----

----

| (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 April 16, 2010  |
|----------------------------------------------|--------|------------------------------------------|
| Common      Stock, $0.15 par value per share |   |  8,695,948                     |

----

|         |                        |                                                     |  Page |
|--------------|-----------------------------|----------------------------------------------------------|------------|
| Part      I  | Financial      Information: |                                                     |
|         |                        |                                                     |       |
|         | Item      1:                | Financial      Statements (Unaudited)                    |       |
|         |                        |                                                     |       |
|         |                        | Consolidated      Statements of Income – Three     |       |
|         |                        | Months      Ended March 31, 2010 and 2009                | 3          |
|         |                        |                                                     |       |
|         |                        | Consolidated      Balance Sheets – March 31, 2010  |       |
|         |                        | and      December 31, 2009                               | 4          |
|         |                        |                                                     |       |
|         |                        | Consolidated      Statements of Cash Flows – Three |       |
|         |                        | Months      Ended March 31, 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                                   | 21         |
|         |                        |                                                     |       |
|         | Item      4:                | Controls      and Procedures                             | 21         |
|         |                        |                                                     |       |
| Part      II | Other      Information      | 22                                                       |
|         |                        |                                                     |       |
|         | Item      1A:               | Risk      Factors                                        | 22         |
|         |                        |                                                     |       |
|         | Item      5:                | Other      Information                                   | 22         |
|         |                        |                                                     |       |
|         | Item      6:                | Exhibits                                                 | 23         |
|         |                        |                                                     |       |
|         |                        | Signatures                                               | 24         |
|         |                        |                                                     |       |
|         |                        | Exhibit      Index                                       | 25         |

----

|                                                                              |   | Three      Months Ended |      |
|-----------------------------------------------------------------------------------|--------|-------------------------|-----------|
|                                                                              |   | March      31, 2010     |      |   | March      31, 2009 |   |
| REVENUES:                                                                         |   |                    |      |   |   |   |
|    Laboratory      services:                                       |   |                    |      |   |   |   |
|       Drugs-of-abuse      testing services          |   | $                       | 8,796     |   |   | $ | 8,446 |   |
|       Clinical      & other laboratory services |   |                    | 6,890     |   |   |   | 5,397 |   |
|       Clinical      trial services                  |   |                    | 833       |   |   |   | 2,315 |   |
|    Product      sales                                              |   |                    | 4,642     |   |   |   | 4,500 |   |
|                                                                              |   |                    | 21,161    |   |   |   | 20,658 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| COST      OF REVENUES:                                                            |   |                    |      |   |   |   |   |   |
|   Cost      of services                                                 |   |                    | 11,033    |   |   |   | 11,117 |   |
|   Cost      of sales                                                    |   |                    | 2,028     |   |   |   | 1,898 |   |
|                                                                              |   |                    | 13,061    |   |   |   | 13,015 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| GROSS      PROFIT                                                                 |   |                    | 8,100     |   |   |   | 7,643 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| OPERATING      EXPENSES:                                                          |   |                    |      |   |   |   |   |   |
|    Selling,      general and administrative                        |   |                    | 7,433     |   |   |   | 6,221 |   |
|    Research      and development                                   |   |                    | 549       |   |   |   | 570 |   |
|                                                                              |   |                    | 7,982     |   |   |   | 6,791 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| INCOME      FROM OPERATIONS                                                       |   |                    | 118       |   |   |   | 852 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| OTHER      INCOME (EXPENSE):                                                      |   |                    |      |   |   |   |   |   |
|    Interest      expense                                           |   |                    | (1        | ) |   |   | (6 | ) |
|    Other      income (expense)                                     |   |                    | 5         |   |   |   | (184 | ) |
|                                                                              |   |                    | 4         |   |   |   | (190 | ) |
|                                                                              |   |                    |      |   |   |   |   |   |
| INCOME      BEFORE INCOME TAX EXPENSE                                             |   |                    | 122       |   |   |   | 662 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| INCOME      TAX EXPENSE                                                           |   |                    | (45       | ) |   |   | (242 | ) |
|                                                                              |   |                    |      |   |   |   |   |   |
| NET      INCOME                                                                   |   | $                       | 77        |   |   | $ | 420 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| BASIC      EARNINGS PER COMMON SHARE                                              |   | $                       | 0.01      |   |   | $ | 0.05 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| DILUTED      EARNINGS PER COMMON SHARE                                            |   | $                       | 0.01      |   |   | $ | 0.05 |   |
|                                                                              |   |                    |      |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF SHARES OUTSTANDING:                               |   |                    |      |   |   |   |   |   |
|           Basic                 |   |                    | 8,632,574 |   |   |   | 8,496,350 |   |
|           Diluted               |   |                    | 8,847,337 |   |   |   | 8,693,042 |   |

