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 June 30, 2001

                                       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:          (651) 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 July 20,
2001, was 3,578,135.

<PAGE>


                             MEDTOX SCIENTIFIC, INC.

                                      INDEX

                                                                           Page

Part I    Financial Information:

          Item 1:  Financial Statements (Unaudited)

                   Consolidated Statements of Operations - Three and
                   Six Months Ended June 30, 2001 and 2000 .......           3

                   Consolidated Balance Sheets - June 30, 2001
                   and December 31, 2000 ................................... 4

                   Consolidated Statements of Cash Flows - Six
                   Months Ended June 30, 2001 and 2000 ............          5

                   Notes to Consolidated Financial Statements........        6

          Item 2:

                   Management's Discussion and Analysis of
                   Financial Condition and Results of Operations .....      11

          Item 3:

                   Quantitative and Qualitative Disclosure
                   About Market Risk .......................................20

Part II   Other Information ............................................    21
                   Signatures ............................................  22


<PAGE>


Item 1:  FINANCIAL STATEMENTS (UNAUDITED)

                             MEDTOX SCIENTIFIC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Dollars in thousands except per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                      Three Months Ended                       Six Months Ended
                                              June 30, 2001        June 30, 2000      June 30, 2001       June 30, 2000
                                            -------------------  ------------------  -----------------   -----------------
<S>                                       <C>                   <C>                 <C>                 <C>
REVENUES:
   Laboratory services                        $9,991               $9,460             $19,295             $17,745
   Product sales
                                               2,570                1,856               4,872               3,247
                                            -------------------  ------------------  -----------------   -----------------

                                              12,561               11,316              24,167              20,992

COST OF REVENUES:
  Cost of services                             6,575                6,093              12,970              11,634
  Cost of sales                                  950                  809               2,003               1,372
                                            -------------------  ------------------  -----------------   -----------------
                                               7,525                6,902              14,973              13,006
                                            -------------------  ------------------  -----------------   -----------------

GROSS PROFIT
                                               5,036                4,414               9,194               7,986

OPERATING EXPENSES:
   Selling, general and administrative         3,451                3,349               6,591               6,147
   Research and development                      318                  306                 633                 555
                                            -------------------  ------------------  -----------------   -----------------
                                               3,769                3,655               7,224               6,702
                                            -------------------  ------------------  -----------------   -----------------

INCOME FROM OPERATIONS                         1,267                  759               1,970               1,284

OTHER INCOME (EXPENSE):
   Interest expense                             (288)                (278)               (528)               (506)
   Other expense, net                            (19)                   -                 (44)                  -
                                            -------------------  ------------------  -----------------   -----------------
                                                (307)                (278)               (572)               (506)
                                            -------------------  ------------------  -----------------   -----------------

NET INCOME                                       960                  481               1,398                 778
                                            ===================  ==================  =================   =================

BASIC EARNINGS PER COMMON
 SHARE                                         $0.27               $ 0.17             $  0.40              $ 0.27
                                            ===================  ==================  =================   =================

DILUTED EARNINGS PER COMMON
 SHARE                                         $0.26               $ 0.16             $  0.37              $ 0.26
                                            ===================  ==================  =================   =================

</TABLE>
<PAGE>


                             MEDTOX SCIENTIFIC, INC.
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                      June 30,         December 31,
                                                                                       2001                2000
                                                                                  ---------------     ---------------
<S>                                                                             <C>                 <C>
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                                           $      48           $     213
   Accounts receivable:
         Trade,  less allowance for doubtful  accounts
         ($850 in 2001 and $1,131 in 2000)                                                10,307               7,873
         Other                                                                               361                 264
                                                                                  ---------------     ---------------
             Total accounts receivable                                                    10,668               8,137
   Inventories                                                                             2,816               3,052
   Prepaid expenses and other                                                                818                 830
                                                                                  ---------------     ---------------
             Total current assets                                                         14,350              12,232
EQUIPMENT AND IMPROVEMENTS, NET                                                           12,020               5,211
GOODWILL, net of accumulated amortization of $4,723 in 2001 and $4,438 in 2000            11,879              12,291
OTHER ASSETS, net of accumulated amortization of $17 in 2001 and $7 in 2000                  280                 290
                                                                                  ---------------     ---------------
TOTAL ASSETS                                                                          $   38,529          $   30,024
                                                                                  ===============     ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Line of credit                                                                     $    4,549          $    3,724
   Accounts payable                                                                        2,104               2,819
   Accrued expenses                                                                        3,574               3,213
   Accrued restructuring costs                                                                 -                 160
   Current portion of long-term debt                                                       2,235               1,579
   Current portion of capital leases                                                         191                 221
                                                                                  ---------------     ---------------
             Total current liabilities                                                    12,653              11,716
LONG-TERM DEBT                                                                             8,610               2,480
LONG-TERM PORTION OF CAPITAL LEASES                                                          327                 418

STOCKHOLDERS' EQUITY:
   Preferred stock, $1.00 par value;  authorized shares,
     50,000;  none issued and outstanding                                                     -                   -
   Common  stock,  $0.15 par  value;  authorized  shares,
    7,400,000;  issued  and outstanding
    shares, 3,531,044 in 2001 and 3,508,151 in 2000                                          530                 526
   Additional paid-in capital                                                             65,695              65,422
   Deferred stock-based compensation                                                       (618)               (472)
   Accumulated deficit                                                                  (48,492)            (49,890)
   Treasury stock                                                                          (176)               (176)
                                                                                  ---------------     ---------------
             Total stockholders' equity                                                   16,939              15,410
                                                                                  ---------------     ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $      38,529        $     30,024
                                                                                  ===============     ===============
</TABLE>

