UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


_X_  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998

                                       OR

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


                         Commission file number 0-12117


                                 VENTURIAN CORP.
             (Exact name of registrant as specified in its charter)


            Minnesota                                         41-1460782
(State or other jurisdication of                        IRS Employer ID Number
incorporation or organziation)

11111 Excelsior Boulevard, Hopkins, MN                          55343
(Address of principal executive offices)                      (Zip code)

Registrant's telephone number,
including area code                                         (612) 931-2500

Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding twelve months and (2) has been subject to the filing requirements for
at least the past 90 days.

Yes  _X_   No ___

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:

                                                   Outstanding at July 31, 1998
$1.00 par value common shares                                1,197,081

<PAGE>


                        VENTURIAN CORP. AND SUBSIDIARIES

                                    FORM 10-Q

                                      INDEX



PART I.   Financial Information


     Item 1.

          Consolidated Condensed Balance Sheets
          June 30, 1998 and December 31, 1997                                 3

          Consolidated Condensed Statements of Operations
          Three and six months ended June 30, 1998 and 1997                   4

          Consolidated Condensed Statements of Cash Flows
          Six months ended June 30, 1998 and 1997                             5

          Notes to Consolidated Condensed Financial
          Statements                                                          6


     Item 2.

          Management's Discussion and Analysis of
          the Results of Operations and Financial Condition                  12


PART II.  Other information

     Item 2.  Changes in Securities and Use of Proceeds                      20

     Item 6.  Exhibits and Reports on Form 8-K                               20

<PAGE>


                        Venturian Corp. and Subsidiaries
                     Consolidated Condensed Balance Sheets
                                 (In thousands)

<TABLE>
<CAPTION>
                                                          June 30,          December 31,
                                                            1998                1997
                                                         ----------         ----------
                                                         (Unaudited)
<S>                                                      <C>                <C>       
Current assets
  Cash and cash equivalents                              $      260         $      473
  Accounts receivable, less allowance
    for doubtful accounts of $250 in June
    1998 and $195 in December 1997                            8,261              6,809
  Inventories                                                 8,542              5,421
  Restricted cash                                             2,238                 91
  Prepaid expenses                                              101                451
                                                         ----------         ----------

    Total current assets                                     19,402             13,245

Property and equipment - at cost
  Buildings and improvements                                  1,916              1,916
  Equipment                                                   5,668              5,391
                                                         ----------         ----------
                                                              7,584              7,307
  Less accumulated depreciation and amortization              5,517              5,331
                                                         ----------         ----------
                                                              2,067              1,976
  Land                                                          230                230
                                                         ----------         ----------
                                                              2,297              2,206

Other assets
  Cash surrender value of life insurance, net                 3,454              3,884
  Rental real estate, net of depreciation                     2,868              2,943
  Investment in unconsolidated subsidiary                        --              1,040
  Other                                                         569                570
                                                         ----------         ----------
                                                              6,891              8,437
                                                         ----------         ----------

                                                         $   28,590         $   23,888
                                                         ==========         ==========

Liabilities and Shareholders' Equity
Current liabilities
  Bank overdraft                                         $      660         $      675
  Notes payable to bank                                       1,650              2,200
  Current maturities of long-term debt                          132                193
  Accounts payable                                            4,428              3,346
  Advances from customers                                     2,225                482
  Accrued liabilities                                         3,594              1,398
                                                         ----------         ----------

    Total current liabilities                                12,689              8,294

Long-term debt, less current maturities                       3,999              3,954

Deferred compensation and postretirement benefits             2,217              2,279

Commitments and contingencies                                    --                 --

Shareholders' equity
  Common stock - $1 par value                                 1,134              1,130
  Additional contributed capital                             15,619             15,593
  Accumulated deficit                                        (7,068)            (7,362)
                                                         ----------         ----------
                                                              9,685              9,361
                                                         ----------         ----------

                                                         $   28,590         $   23,888
                                                         ==========         ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

<PAGE>


                        Venturian Corp. and Subsidiaries
                Consolidated Condensed Statements of Operations
                 (Dollars in thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                          Three months ended                  Six months ended
                                                               June 30,                            June 30,
                                                    -----------------------------       -----------------------------
                                                        1998              1997              1998              1997
                                                    -----------       -----------       -----------       -----------
<S>                                                 <C>               <C>               <C>               <C>        
Net sales                                           $    12,679       $     8,078       $    20,075       $    14,821

Cost of products sold                                     9,255             5,831            14,287            10,672
                                                    -----------       -----------       -----------       -----------
  Gross profit                                            3,424             2,247             5,788             4,149

