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 September 30, 1999

                                       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 November
10, 1999, was 2,903,673.

<PAGE>



                             MEDTOX SCIENTIFIC, INC.

                                      INDEX

                                                                        Page

Part I Financial Information:

       Item 1:  Financial Statements (Unaudited)

             Consolidated Balance Sheets - September 30, 1999
             and December 31, 1998 ...................................       3

             Consolidated Statements of Operations - Three
             Months Ended September 30, 1999 and 1998 and Nine
             Months Ended September 30, 1999 and 1998 ...............        5

             Consolidated Statements of Cash Flows - Nine
             Months Ended September 30, 1999 and 1998 ...............        6

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

       Item 2:

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

Part II      Other Information .......................................      19
                Signatures ...........................................      21


<PAGE>
<TABLE>


                                     MEDTOX SCIENTIFIC, INC.
                                   CONSOLIDATED BALANCE SHEETS
                            (In thousands except per share amounts)
                                           (Unaudited)
<CAPTION>
                                                         September 30         December 31
                                                             1999                1998
                                                        ------------------------------------

<S>                                                   <C>                   <C>

Assets
Current assets
   Cash and cash equivalents                                     $ 287                  $ -

   Accounts receivable:
         Trade, less allowance for doubtful
           accounts ($375-1999; $245-1998)                       7,200                5,957
         Other                                                      89                   30
                                                        ------------------------------------
                                                                 7,289                5,987
   Inventories:
         Raw materials                                             482                  444
         Work in process                                           196                  151
         Finished goods                                             47                   80
         Supplies                                                  422                  432
                                                        ------------------------------------
                                                                 1,147                1,107

   Prepaid expenses and other                                      900                  524
                                                        ------------------------------------

         Total current assets                                    9,623                7,618

Equipment and improvements:
    Furniture and equipment                                     12,464               11,779
    Leasehold improvements                                       1,310                1,283
                                                        ------------------------------------
                                                                13,774               13,062
    Less accumulated depreciation
         and amortization                                      (11,089)             (10,087)
                                                        ------------------------------------

                                                                 2,685                2,975
Goodwill, net of accumulated amortization of
    $3,732 in 1999 and $3,086 in 1998                           13,385               14,007

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

Total assets                                                  $ 25,693             $ 24,600
                                                        ====================================

</TABLE>

<PAGE>
<TABLE>

                                     MEDTOX SCIENTIFIC, INC.
                                   CONSOLIDATED BALANCE SHEETS
                            (In thousands except per share amounts)
                                           (Unaudited)
<CAPTION>
                                                         September 30         December 31
                                                             1999                1998
                                                        ------------------------------------

<S>                                                      <C>                 <C>
Liabilities and stockholders' equity
Current liabilities
   Line of credit                                              $ 4,090              $ 3,095
   Checks written in excess of bank balances                         -                  142
   Accounts payable                                              2,901                3,531
   Accrued expenses                                              1,855                1,724
   Current portion of restructuring accrual                        609                1,079
   Current portion of long-term debt                             1,387                1,140
   Current portion of capital lease obligations                    186                  186
                                                        ------------------------------------

         Total current liabilities                              11,028               10,897

Long-term portion of restructuring accrual                           -                   76
Capital lease obligations                                          346                  516
Long term debt obligations                                       1,709                1,785

Stockholders' equity
   Preferred Stock, $1.00 par value:
         Authorized - 1,000,000 shares;
         Issued and outstanding -
         none in 1999 and none in 1998                               -                    -
   Common Stock, $ .15 par value:
         Authorized - 7,400,000 shares in 1999,
         3,750,000 shares in 1998;
         Issued and outstanding -
         2,903,376 shares in 1999 and
         2,899,669 shares in 1998                                  437                  435
   Additional paid-in capital                                   59,845               59,815
   Accumulated deficit                                         (47,496)             (48,748)
  Treasury stock                                                  (176)                (176)
                                                        ------------------------------------

        Total stockholders' equity                              12,610               11,326

                                                        ------------------------------------
Total liabilities and stockholders' equity                    $ 25,693             $ 24,600
                                                        ====================================
</TABLE>

<PAGE>
<TABLE>



                             MEDTOX SCIENTIFIC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands except per share amounts)
                                   (Unaudited)

<CAPTION>
                                                             Three Months Ended                       Nine Months Ended
                                                                September 30                             September 30
                                                            1999              1998                   1999              1998
<S>                                                   <C>               <C>                   <C>                <C>
Revenues