<PAGE>



                             MEDTOX SCIENTIFIC, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                        Six Months Ended
                                                                             June 30, 2001           June 30, 2000
                                                                           -------------------    --------------------
<S>                                                                       <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                               $           1,398        $            778
   Adjustments to reconcile net income to net cash used in
           operating activities:
      Depreciation and amortization                                                     1,207                   1,141
      Provision for losses on accounts receivable                                          93                      83
      Deferred compensation                                                                75                       -
      Changes in operating assets and liabilities:
         Accounts receivable                                                          (2,624)                 (2,270)
         Inventories                                                                      236                   (420)
         Prepaid expenses and other current assets                                         12                      38
         Accounts payable and accrued expenses                                          (354)                   (357)
         Accrued restructuring costs                                                    (160)                   (234)
                                                                           -------------------    --------------------
                Net cash used in operating activities                                   (117)                 (1,241)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital expenditures                                                              (7,584)                 (2,042)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase in checks written in excess of bank balances                                   -                     352
    Net proceeds from sale of common stock                                                 55                      30
    Net borrowings on line of credit                                                      825                     621
    Proceeds from long-term debt                                                        7,400                   3,648
    Principal payments on long-term debt                                                (623)                 (1,809)
    Principal payments on capital leases                                                (121)                   (135)
                                                                           -------------------    --------------------
              Net cash provided by financing activities                                 7,536                   2,707
                                                                           -------------------    --------------------

DECREASE IN CASH AND CASH EQUIVALENTS                                                   (165)                   (576)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          213                     576
                                                                           -------------------    --------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  $              48       $              -
                                                                           ===================    ====================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Non cash activities:
          Additions to capital leases                                       $              -        $             298

    Cash paid for:
          Interest                                                                        538                     461

</TABLE>


<PAGE>


                             MEDTOX SCIENTIFIC, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2001


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 notes  required by  generally  accepted
accounting principles. In the opinion of management, all adjustments (consisting
only  of  normal  recurring   adjustments)   considered  necessary  for  a  fair
presentation  of  financial  condition  and  results  of  operations  have  been
included. Operating results for the six-month period ended June 30, 2001 are not
necessarily  indicative of the results that may be attained for the entire year.
These consolidated  financial  statements should be read in conjunction with the
consolidated  financial  statements  and  the  notes  thereto  included  in  the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.

Reclassifications:   Certain  reclassifications  have  been  made  to  the  2000
financial statements to conform with the 2001 presentations.


New Accounting Standard:  In July 2001, the Financial Accounting Standards Board
issued Statement on Financial  Accounting  Standards  (SFAS) No. 141,  "Business
Combinations,"  and SFAS No. 142,  "Goodwill and Other Intangible  Assets." SFAS
No. 141  eliminates the  pooling-of-interests  method of accounting for business
combinations  after June 30, 2001.  SFAS No. 142  establishes  new standards for
accounting for goodwill and intangible assets and will be adopted by the Company
on January 1, 2002.  Management  has not completed its  assessment of the impact
the  adoption  of SFAS No.  141 and 142  will  have on the  Company's  financial
position and results of operations.


NOTE B - DEBT

In January 1998, the Company entered into a Credit Security Agreement (the Wells
Fargo Credit  Agreement) with Wells Fargo Business Credit,  Inc. The Wells Fargo
Credit  Agreement,  as amended,  consists  of (i) a term loan of $3.185  million
bearing interest at prime + 1.25%;  (ii) a revolving line of credit,  payable on
demand,  of not more than $6.0 million or 85% of the  Company's  eligible  trade
accounts receivable bearing interest at prime + 1%; and (iii) a capex note of up
to $3.5 million for the purchase of capital  equipment bearing interest at prime
+ 1.25% and (iv)  availability of letters of credit in amounts not to exceed the
lesser of  $300,000  (less  outstanding  letters of  credit)  or the  unborrowed
portion of the revolving line of credit (less outstanding letters of credit).

<PAGE>

NOTE C - SEGMENTS

The Company has two reportable segments: Lab Services and Product Sales. The Lab
Services segment consists of MEDTOX Laboratories, Inc. Services provided include
forensic  toxicology,   clinical  toxicology,  heavy  metals  analyses,  courier
delivery, and medical surveillance. The Product Sales segment consists of MEDTOX
Diagnostics,  Inc.  Products  manufactured  include  easy to  use,  inexpensive,
on-site drug tests such as PROFILE(R)-II,  EZ-SCREEN(R), and VERDICT(R)-II.  The
Company's  reportable segments are strategic business units that offer different
products and services.  They are managed  separately  as each business  requires
different products, services and marketing strategies.

In  evaluating  financial  performance,  management  focuses  on net income as a
segment's measure of profit or loss.

