the
plaintiff  relating to  forensically  acceptable  determinations  of gestational
fetal exposure to drugs and other chemical agents.  The Company has answered the
complaint  denying any  infringement  and has  counterclaimed  for a declaratory
judgment that the patents are invalid, unenforceable, and not infringed. It also
has   counterclaimed  for  unfair  competition  under  federal  and  state  law,
requesting money damages as well as injunctive  relief.  The Company,  while not
abandoning its legal recourse,  has recently entered into settlement discussions
with the  plaintiff.  The Company  believes that the probable  resolution of
this  matter will not  materially  affect the  financial  position or results of
operations of the Company.

On January  31,  1997,  the  Company  filed suit in  Federal  District  Court in
Minnesota against a majority shareholder and two former outside directors of the
Company alleging violation of Section 16b of the Securities Exchange Act of 1934
and seeking recovery of more than $500,000 in short-swing  profits. On August 4,
1997,  the U.S.  District  Court granted the  Defendants'  motion to dismiss the
Company's  complaint,  ruling  the  Defendants'  conduct  did not  constitute  a
violation of Section 16b. On October 29,  1997,  the Company  filed an appeal of
that decision to the United States Court of Appeals for the Eighth Circuit. That
appeal is currently pending.



<PAGE>




               CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS
             THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER
               FROM THOSE PROJECTED IN FORWARD LOOKING STATEMENTS

         In  connection  with  the  "safe  harbor"  provisions  of  the  Private
Securities  Litigation  Reform  Act of 1995,  readers of this  document  and any
document  incorporated by reference  herein,  are advised that this document and
documents  incorporated by reference into this document  contain both statements
of historical facts and forward looking  statements.  Forward looking statements
are subject to certain risks and uncertainties, which could cause actual results
to differ  materially from those  indicated by the forward  looking  statements.
Examples  of forward  looking  statements  include,  but are not  limited to (i)
projections  of revenues,  income or loss,  earnings or loss per share,  capital
expenditures,  dividends,  capital  structure and other  financial  items,  (ii)
statements of the plans and objectives of the Company or its management or Board
of  Directors,  including  the  introduction  of new  products,  or estimates or
predictions  of actions  by  customers,  suppliers,  competitors  or  regulatory
authorities,   (iii)  statements  of  future  economic  performance,   and  (iv)
statements of assumptions  underlying  other statements and statements about the
Company or its business.

         This document and any documents  incorporated by reference  herein also
identify important factors which could cause actual results to differ materially
from  those  indicated  by the  forward  looking  statements.  These  risks  and
uncertainties include price competition, the decisions of customers, the actions
of  competitors,  the effects of government  regulation,  possible delays in the
introduction of new products,  customer acceptance of products and services, the
possible effects of the MEDTOX  acquisition and its related financings and other
factors which are described herein and/or in documents incorporated by reference
herein.

         The  cautionary  statements  made  pursuant to the  Private  Litigation
Securities  Reform Act of 1995 above and elsewhere by the Company  should not be
construed  as  exhaustive  or  as  any  admission   regarding  the  adequacy  of
disclosures made by the Company prior to the effective date of such Act. Forward
looking  statements are beyond the ability of the Company to control and in many
cases the Company  cannot  predict  what factors  would cause  results to differ
materially from those indicated by the forward looking statements.


<PAGE>


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

Introduction

         The Company commenced operations as Environmental Diagnostics,  Inc. in
June 1983 and until 1986 was a development  stage  company.  The Company  became
engaged in the manufacture and sale of Conventional  Biodiagnostic Products as a
result of its acquisition of Granite  Technological  Enterprises,  Inc. in 1986.
The Company began the manufacture and sale of its EZ-SCREEN(R)  diagnostic tests
in 1985 and introduced its patented one-step assays, VERDICT(R) and RECON(R), in
1993.  Also  in  1993,  the  Company  formed  DIAGNOSTIX,  Inc.  to  market  its
agricultural  diagnostic  products.  The Company entered the laboratory  testing
market when it completed the acquisition of Princeton Diagnostic Laboratories of
America,  Inc.,  (PDLA) in 1994.  On January 30, 1996 the Company  completed the
acquisition  of  MEDTOX.  In  1997,  the  Company  changed  its  name to  MEDTOX
Scientific,  Inc. Since inception,  the Company has financed its working capital
requirements primarily from the sale of equity securities.