   Laboratory service revenues                          $ 7,944             $ 6,861             $ 23,204           $ 20,715
   Product sales                                          1,130                 748                2,857              1,879
                                                        -------------------------------------------------------------------
                                                          9,074               7,609               26,061             22,594

Cost of services                                          5,283               4,957               15,508             14,226
Cost of sales                                               623                 443                1,579              1,208
                                                       --------------------------------------------------------------------
                                                          5,906               5,400               17,087             15,434

          Gross profit                                    3,168               2,209                8,974              7,160

Operating expenses
   Selling, general and administrative                    2,401               1,956                6,675              5,634
   Research and development                                 198                 283                  618                878
   Interest and financing costs                             220                 162                  595                479
   Other  non-recurring                                       -                   -                 (164)                 -
                                                       ---------------------------------------------------------------------
                                                          2,819               2,401                7,724              6,991
                                                       ---------------------------------------------------------------------


Net income                                                  349                (192)               1,250                169
                                                       =====================================================================

   Basic net earnings per common share (1)               $ 0.12             $ (0.07)              $ 0.43             $ 0.06
                                                       ======================================================================

   Diluted net earnings per common share (1)             $ 0.12             $ (0.07)              $ 0.42             $ 0.06
                                                       ======================================================================


(1) Income per share for the three months and nine months
    ended September 30, 1998 has been restated to reflect
    a one-for-twenty reverse stock split in February, 1999

</TABLE>

<PAGE>
<TABLE>


                                       MEDTOX SCIENTIFIC, INC.
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (In thousands)
                                             (Unaudited)
<CAPTION>
                                                                           Nine Months Ended
                                                                      September 30      September 30
                                                                          1999               1998
                                                                  ------------------------------------
<S>                                                               <C>                 <C>
Operating activities
Net income                                                                $ 1,250               $ 169
   Adjustments to reconcile net income  to net cash
    used in operating activities:
      Depreciation and amortization                                         1,625               1,564
      Changes in operating assets and liabilities;
         Accounts receivable                                               (1,302)             (1,013)
         Inventories                                                          (40)                 65
         Prepaid expenses and other                                          (376)               (245)
         Accounts payable, accrued expenses and other                        (499)                 21
         Restructuring accruals                                              (546)               (238)
                                                                  ------------------------------------
Net cash used in operating activities                                         112                 323

Investing activities
    Purchases of equipment and improvements                                  (712)               (809)

Financing activities
    Checks in excess of bank balance                                         (142)                  -
    Net proceeds from sale of common stock                                      2                  19
    Net proceeds from line of credit, term loans
       and notes payable                                                   28,875               3,117
    Principal payments on capital lease obligations                          (170)               (135)
    Principal payments on line of credit, term loans
       and notes payable                                                  (27,678)             (2,541)
                                                                  ------------------------------------
Net cash provided by financing activities                                     888                 460
                                                                  ------------------------------------

Increase  in cash and cash equivalents                                        287                 (26)
Cash and cash equivalents at beginning of period                                -                  58
                                                                  ------------------------------------

Cash and cash equivalents at end of period                                  $ 287                $ 32
                                                                  ====================================

Supplemental noncash activities
During 1999, the Company entered into capital lease obligations totaling $58,300.

</TABLE>

<PAGE>

                             MEDTOX SCIENTIFIC, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999

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 nine-month period ended September 30, 1999
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, 1998.

The  Company's  stockholders  approved  a  one-for-twenty  reverse  stock  split
effective  February 23, 1999.  All stock options,  warrant,  share and per share
data included in this report reflect the effect of this reverse split.

Basic earnings per share is computed on the basis of the weighted average number
of common  shares  outstanding.  Diluted  earnings  per share is computed on the
basis of the  weighted  average  number of common  shares  outstanding  plus the
effect of outstanding stock options using the "treasury stock" method.

In thousands, except share and per share amounts
<TABLE>
<CAPTION>

                                                 Three months ended              Nine months ended
                                                    September 30                  September 30
                                               ------------------------         ------------------
                                                  1999          1998            1999           1998
                                                  ----          ----            ----           ----
<S>                                          <C>            <C>             <C>             <C>
Net Income (A)                                        $349         $(192)         $1,250           $169

Weighted average number of shares                2,903,298      2,897,441      2,902,709      2,891,162
of common stock outstanding (B)

Dilutive effect of stock options                   123,171              0         99,304              0
                                                   -------    -------------     --------      ----------

Common stock and common                          3,026,469      2,897,441      3,002,013      2,891,162
stock equivalents (C)                            =========      =========      =========      =========

Net income per share:
         Basic (A/B)                                  $.12         $(.07)           $.43           $.06
                                                      ====         ======           ====           ====
         Diluted (A/C)                                $.12         $(.07)           $.42           $.06
                                                      ====         ======           ====           ====
</TABLE>

<PAGE>

Reclassifications:   Certain  reclassifications  have  been  made  to  the  1998
financial statements to conform with 1999 presentation.