Operating expenses
  Sales and marketing                                       869             1,125             1,811             2,371
  Administrative                                          1,018             1,096             1,688             2,114
  Warehousing                                               461               410             1,005               892
                                                    -----------       -----------       -----------       -----------
    Total operating expenses                              2,348             2,631             4,504             5,377
                                                    -----------       -----------       -----------       -----------
Operating profit (loss)                                   1,076              (384)            1,284            (1,228)

Other income (expense)
  Investment income                                          15                 3                20                11
  Foreign currency gain (loss)                                0                 0                 0                 0
  Interest expense                                         (208)             (114)             (427)             (208)
  Rental income                                             174               135               292               160
  Gain from life insurance proceeds                          --                --               196                --
  Other                                                      --                 5                 4                14
                                                    -----------       -----------       -----------       -----------
    Total                                                   (19)               29                85               (23)
                                                    -----------       -----------       -----------       -----------

Earnings (loss) before income taxes and
 equity in losses of unconsolidated subsidiary            1,057              (355)            1,369            (1,251)

Income taxes                                                 35                --                35                --
                                                    -----------       -----------       -----------       -----------

Earnings (loss) before equity
  in losses of unconsolidated subsidiary                  1,022              (355)            1,334            (1,251)

Equity in losses of unconsolidated subsidiary              (540)               --            (1,040)               --
                                                    -----------       -----------       -----------       -----------
Net earnings (loss)                                 $       482       ($      355)      $       294       ($    1,251)
                                                    ===========       ===========       ===========       ===========

Net earnings (loss) per share - Basic               $       .43       $      (.31)      $       .26       ($     1.11)
                                                    ===========       ===========       ===========       ===========
Net earnings (loss) per share - Diluted             $       .41       $      (.31)      $       .25       ($     1.11)
                                                    ===========       ===========       ===========       ===========

Weighted average shares outstanding
  Basic                                               1,132,762         1,127,784         1,131,348         1,126,309
  Diluted                                             1,183,514         1,127,784         1,162,928         1,126,309

</TABLE>

        The accompanying notes are an integral part of these statements 

<PAGE>


                        Venturian Corp. and Subsidiaries
                Consolidated Condensed Statements of Cash Flows
                             (Dollars in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                Six months ended
                                                                     June 30,
                                                                1998            1997
                                                             ---------       ---------
<S>                                                          <C>             <C>       
  Cash flows from operating activities:
    Net earnings (loss)                                      $     294       ($  1,251)
    Adjustments to reconcile net earnings (loss) to net
      cash provided by (used in) operating activities:
        Depreciation and amortization                              261             304
        Common stock issued for services                            30              25
        Equity in losses of unconsolidated subsidiary            1,040              --
        Gain from life insurance proceeds                         (196)             --
        Change in assets and liabilities:
          Accounts receivable                                   (1,452)           (691)
          Inventories                                           (3,121)              5
          Restricted cash                                       (2,147)             (3)
          Prepaid expenses                                         350              38
          Other                                                     --              10
          Bank overdraft                                           (15)            115
          Accounts payable                                       1,082             184
          Advances from customers                                1,743              (2)
          Accrued liabilities                                    2,196              35
          Deferred compensation and
            postretirement benefits                                116             116
          Payments on deferred compensation
           and postretirement benefits                            (178)           (161)
                                                             ---------       ---------
        Total adjustments                                         (291)            (25)
                                                             ---------       ---------
  Net cash provided by (used in) operating activities                3          (1,276)

Cash flows from investing activities:
  Purchase of property and equipment                              (277)           (498)
  Improvements to rental real estate                                --            (148)
  Purchase of other assets                                        (207)           (187)
  Proceeds from life insurance                                     828              --
  Other                                                              6              65
                                                             ---------       ---------

  Net cash provided by (used in) investing activities              350            (768)

Cash flows from financing activities
  Payments on long-term debt                                      (176)           (232)
  Proceeds from long-term debt                                     160             150
  Proceeds from line of credit                                   6,450           1,800
  Payments on line of credit                                    (7,000)           (400)
  Proceeds from insurance policy loans                              --             220
  Proceeds from issuance of common stock                            --               2
                                                             ---------       ---------

  Net cash provided by (used in) financing activities             (566)          1,540
                                                             ---------       ---------


Net decrease in cash and cash equivalents                         (213)           (504)
Beginning cash and cash equivalents                                473           1,011
                                                             ---------       ---------

Ending cash and cash equivalents                             $     260       $     507
                                                             =========       =========

Supplemental disclosures of cash flow information:
  Cash paid during the period for:
    Interest                                                 $     296       $     108
    Income taxes                                                     2               1

</TABLE>

        The accompanying notes are an integral part of these statements.