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997

         Total  revenues  for  the  three  months  ended  March  31,  1998  were
$7,079,000 as compared to $6,803,000  for the three months ended March 31, 1997.
Laboratory service revenues were $6,547,000 for the three months ended March 31,
1998 as compared to $6,143,000  for the three months ended March 31, 1997.  This
increase of 7% in  laboratory  service  revenues was  primarily the result of an
increase in  laboratory  samples of 16% which was the result of increased  sales
volume from  current  clients as well as new  clients.  In addition, the Company
realized revenues during the quarter ended March 31, 1998 from courier services,
for medical institutions, which it began providing in late 1997.

     Product  sales include the sales  generated  from  substance  abuse testing
products,  which  incorporates  the EZ-SCREEN and VERDICT  on-site test kits and
other  ancillary  products for the  detection of abused  substances.  Sales from
these  products were $314,000 for the three months ended March 31, 1998 compared
to sales of $437,000  recorded for the same period in 1997. The Company believes
that the decrease in sales of 28% is primarily due to increased competition from
products  perceived as more  user-friendly  than the Company's current products.
The Company believes that the introduction of its new generation of on-site test
kits later  this year will  enable the  Company to compete  successfully  in the
on-site  drug  screening  market and offer  comprehensive  drug testing kits and
services.

         Product sales also include sales of agricultural  diagnostic  products.
Sales of these  products  were $84,000 for the three months ended March 31 1998,
compared to sales of $143,000 for the three  months  ended March 31,  1997.  The
Company  believes  that the  primary  reason for the  decrease of 41% was due to
timing differences in orders from the USDA for the Company's products.
<PAGE>

         Sales  of  contract   manufacturing   services,   microbiological   and
associated product sales were $134,000 for the three months ended March 31, 1998
compared to $80,000 for the same period in 1997.  The increase of 68% was due to
increased  revenue from contract  manufacturing  services  from both  historical
customers and revenues from customers added in late 1997.

           The gross  margin from the  revenues  generated  from the  laboratory
services  was 35% for the three  months  ended  March 31,  1998 as compared to a
gross  margin of 35% for the same period in 1997.  During the three months ended
March 31, 1998, the Company was able to offset declining  average selling prices
by reducing  costs through the increase in sample volume and improved  operating
efficiencies.

         Gross margins from the sales of both manufactured products and products
purchased for resale for the three months ended March 31, 1998 were 34% compared
to 34% of sales of these products during the three months ended March 31, 1997.

         Selling, general and administrative expenses for the three months ended
March 31, 1998 were  $1,914,000,  compared to  $2,026,000  for the three  months
ended March 31, 1997.  The decrease of $112,000,  or 6%, is primarily the result
of reduced sales and marketing  expenses due to a restructuring of the sales and
marketing group in 1997.

         Research  and  development  expenses  incurred  during the three months
ended March 31, 1998 were  $307,000 as compared to $206,000  for the same period
in 1997. The increase of $101,000 or 49% in research and development expenses is
primarily  the result of increased expenses for the  development  of additional
laboratory based tests.

         For the three  months ended March 31,  1998,  the Company  incurred net
interest expense of $140,000,  compared to net interest expense of $116,000
incurred during the three months ended March 31, 1997.  This increase was the 
result of the funds borrowed by the Company to finance certain equipment 
purchases and provide working capital.

     As a result of the above,  the net income for the three  months ended March
31, 1998 was $78,000, compared to the net income of $31,000 for the three months
ended March 31, 1997.