----

|                                                                                                                                        |   | March      31,2010 |    |   | December      31,2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|-----------------------|--------|
| ASSETS                                                                                                                                      |   |               |    |   |                  |   |
| CURRENT      ASSETS:                                                                                                                        |   |               |    |   |                  |   |
|    Cash      and cash equivalents                                                                                            |   | $                  | 4,448   |   |                  | $      | 4,165 |   |
|    Accounts      receivable:                                                                                                 |   |               |    |   |                  |   |   |   |
|          Trade,      less allowance for doubtful accounts ($639 in 2010 and $529 in      2009) |   |               | 16,308  |   |                  |   | 14,916 |   |
|          Other                                                                                 |   |               | 1,295   |   |                  |   | 1,257 |   |
|              Total      accounts receivable                                |   |               | 17,603  |   |                  |   | 16,173 |   |
|    Inventories                                                                                                               |   |               | 3,597   |   |                  |   | 3,593 |   |
|    Prepaid      expenses and other                                                                                           |   |               | 1,526   |   |                  |   | 1,429 |   |
|    Deferred      income taxes                                                                                                |   |               | 3,558   |   |                  |   | 3,603 |   |
|              Total      current assets                                     |   |               | 30,732  |   |                  |   | 28,963 |   |
| BUILDING,      EQUIPMENT AND IMPROVEMENTS, net                                                                                              |   |               | 28,515  |   |                  |   | 29,509 |   |
| GOODWILL                                                                                                                                    |   |               | 15,967  |   |                  |   | 15,967 |   |
| OTHER      INTANGIBLE ASSETS, net                                                                                                           |   |               | 254     |   |                  |   | 273 |   |
| OTHER      ASSETS                                                                                                                           |   |               | 955     |   |                  |   | 1,405 |   |
| TOTAL      ASSETS                                                                                                                           |   | $                  | 76,423  |   |                  | $      | 76,117 |   |
|                                                                                                                                        |   |               |    |   |                  |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                             |   |               |    |   |                  |   |   |   |
| CURRENT      LIABILITIES:                                                                                                                   |   |               |    |   |                  |   |   |   |
|    Accounts      payable                                                                                                     |   | $                  | 3,918   |   |                  | $      | 4,143 |   |
|    Accrued      expenses                                                                                                     |   |               | 4,903   |   |                  |   | 4,670 |   |
|    Current      portion of long-term debt                                                                                    |   |               | 133     |   |                  |   | 302 |   |
|              Total      current liabilities                                |   |               | 8,954   |   |                  |   | 9,115 |   |
| LONG-TERM      LIABILITIES                                                                                                                  |   |               | 3,035   |   |                  |   | 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,      8,799,379                          |   |               |    |   |                  |   |   |   |
|          in      2010 and 8,675,510 in 2009                                                    |   |               | 1,320   |   |                  |   | 1,301 |   |
|    Additional      paid-in capital                                                                                           |   |               | 88,638  |   |                  |   | 88,078 |   |
|    Accumulated      deficit                                                                                                  |   |               | (22,846 | )      |                  |   | (22,923 | ) |
|    Common      stock held in trust, at cost, 367,911 shares in 2010 and    2009                                              |   |               | (4,024  | )      |                  |   | (4,024 | ) |
|    Treasury      stock, at cost, 103,431 shares in 2010 and 2009                                                             |   |               | (1,000  | )      |                  |   | (1,000 | ) |
|              Total      stockholders' equity                               |   |               | 62,088  |   |                  |   | 61,432 |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                       |   | $                  | 76,423  |   |                  | $      | 76,117 |   |