Comprehensive Income:  Comprehensive income is a measure of all nonowner changes
in stockholders'  equity and includes such items as net income,  certain foreign
currency translation items, minimum pension liability  adjustments,  and changes
in the value of  available-for-sales  securities.  For the three and nine months
ended  September  30,  1999 and 1998,  comprehensive  income for the Company was
equivalent to net income as reported.

Accounting  for  Derivatives:  In June 1997 the Financial  Accounting  Standards
Board released SFAS No. 133 "Accounting for Derivatives  Instruments and Hedging
Activities",  which will be effective for the company beginning January 1, 2001.
SFAS No. 133  establishes  new  accounting  reporting  standards for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging  activities.  The Company has not yet  completed its
analysis of the effect,  if any,  this  standard  will have on future  operating
results.

NOTE B - DEBT

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

On November  24, 1998 the Company and Wells Fargo  Business  Credit  amended the
Credit  Agreement.  The amended Wells Fargo Credit Agreement  consists of (i) an
increase in the  remaining  balance on the term loan to the  original  amount of
$2,125,000,  (ii) an increase in the remaining balance on the $700,000 term loan
to $417,000,  and (iii) a note of up to  $1,000,000  for the purchase of capital
equipment for 1999.

On June 4, 1999 the Company and Wells Fargo  Business  Credit amended the Credit
Agreement.  The amended Wells Fargo Credit Agreement  consists of an increase in

<PAGE>

the $700,000 term loan to the original  amount of $700,000.  As of September 30,
1999 the $2,125,000 term loan carried a balance of $1,535,000; the $700,000 term
loan carried a balance of $525,000;  the  revolving  line of credit  balance was
$4,090,000; and the balance on the capital equipment note was $481,000.

As of  December  31,  1998,  the  Company  was not in  compliance  with  certain
covenants of the Wells Fargo Credit Agreement.  However,  on April 12, 1999, the
Company  amended the Wells Fargo Credit  Agreement  (the Third  Amendment).  The
Third  Amendment  waived the  Company's  noncompliance  with these  covenants at
December 31, 1998,  increased  the limit on the note for the purchase of capital
equipment  from  $1,000,000  to  $1,400,000  and also  modified the terms of the
financial  covenants  for 1999.  As of  September  30,  1999 the  Company was in
compliance with the covenants of the Wells Fargo Credit Agreement as modified by
the Third Amendment.

At September 30, 1999, the Company had received $575,000 from private placements
of  subordinated  debt,  with a maturity  date of March 31,  2001.  $175,000 was
received in the fourth quarter of 1998 with the remaining  $400,000  received in
the first  quarter of 1999.  The debt  carries an  interest  rate of 12% and has
accompanying  warrants to  purchase a number of shares of common  stock equal to
25% of the notes purchased at an exercise price of $5.50 per share.

The Company has  determined  the value of the warrants at the date of the grants
to be $28,500.  The value of the warrants has been  accounted  for as additional
paid-in  capital and deducted  from the principal of the  subordinated  notes as
discount on debt issued.

The funds  received from the  amendment to the Wells Fargo Credit  Agreement and
the  private  placements  of  subordinated  debt were  used to fund the  working
capital needs of the Company.

NOTE C - SEGMENTS

The Company  adopted SFAS No. 131,  Disclosures  about Segments of an Enterprise
and Related  Information,  in 1998,  which  changes the way the Company  reports
information  about its operating  segments.  The  information  for 1998 has been
restated to conform to the 1999 presentation.

The Company has two  reportable  segments:  Product Sales and Lab Services.  The
Product Sales segment is made up entirely 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). The Lab Services segment includes
MEDTOX  Laboratories and CMS.  Services  provided  include forensic  toxicology,
clinical  toxicology,  heavy  metals  analyses,  courier  delivery,  and medical
surveillance.