<PAGE>


                        VENTURIAN CORP. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


NOTE A - BASIS OF PRESENTATION

         The accompanying unaudited financial statements have been prepared in
accordance with the instructions in Regulation S-X pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although management believes
that the disclosures are adequate to make the information presented not
misleading.

In the opinion of management, the unaudited condensed financial statements
reflect all adjustments, which consist of only normal recurring accruals,
necessary to present a fair statement of the results of operations and financial
position for the periods presented. Results of operations for the interim
periods are not necessarily indicative of results for the full year.

NOTE B - INVENTORIES

         Inventories are stated at the lower of cost or market, principally
using the specific identification method. A portion of Napco's inventory is
acquired on a speculative basis in varying quantities when it becomes available
for purchase. Napco's sales of this inventory may vary from the current period
to several years. It is the company's practice to classify this inventory, which
totaled $2,240,000 at June 30, 1998 and $1,978,000 at December 31, 1997, with
current assets. The company's obsolescence policy requires that purchases of
this inventory be written off if not sold after four years. The four year period
was selected after a review of customers' historical buying patterns and is
reviewed annually to determine whether the period continues to be appropriate.

NOTE C - LINES OF CREDIT

         Napco has an agreement with a bank to provide a $4,000,000 line of
credit for international transactions and cash advances. The agreement requires
that up to $1,000,000 of certain letters of credit be collateralized 100 percent
with a restricted cash balance. The agreement also provides for cash or letter
of credit advances up to $3,000,000, collateralized by the cash surrender value
of certain of the company's life insurance policies. Letters of credit may be

<PAGE>


issued for up to $1,000,000 against this line, with the balance available for
cash advances.

In December 1997, the line of credit was amended to provide for additional
working capital advances of up to $3,000,000 through April 30, 1998,
collateralized by accounts receivable, inventory, equipment and other property.
In May 1998, the bank agreed to extend the term of this amendment through
October 31, 1998. The bank has also agreed to provide an additional $2,000,000
in special letter of credit advances, as defined in the agreement, through
February 28, 1999.

Advances on the $4,000,000 line of credit bear interest at the bank's base rate
and advances on the other lines of credit bear interest at the bank's base rate
plus 3/4 percent. At June 30, 1998, approximately $4,667,000 was available for
cash and letter of credit advances pursuant to the agreement, as amended. As of
June 30, 1998, $1,650,000 in cash advances were outstanding against the line of
credit and approximately $718,000 in letter of credit advances were outstanding.
At June 30, 1998, approximately $1,965,000 in letter of credit advances were
outstanding on the special letter of credit agreement, which was collateralized
by a restricted cash balance.

Napco has additional lines of credit available for international transactions
such as letters of credit and bid, performance and advance payment guarantees on
a transaction basis for which restricted cash balances are required. Letters of
credit issued by financial institutions which were collateralized by a
restricted cash balance totaled $273,000 as of June 30, 1998.

NOTE D - COMMITMENTS AND CONTINGENCIES

         At June 30, 1998, the company had performance and advance payment
guarantees outstanding on various sales contracts totaling $310,000. These
guarantees were backed by insurance bonds, which do not require cash collateral.

The company owns rental real estate that contains industrial contaminants and
must be remediated. In 1996, the MPCA granted approval of the Phase II
Investigation and Review of Remedial Alternatives Report and the Response Action
Plan and Remedial Design Report submitted by a consultant retained by the
company in connection with the environmental remediation of the property.
Remediation recommended by the consultant at the property commenced in 1996 and
was completed in 1997 with the exception of a groundwater monitoring program
which began in December 1996. An agreement in principle was reached with the
MPCA in early 

<PAGE>


1998, and the company now expects to receive a Certificate of Completion by
September 1998 for the property. The Certificate will likely include a Voluntary
Response Action Agreement to continue the groundwater monitoring program.

NOTE E - INVESTMENT IN UNCONSOLIDATED SUBSIDIARY

         Atio Corporation USA, Inc. (Atio USA), formerly Venturian Software
Enterprises, Inc., provides customer contact automation software under the trade
name Cybercall(R).

