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, 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 August
13, 1999, was 2,903,278.

<PAGE>

                             MEDTOX SCIENTIFIC, INC.

                                      INDEX

                                                                           Page

Part I  Financial Information:

          Item 1:  Financial Statements

            Consolidated Balance Sheets - June 30, 1999 (Unaudited)
            and December 31, 1998 ......................                     3

            Consolidated Statements of Operations - Three
            Months Ended June 30, 1999 and 1998 and Six
            Months Ended June 30, 1999 and 1998 (Unaudited).........         5

            Consolidated Statements of Cash Flows - Six
            Months Ended June 30, 1999 and 1998 (Unaudited).........         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 ..............................................      20

<PAGE>

<TABLE>

                             MEDTOX SCIENTIFIC, INC.
                          CONSOLIDATED BALANCE SHEETS
                  (In thousands, except for number of shares)
                                  (Unaudited)

<CAPTION>



                                                       June 30            December 31
                                                         1999                1998
<S>                                                 <C>                 <C>
Assets
Current assets
   Cash and cash equivalents                           $    -             $      -

   Accounts receivable:
         Trade, less allowance for doubtful
           accounts ($246-1999; $245-1998)              7,397                5,957
         Other                                             60                   30
                                               ------------------------------------
                                                        7,457                5,987
   Inventories:
         Raw materials                                    462                  444
         Work in process                                  168                  151
         Finished goods                                    89                   80
         Supplies                                         503                  432
                                               ------------------------------------
                                                        1,222                1,107

   Prepaid expenses and other                             728                  524
                                               ------------------------------------


         Total current assets                           9,407                7,618



Equipment and improvements:
    Furniture and equipment                            12,285               11,779
    Leasehold improvements                              1,305                1,283
                                               ------------------------------------
                                                       13,590               13,062
    Less accumulated depreciation
         and amortization                             (10,793)             (10,087)
                                               ------------------------------------

                                                        2,797                2,975
Goodwill, net of accumulated amortization of
    $3,492 in 1999 and $3,086 in 1998                  13,601               14,007

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

Total assets                                         $ 25,805             $ 24,600
                                               ====================================
</TABLE>

<PAGE>
<TABLE>


                             MEDTOX SCIENTIFIC, INC.
                           CONSOLIDATED BALANCE SHEETS
                   (In thousands, except for number of shares)
                                  (Unaudited)
<CAPTION>


                                                           June 30            December 31
                                                             1999                1998
                                                        ------------------------------------

<S>                                                     <C>                    <C>
Liabilities and stockholders' equity
Current liabilities
   Line of credit                                              $ 4,482              $ 3,095
   Checks written in excess of bank balances                        58                  142
   Accounts payable                                              2,727                3,531
   Accrued expenses                                              1,700                1,724
   Current portion of restructuring accrual                        734                1,079
   Current portion of long-term debt                             1,480                1,140
   Current portion of capital lease obligations                    186                  186
                                                        ------------------------------------

         Total current liabilities                              11,367               10,897


Long-term portion of restructuring accrual                           -                   76
Capital lease obligations                                          404                  516
Long term debt obligations                                       1,774                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 - 3,750,000 shares;
         Issued and outstanding -
         2,903,236 shares in 1999 and
         2,899,669 shares in 1998                                  437                  435
   Additional paid-in capital                                   59,845               59,815
   Accumulated deficit                                         (47,846)             (48,748)
  Treasury stock                                                  (176)                (176)
                                                        ------------------------------------

        Total stockholders' equity                              12,260               11,326

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

Total liabilities and stockholders' equity                    $ 25,805             $ 24,600
                                                        ====================================
</TABLE>
<PAGE>
<TABLE>


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

<CAPTION>

                                                           Three Months Ended                             Six Months Ended
                                                                June 30                                      June 30

                                                        1999                1998                     1999                1998
<S>                                                    <C>                 <C>                      <C>              <C>
Revenues