<PAGE>

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

<TABLE>
<CAPTION>


Segment Information
  (In thousands)                      Three months ended               Nine months ended
                                         September 30                    September 30
<S>                                <C>                              <C>
Laboratory  Services:                      1999            1998            1999           1998
    Net Sales                             7,944           6,861          23,204         20,715
    Segment Income(Loss)                    302             (71)          1,245            725

Product Sales:                             1999            1998            1999           1998
    Net Sales                             1,130             748           2,857          1,879
    Segment Income(Loss)                     47            (121)              5           (556)

Total:                                     1999            1998            1999           1998
    Net Sales                             9,074           7,609          26,061         22,594
    Income(Loss)                            349            (192)          1,250            169

</TABLE>

NOTE D - CONTINGENCIES

In February,  1999 the Company  settled a claim of patent  infringement  brought
against the Company by United  States Drug  Testing  Laboratories  on August 20,
1996. It was alleged that the Company  infringed two patents  allegedly owned by
United  States Drug Testing  Laboratories  relating to  forensically  acceptable
determinations of gestational fetal exposure to drugs and other chemical agents.
The Company, while denying any infringement, has settled with United States Drug
Testing  Laboratories  and has paid  United  States  Drug  Testing  Laboratories
$17,500 and issued  United  States Drug  Testing  Laboratories  2,500  shares of
common  stock  valued at $12,500.  The Company had  previously  accrued for this
contingency.  Accordingly,  the settlement of this matter did not affect results
of  operations  during the three months and the nine months ended  September 30,
1999.

Under the  MEDTOX  Laboratories  acquisition  agreement,  the  sellers of MEDTOX
Laboratories, remain liable for any and all damages awarded for any infringement
which may have occurred on or before the closing date of the Purchase Agreement.
The Purchase  Agreement  also  provides for the seller to indemnify and hold the
Company  harmless  from and against any  damages,  loss,  liability  or expense,
including  reasonable  attorneys'  fees and court  cost in  connection  with any
infringement  which may have occurred on or before the closing date. The Company
is seeking to recover  $79,000 in damages  from the sellers in  accordance  with
these  provisions of the Purchase  Agreement for legal fees and settlement  cost
relating to the United States Drug Testing Laboratories claim.

<PAGE>


On January  31,  1997,  the  Company  filed suit in  Federal  District  Court in
Minnesota  against  Morgan  Capital  LLC,  David  Bistricer  and Alex  Bistricer
alleging  violation in 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  granted  Defendants'  motion  to  dismiss  the  Company's
complaint, ruling that the Defendants' conduct did not constitute a violation of
Section 16(b). 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 United States District Court for the
District of Minnesota  ruled in favor of the Company in its claim against Morgan
Capital LLC. The Court found that Morgan Capital, LLC had violated Section 16(b)
and ordered  Morgan  Capital,  LLC to pay the Company  damages of $551,000  plus
interest. The Company believes it is likely that Morgan Capital, LLC will appeal
the decision to the Eighth  Circuit U.S.  Court of Appeals.  The Company has not
recorded a receivable for this amount due to the uncertainty of the matter.

In May 1999 the Company  settled a lawsuit in the Circuit  Court of Cook County,
Illinois.  The suit was  brought by a previous  landlord  who  alleged  that the
Company  breached the terms of a lease in connection with the asset  acquisition
of MEDTOX Laboratories. In December 1998, the Court had granted summary judgment
against the Company on the issue of liability.  The Company  settled this matter
in May,  1999 for  $684,965.  The Company  had  previously  accrued  $850,000 at
December 31, 1998 for this contingency. The decrease in the accrual was recorded
in the second quarter of 1999 as a reduction in restructuring costs.

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, Year 2000 remediation
efforts, or estimates or

<PAGE>

predictions  of actions  by  customers,  suppliers,  competitors  or  regulatory
authorities,   (iii)  statements  of  future  economic  performance,   and  (iv)
statements of assumptions  underlying  other statements and statements about the
Company or its business.

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

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

Introduction

MEDTOX  Scientific,  Inc. and its subsidiaries,  MEDTOX  Laboratories,  Inc. and
MEDTOX  Diagnostics,  Inc.,  are  referred  to herein as "the  Company".  MEDTOX
Laboratories,  Inc.  is a  toxicology  laboratory  which was founded in 1984 and
provides forensic toxicology,  clinical  toxicology,  and heavy metals analyses.
MEDTOX Diagnostics,  Inc. develops,  manufactures and markets on-site diagnostic
and screening tests which are used to detect  substances in humans,  foodstuffs,
animals, feed and the environment. The company is continuing to transition these
operating  units from being  providers  of high  quality  testing  services  and
devices into a broader service organization by supporting  underlying laboratory
analysis and point-of-care  devices with logistics  management,  data management
and overall program management services.

The Company has two reportable segments:  Laboratory Services and Product Sales.
Laboratory Services include forensic toxicology,  clinical toxicology, and heavy
metal  analyses  as well as  logistics,  data,  and overall  program  management
services. Product Sales include a variety of on-site screening products.