Prior to October 1997, Atio USA was a 90 percent owned subsidiary of Venturian
Corp. and prior to December 1996 was an 80 percent owned subsidiary of Venturian
Corp. As a result of a transaction entered into in October 1997, Venturian Corp.
owns 45 percent of Atio USA. As of October 1, 1997, Venturian Corp. began
accounting for its investment in Atio USA under the equity method of accounting.
For the three and six months ended June 30, 1998, Venturian Corp. recorded
$540,000 and $1,040,000 of equity in losses of unconsolidated subsidiary for its
45 percent share of Atio USA's losses and has fully written off its investment
in Atio USA.

Atio USA has needed additional working capital to fund its operations, and Atio
Corporation International agreed in June 1998 to provide up to $2,400,000 as a
loan to provide for the short-term funding requirements of Atio USA. Atio
Corporation International has the right to convert any portion of the loan which
has been issued to equity in Atio USA at a price of $1.75 per share, upon
demand, within one year from the date of the loan. In addition, Atio USA may
make future capital calls pursuant to the capital call provisions of a
shareholders agreement. Should the company elect not to provide additional
funding to Atio USA in response to these capital call requirements, its
ownership percentage could be diluted based upon the capital contributions made
by other parties. The company's ownership could also be diluted based upon a
conversion of any portion of the $2,400,000 loan from Atio International.

The following is summarized financial information of Atio USA as of June 30,
1998 and for the six months then ended:

         Current assets                                      $  363,000
         Noncurrent assets                                      484,000
         Current liabilities                                  1,062,000
         Noncurrent liabilities                                 500,000
         Shareholders' deficit                                 (714,000)
         Revenues                                               219,000
         Net loss                                            (2,361,000)

<PAGE>


Venturian Corp.'s results of operations include all of the results of Atio USA
for the three and six months ended June 30, 1997.

NOTE F - NEW ACCOUNTING PRONOUNCEMENTS

         During 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," which was required to be adopted in the first quarter of
1998. SFAS No. 130 established standards for the reporting and display an amount
representing comprehensive income and its components as part of the company's
basic financial statements. Comprehensive income includes certain non-owner
changes in equity that currently are excluded from net income. Because the
company historically has not experienced transactions that would be included in
comprehensive income, the adoption of SFAS No. 130 did not have a material
effect on the consolidated financial position, results of operations, or cash
flows of the company.

Additionally, the company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," effective January 1, 1998. SFAS No. 131
requires the company to disclose financial and other information about its
business segments, their products and services, geographic areas, sales,
profits, assets and other information. SFAS No. 131 is effective for financial
statements for periods beginning after December 15, 1997, however the statement
does not need to be applied to interim financial statements in the initial year
of application. Comparative information for the interim periods in the initial
year of application will be reported in the company's financial statements for
interim periods in fiscal 1999.

NOTE G - NET EARNINGS (LOSS) PER SHARE

         The company's basic net earnings (loss) per share amounts have been
computed by dividing net earnings (loss) by the weighted average number of
outstanding common shares. The company's diluted net earnings (loss) per share
is computed by dividing net earnings (loss) by the weighted average number of
outstanding common shares and common share equivalents relating to stock
options, when dilutive.

For the three and six months ended June 30, 1998, 50,752 and 31,581 shares of
common stock equivalents were included in the computation of diluted net
earnings (loss) per share. Options to purchase 41,600 and 46,300 shares of
common stock with an average exercise price of $7.74 and $6.47 were outstanding
for the three and six months ended June 30, 1998, and options to purchase
173,400 and 174,150 shares of

<PAGE>


common stock with an average exercise price of $4.52 and $4.51 were outstanding
for the three and six months ended June 30, 1997, but were not included in the
computation of diluted net loss per share because to do so would have been
anti-dilutive.

NOTE H - SHAREHOLDERS' EQUITY

         The company's Board of Directors declared a three-for-two stock split
on February 24, 1998. The record date for the stock split was April 15, 1998 and
the stock split was effected on April 30, 1998. The company's share and per
share information for 1997 has been restated to reflect the effects of the
three-for-two stock split.