         Management  believes the acquisition of MEDTOX and the restructuring of
the laboratory operations has and will continue to improve the operating results
of the Company,  although there can be no assurance of the continued  success of
reducing costs and improving efficiencies.  Management expects net sales to grow
through both the addition of new accounts and the introduction of new laboratory
testing services and on-site products, particularly the new Profile(R) II on-
site product for the  detection of multiple  substances  of abuse.  In addition,
the Company  believes  that  the  laboratory  business  is  subject  to  
seasonality consistent with hiring  practices of its clients.  This  seasonality
results in higher sales in the second quarter with lower sales in July and 
December.
<PAGE>

Material Changes in Financial Condition

         As of March 31, 1998, cash and cash equivalents were $317,000  compared
to $58,000 at December 31, 1997.

         As of March 31, 1998,  accounts  receivable were $5,954,000 compared to
$5,553,000 at December 31, 1997. The increase of $401,000, or 7%, is primarily
the result of higher  sales in the  quarter  ended March 31, 1998 as compared to
the quarter ended December 31, 1997.

         Prepaid  expenses and other  assets were  $499,000 at March 31, 1998 as
compared to $415,000 at December  31,  1997.  The  increase of $84,000, or 20%, 
is primarily the result of an increase in certain  annual expenses which will be
amortized throughout the year.

         At March 31,  1998,  the Company had a total  balance of  restructuring
accruals of $716,000  compared  to a balance of $786,000 at December  31,  1997.
This  decrease of 9% is the result of certain  payments made during the quarter
ended March 31, 1998.

         At March 31,  1998,  the Company had a total loan  balance  owed to its
financial  lender of $5,711,000,  compared to a total balance of $5,016,000 owed
at December  31,  1997.  The net increase of $695,000, or 14%, was the result of
increased  borrowings by the Company to provide  working  capital and to pay for
purchases of certain assets to improve operating efficiencies.

Liquidity and Capital Resources

         Since its inception,  the working  capital  requirements of the Company
have been funded  primarily  by cash  received  from equity  investments  in the
Company and, more recently, debt  financing.  At March 31, 1998,  the Company 
had cash and cash equivalents of $317,000.  In the short term, the Company
believes that the aforementioned capital will be sufficient to fund the 
Company's planned operations through 1998,  although there can be no 
assurance that the available capital will be sufficient to fund the future 
operations of the Company  beyond 1998.  The Company believes that consistent  
profitable earnings, as well as continued  access  to  capital,  will  be the  
primary basis for funding the operations of the Company for the long term.

         The Company  believes that the  acquisition  of MEDTOX,  the subsequent
consolidation  of the  laboratory  operations  from PDLA into MEDTOX,  and other
synergy  realized  from the  acquisition  of MEDTOX has  enabled  the Company to
generate  positive  cash  flow.  The  Company  continues  to follow a plan which
includes  (i)  continuing  to  aggressively  monitor and control  costs and (ii)
increasing revenue from sales of the Company's services and products.  There can
however be no assurance that costs can be controlled, revenues can be increased,
additional  financing  obtained,  or  that  the  Company  will  continue  to  be
profitable.
<PAGE>


ITEM 2   CHANGES IN SECURITIES.  Inapplicable

ITEM 3   DEFAULTS ON SENIOR SECURITIES.  Inapplicable

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.  None

ITEM 5   OTHER INFORMATION.  Inapplicable

ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K.

         There were no reports filed on Form 8-K during the three months ended 
         March 31, 1998.

<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


Date:    May 8, 1998


                                 MEDTOX SCIENTIFIC, INC.

              
                                 By:   /s/ Harry G. McCoy
                                       Harry G. McCoy, Chairman and President

                                 By:   /s/ Richard J. Braun
                                       Richard J. Braun, Chief Executive Officer

                                 By:   /s/ Peter J. Heath
                                       Peter J. Heath, Vice President of Finance
                                       and Chief Financial Officer