The Company commenced operations as Environmental Diagnostics, Inc. in June 1983
and until 1986 was a development  stage  company.  The Company became engaged in
the manufacture and sale of Conventional  Biodiagnostic  Products as a result of
its acquisition of Granite Technological Enterprises,  Inc. in 1986. The Company
entered the  laboratory  testing  market when it completed  the  acquisition  of
Princeton Diagnostic  Laboratories of America,  Inc., (PDLA) in 1994. On January

<PAGE>

30, 1996 the Company,  then known as EDITEK,  Inc., completed the acquisition of
MEDTOX. In 1997, the Company changed its name to MEDTOX Scientific, Inc.

Three Months Ended September 30, 1999 Compared to Three Months Ended September
30, 1998

Laboratory Services

Revenues from Laboratory  Services for the three months ended September 30, 1999
were  $7,944,000 as compared to $6,861,000 for the three months ended  September
30, 1998. The increase of $1,083,000 or 15.8% was primarily  attributable  to an
8.8% increase in laboratory  samples and an increase in revenue from value added
services.

The gross margin from the revenues  generated from the  laboratory  services was
33.5% for the three  months  ended  September  30,  1999 as  compared to a gross
margin of 27.8% for the same period in 1998.  The  increase  in gross  margin is
primarily  attributable to improved  efficiencies  from higher sample volume and
increased revenue from value added services.

Selling,  general  and  administrative  expenses  for  the  three  months  ended
September 30, 1999 were  $2,070,000  compared to $1,703,000 for the three months
ended  September  30,  1998.  The  increase  of  $367,000  or  21.6% in 1999 was
primarily  the result of increased  sales  expense.  As a  percentage  of sales,
selling,  general and  administrative  expenses  were 26.1% for the three months
ended September 30, 1999 compared to 24.8% for the same period in 1998.

Research  and  development  expenses  incurred  during  the three  months  ended
September  30, 1999 were  $83,000 as compared to $131,000 for the same period in
1998.  This  decrease  of $48,000  was  primarily  the  result of a decrease  in
personnel costs.

The Laboratory  Services  segment for the three months ended  September 30, 1999
incurred interest and financing costs of $205,000, compared to costs of $147,000
incurred  during the three months ended September 30, 1998 primarily as a result
of higher debt levels.

As a result of the above, the net income for the Laboratory  Services segment of
the Company for the three months ended September 30, 1999 was $302,000, compared
to the net loss of $71,000 for the three months ended September 30, 1998.

Product Sales

Revenues  from  Product  Sales for the three  months  ended  September  30, 1999
increased 51.1% to $1,130,000 as compared to $748,000 for the three months ended
September  30, 1998.  The increase was primarily attributable to increased sales
in substance abuse testing products.

<PAGE>

Product sales from substance  abuse testing  products,  which  incorporates  the
EZ-SCREEN  PROFILE(R)-II and VERDICT(R)-II on-site test kits and other ancillary
products for the detection of abused  substances,  increased  134.2% to $726,000
for the three  months-ended  September 30, 1999 compared to sales of $310,000 in
1998. The increase in product sales is primarily due to a strong response to the
introduction of the Company's  second-generation  test kits,  PROFILE(R)- II and
VERDICT(R)-  II. The Company is  continuing to develop new products in this area
and plans to introduce  its  Emergency  Room (ER) panel in the first  quarter of
2000.

Product sales from agricultural  diagnostic products decreased 25.2% to $169,000
for the three months ended  September 30, 1999 compared to $226,000 in 1998. The
primary reason for the decrease of $57,000 was the result of decreased purchases
by the USDA for the  Company's  products.  The  USDA's  needs for the  Company's
products  vary from  quarter to quarter  and sales to the USDA are  expected  to
fluctuate accordingly.

Sales  of  contract  manufacturing  services,   microbiological  and  associated
products  increased  10.8% to $235,000 for the three months ended  September 30,
1999 compared to $212,000 in 1998.  This  increase was due to increased  revenue
from both historical and new customers.

Gross margins from Product  Sales for the three months ended  September 30, 1999
were 44.9% compared to 40.8% for the three months ended  September 30, 1998. The
increase in gross margin from product  sales was due to higher  overall sales of
products.

Selling, general and administration expenses for Products Sales during the three
months ended September 30, 1999 were $331,000 compared to $253,000 for the three
months ended  September 30, 1998. The increase of $78,000 or 30.8% was primarily
the result of increased costs associated with higher sales volume.