NOTE I - SUBSEQUENT EVENT

         On July 30, 1998, the company announced that it had closed on a
privately negotiated transaction whereby Quarterdeck Equity Partners, Inc.
("Quarterdeck") had purchased 63,005 shares of Venturian Corp. common stock at
$7.00 per share and $504,000 of an 11 percent convertible debenture. The
debenture is convertible at $8.00 per share into 63,005 shares of common stock,
at the option of Quarterdeck, during a period that begins 120 days after the
closing date and that ends three years after the closing date. Upon conversion
of debenture, Quarterdeck would become a 10 percent holder of Venturian common
stock. Upon written request of Quarterdeck, the company has agreed to nominate
the president of Quarterdeck to the Board of Directors of the company at the
next annual meeting of shareholders of the company. In addition, Gary B.
Rappaport, Chairman of the Board of Venturian, has entered into a separate
voting agreement whereby he has agreed to vote his shares in support of the
Quarterdeck nominee. Quarterdeck has agreed that, for a period of two years
neither it nor any of its members or affiliates will purchase any capital stock
or other securities or rights to purchase capital stock or other securities of
the company without Venturian's prior written consent, provided, however, that
Quarterdeck may purchase shares of Venturian's common stock in the open market
with a purchase price not in excess of $55,000 in the aggregate; and provided,
further, that Quarterdeck may purchase in the open market shares of capital
stock or other securities or rights to the extent necessary to maintain its
percentage interest in Venturian.

Quarterdeck Equity Partners, Inc. is an affiliate of Quarterdeck Investment
Partners, Inc., a Washington D.C. and Los Angeles based investment bank focusing
in the global aerospace and defense markets. In June, the company announced that
it had retained Quartedeck Investment Partners as its financial adviser in an
initiative to become a force in the consolidation of small companies in the
global defense industry.

<PAGE>


                        VENTURIAN CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
                             June 30, 1998 and 1997

Forward-looking statements contained in this Report on Form 10-Q are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. There are certain important factors that could cause results
to differ materially from those anticipated by the statements made herein,
certain of which are set forth herein. Investors are cautioned that all
forward-looking statements involve risks and uncertainty. Among the factors that
could cause actual results to differ materially are the following:

With respect to Napco International, one of the primary risks relates to its
export sales, which could be affected by political decisions by the U.S.
government, which could prevent future sales to foreign nations, or monetary,
military or economic conditions in certain countries that may affect sales in
such countries. Management believes that these risks are reduced by Napco's wide
geographic and product diversification. While historically there has not been a
reliance on one single customer, sales to one customer accounted for 23 percent
and 32 percent of sales for the years ended December 31, 1997 and 1996. Sales to
this customer accounted for approximately 2 percent and 3 percent of net sales
for the three and six months ended June 30, 1998. Sales to one other customer
accounted for 45 percent and 37 percent of net sales for the three and six
months ended June 30, 1998. For the year ended December 31, 1997, sales to this
customer accounted for 10 percent of Napco sales. Sales to one additional
customer accounted for 21 percent and 15 percent for the three and six months
ended June 30, 1998. Napco had no sales to this customer for the three and six
months ended June 30, 1997. Other factors such as competition, the potential for
labor disputes and interruption in sources of supply also could cause results to
differ.

Prior to October 1997, Atio USA was a 90 percent owned subsidiary of Venturian
Corp. and prior to December 1996 was an 80 percent owned subsidiary of Venturian
Corp.

As a result of a of a transaction entered into in October 1997, Venturian Corp.
owns 45 percent of Atio USA. As of October 1, 1997, Venturian Corp. began
accounting for its investment in Atio USA under the equity method of accounting.
The company's results for the three and six 

<PAGE>


months ended June 30, 1998 include 45 percent of Atio USA's results of
operations which have been reported under the caption "Equity in losses of
unconsolidated subsidiary" in the company's Condensed Statement of Operations.
As of June 30, 1998, the company had fully written off its investment in Atio
USA.

The company's results of operations include all of the results of Atio USA for
the three and six months ended June 30, 1997, as follows:

         Net sales                   $ 268,000              $534,000
         Gross profit                  248,000               471,000
         Operating expenses            814,000             1,525,000
         Operating loss               (566,000)           (1,054,000)
         Net loss                    $(585,000)          $(1,078,000)


RESULTS OF OPERATIONS

Net Sales

Consolidated net sales were $12,679,000 during the second quarter of 1998,
compared with $8,078,000 for the same period in 1997. For the first six months
of 1998, consolidated net sales were $20,075,000, compared with $14,821,000 for
the same period last year.

Napco sales increased to $12,679,000 for the three months ended June 30, 1998,
up approximately 62 percent from $7,810,000 for the three months ended June 30 a
year ago. For the six months ended June 30, 1998 and 1997, Napco sales were
$20,075,000 and $14,287,000. Sales for both the three and six month periods were
up significantly due to shipments against two large programs. Sales on Napco's
$15.9 million contract with the U.S. Government for M113 upgrade kits totaled
approximately $5,339,000 during the second quarter and $6,795,000 for the first
six months of this year. Shipments against a contract for repowering kits for
the M41 light tank totaled approximately $2,581,000 and $3,079,000 for the same
periods.