Segment Information
(In thousands)
<TABLE>
<CAPTION>

                                                     Three Months Ended                         Six Months Ended
                                                 June 30, 2001      June 30, 2000          June 30, 2001       June 30, 2000
                                                 -------------      -------------          -------------       -------------
<S>                                            <C>                <C>                    <C>                 <C>
Laboratory  Services:
   Revenues                                          $   9,991          $   9,460             $   19,295          $   17,745
   Interest expense                                        276                259                    503                 468
   Depreciation and amortization                           555                561                  1,145               1,105
   Segment income                                          554                419                    847                 704
   Segment assets                                       34,515             26,488                 34,515              26,488
   Expenditures for segment assets                         443                963                  7,423               1,735

Product Sales:
   Revenues                                              2,570              1,856                  4,872               3,247
   Interest expense                                         12                 19                     25                  38
   Depreciation and amortization                            32                 22                     62                  36
   Segment income                                          406                 62                    551                  74
   Segment assets                                        4,014              2,975                  4,014               2,975
   Expenditures for segment assets                          65                304                    161                 307

Total:
   Revenues                                             12,561             11,316                 24,167              20,992
   Interest expense                                        288                278                    528                 506
   Depreciation and amortization                           587                583                  1,207               1,141
   Segment income                                          960                481                  1,398                 778
   Segment assets                                       38,529             29,463                 38,529              29,463
   Expenditures for segment assets                         508              1,267                  7,584               2,042

</TABLE>

<PAGE>


NOTE D - INVENTORIES

Inventories consisted of the following:
(In thousands)
                            June 30,               December 31,
                              2001                    2000
                         --------------        ------------------

     Raw materials       $      823             $        910
     Work in process            390                      322
     Finished goods             303                      373
     Supplies                 1,300                    1,447
                        ---------------        ------------------
                         $    2,816             $      3,052
                        ================       ==================



NOTE E - PURCHASE OF BUILDING

The administrative offices and laboratory operations for the Laboratory Services
segment of the Company's  business are located primarily in a 53,576 square foot
facility in St. Paul,  Minnesota.  On March 16, 2001 the Company  purchased  the
entire  three  building  complex  with a total of  129,039  square  feet,  which
included the 53,576  square feet  formerly  leased by the  Company's  Laboratory
Services segment.  The purchasing entity was New Brighton Business Center LLC, a
wholly owned limited liability company,  established by the Company for the sole
purpose of purchasing the entire three building complex.  The selling entity was
PHL-OPCO, LP a Delaware limited partnership,  which was an unrelated third party
who had operated the facility as its landlord  until the sale of the property to
the Company.  The purchase price,  exclusive of expenses and closing costs,  was
$6.35 million and was financed by a mortgage loan from  Principal Life Insurance
Company of Des Moines, Iowa in the amount of $6.2 million. The mortgage loan has
a term of ten years and is being repaid based on a 20-year amortization schedule
with a balloon  payment at the end of the ten year term.  The  interest  rate is
fixed at an annual rate of 7.23% for the first five years at which time the rate
will be  renegotiated  by the parties.  The facility  includes other  commercial
tenants who have  individual  leases that range from 4 years to less then 1 year
in duration. The current annual rent paid by such third party tenants, excluding
their pro-rata share of operating expenses, is approximately $431,000 per year.

The following components of the Company's rental activities were reported net in
other  income  (expense)  in  the  Consolidated  Statement  of  Operations:
(In thousands)
<TABLE>
<CAPTION>

                                                     Three  Months Ended   Six Months Ended
                                                       June 30,  2001        June 30,  2001
                                                     --------------------  ----------------
<S>                                              <C>                   <C>
Gross rental income                                   $    412              $   470
Operating and administrative expenses                     (254)                (296)
                                                      ------------          ------------
Net rental income before intercompany
elimination                                                158                  174
Elimination of intercompany rental income                 (181)                (222)
                                                      ------------          ------------
Net rental loss                                       $    (23)            $    (48)
                                                      ============          ============
</TABLE>

<PAGE>

NOTE F - EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
common share: (Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>

                                                      Three Months Ended                  Six Months Ended
                                                June 30, 2001    June 30, 2000      June 30, 2001    June 30, 2000
                                                -------------    -------------      -------------    -------------
<S>                                           <C>              <C>               <C>              <C>
Net income (A)                                  $         960    $         481     $        1,398   $           778
                                                =============    =============     ==============   ===============
Weighted average number of basic
    common shares outstanding (B)                   3,532,109        2,915,610          3,527,697         2,910,044
Dilutive effect of stock options and
    warrants computed based on the
    treasury stock method using average
    market price                                      224,032          134,484            202,078           137,105
                                                -------------    -------------     --------------    --------------
Weighted average number of diluted
    common shares outstanding (C)                   3,756,141        3,050,094          3,729,775         3,047,149
                                                =============    =============     ==============    ==============
Basic earnings per common share (A/B)           $        0.27    $        0.17     $         0.40    $         0.27
                                                =============    =============     ==============    ==============
Diluted earnings per common share (A/C)         $        0.26    $        0.16     $         0.37    $         0.26
                                                =============    =============     ==============    ==============
</TABLE>

Options and warrants to purchase 647,564,  846,314,  190,459, and 135,958 shares
of common stock were outstanding  during the three and six months ended June 30,
2001 and 2000, respectively, but were not included in the computation of diluted
earnings per share as their exercise prices were greater than the average market
price of the common shares.