Research and  development  expenses  incurred for Product Sales during the three
months ended  September  30, 1999 were  $115,000 as compared to $152,000 for the
same period in 1998.  The decrease of $37,000 or 24.3% was  primarily the result
of completion of the development of the Company's  Profile(R)-II  new generation
on-site product.

For the three  months  ended  September  30,  1999,  the Product  Sales  segment
incurred  interest and financing costs of $15,000 compared to $15,000 during the
three months ended September 30, 1998.

As a result of the above,  the  Product  Sales  segment net income for the three
months  ended  September  30,  1999  was  $47,000,  compared  to the net loss of
($121,000) for the three months ended September 30, 1998.

<PAGE>

Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998

Laboratory Services

Revenues from  Laboratory  Services for the nine months ended September 30, 1999
were  $23,204,000 as compared to $20,715,000 for the nine months ended September
30, 1998. The increase of $2,489,000 or 12.0% was primarily  attributable  to an
8.5%  increase in  laboratory  samples  and an  increase in average  revenue per
sample from value added services.

The gross margin from the revenues  generated from the  laboratory  services was
33.2% for the nine months ended September 30, 1999 as compared to a gross margin
of 31.3% for the same period in 1998.

Selling, general and administrative expenses for the nine months ended September
30, 1999 were  $5,819,000  compared  to  $4,899,000  for the nine  months  ended
September 30, 1998.  The increase of $920,000 or 18.8% in 1999 was primarily the
result of increased sales expense.  As a percentage of sales,  selling,  general
and  administrative  expenses were 25.1% for the nine months ended September 30,
1999 compared to 23.6% for the same period in 1998.

Research  and  development  expenses  incurred  during  the  nine  months  ended
September  30, 1999 were $247,000 as compared to $435,000 for the same period in
1998.  This  decrease  of  $188,000  was  primarily  the result of a decrease in
personnel costs.

The  Laboratory  Services  segment for the nine months ended  September 30, 1999
incurred interest and financing costs of $547,000, compared to costs of $435,000
incurred  during the nine months  ended  September  30,  1998.  The increase was
primarily as a result of higher debt levels.

As a result of the above, the net income for the Laboratory  Services segment of
the  Company  for the nine  months  ended  September  30,  1999 was  $1,245,000,
compared to the net income of $725,000 for the nine months ended  September  30,
1998.

Product Sales

Revenues  from  Product  Sales for the nine  months  ended  September  30,  1999
increased  52.0% to  $2,857,000  as compared to  $1,879,000  for the nine months
ended  September 31, 1998. The increase was  attributable  to increased sales in
all product sales areas.

Product sales from substance  abuse testing  products,  which  incorporates  the
EZ-SCREEN  PROFILE(R)-II and VERDICT(R)-II on-site test kits and other ancillary
products for the detection of abused  substances,  increased 88.9% to $1,735,000

<PAGE>

for the nine months ended  September  30, 1999  compared to sales of $918,000 in
1998. The increase in product sales is primarily due to a strong response to the
introduction of the Company's second-generation test kit, PROFILE(R)- II.

Product sales from agricultural  diagnostic  products increased 5.1% to $395,000
for the nine months ended  September 30 1999  compared to $376,000 in 1998.  The
primary reason for the increase of $19,000 was the result of increased purchases
by the USDA for the Company's products.

Sales  of  contract  manufacturing  services,   microbiological  and  associated
products  increased  24.3% to $727,000 for the nine months ended  September  30,
1999 compared to $585,000 in 1998.  This increase was due to increased  revenues
from both historical customers and new customers.

Gross  margins from Product  Sales for the nine months ended  September 30, 1999
were 44.7%  compared to 35.7% for the nine months ended  September 31, 1998. The
increase in gross margin from product  sales was due to higher  overall sales of
products.

Selling,  general and administration expenses for Products Sales during the nine
months ended September 30, 1999 were $856,000, compared to $735,000 for the nine
months ended September 30, 1998. The increase of $121,000 or 16.5% was primarily
the result of increased costs associated with higher sales volume.

Research and  development  expenses  incurred for Product  Sales during the nine
months ended  September  30, 1999 were  $371,000 as compared to $443,000 for the
same period in 1998.  The decrease of $72,000 or 16.3% was  primarily the result
of completed development of the Company's PROFILE(R)-II on-site product.

For the nine months ended September 30, 1999, the Product Sales segment incurred
interest  and  financing  costs of $48,000 as  compared  to $44,000 for the same
period in 1998.  The  increase  of $4,000 or 9.1% was  primarily  the  result of
increased  debt levels.  The  interest and finance  costs were the result of the
funds  borrowed  by the  Company to fund asset  purchases  and  working  capital
requirements.