----

|                                                                                                                                           |   | Three      Months Ended |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                                                                                           |   | March      31,2010      |   |   | March      31,2009 |   |
|                                                                                                                                           |   |                    |   |   |   |   |
| CASH      FLOWS PROVIDED BY OPERATING ACTIVITIES:                                                                                              |   |                    |   |   |   |   |
|    Net      income                                                                                                              |   | $                       | 77     |   |   | $ | 420 |   |
|    Adjustments      to reconcile net income to net cash provided by                                                             |   |                    |   |   |   |   |   |   |
|            operating      activities:                                                   |   |                    |   |   |   |   |   |   |
|       Depreciation      and amortization                                                                         |   |                    | 1,420  |   |   |   | 1,299 |   |
|       Provision      for losses on accounts receivable                                                           |   |                    | 230    |   |   |   | 158 |   |
|       Loss      on sale of equipment                                                                             |   |                    | -      |   |   |   | 9 |   |
|       Deferred      and stock-based compensation                                                                 |   |                    | 244    |   |   |   | 203 |   |
|       Deferred      income taxes                                                                                 |   |                    | 45     |   |   |   | 242 |   |
|       Changes      in operating assets and liabilities:                                                          |   |                    |   |   |   |   |   |   |
|          Accounts      receivable                                                                 |   |                    | (1,660 | ) |   |   | (1,474 | ) |
|          Inventories                                                                              |   |                    | (4     | ) |   |   | (47 | ) |
|          Prepaid      expenses and other current assets                                           |   |                    | (97    | ) |   |   | (138 | ) |
|          Other      assets                                                                        |   |                    | 17     |   |   |   | 11 |   |
|          Accounts      payable and accrued expenses                                               |   |                    | 649    |   |   |   | (146 | ) |
|                 Net      cash provided by operating activities |   |                    | 921    |   |   |   | 537 |   |
|                                                                                                                                           |   |                    |   |   |   |   |   |   |
| CASH      FLOWS USED IN INVESTING ACTIVITIES:                                                                                                  |   |                    |   |   |   |   |   |   |
|     Purchase      of building, equipment and improvements                                                                  |   |                    | (1,048 | ) |   |   | (720 | ) |
|                 Net      cash used in investing activities     |   |                    | (1,048 | ) |   |   | (720 | ) |
|                                                                                                                                           |   |                    |   |   |   |   |   |   |
| CASH      FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:                                                                                    |   |                    |   |   |   |   |   |   |
|     Principal      payments on long-term debt                                                                              |   |                    | (169   | ) |   |   | (169 | ) |
|     Purchase      of common stock for incentive plan                                                                       |   |                    | -      |   |   |   | (392 | ) |
|     Net      proceeds from the exercise of stock options                                                                   |   |                    | 579    |   |   |   | 224 |   |
|               Net      cash provided by (used in) financing activities   |   |                    | 410    |   |   |   | (337 | ) |
|                                                                                                                                           |   |                    |   |   |   |   |   |   |
| INCREASE      (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                                          |   |                    | 283    |   |   |   | (520 | ) |
|                                                                                                                                           |   |                    |   |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                                                          |   |                    | 4,165  |   |   |   | 4,069 |   |
|                                                                                                                                           |   |                    |   |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                                                                                                |   | $                       | 4,448  |   |   | $ | 3,549 |   |
|                                                                                                                                           |   |                    |   |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION:                                                                                        |   |                    |   |   |   |   |   |   |
|    Cash      paid for:                                                                                                          |   |                    |   |   |   |   |   |   |
|           Interest                                                                           |   | $                       | 1      |   |   | $ | 7 |   |
|           Income      taxes                                                                  |   |                    | 25     |   |   |   | 11 |   |
|                                                                                                                                           |   |                    |   |   |   |   |   |   |
| Supplemental      noncash activities:                                                                                                          |   |                    |   |   |   |   |   |   |
|           Asset      additions and related obligations in payables                           |   |                    | 118    |   |   |   | 727 |   |