   Laboratory service revenues                              $ 8,210              $ 7,307                $ 15,260      $ 13,854
   Product sales                                                942                  599                   1,727         1,131
                                                            -----------------------------               ----------------------
                                                              9,152                7,906                  16,987        14,985

Cost of services                                              5,386                4,878                  10,225         9,278
Cost of sales                                                   549                  413                     956           765
                                                            ----------------------------                ----------------------
                                                              5,935                5,291                  11,181        10,043

          Gross profit                                        3,217                2,615                   5,806         4,942

Operating expenses

   Selling, general and administrative                        2,254                1,867                   4,274         3,669
   Research and development                                     187                  288                     420           595
   Interest and financing costs                                 199                  177                     375           317
   Other  non-recurring                                        (164)                   -                    (164)            -
                                                            ----------------------------                ----------------------
                                                              2,476                2,332                   4,905         4,581
                                                            ----------------------------                ----------------------
Net income                                                      741                  283                     901           361
                                                            ----------------------------                ----------------------
                                                            ----------------------------                ----------------------
   Basic net earnings per common share                       $ 0.26               $ 0.10                  $ 0.31        $ 0.12
                                                            ----------------------------                ----------------------
                                                            ----------------------------                ----------------------
   Diluted net earnings per common share                     $ 0.25               $ 0.10                  $ 0.31        $ 0.12
                                                            =============================               ======================

(1) Income per share for the three months ended June 30, 1998 and the six months
ended June 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>

                                                                           Six Months Ended
                                                                        June 30           June 30
                                                                          1999              1998
                                                                  ------------------------------------
<S>                                                                <C>                   <C>
Operating activities
Net income                                                          $         901         $       361
   Adjustments to reconcile net income  to net cash
    used in operating activities:
      Depreciation and amortization                                         1,113               1,027
      Changes in operating assets and liabilities;
         Accounts receivable                                               (1,470)             (1,080)
         Inventories                                                         (115)                (44)
         Prepaid expenses and other                                          (204)                (78)
         Accounts payable, accrued expenses and other                        (827)               (481)
         Restructuring accruals                                              (421)               (107)
                                                                  ------------------------------------
Net cash used in operating activities                                      (1,023)               (402)

Investing activities
    Purchases of equipment and improvements                                  (529)               (677)

Financing activities
    Checks in excess of bank balance                                          (84)                  -
    Net proceeds from sale of common stock                                      2                  12
    Net proceeds from line of credit, term loans
       and notes payable                                                   19,061               6,290
    Principal payments on capital lease obligations                          (112)                (94)
    Principal payments on line of credit, term loans
       and notes payable                                                  (17,315)             (5,131)
                                                                  ------------------------------------
Net cash provided by financing activities                                   1,552               1,077
                                                                  ------------------------------------

Increase  in cash and cash equivalents                                          -                  (2)
Cash and cash equivalents at beginning of period                                -                  58
                                                                  ------------------------------------

Cash and cash equivalents at end of period                           $          -         $        56
                                                                  ====================================



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
                                  June 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 six-month period ended June 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 "treasury stock" method.

<TABLE>
<CAPTION>

                                                  Three months ended            Six months ended
                                                        June 30                        June 30
                                                  1999          1998              1999           1998

<S>                                             <C>           <C>             <C>           <C>
Net Income (A)                                    $741,000       $283,000       $901,000       $361,000
Weighted average number of shares
  of common stock outstanding (B)                2,903,502      2,897,033      2,902,414      2,888,666

Dilutive effect of stock options                    30,386              0         23,193              0
Common stock and common
 stock equivalents (C)                           2,933,888      2,897,033      2,925,607      2,888,666
Net income per share:
         Basic (A/B)                                  $.26           $.10           $.31           $.12
         Diluted (A/C)                                $.25           $.10           $.31           $.12

</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 six months ended June
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, 2000.
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
the $700,000 term loan to the original  amount of $700,000.  As of June 30, 1999
the $2,125,000 term loan carried a balance of $1,712,000; the $700,000 term loan
carried a  balance  of  $700,000;  the  revolving  line of  credit  balance  was
$4,482,000; and the balance on the capital equipment note was $309,000.
<PAGE>

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 June 30, 1999 the Company was in compliance
with the covenants of the Wells Fargo Credit  Agreement as modified by the Third
Amendment.