NOTE G - CONTINGENCIES

In January 1997,  the Company filed suit in Federal  District Court in Minnesota
against  Morgan  Capital  LLC,  David  Bistricer  and  Alex  Bistricer  alleging
violation  of  Section  16(b) of the  Securities  and  Exchange  Act of 1934 and
seeking recovery of more than $500,000 in short-swing profits. Messrs. David and
Alex Bistricer are former directors of the Company.  On August 4, 1997, the U.S.
District  Court  dismissed the Company's  complaint and on October 29, 1997, the
Company  filed an appeal of that  decision to the United States Court of Appeals
for the Eighth  Circuit.  On July 21,  1998,  the Eighth  Circuit  reversed  the
District Court dismissal and remanded the case to the District Court. On June 3,
1999 the U.S.  District  Court found that Morgan  Capital had  violated  Section
16(b) and ordered  Morgan  Capital to pay the Company  damages of $551,000  plus
interest.  On or about September 30, 2000 the parties entered into a Stipulation
and Mutual  Release  dismissing  with  prejudice  all  claims and  counterclaims
between the parties  regarding the transaction  other then the Company's Section
16(b) claim against the former stockholder,  Morgan Capital. The parties entered
into this Stipulation along with an Escrow Agreement requiring Morgan Capital to
deposit into escrow  72,500  shares of publicly  registered  common stock of the
Company as collateral to secure  payment by Morgan Capital of the judgment to be
entered in favor of the Company in the amount of $675,000 plus any post-judgment
interest.  The Federal  District  Court  entered  such  judgment in favor of the
Company on October 17, 2000.  Morgan Capital  subsequently  appealed the Federal
District Court's  decision to the Eighth Circuit Court of Appeals.  On August 3,

<PAGE>

2001 the  Eighth  Circuit  Court  of  Appeals  ruled  in  favor of the  Company,
affirming the District  Court decision  awarding the Company  $675,000 plus post
judgment  interest.  Morgan  Capital has notified  the Company,  pursuant to the
Escrow  Agreement,  that it will pay the Company  cash to satisfy the  judgment,
which the Company believes will total at least $708,000.

In March 2000,  the Company was served with a copy of a complaint  filed against
the Company in the Circuit Court of Cook County, Illinois, by the Plaintiff, The
Methodist Medical Center of Illinois. The Plaintiff is alleging that the Company
interfered with various contractual relationships of the Plaintiff in connection
with the  referral  of certain  customers  to the  Company  by other  defendants
previously  sued by the  Plaintiff in the same  action.  The Company has filed a
cross  claim  against  the  other  defendants  in the  litigation  based on such
defendants' contractual obligation to indemnify the Company against any damages,
costs or expenses (including attorney fees) incurred by the Company, arising out
of any claim of contractual  interference  by the Company in connection with the
referral of the  customers to the Company by such  defendants.  The parties have
reached an  agreement  to settle the case,  whereby the Company will pay $75,000
with a full release of all claims and a dismissal  order  expected to be entered
in August of 2001.  The Company will  voluntarily  dismiss its indemnity  claims
against the  co-defendants for reimbursement of the $75,000 paid, with the right
of refiling the  indemnification  claim  existing for one year. The Company will
continue to pursue its right of indemnification  for the $75,000 during the next
year.

On October 26, 2000,  Harry McCoy was replaced as Chairman and  President of the
Company but  continued to receive  payments as an employee  under an  employment
agreement  with the Company.  In May 2001,  Mr. McCoy  commenced  employment  at
Hamilton Thorne Biosciences, Inc. as its President. The Company has informed Mr.
McCoy that it views such employment as a termination of his employment agreement
with the Company.  Mr.  McCoy has disputed  this  assertion  and has  threatened
litigation  against the Company.  The Company is unable to ascertain whether Mr.
McCoy will pursue such litigation.


<PAGE>



Item 2    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS


               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. The factors that could affect
our actual results include the following:

o        increased competition, including price competition

o        general economic and business conditions, both nationally and
         internationally

o        changes in business strategy or development plans

o        techonological, evolving industry standards, or other problems that
         could delay the sale of our products

o        our inability to obtain appropriate  licenses from third parties,
         protect our trade secrets,  operate without infringing upon the
         proprietary rights of others, or prevent others from infringing on our
         proprietary rights

o        our inability to obtain sufficient financing to continue to expand
         operations

o        changes in demand for products and services by our customers

o        our failure to obtain and retain new customers and alliance partners,
         or a reduction in tests ordered or specimens  submitted by existing
         customers
<PAGE>

o        adverse results in litigation matters

o        our ability to attract and retain experienced and qualified personnel

o        failure to maintain our days sales outstanding levels

o        losses due to bad debt

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.

General

MEDTOX Scientific,  Inc. (formerly EDITEK,  Inc.), a Delaware  corporation,  was
organized  in  September  1986  to  succeed  the  operations  of  a  predecessor
California   corporation.   MEDTOX   Scientific,   Inc.  and  its   wholly-owned
subsidiaries,  MEDTOX  Laboratories,  Inc.,  MEDTOX  Diagnostics,  Inc., and New
Brighton  Business  Center  LLC are  referred  to herein as "the  Company".  The
Company is engaged primarily in two distinct,  but very much related businesses.
The business of manufacturing and distribution of diagnostic  devices is carried
on by MEDTOX Diagnostics,  Inc. from its facility in Burlington,  North Carolina
and the business of forensic and  clinical  laboratory  services is conducted by
MEDTOX Laboratories, Inc. at its facility in St. Paul, Minnesota.