----

----

| (In      thousands)                                       |   | Three      Months Ended |   |
|-----------------------------------------------------------|--------|-------------------------|--------|
|                                                      |   | March      31, 2010     |   |   | March      31, 2009 |   |
| Laboratory      Services:                                 |   |                    |   |   |   |   |
|         Revenues                                |   | $                       | 16,519 |   |   | $ | 16,158 |   |
|         Depreciation and amortization           |   |                    | 1,223  |   |   |   | 1,151 |   |
|         Income (loss) from operations           |   |                    | (561   | ) |   |   | 74 |   |
|         Capital expenditures for segment assets |   |                    | 1,001  |   |   |   | 623 |   |
|                                                      |   |                    |   |   |   |   |   |   |
| Product      Sales:                                       |   |                    |   |   |   |   |   |   |
|         Revenues                                |   | $                       | 4,642  |   |   | $ | 4,500 |   |
|         Depreciation and amortization           |   |                    | 197    |   |   |   | 148 |   |
|         Income from operations                  |   |                    | 679    |   |   |   | 778 |   |
|         Capital expenditures for segment assets |   |                    | 47     |   |   |   | 97 |   |
|                                                      |   |                    |   |   |   |   |   |   |
| Corporate      (unallocated):                             |   |                    |   |   |   |   |   |   |
|         Other income (expense)                  |   | $                       | 4      |   |   | $ | (190 | ) |
|                                                      |   |                    |   |   |   |   |   |   |
| Company:                                                  |   |                    |   |   |   |   |   |   |
|         Revenues                                |   | $                       | 21,161 |   |   | $ | 20,658 |   |
|         Depreciation and amortization           |   |                    | 1,420  |   |   |   | 1,299 |   |
|         Income from operations                  |   |                    | 118    |   |   |   | 852 |   |
|         Other income (expense)                  |   |                    | 4      |   |   |   | (190 | ) |
|         Income before income tax expense        |   |                    | 122    |   |   |   | 662 |   |
|         Capital expenditures for assets         |   |                    | 1,048  |   |   |   | 720 |   |

| (In      thousands)                 |   | March      31, 2010 |   |   | December      31, 2009 |   |
|-------------------------------------|--------|---------------------|--------|--------|------------------------|--------|
| Assets:                             |   |                |   |   |                   |   |
|        Laboratory Services     |   | $                   | 60,037 |   |                   | $      | 60,630 |   |
|        Product Sales           |   |                | 12,828 |   |                   |   | 11,884 |   |
|        Corporate (unallocated) |   |                | 3,558  |   |                   |   | 3,603 |   |
|        Company                 |   | $                   | 76,423 |   |                   | $      | 76,117 |   |

| (In      thousands)                  |   | Three      Months Ended |   |
|--------------------------------------|--------|-------------------------|--------|
|                                 |   | March      31, 2010     |   |   | March      31,2009 |   |
|                                 |   |                    |   |   |   |   |
| POC      on site testing products    |   | $                       | 4,109  |   |   | $ | 4,025 |   |
| Contract      manufacturing services |   |                    | 395    |   |   |   | 378 |   |
| Other      diagnostic products       |   |                    | 138    |   |   |   | 97 |   |
|                                 |   | $                       | 4,642  |   |   | $ | 4,500 |   |