At June 30,  1999,  the Company had  received  $575,000  ($400,000  of which was
received  during  the  first  quarter  of  1999)  from  private   placements  of
subordinated  debt,  with a maturity date of March 31, 2001. 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.  Products
manufactured  include  easy to use,  inexpensive,  on-site  drug  tests  such as
PROFILE II, EZ-SCREEN,  EZ-QUANT, and VERDICT. 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               Six months ended
                                                June 30                          June 30
<S>                                  <C>               <C>              <C>           <C>
Laboratory  Services:                      1999            1998            1999           1998
    Net Sales                             8,210           7,307          15,260         13,854
    Segment Income(Loss)                    710             500             943            796

Product Sales:                             1999            1998            1999           1998
    Net Sales                               942             599           1,727          1,131
    Segment Income(Loss)                     31           (217)            (42)          (435)

Total:                                     1999            1998            1999           1998
    Net Sales                             9,152           7,906          16,987         14,985
    Income(Loss)                            741             283             901            361

</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  infringes 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 effect results
of operations during the three months and the six months ended June 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 had violated  Section 16(b) and
ordered Morgan Capital to pay the Company damages of $551,000 plus interest. The
Company  believes it is likely that Morgan  Capital  will appeal the decision to
the 8th Circuit U.S. Court of Appeals.

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 for  $684,965.  The  Company had  previously  accrued  $850,000  for this
contingency.

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)

<PAGE>

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
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.
<PAGE>

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

Laboratory Services

Revenues from Laboratory  Services for the three months ended June 30, 1999 were
$8,210,000 as compared to  $7,307,000  for the three months ended June 30, 1998.
The increase of $903,000 or 12.4% was primarily attributable to an 8.8% 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
34.4% for the three  months ended June 30, 1999 as compared to a gross margin of
33.2% 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 June 30,
1999 were $2,009,000  compared to $1,650,000 for the three months ended June 30,
1998.  The  increase of $359,000  or 21.8% in 1999 was  primarily  the result of
increased  sales  expenses.  As a  percentage  of sales,  selling,  general  and
administrative  expenses  were 24.5% for the three  months  ended June 30,  1999
compared to 22.6% for the same period in 1998.

Research and  development  expenses  incurred during the three months ended June
30, 1999 were $84,000 as compared to $132,000 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  June 30,  1999
incurred interest and financing costs of $183,000, compared to costs of $148,000
incurred  during the three months  ended June 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 June 30, 1999 was  $710,000,  compared to
the net income of $500,000 for the three months ended June 30, 1998.

Product Sales

Revenues from Product  Sales for the three months ended June 30, 1999  increased
57.3% to $942,000 as compared to $599,000  for the three  months  ended June 30,
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 90.8% to $561,000 for
the three  months-ended  June 30,1999 compared to sales of $294,000 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

<PAGE>

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  increased 7.6% to $71,000
for the three  months  ended June 30,  1999  compared  to  $66,000 in 1998.  The
primary reason for the increase of $5,000 was the result of increased  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  30.1% to $310,000  for the three months ended June 30, 1999
compared to $239,000 in 1998.  This increase was due to increased  revenues from
both historical customers and new customers added in late 1998.

Gross  margins from Product  Sales for the three months ended June 30, 1999 were
41.8%  compared to 31.1% for the three months ended June 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 June 30, 1999 were  $245,000  compared  to $217,000  for the three
months ended June 30, 1998.  The increase of $28,000 or 12.9% 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 June 30, 1999 were  $103,000 as compared to $156,000  for the same
period in 1998.  The  decrease of $53,000 or 34.0% 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 June 30, 1999,  the Product  Sales  segment  incurred
interest and  financing  costs of $16,000  compared to $29,000  during the three
months ended June 30, 1998.  The decrease was the result of lower  borrowings by
the Company.