The Company has two reportable segments:  "Laboratory Services" conducted by the
Company's  wholly owned  subsidiary,  MEDTOX  Laboratories,  Inc. and  "Products
Sales" conducted by the Company's wholly owned  subsidiary  MEDTOX  Diagnostics,
Inc. Laboratory Services include forensic toxicology,  clinical toxicology,  and
heavy metal analyses as well as logistics,  data, and overall program management
services. Product Sales include sales of a variety of on-site screening products
and  contract  manufacturing.  For the three and six months ended June 30, 2001,
Laboratory  Services  revenue  accounted  for  80%  of the  Company's  revenues,
compared  with 84% and 85% for the same  periods in 2000.  Revenue  from Product
Sales  accounted for 20% of the total  revenues of the Company for the three and
six months ended June 30, 2001,  compared  with 16% and 15% for the same periods
in 2000.

Results of Operations

The Company  achieved record revenues and net income for the three and six month
periods ended June 30, 2001.  Revenues for the second  quarter of 2001 increased
11% over the second quarter of 2000, driven by sales of the  PROFILE(R)-II  Test
System and the expanding VERDICT(R)-II product line, as well as increased sample
volume from the Company's  occupational  health,  wellness and esoteric  testing
clients.  Selling, general, and administrative expenses in the second quarter of
2001  decreased as a percentage of sales to 27.5% from 29.6% in the same quarter

<PAGE>

in 2000,  reflecting  efforts taken to reorganize the laboratory  operations and
reduce  operating costs. The following table sets forth the percentages of total
revenues  represented by certain items  reflected in the Company's  Consolidated
Statements of Operations:
<TABLE>
<CAPTION>

                                                  Three Months Ended                     Six Months Ended
                                              June 30, 2001     June 30, 2000     June 30, 2001    June 30, 2000
----------------------------------------------------------------------------------------------------------------------------
  <S>                                       <C>               <C>               <C>              <C>
   Revenues                                      100.0%            100.0%            100.0%            100.0%
   Cost of revenues                               59.9              61.0              62.0              62.0
   Operating expenses:
     Selling, general, and administrative         27.5              29.6              27.3              29.3
     Research and development                      2.5               2.7               2.6               2.6
                                               ----------       -----------        ----------       ----------
                                                  30.0              32.3              29.9              31.9
   Other expense                                   2.5               2.5               2.3               2.4
                                               ----------       -----------        ----------       ----------
   Net income                                      7.6%              4.2%              5.8%              3.7%
                                               ========         =========          ========         =========
</TABLE>

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Revenues

Revenues  increased  11% to $12.6  million for the three  months  ended June 30,
2001, driven by a $0.7 million,  or 38% increase in Product Sales revenues and a
$0.5 million, or 6% increase in Laboratory Services revenues.

The Product Sales segment  achieved  higher  revenues due to increased  sales of
substance  abuse testing  products,  partially  offset by a slight  reduction in
sales of contract manufacturing  services and agricultural  diagnostic products.
Product sales from substance  abuse testing  products,  which  incorporates  the
EZ-SCREEN(R),  PROFILE(R)-II  and  VERDICT(R)-II  on-site  test  kits and  other
ancillary  products  for the  detection  of abused  substances,  increased  $0.9
million to $2.2 million in the second quarter of 2001. This growth reflected the
sales and  marketing  efforts  for the  Company's  second-generation  test kits,
PROFILE(R)-II and VERDICT(R)-II. The VERDICT(R)-II was developed for the prison,
probation, parole and rehabilitation markets. The VERDICT(R)-II product line now
consists  of 18  different  configurations  to detect  from one to five drugs of
abuse. The Company continues to develop new products in this area, including the
PROFILE(R)-ER   device.   The   PROFILE(R)-ER   device  is  an   on-site,   nine
drugs-of-abuse  panel,  targeted at hospital laboratories for emergency response
screening in drugs-of-abuse overdose situations. The Company currently sells the
PROFILE(R)-ER  device through its direct sales force and has recently  signed an
agreement with a leading supplier of medical,  surgical and laboratory  supplies
to distribute the device.  The Company is also in  discussions  with other major
buying groups and distributors that have expressed interest in the PROFILE(R)-ER
device.

Product sales from  agricultural  diagnostic  products  decreased 51% to $73,000
primarily  as a result  of  decreased  purchases  by the USDA for the  Company's
products. The USDA's needs for the Company's products vary from year-to-year and
sales to the USDA are  expected  to  fluctuate  accordingly.  Sales of  contract
manufacturing services, microbiological and associated products decreased 32% to
$257,000  due to  decreased  revenues  from both  historical  customers  and new
customers.
<PAGE>

The growth in Laboratory Services revenues was primarily due to a 7% increase in
the number of  laboratory  tests  performed.  Sample  volume from the  Company's
occupational  health,  wellness  and  esoteric  testing  clients  increased  41%
compared to the second quarter of 2000. The Company's  research and  development
group  continues to improve and add to the over 900  proprietary  bio-analytical
assays that have been  developed.  In the past,  these tests have  largely  been
marketed to hospitals,  clinics and other laboratories.  However, more recently,
the Company has increased its efforts to apply the assay  development  skills to
the  bio-analytical  needs of the  pharmaceutical  market.  Despite  the overall
favorable sales trend within the Laboratory operations,  the slowing economy and
the  Company's  planned  emphasis on the  PROFILE(R)-II  Test System for on-site
drugs-of-abuse  (DAU)  screening  slowed  the  growth of  laboratory  DAU sample
volume.