As a result of the above,  the  Product  Sales  segment  net income for the nine
months  ended  September  30,  1999  was  $5,000,  compared  to the net  loss of
($556,000) for the nine months ended September 30, 1998.

Material Changes in Financial Condition

Laboratory Services

As of  September  30, 1999 net  accounts  and notes  receivable  for  Laboratory
Services  were  $6,442,000  compared to  $5,554,000  at December 31, 1998.  This

<PAGE>

increase of $888,000 or 16.0% was  primarily  the result of higher sales for the
quarter ended September 30, 1999 as compared to quarter ended December 31, 1998.

Prepaid  expenses  and other  assets  were  $768,000  at  September  30, 1999 as
compared to $503,000 at December 31, 1998. This increase of $265,000 or 52.7% is
primarily the result of renewal of annual  licenses,  fees, and contracts  which
will be amortized throughout the year.

At September 30, 1999,  Laboratory Services had a total balance of restructuring
accruals of $609,000  compared to a balance of  $1,155,000 at December 31, 1998.
The decrease of $546,000 is the result of settlement of pending  litigation  and
certain payments made during the nine months ended September 30, 1999.

At September 30, 1999,  Laboratory Services had a total loan balance owed to its
financial  lender of  $6,484,000  compared to a total  balance of  $5,264,000 at
December 31, 1998. The increase of $1,220,000 or 23.2% was the result  increased
borrowing during the nine months ended September 30, 1999.

Product Sales

At September 30, 1999, net accounts  receivable for Product Sales were $758,000.
This  $355,000  increase  as  compared  to  $403,000  at  December  31, 1998 was
primarily  due to  higher  sales in the  quarter  ended  September  30,  1999 as
compared to the quarter ended December 31, 1998.

Prepaid  expenses  and other  assets  were  $132,000  at  September  30, 1999 as
compared to $21,000 at December 31, 1998.  The increase of $111,000 is primarily
the result of partial  payments  on  specialized  equipment  ordered but not yet
operational  and  renewal of certain  annual  expenses  which will be  amortized
throughout the year.

At September  30, 1999,  the Product Sales segment had a total loan balance owed
to its  financial  lender of $698,000,  compared to a total  balance of $756,000
owed at December 31, 1998. The net decrease of $58,000,  or 7.7%, was the result
of payments made during the nine months ended September 30, 1999.

Liquidity and Capital Resources

Cash received from debt financing has been the primary source of funding for the
working capital  requirements of the Company. At September 30, 1999, the Company
had  available   borrowings  of  $1,027,000.   The  Company  believes  that  the
aforementioned  capital  will  be  sufficient  to  fund  the  Company's  planned
operations  through the remainder of 1999.  While there can be no assurance that
the available  capital will be  sufficient to fund the future  operations of the
Company beyond 1999, the Company believes that consistent  profitable  earnings,
as well as access to debt and equity,  will be the primary basis for funding the
operations of the Company for the long term.

<PAGE>

The  Company  continues  to  follow a plan  which  includes  (i)  continuing  to
aggressively monitor and control costs and (ii) increasing revenue from sales of
the Company's products,  services, and research and development contracts. There
can be no assurance  that costs can be  controlled,  revenues can be  increased,
financing may be obtained, or that the Company will continue to be profitable.

Year 2000

The Year 2000 issue  arises from the fact that many  computer  systems rely on a
two-digit  date code to identify the year (e.g.  99 to represent  1999) and thus
may not be able to differentiate between the year 2000 and the year 1900. If not
corrected,  systems  processing  date-dependant  information  may fail or create
erroneous results causing  disruption of operations  including,  but not limited
to,  a  temporary  inability  to  process  transactions,  report  results,  send
invoices, or engage in similar normal business activity.

Readiness

In 1998, the Company created a task force representing all departments
with the goal of achieving an  uninterrupted  transition  into the Year 2000 for
its products,  internal  computer  systems,  and  equipment.  The Company has no
products with embedded computer chips or  date-sensitive  controls and therefore
does not believe there are any Year 2000  compatibility  issues. The Company has
nearly  completed  its  assessment,  modifications,  and testing of its internal
computer  systems and equipment.  The Company  presently  believes that with the
modifications  completed or planned to existing  software and  conversion to new
software, the Year 2000 issue will not pose significant operational problems for
its computer systems.