As a result of the above,  the  Product  Sales  segment net income for the three
months ended June 30, 1999 was $31,000,  compared to the net loss of  ($217,000)
for the three months ended June 30, 1998.

Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998

Laboratory Services

Revenues  from  Laboratory  Services for the six months ended June 30, 1999 were
$15,260,000 as compared to  $13,854,000  for the six months ended June 30, 1998.
The  increase  of  $1,406,000  or 10.1% was  primarily  attributable  to an 8.5%

<PAGE>

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
33.0% for the six months  ended June 30, 1999 as  compared to a gross  margin of
33.0% for the same period in 1998.

Selling,  general and administrative  expenses for the six months ended June 30,
1999 were  $3,748,000  compared to $3,188,000  for the six months ended June 30,
1998.  The  increase of $560,000  or 17.6% in 1999 was  primarily  the result of
increased  depreciation expense, and increased sales expense. As a percentage of
sales,  selling,  general  and  administrative  expenses  were 24.5% for the six
months ended June 30, 1999 compared to 23.0% for the same period in 1998.

Research and development  expenses incurred during the six months ended June 30,
1999 were  $164,000 as compared  to $304,000  for the same period in 1998.  This
decrease of $140,000 was primarily the result of a decrease in personnel costs.

The Laboratory  Services segment for the six months ended June 30, 1999 incurred
interest and financing costs of $342,000, compared to costs of $288,000 incurred
during the six months  ended June 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 six months ended June 30, 1999 was $943,000, compared to the
net income of $796,000 for the six months ended June 30, 1998.

Product Sales

Revenues  from Product  Sales for the six months  ended June 30, 1999  increased
52.7% to $1,727,000 as compared to $1,131,000  for the six months ended June 30,
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 65.8% to $1,008,000
for the six months  ended June 30,  1999  compared to sales of $608,000 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 50.7% to $226,000
for the six months ended June 30 1999 compared to $150,000 in 1998.  The primary
reason for the increase of $76,000 was the result of increased  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.
<PAGE>

Sales  of  contract  manufacturing  services,   microbiological  and  associated
products  increased  31.9% to  $492,000  for the six months  ended June 30, 1999
compared to $373,000 in 1998.  This increase was due to increased  revenues from
both historical customers and new customers added in late 1998.

Gross  margins  from  Product  Sales for the six months ended June 30, 1999 were
44.6%  compared to 32.4% for the six months ended June 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 six
months  ended June 30, 1999 were  $526,000,  compared  to  $481,000  for the six
months ended June 30, 1998.  The increase of $45,000 or 9.4% was  primarily  the
result of increased costs associated with higher sales volume.

Research and  development  expenses  incurred  for Product  Sales during the six
months  ended June 30, 1999 were  $256,000 as compared to $291,000  for the same
period in 1998.  The  decrease of $35,000 or 12.0% was  primarily  the result of
completed development of the Company's Profile (R)-II on-site product.

For the six months  ended June 30,  1999,  the Product  Sales  segment  incurred
interest  and  financing  costs of $33,000 as  compared  to $29,000 for the same
period in 1998.  The  increase  of $4,000 or 13.8% 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 loss for the six months
ended June 30, 1999 was  ($42,000),  compared to the net loss of ($435,000)  for
the six months ended June 30, 1998.

Material Changes in Financial Condition

Laboratory Services

As of June 30, 1999 net accounts and notes  receivable for  Laboratory  Services
were  $6,785,000  compared to $5,554,000 at December 31, 1998.  This increase of
$1,231,000  or 22.2% was  primarily  the result of higher  sales for the quarter
ended June 30, 1999 as compared to quarter ended December 31, 1998.