----

| (In      thousands)                         |   | March      31, 2010 |   |   | December      31,2009 |   |
|---------------------------------------------|--------|---------------------|--------|--------|-----------------------|--------|
|                                        |   |                |   |   |                  |   |
| Raw      materials                          |   | $                   | 746    |   |                  | $      | 653 |   |
| Work      in process                        |   |                | 361    |   |                  |   | 400 |   |
| Finished      goods                         |   |                | 323    |   |                  |   | 360 |   |
| Supplies,      including off-site inventory |   |                | 2,167  |   |                  |   | 2,180 |   |
|                                        |   | $                   | 3,597  |   |                  | $      | 3,593 |   |

| (In      thousands, except share and per share data)                                                              |   | Three      Months Ended |      |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|
|                                                                                                              |   | March      31, 2010     |      |   | March      31,2009 |   |
|                                                                                                              |   |                    |      |   |   |   |
| Net      income (A)                                                                                               |   | $                       | 77        |   |   | $ | 420 |   |
| Weighted      average number of basic common shares outstanding (B)                                               |   |                    | 8,632,574 |   |   |   | 8,496,350 |   |
| Dilutive      effect of stock options computed based on the treasury stock method using      average market price |   |                    | 214,763   |   |   |   | 196,692 |   |
| Weighted      average number of diluted common shares outstanding (C)                                             |   |                    | 8,847,337 |   |   |   | 8,693,042 |   |
| Basic      earnings per common share (A/B)                                                                        |   | $                       | 0.01      |   |   | $ | 0.05 |   |
| Diluted      earnings per common share (A/C)                                                                      |   | $                       | 0.01      |   |   | $ | 0.05 |   |

----

----

| ·   | increased      competition, including pricecompetition |
|--------------------|--------------------------------------------------------|

| ·   | 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 ourproducts |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 tradesecrets |
|---------------|------------------------------------------------|

| 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 ourbusiness |
|--------------------|--------------------------------------------------------|

| ·   | 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 marketopportunities |
|--------------------|-----------------------------------------------------------|

| ·   | failure      to receive regulatory approvals andclearances |
|--------------------|------------------------------------------------------------|

| ·   | 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 |   |   | Quarter-over-Quarter |   |
|-------------------------------------------------------------------|--------|-------------------------|--------|--------|----------------------|--------|
| (In      thousands, except percentages)                           |   | March      31, 2010     |   |   | March      31, 2009  |   |   | $      Change |   |   | %      Change |   |
| Revenues:                                                         |   |                    |   |   |                 |   |   |   |   |   |   |   |
|                                                              |   |                    |   |   |                 |   |   |   |   |   |   |   |
| Laboratory      Services                                          |   |                    |   |   |                 |   |   |   |   |   |   |   |
|    Drugs-of-abuse      testing  services |   | $                       | 8,796  |   |                 | $      | 8,446 |   |   | $ | 350 |   |   |   | 4 | % |
|    Clinical      & other laboratory services   |   |                    | 6,890  |   |                 |   | 5,397 |   |   |   | 1,493 |   |   |   | 28 | % |
|    Clinical      trial services                    |   |                    | 833    |   |                 |   | 2,315 |   |   |   | (1,482 | ) |   |   | (64 | )% |
|                                                              |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Product      Sales                                                |   |                    | 4,642  |   |                 |   | 4,500 |   |   |   | 142 |   |   |   | 3 | % |
|                                                              |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | $                       | 21,161 |   |                 | $      | 20,658 |   |   | $ | 503 |   |   |   | 2 | % |

----

|                   |   | Three      Months Ended |   |   | Quarter-over-Quarter |   |
|------------------------|--------|-------------------------|--------|--------|----------------------|--------|
|                   |   | March      31, 2010     |   |   | %      of Revenues   |   |   | March      31, 2009 |   |   | %      of Revenues |   |   | $      Change |   |   | %Change |   |
| Cost      of Revenues: |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of Services  |   | $                       | 11,033 |   |                 |   | 66.8 | %* |   | $ | 11,117 |   |   |   | 68.8 | %* |   | $ | (84 | ) |   |   | (1 | )% |
|                   |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of Sales     |   |                    | 2,028  |   |                 |   | 43.7 | %** |   |   | 1,898 |   |   |   | 42.2 | %** |   |   | 130 |   |   |   | 7 | % |
|                   |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   |   | $                       | 13,061 |   |                 |   | 61.7 | % |   | $ | 13,015 |   |   |   | 63.0 | % |   | $ | 46 |   |   |   | - | % |