Atio USA sales included in results of operations were $268,000 and $534,000 for
the quarter and six months ended June 30, 1997.

<PAGE>


Costs and Expenses

Cost of products sold on a consolidated basis was 73 percent of net sales for
the second quarter of 1998, compared with 72 percent of net sales a year ago.
Cost of products sold was 71 percent and 72 percent of net sales for the six
months ended June 30, 1998 and 1997.

For the second quarter, cost of products sold for Napco sales was approximately
73 percent of net sales in 1998 and 74 percent of net sales in 1997. Cost of
products sold for Napco sales was 71 percent and 74 percent of net sales for the
six months ended June 30, 1998 and 1997, respectively.

Atio USA cost of products sold was approximately 7 and 12 percent of net sales
for the second quarter and first six months of 1997.

Consolidated operating expenses for the second quarter and first six months of
1998 were $2,348,000 and $4,504,000. In 1997, consolidating operating expenses
were $2,631,000 and $5,377,000 for the same periods.

Napco operating expenses increased to $2,119,000 for the second quarter of 1998,
compared with $1,673,000 for the second quarter of last year. On a year-to-date
basis, Napco operating expenses were $4,090,000 in 1998, compared with
$3,565,000 in 1997.

Napco sales and marketing expenses increased by $96,000 to $869,000 in this
year's second quarter from $773,000 for the same period a year ago. Commission
expense included in sales and marketing expense was $97,000, or approximately 1
percent of net sales during the second quarter of 1998, compared with $163,000,
or approximately 2 percent of net sales during the second quarter a year ago.
Napco pays no commission on either of the two large programs which comprised a
significant portion of sales during the second quarter, resulting in the lower
level of commission expense during 1998's second quarter. Sales and marketing
expenses excluding commission expense increased during this year's second
quarter compared with last year, in part due to additions to staff during the
latter half of 1997, and also due to higher prototype expenses and bank charges
incurred in connection with the large repower program. Napco sales and marketing
expenses were $1,811,000 and $1,673,000 for the six months ended June 30, 1998
and 1997.

<PAGE>


Napco administrative expenses increased to $789,000 in the second quarter of
1998, from $490,000 for the same period a year ago. Year-to-date administrative
expenses were $1,274,000 and $1,000,000 in 1998 and 1997. Administrative
expenses were up in the second quarter and year-to-date in 1998, primarily due
to incentive accruals.

Napco warehousing expense was $461,000 during the second quarter of 1998,
compared with $410,000 for the same period last year. Year-to-date warehousing
expenses increased to $1,005,000 in 1998, up from $892,000 for the first half of
1997. Increases during both periods are attributable to higher warehousing costs
associated with the large U.S. Government program.

Operating expenses for Atio USA included in results of operations were $814,000
and $1,525,000 for the three and six months ended June 30, 1997.

Corporate overhead expenses, included in administrative expense, were $229,000
in the second quarter of 1998, compared with $144,000 for the same period a year
earlier. Year-to-date corporate overhead also increased to $414,000 in 1998 from
$287,000 in 1997. Higher expense levels in both periods are mainly attributable
to the addition of a new company president late in the fourth quarter of 1997.

Other Income (Expense)

Other income includes rental income, net of expenses, of $174,000 and $135,000
for the second quarters of 1998 and 1997. Year-to-date, rental income, net of
expenses, was $292,000 in 1998 and $160,000 in 1997. Net rental income was
higher in 1998 due to increased occupancy rates as well as to a decrease in
utility and maintenance costs.

Other income also included a $196,000 gain from life insurance proceeds recorded
during the first quarter of 1998.

Interest expense increased to $208,000 in the second quarter of 1998, from
$135,000 for the same period a year ago. Interest expense was $427,000 for the
first half of 1998, compared with $208,000 for the first six months of 1997. The
increase in interest expense was due both to the refinancing of the company's
rental real estate and also due to increased borrowings against the company's
line of credit to fund operations.

<PAGE>


Operating Profit (Loss)

The company reported an operating profit of $1,076,000 for the second quarter of
1998, compared with an operating loss of $384,000 for the second quarter last
year. Last year, results of operations included the operating losses of Atio
USA, which totaled $566,000 for the second quarter. On a year-to-date basis, the
company reported an operating profit of $1,284,000, compared with an operating
loss of $1,228,000 for the first half of 1997. A year ago, results of operations
included the $1,078,000 operating losses of Atio USA through June 30, 1997.