Prepaid  expenses and other assets were $652,000 at June 30, 1999 as compared to
$503,000 at December 31, 1998.  This  increase of $149,000 or 29.6% is primarily
the result of renewal of annual licenses,  fees, and maintenance contracts which
will be amortized throughout the year.
<PAGE>

At June 30,  1999,  Laboratory  Services  had a total  balance of  restructuring
accruals of $734,000  compared to a balance of  $1,155,000 at December 31, 1998.
The decrease of $421,000 is the result of settlement of pending  litigation  and
certain payments made during the six months ended June 30, 1999.

At June 30,  1999,  Laboratory  Services  had a total loan  balance  owed to its
financial  lender of  $7,147,000  compared to a total  balance of  $5,264,000 at
December 31, 1998. The increase of $1,883,000 or 35.8% was the result  increased
borrowing during the six months ended June 30, 1999.

Product Sales

At June 30, 1999, net accounts receivable for Product Sales were $612,000.  This
$209,000 increase as compared to $403,000 at December 31, 1998 was primarily due
to higher  sales in the  quarter  ended June 30, 1999 as compared to the quarter
ended December 31, 1998.

Prepaid  expenses  and other assets were $76,000 at June 30, 1999 as compared to
$21,000 at December 31, 1998. The increase of $55,000 is primarily the result of
the renewal of certain annual  expenses  which will be amortized  throughout the
year.

At June 30, 1999, the Product Sales segment had a total loan balance owed to its
financial  lender of $583,000,  compared to a total  balance of $756,000 owed at
December 31, 1998.  The net  decrease of $173,000,  or 22.8%,  was the result of
payments made during the six months ended June 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 June 30, 1999, the Company had
checks  written  in  excess  of cash of  $58,000  and  available  borrowings  of
$454,000.   The  Company  believes  that  the  aforementioned  capital  will  be
sufficient to fund the Company's  planned  operations  through 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.

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,  acquisitions successfully  consummated,  or that the
Company will continue to be profitable.
<PAGE>

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-dependent  information  may fail or create
erroneous results, causing disruptions of operations, including, but not limited
to,  a  temporary  inability  to  process  transactions,  report  results,  send
invoices, or engage in similar normal business activity.

The Company has completed its  assessment of its internal  computer  systems and
has completed 85% of the testing and modifications  required to a portion of its
software so that its computer systems function properly with respect to dates in
the year 2000 and beyond.  The Company  expects the remaining 15% of the testing
and  modifications  to be  completed  during  the  third  quarter.  The  Company
presently  believes  that with these  modifications  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  initiated  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.  As there can be no
guarantee  that the systems of other  companies on which the Company relies will
be timely  converted  or that a  failure  to  convert  or a  conversion  that is
incompatible  with the Company's  system would not have an adverse effect on the
Company's  systems,  the  Company  is  developing  contingency  plans  including
alternate vendors and increased stock levels for all critical items.

The Company  anticipates  completing  the Year 2000 project prior to any adverse
impact on its computer  operating  system,  however,  if such  modifications and
conversions are not made, or completed timely,  the Year 2000 issue could have a
material impact on the operations of the Company.

The cost of the Year  2000  project  is not  expected  to be  material.  Changes
required  to   internally   supported   software  are  minor   compared  to  the
modifications  performed in the normal  course of business and the Company plans
to use internal  resources and delay other  projects to complete these Year 2000
modifications.  Updates to  externally  supported  software  are  covered  under
existing  service  contracts or are not  anticipated  to have costs  material in
nature.

The  assessment of the impact,  cost, and completion of the Year 2000 project is
based on  management's  best estimates.  Actual results could differ  materially
from those anticipated by factors  including,  but not limited to, the continued
availability  of certain  resources,  third party  modification  plans,  and the
ability to locate and correct all relevant computer codes.
<PAGE>


ITEM 2   CHANGES IN SECURITIES  Inapplicable

ITEM 3   DEFAULTS ON SENIOR SECURITIES.  Inapplicable

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

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:    August 16, 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