|                                                      |   | Three      Months Ended |   |   | Quarter-over-Quarter |   |
|-----------------------------------------------------------|--------|-------------------------|--------|--------|----------------------|--------|
|                                                      |   | March      31, 2010     |   |   | %      of Revenues   |   |   | March      31, 2009 |   |   | %      of Revenues |   |   | $Change |   |   | %      Change |   |
| Operating      Expenses:                                  |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and   administrative |   | $                       | 7,433  |   |                 |   | 35.1 | % |   | $ | 6,221 |   |   |   | 30.1 | % |   | $ | 1,212 |   |   |   | 20 | % |
|                                                      |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research      and   development            |   |                    | 549    |   |                 |   | 2.6 | % |   |   | 570 |   |   |   | 2.8 | % |   |   | (21 | ) |   |   | (4 | )% |
|                                                      |   |                    |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   | $                       | 7,982  |   |                 |   | 37.7 | % |   | $ | 6,791 |   |   |   | 32.9 | % |   | $ | 1,191 |   |   |   | 18 | % |

----

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| ·   | 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 definedabove. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| ITEM 5 | OTHER      INFORMATION. |
|--------|-------------------------|

| Executive      Officer   | Title                                                                                                      |   | Salary |    |
|--------------------------|------------------------------------------------------------------------------------------------------------|--------|--------|---------|
| Richard      J. Braun    | President      and Chief Executive Officer                                                                 |   | $      | 390,000 |   |
| Kevin      J. Wiersma    | Chief      Financial Officer, Vice President and Chief Operating Officer of MEDTOX      Laboratories, Inc. |   | $      | 235,800 |   |
| James      A. Schoonover | Vice      President and Chief Marketing Officer                                                            |   | $      | 235,800 |   |
| B.      Mitchell Owens   | Vice      President and Chief Operating Officer of MEDTOX Diagnostics,      Inc.                           |   | $      | 223,100 |   |
| Susan      E. Puskas     | Vice      President Quality, Regulatory Affairs, and Human Resources                                       |   | $      | 235,800 |   |

| Title                                                                                      |         | Target Payout      % |
|--------------------------------------------------------------------------------------------|--------------|---------------------------|
|  Chief      Executive Officer                                                         |    | 100                       | % |
|                                                                                       |         |                      |   |
| Chief      Financial Officer and Chief Operating Officer of MEDTOX Laboratories,      Inc. |    | 60                        | % |
|                                                                                       |         |                      |   |
| Vice      President and Chief Marketing Officer                                            |         | 60                        | % |
|                                                                                       |         |                      |   |
| Vice      President and Chief Operating Officer of MEDTOX Diagnostics,      Inc.           |         | 60                        | % |
|                                                                                       |         |                      |   |
| Vice      President Quality, Regulatory Affairs, and Human Resources                       |         | 60                        | % |

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

----

| Signature             | Title                                                                 | Date             |
|-----------------------|-----------------------------------------------------------------------|------------------|
|                  |                                                                  |             |
| /s/ Richard J. Braun  | President,      Chief Executive Officer, and                          | May      4, 2010 |
| Richard      J. Braun | Chairman      of the Board of Directors (Principal Executive Officer) |             |
|                  |                                                                  |             |
| /s/ Kevin J. Wiersma  | Vice      President and Chief Financial Officer                       | May      4, 2010 |
| Kevin      J. Wiersma | (Principal      Financial Officer)                                    |             |
|                  |                                                                  |             |
| /s/ Angela M. Lacis   | Corporate      Controller                                             | May      4, 2010 |
| Angela      M. Lacis  | (Principal      Accounting Officer)                                   |             |
|                  |                                                                  |             |

----

|   | 10.1 | Executive      Salaries for 2010.** |
|--------|------|-------------------------------------|

|   | 10.2 | Target Financial Objectives for      Fiscal Year 2010 under the Annual Incentive Plan and Long Term 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. |
|--------|------|------------------------------------------------------------------------------------------------------------|

|   |  **      Denotes a management contract or compensatory plan or      arrangement |
|--------|--------------------------------------------------------------------------------------|