Napco reported an operating profit of $1,305,000 for the quarter ended June 30,
1998, compared with an operating profit of $326,000 for the same period in 1997.
For the first six months of 1998, Napco reported an operating profit of
$1,698,000, compared with an operating profit of $113,000 reported for the same
period last year. Napco operating profits were significantly higher during 1998,
primarily due to substantial increases in sales.

Income Taxes

The company recorded income tax expense of $35,000 for the three and six months
ended June 30, 1998. While the company had net operating loss carryforwards
sufficient to offset tax expense, income tax expense was attributable to
alternative minimum tax. The company did not record a tax benefit for the
quarter and six months ended June 30, 1997 because no taxes would have been
recoverable from a carryback of the net loss.

Equity in Losses of Unconsolidated Subsidiary

The company recorded $540,000 and $1,040,000 of equity in losses of
unconsolidated subsidiary for the three and six months ended June 30, 1998.
These losses represent the company's 45 percent share of Atio USA's losses for
the periods presented. As of June 30, 1998, the company has fully written off
its investment in Atio USA.

Net Earnings (Loss)

The company reported net earnings of $482,000 for the second quarter of 1998,
compared with a net loss of $355,000 for the same period last year. For the
first six months of 1998, the company reported net earnings of $294,000,
compared with a net loss of $1,251,000 for the first half of 

<PAGE>


1997. In 1998, the net earnings (loss) are after deducting the company's 45
percent equity in the losses of Atio USA. In 1997, the net loss included all of
the results of operations of Atio USA.

Backlog

Napco's backlog totaled $24,789,000 at June 30, 1998, up from $23,892,000 at
June 30, 1997.


FINANCIAL CONDITION

The company's current ratio was 1.5 to one at June 30, 1998, compared with 1.6
to one at the end of 1997. Long-term debt at June 30, 1998 and December 31, 1997
totaled $3,999,000 and $3,954,000 and was approximately 14 percent and 17
percent of total assets at the end of the quarter and prior year. Cash and cash
equivalents at June 30, 1998 decreased to $260,000, compared with $473,000 at
December 31, 1997.

Napco has an agreement with a bank to provide a $4,000,000 line of credit for
international transactions and cash advances. The agreement requires that up to
$1,000,000 of certain letters of credit be collateralized 100 percent with a
restricted cash balance. The agreement also provides for cash or letter of
credit advances up to $3,000,000, collateralized by the cash surrender value of
certain of the company's life insurance policies. Letters of credit may be
issued for up to $1,000,000 against this line, with the balance available for
cash advances.

In December 1997, the line of credit was amended to provide for additional
working capital advances of up to $3,000,000 through April 30, 1998,
collateralized by accounts receivable, inventory, equipment and other property.
In May 1998, the bank agreed to extend the term of this amendment through
October 31, 1998. The bank has also agreed to provide an additional $2,000,000
in special letter of credit advances, as defined in the agreement, through
February 28, 1999.

Advances on the $4,000,000 line of credit bear interest at the bank's base rate
and advances on the other lines of credit bear interest at the bank's base rate
plus 3/4 percent. At June 30, 1998, approximately $4,667,000 was available for
cash and letter of credit advances pursuant to the agreement, as amended. As of
June 30, 1998, $1,650,000 in cash advances were outstanding against the line of
credit and approximately $718,000 in letter of credit advances were outstanding.
At June 30, 1998, approximately $1,965,000 in letter of credit advances were
outstanding on the special 

<PAGE>


letter of credit agreement, which was collateralized by a restricted cash
balance.

Napco has additional lines of credit available for international transactions on
a transaction basis for which restricted cash balances are required. Letters of
credit issued by financial institutions which were collateralized by a
restricted cash balance totaled $273,000 as of June 30, 1998.

As of October 1, 1997, the company began accounting for its 45 percent
investment in Atio USA under the equity method of accounting. As of June 30,
1998, the company had fully written off its investment in Atio USA.

Atio USA has needed additional working capital to fund its operations, and Atio
Corporation International agreed in June 1998 to provide up to $2,400,000 as a
loan to provide for the short-term funding requirements of Atio USA. Atio
Corporation International has the right to convert any portion of the loan which
has been issued to equity in Atio USA at a price of $1.75 per share, upon
demand, within one year from the date of the loan. In addition, Atio USA may
make future capital calls which the company may elect to meet pursuant to the
capital call provisions of a shareholders agreement. Should the company elect
not to provide additional funding to Atio USA in response to these capital call
requirements, its ownership percentage could be diluted based upon capital
contributions made by other parties. The company's ownership percentage could
also be diluted based upon a conversion of any portion of the $2,400,000 loan
from Atio Corporation International. Management has not determined whether it
will fund further capital requirements of Atio USA. There can be no assurance
that Atio USA will be able to secure necessary working capital through external
financing or capital calls.