Gross profit

Consolidated  gross  margin was 40.1% for the three  months  ended June 30, 2001
compared to 39.0% for the same period in 2000, reflecting improvement in Product
Sales gross margin, offset by a decline in Laboratory Services gross margin.

Laboratory  Services  gross margin was 34.2% for the three months ended June 30,
2001,  down from 35.6% for the three months ended June 30, 2000.  The decline in
the gross margin was primarily  attributable to higher specimen collection costs
and increased employee health insurance costs.

Gross  margin from  Product  Sales  improved to 63.0% for the three months ended
June 30, 2001 from 56.4% for the three months ended June 30, 2000,  driven by an
increased  mix  of  higher  margin  products  and  efficiencies  gained  at  the
production facility.

Selling, general and administrative expenses

Selling,  general and  administrative  expenses were $3.5  million,  or 27.5% of
revenues for the three  months ended June 30, 2001,  compared to $3.3 million or
29.6% of revenues in the same period of 2000.  The decrease in the percentage of
revenues  reflects  efforts taken to reorganize  the  laboratory  operations and
reduce overall  operating  costs.  The increase in the absolute dollar amount of
selling,  general and  administrative  expenses was  attributable  to the higher
revenue level in the second quarter of 2001.

Other expense

Other expense consisted primarily of interest expense, which remained relatively
stable.  Other  expense in the three months ended June 30, 2001 also  included a
loss of $23,000 from the Company's rental activities.
<PAGE>

Net income

In the three months ended June 30, 2001, the Company recorded net income of $1.0
million  compared to $0.5 million in the same period of 2000.  This  improvement
was driven by an 11%  increase  in  consolidated  revenues  and a  reduction  in
selling, general, and administrative expenses as a percentage of revenues.

Laboratory  Services net income was $0.6 million for the three months ended June
30, 2001 up from $0.4 million during the same period of 2000.  This  improvement
was primarily driven by the reduction in selling,  general,  and  administrative
expenses.

Product  Sales net income was $0.4  million for the three  months ended June 30,
2001  compared  to  $62,000 in the same  period of 2000.  This  improvement  was
primarily attributable to the growth in sales and an improved gross margin.



<PAGE>

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

Revenues

Revenues  increased 15% to $24.2 million for the six months ended June 30, 2001,
driven by a $1.6 million,  or 9% increase in Laboratory  Services revenues and a
$1.6 million, or 50% increase in Product Sales revenues.

The growth in Laboratory  Services  revenues was primarily due to a 12% increase
in the number of laboratory  tests  performed.  Sample volume from the Company's
occupational  health,  wellness  and  esoteric  testing  clients  increased  40%
compared to the first six months of 2000. The Company's research and development
group  continues to improve and add to the over 900  proprietary  bio-analytical
assays that have been  developed.  In the past,  these tests have  largely  been
marketed to hospitals,  clinics and other laboratories.  However, more recently,
the Company has increased its efforts to apply the assay  development  skills to
the  bio-analytical  needs of the  pharmaceutical  market.  Despite  the overall
favorable sales trend within the Laboratory operations,  the slowing economy and
the  Company's  planned  emphasis on the  PROFILE(R)-II  Test System for on-site
drugs-of-abuse  (DAU)  screening  slowed  the  growth of  laboratory  DAU sample
volume.

The Product Sales segment  achieved  higher  revenues due to increased  sales of
substance  abuse testing  products,  partially  offset by a slight  reduction in
sales of contract manufacturing  services and agricultural  diagnostic products.
Product sales from substance  abuse testing  products,  which  incorporates  the
EZ-SCREEN(R),  PROFILE(R)-II  and  VERDICT(R)-II  on-site  test  kits and  other
ancillary  products  for the  detection  of abused  substances,  increased  $1.8
million to $4.2 million for the first six months of 2001. This growth  reflected
the sales and marketing efforts for the Company's  second-generation  test kits,
PROFILE(R)-II and VERDICT(R)-II. The VERDICT(R)-II was developed for the prison,
probation, parole and rehabilitation markets. The VERDICT(R)-II product line now
consists  of 18  different  configurations  to detect  from one to five drugs of
abuse. The Company continues to develop new products in this area, including the
PROFILE(R)-ER   device.   The   PROFILE(R)-ER   device  is  an   on-site,   nine
drugs-of-abuse  panel,  targeted at hospital laboratories for emergency response
screening in drugs-of-abuse overdose situations. The Company currently sells the
PROFILE(R)-ER  device through its direct sales force and has recently  signed an
agreement with a leading supplier of medical,  surgical and laboratory  supplies
to distribute the device.  The Company is also in  discussions  with other major
buying groups and distributors that have expressed interest in the PROFILE(R)-ER
device.

Product  sales  from  agricultural  diagnostic  products  decreased  16% to $0.2
million  primarily  as a  result  of  decreased  purchases  by the  USDA for the
Company's  products.  The  USDA's  needs for the  Company's  products  vary from
year-to-year and sales to the USDA are expected to fluctuate accordingly.  Sales
of contract  manufacturing  services,  microbiological  and associated  products
decreased  22% to $0.5 million due to decreased  revenues  from both  historical
customers and new customers.