The Company has identified and completed  formal  communication  with all of its
significant suppliers to determine the extent to which the Company is vulnerable
to those  third  parties  ability to  resolve  their own Year 2000  issues.  The
Company has received  responses from all of those suppliers that it believes are
highly critical to its operations.  The Company is not aware of Year 2000 issues
with it key suppliers that would have a material  adverse effect on its business
activities or results of operations.

Costs

The Company believes that the total cost of its Year 2000 efforts will not
be material to its  financial  condition,  liquidity  or results of  operations.
Changes  required to internally  supported  software were minor  compared to the
modifications  performed  in the normal  course of  business.  The Company  used
internal  resources and delayed other  projects  while  completing the Year 2000
modifications.  Updates to externally  supported software were generally covered
under  existing  service  contracts.  The total cost of the Company's  Year 2000
efforts in 1998 and 1999 is  estimated to be less than  $50,000.  The total cost
relates  primarily to software license fees and new hardware and equipment,  but
excludes costs  associated with Company  employees.  Costs  associates with Year
2000 compliance are expensed as incurred.

<PAGE>

Risks

Management  believes that  sufficient  resources  have been allocated and
contingency  plans  are in place to  avoid  any  material  impact  on  operating
results.  However,  there can be no guarantee  that the  Company's  systems were
successfully  converted  or that  Year  2000  problems  will  not  result  in an
interruption   in,  or  failure  of,  certain  normal  business   activities  or
operations.  In addition,  there can be no  guarantee  that the systems of other
companies  on which  the  Company  relies  will be Year 2000  compliant  and the
Company is unable to  determine  whether  failure of third  parties  will have a
material impact on the Company's  results of operations,  liquidity or financial
condition.  At the present  time,  it is not possible to determine  whether such
events are likely to occur or quantify any  potential  impact they might have on
the Company's future operating results or financial condition.

Contingency Plans

Business  continuation  plans for critical business  processes
and applications have been developed.  The Company has established a contingency
plan which addresses alternative processes such as manual procedures,  potential
alternative  suppliers,  and  increased  inventory  to  protect  against  supply
interruption.

Readers are cautioned  that  forward-looking  statements  contained in the "Year
2000" update should be read in conjunction with the Company's  disclosures under
the heading:  "CAUTIONARY  STATEMENT  IDENTIFIYING  IMPORTANT FACTORS THAT COULD
CAUSE  THE  COMPANY'S   ACTUAL  RESULTS  TO  DIFFER  FROM  THOSE   PROJECTED  IN
FORWARD-LOOKING STATEMENTS" under Item 2 above.

PART II  OTHER INFORMATION

ITEM 1   LEGAL PROCEEDINGS.  See Part I, Note D

ITEM 2   CHANGES IN SECURITIES  Inapplicable

ITEM 3   DEFAULTS ON SENIOR SECURITIES.  Inapplicable

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


The Annual Meeting (the "1998 Annual  Meeting") of the  stockholders of
the Company was held on September 16, 1999. The following items were approved by
a vote of the stockholder.

<PAGE>

     1.  The  following  individuals  were  elected  to  serve  on the  Board of
Directors  of the  Company  for the  ensuing  year and  until  their  respective
successors are duly elected and qualified:  Harry G. McCoy, Pharm. D., Samuel C.
Powell, Ph.D., Richard J. Braun, James W. Hansen, Miles E. Efron.

         2.  By  a  vote  of  2,333,440  in  favor  and  238,818  against,   the
stockholders  of the Company  approved the  amendment  to Article  FOURTH of the
Company's  Certificate  of  Incorporation  to increase its number of  authorized
common stock from  3,750,000  shares to 7,400,000  shares.  330,989  shares were
abstained or did not vote.

         3.  By  a  vote  of  1,468,805  in  favor  and  120,703  against,   the
stockholders  of the  Company  approved  an  amendment  to Article  FIFTH of the
Company's  Certificate of Incorporation to provide for the classification of the
Board of  Directors  into three  classes of  directors  with  staggered  term of
office. 1,313,739 shares were abstained or did not vote.

         4.  By  a  vote  of  2,404,280  in  favor  and  146,104  against,   the
stockholders  of the Company  approved an  amendment to the  Company's  Employee
Stock  Purchase  Plan to  increase  from  25,000 to 150,000 the number of shares
authorized to be issued pursuant to that Plan.  352,863 shares were abstained or
did not vote.

During the quarter ended  September 30, 1999, no other matters were submitted to
a vote of securities holders.


ITEM 5   OTHER INFORMATION.  Inapplicable

ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K.
         Exhibit 27: Financial Data Schedule

<PAGE>


                                   SIGNATURES


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


Date:    November 12, 1999


                               MEDTOX SCIENTIFIC, INC.

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

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