Management believes that the company's present cash reserves and available
credit should be sufficient to fund its operations and to collateralize all
international transactions. In addition, management has been successful in
obtaining insurance bonds with no collateral requirements for certain of its
international transactions rather than utilizing its traditional bank lines of
credit. The company has additional sources of funds in the form of borrowings
against life insurance policies or other non-current assets.

The company does not expect Year 200 computer issues to significantly affet its
operations. The company is reviewing internally developed programs for
compliance and is contacting external software vendors and other suppliers
regarding compliance. The company has not yet made an 

<PAGE>


estimate of the costs involved, but does not expect such costs to be material.

The company's common stock is traded on the Nasdaq Stock Market's National
Market. In February 1998, Nasdaq notified the company that it was not in
compliance with Nasdaq's new public float requirement which became effective on
February 23, 1998. Nasdaq requires a minimum of 750,000 shares not held directly
or indirectly by any officer or director and any other person who is the
beneficial owner of more than 10 percent of the total shares outstanding.
Subsequent to Nasdaq's notification, the company's Board of Directors declared a
three-for-two stock split in order to meet the public float requirement. The
record date for the stock split was April 15, 1998 and was effected on April 30,
1998.

By letter dated July 20, 1998, Nasdaq informed the company that its stock would
continue to be listed on the Nasdaq Stock Market's National Market.

<PAGE>


                        VENTURIAN CORP. AND SUBSIDIARIES
                                     PART II
                                OTHER INFORMATION


Item 2.  Changes in Securities and Use of Proceeds

         On July 30, 1998, the company announced that it had closed on a
privately negotiated transaction whereby Quarterdeck Equity Partners, Inc.
("Quarterdeck") had purchased 63,005 shares of Venturian Corp. common stock at
$7.00 per share and $504,000 of an 11 percent convertible debenture. The
debenture is convertible at $8.00 per share into 63,005 shares of common stock,
at the option of Quarterdeck, during a period that begins 120 days after the
closing date and that ends three years after the closing date. Upon conversion
of debenture, Quarterdeck would become a 10 percent holder of Venturian common
stock. Upon written request of Quarterdeck, the company has agreed to nominate
the president of Quarterdeck to the Board of Directors of the company at the
next annual meeting of shareholders of the company. In addition, Gary B.
Rappaport, Chairman of the Board of Venturian, has entered into a separate
voting agreement whereby he has agreed to vote his shares in support of the
Quarterdeck nominee. Quarterdeck has agreed that, for a period of two years
neither it nor any of its members or affiliates will purchase any capital stock
or other securities or rights to purchase capital stock or other securities of
the company without Venturian's prior written consent, provided, however, that
Quarterdeck may purchase shares of Venturian's common stock in the open market
with a purchase price not in excess of $55,000 in the aggregate; and provided,
further, that Quarterdeck may purchase in the open market shares of capital
stock or other securities or rights to the extent necessary to maintain its
percentage interest in Venturian.

Quarterdeck Equity Partners, Inc. is an affiliate of Quarterdeck Investment
Partners, Inc., a Washington D.C. and Los Angeles based investment bank focusing
in the global aerospace and defense markets. In June, the company announced that
it had retained Quartedeck Investment Partners as its financial adviser in an
initiative to become a force in the consolidation of small companies in the
global defense industry.

The company relied on the exemption from registration contained in Section 4 (2)
of the Securities Act of 1933, as amended, since the sale was to only a single,
sophisticated investor.


Item 6.  Exhibits and Reports on Form 8-K

     a)  Exhibits

<PAGE>


         Exhibit 4. 11% Subordinated Convertible Debenture, dated July 30, 1998
issued to Quarterdeck Public Equities, LLC.

         Exhibit 10.1 Common Stock and Debenture Purchase Agreement, dated July
30, 1998, between Venturian Corp. and Quarterdeck Public Equities, LLC.

         Exhibit 10.2 Voting Agreement, dated July 30, 1998, between Quarterdeck
Public Equities, LLC and Gary B. Rappaport.

         Exhibit 27. Financial Data Schedule (for SEC use only)

     b)  No report on Form 8-K was filed during the quarter for which this 
report is filed.

<PAGE>


                                    SIGNATURE


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.



                                                VENTURIAN CORP.
                                                (Registrant)


                                            By: /s/ Mary F. Jensen
                                                Mary F. Jensen
                                                Chief Financial Officer



Date:   August 13, 1998