<PAGE>

Gross profit

Consolidated  gross  margin  of 38.0% for the six  months  ended  June 30,  2001
remained flat  compared to the same period of 2000,  reflecting  improvement  in
Product Sales gross margin,  offset by a decline in  Laboratory  Services  gross
margin.

Laboratory  Services  gross  margin was 32.8% for the six months  ended June 30,
2001, down from 34.4% for the six months ended June 30, 2000. The decline in the
gross margin was primarily  attributable to higher specimen collection costs and
increased employee health insurance costs.

Gross margin from Product Sales  improved to 58.9% for the six months ended June
30,  2001 from  57.7%  for the six  months  ended  June 30,  2000,  driven by an
increased  mix  of  higher  margin  products  and  efficiencies  gained  at  the
production facility.

Selling, general and administrative expenses

Selling,  general and  administrative  expenses were $6.6  million,  or 27.3% of
revenues  for first six  months of 2001,  compared  to $6.1  million or 29.3% of
revenues  for the first six months of 2000.  The decrease in the  percentage  of
revenues  reflects  efforts taken to reorganize  the  laboratory  operations and
reduce overall  operating  costs.  The increase in the absolute dollar amount of
selling,  general and  administrative  expenses was  attributable  to the higher
revenue level in the first six months of 2001.

Research and development expenses

Research and  development  expenses  increased by 14% in the first six months of
2001, principally due to higher expenses associated with new product development
for on-site and other ancillary products in the Product Sales segment.

Other expense

Other expense consisted primarily of interest expense, which remained relatively
stable  from the first six  months of 2000 to the first six months  2001.  Other
expense in the six months  ended June 30,  2001 also  included a loss of $48,000
from the Company's rental activities.

Net income

In the six months ended June 30, 2001,  the Company  recorded net income of $1.4
million  compared to $0.8 million in the same period of 2000.  This  improvement
was  driven by a 15%  increase  in  consolidated  revenues  and a  reduction  in
selling, general, and administrative expenses as a percentage of revenues.

Laboratory  Services  net income was $0.8  million for the six months ended June
30,  2001  compared  to $0.7  million  during  the same  period  of  2000.  This
improvement  was  primarily  driven by the  reduction in selling,  general,  and
administrative expenses as a percentage of revenues.
<PAGE>

Product  Sales net  income  was $0.6  million  in the  first six  months of 2001
compared to $74,000 in the same period of 2000.  This  improvement was primarily
attributable to the growth in sales and an improved gross margin.


Liquidity and Capital Resources

The working capital  requirements  of the Company have been funded  primarily by
cash received from bank financing and the sale of equity securities.

Net cash used in operating activities was $117,000 for the six months ended June
30, 2001  compared to $1.2  million in the same period of 2000.  The decrease in
cash used of $1.1 million was primarily due to an  improvement  in net income of
$0.6  million  and a  reduction  in  inventory  levels,  partially  offset by an
increase in accounts  receivable.  Inventory  levels decreased $0.2 million from
December 31, 2000 to June 30, 2001  compared to an increase of $0.4 million from
December  31, 1999 to June 30, 2000.  The  increase in  inventory  levels in the
prior year period was  attributable  to an increase in forecasted  sales for the
third quarter of 2000. Accounts receivable  increased $2.6 million from December
31, 2000 to June 30, 2001, reflecting the impact of the slowing economy.

Net cash used in investing activities,  consisting of capital expenditures,  was
$7.6 million for the six months ended June 30, 2001, up from $2.0 million in the
same period of 2000. In March of 2001, the Company purchased the three building,
129,039  square  foot  complex  in St.  Paul,  Minnesota,  where  the  Company's
laboratory  segment  formerly  leased  53,576 square feet.  The purchase  price,
exclusive of expenses and closing costs, was $6.35 million and was financed by a
mortgage loan from Principal Life Insurance  Company of Des Moines,  Iowa in the
amount of $6.2  million.  The mortgage loan has a term of ten years and is being
repaid based on a 20-year  amortization  schedule with a balloon  payment at the
end of the ten-year  term. The interest rate is fixed at an annual rate of 7.23%
for the first  five  years at which  time the rate will be  renegotiated  by the
parties.  The facility  includes other  commercial  tenants who have  individual
leases  that range  from 4 years to less then 1 year in  duration.  The  current
annual rent paid by such third party tenants,  excluding their pro-rata share of
operating expenses,  is approximately  $431,000 per year. See Note E of Notes to
Consolidated Financial Statements.

Net cash  provided  by  financing  activities  of $7.5  million in the first six
months of 2001 was  principally  associated  with  proceeds  received  under the
mortgage  loan  discussed  above  and the  Company's  credit  agreement  for the
purchase of capital equipment. Net cash provided by financing activities of $2.7
million in the first six months of 2000 primarily  represented proceeds from the
renegotiation  of the Company's  term debt which were used to fund the Company's
operations  during  the first  quarter  of 2000 and pay down the line of credit,
which occurred in the second quarter of 2000.

In January 1998, the Company entered into a Credit Security Agreement (the Wells
Fargo Credit  Agreement) with Wells Fargo Business Credit,  Inc. The Wells Fargo
Credit  Agreement,  as amended,  consists  of (i) a term loan of $3.185  million
bearing interest at prime + 1.25%;  (ii) a revolving line of credit,  payable on
demand,  of not more than $6.0 million or 85% of the  Company's  eligible  trade

<PAGE>

accounts receivable bearing interest at prime + 1%; and (iii) a capex note of up
to $3.5 million for the purchase of capital  equipment bearing interest at prime
+ 1.25% and (iv)  availability of letters of credit in amounts not to exceed the
lesser of  $300,000  (less  outstanding  letters of  credit)  or the  unborrowed
portion of the revolving line of credit (less outstanding letters of credit).

The Company is relying on expected positive cash flow from operations,  its line
of  credit,  and  capex  note to fund  its  future  working  capital  and  asset
purchases.  The  amount  of  credit  on the  revolving  line of  credit is based
primarily  on the  receivables  of the  Company  and,  as such,  varies with the
accounts receivable, and to a lesser degree, the inventory of the Company. As of
June 30, 2001, the Company had total  borrowing  capacity of $6.0 million on its
line of credit,  of which $4.6 million was borrowed,  leaving a net availability
of $1.4 million as of June 30, 2001.

In the short term, the Company believes that the aforementioned  capital will be
sufficient to fund the Company's  planned  operations  through 2001. While there
can be no assurance  that the  available  capital will be sufficient to fund the
future  operations of the Company beyond 2001, the Company  believes that future
profitable  operations,  as well as access to additional capital through debt or
equity  financings,  will be the primary means for funding the operations of the
Company for the long term.

The  Company  continues  to  follow  a  plan  which  includes  (i)  aggressively
monitoring and  controlling  costs,  (ii)  increasing  revenue from sales of the
Company's  existing  products and  services  (iii)  developing  new products and
services,   as  well  as  (iv)  continuing  to  selectively  pursue  synergistic
acquisitions to increase the Company's critical mass.  However,  there can be no
assurance that costs can be controlled, revenues can be increased, financing may
be obtained,  acquisitions successfully consummated, or that the Company will be
profitable.

Impact of Inflation and Changing Prices

The impact of inflation  and changing  prices on the Company has been  primarily
limited to salary,  laboratory and operating supplies and rent increases and has
not been  material  to date to the  Company's  operations.  In the  future,  the
Company  may not be able to  increase  the  prices of  laboratory  testing by an
amount  sufficient  to cover the cost of  inflation,  although  the  Company  is
responding to these  concerns by refocusing the  laboratory  operations  towards
higher margin testing (including clinical and pharmaceutical  trials) as well as
emphasizing the marketing, sales and operations of the Product Sales business.

Seasonality

The Company believes that the laboratory testing business is subject to seasonal
fluctuations in pre-employment  screening.  These seasonal  fluctuations include
reduced volume in the summer months,  year-end holiday periods,  and other major
holidays.  In addition,  inclement  weather may have a negative impact on volume
thereby reducing net revenues and cash flow.

<PAGE>

Item 3            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
                  MARKET RISK.

Market  risk is the risk that the  Company  will  incur  losses  due to  adverse
changes in interest rates or currency  exchange rates and prices.  The Company's
primary market risk exposures are to changes in interest rates.  During 2000 and
through June 30,  2001,  the Company did not have sales  denominated  in foreign
currencies nor did it have any  subsidiaries  located in foreign  countries.  As
such,  the  Company  is not  exposed to market  risk  associated  with  currency
exchange rates and prices.

The Company had $575,000 of subordinated  notes  outstanding as of June 30, 2001
and December 31, 2000, at a fixed  interest  rate of 12% per annum.  The Company
also had capital leases at various fixed rates.  In addition,  at June 30, 2001,
the Company had a $6.2 million mortgage loan payable to Principal Life Insurance
Company at a fixed  annual  rate of 7.23% for the first five years at which time
the rate will be  renegotiated by the parties.  These financial  instruments are
subject to interest  rate risk and will  increase or decrease in value if market
interest rates change.

The Company had approximately  $8.3 million and $7.0 million  outstanding on its
line of credit and long-term debt issued under the Wells Fargo Credit  Agreement
as of June 30, 2001 and  December  31,  2000,  respectively.  The debt under the
Wells Fargo Credit Agreement is held at variable interest rates. The Company has
cash flow exposure on its committed and uncommitted line of credit and long-term
debt due to its variable  prime rate pricing.  At June 30, 2001 and December 31,
2000,  a 1% change in the prime rate would not  materially  increase or decrease
interest expense or cash flows.

<PAGE>

PART II  OTHER INFORMATION

ITEM 1   LEGAL PROCEEDINGS.   See Part I, Note G

ITEM 2   CHANGES IN SECURITIES.  Inapplicable

ITEM 3   DEFAULTS ON SENIOR SECURITIES.  Inapplicable

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.  Inapplicable

ITEM 5   OTHER INFORMATION.  Inapplicable

ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K.

         a.  Exhibits:   Inapplicable

         b.  Reports on Form 8-K:   Inapplicable


<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.


         Signature                 Title                                Date

/s/Richard J. Braun    President, Chief Executive Officer,       August 14, 2001
---------------------   and Chairman of the Board of Directors
Richard J. Braun        (Principal Executive Officer)

/s/ Kari L. Golembeck  Controller (Principal Accounting Officer) August 14, 2001
-----------------------
Kari L. Golembeck