| UNITED          STATES          SECURITIES AND EXCHANGE COMMISSION          WASHINGTON, D.C. 20549 FORM. 10-QSB

[ X ]	QUARTERLY          REPORTS UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF          1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2001.

OR

[ ]	QUARTERLY REPORTS          UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR          THE TRANSITION PERIOD FROM ____________ TO ______________.

Commission          File No. 0-19844

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PARACELSIAN,          INC.

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

(Exact          name of small business issuer as specified in its charter)          Delaware  
							16-1399565          -----------  
--------------------          
 (State          or other jurisdiction of incorporation or organization)   
(I.R.S.          Employer Identification No.) 
222          Langmuir Laboratories, Cornell Technology Park, Ithaca, New York   
14850
--------------------------------------------------------------------            
--------------------          	 (Address          of principal executive offices)  
Zip          Code       
Issuer's          telephone number: (607) 257-4224          -----------------------------------------------------

Check whether the issuer (1) filed all reports required          to be filed by section 13 or 15(d) of the Securities Exchange Act during          the past 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 [ ]

There          were 23,526,849 shares of Common Stock outstanding at May 1, 2001

**(PAGE          1)**

**Paracelsian,          Inc. and Subsidiary**

Index
  
Page

PART I. FINANCIAL INFORMATION

Item 1.  Financial          Statements
   
Consolidated Balance          Sheet as of March 31, 2001 (Unaudited)

3
 
Consolidated Statements          of Operations for the three months and six months ended March 31, 2001          and 2000 and the cumulative period from inception to March 31, 2001          (Unaudited) 

                     4
 
Consolidated Statements          of Cash Flows for the six months ended March 31, 2001 and 2000 and the          cumulative period from inception to March 31, 2001 (Unaudited)

5
 
Notes to Consolidated          Financial Statements (Unaudited)

7
 
Item. 2 Management's          Discussion and Analysis of Financial Condition and Results of Operations

9
 
PART II OTHER INFORMATION
 
Item 1 Legal Proceedings

12
 
Item 6 Exhibits and          Reports of Form 8-K

12
 Signatures12   
**Paracelsian,          Inc. and Subsidiary**(A Development          Stage Company)           Consolidated Balance Sheet           March 31, 2001 (Unaudited) 
      
Assets          

Current Assets: 
  
Cash and cash equivalents          

$4,746          
  
Inventory 

- 
  
Prepaid expenses 

28,785          
  
Other current assets          

30,445          
    
                                      Total current assets 

63,976          
    
Equipment, net 

108,484          

Interest Receivable

   45,988 

Note Receivable

148,750 

Other Assets: 
  
Patents and trademarks,          net 

204,845          
      
508,067          
      
$572,043          
    
Liabilities          and Stockholders Equity (Deficit) 

Current Liabilities:          
  
Accounts payable 

$431,032          
  
Accrued expenses 

601,312          
  
Current portion of          capital lease obligation 

1,975          
  
Current portion of          notes payable 

139,206          
  
Advances from related          party

191,877 
    
                                      Total current liabilities 

1,334,805          

Long-term Liabilities:          
  
 Long-term portion          of capital lease obligation 

6,084          
  
Long-term portion of          notes payable 

12,150          
    
                                      Total current and long-term liabilities          

1,353,039          
    
Stockholders Equity (Deficit) 
  
 Common Stock, $.01 par value; 35,000,000 shares authorized;          
  
                                      23,520,849 shares outstanding 

234,904 
      
Additional paid-in-capital 

25,404,381 
  
Deficit accumulated during the development stage

(25,077,766)
  
Treasury stock, at cost; 265,478 shares

(1,342,515)
    
                                       Total stockholders equity (deficit)          

(780,996)
    $572,043   
See accompanying  notes to consolidated financial statements

**(PAGE    3)**

**Paracelsian,          Inc. and Subsidiary**

(A Development          Stage Company)          Consolidated Statements of Operations          For the three months and six months ended March 31, 2001 and 2000,          And the cumulative period from inception to March 31, 2000          (Unaudited)
              
Three          Months Ended           March 31,

Six          Months Ended           March 31, 

Cumulative          Period          from Inception to          March 31, 
  
2001             

2000             

2001             

2000             

2001          

Revenues: 
      
 Marketing rights 

59,866          

65,969          

 123,121          

 116,358          

 974,793          
  
Products 

 2,964          

 - 

 7,162          

 1,138          

 259,180          
  
Product testing 

 5,614          

 25,372          

 5,614          

 50,892          

 167,991          
  
Product royalties 

 - 

 - 

 - 

 - 

 1,246          
  
Subscription revenue          

 - 

 - 

 - 

 - 

 31,625          
      
                Total          Revenues 

 68,444          

 91,341          

 135,897          

 168,388          

 1,434,835          
    
Operating expenses:          
  
Research and product          engineering 

 132,751          

 150,783          

 255,696          

 304,786          

 9,437,727          
  
General and administrative          

 190,928          

 277,755          

 448,574          

 576,337          

 14,915,741          
  
Product launch costs          

 - 

 - 

 - 

 - 

 300,544          
  
Cost of products sold          

 357          

 - 

 1,752          

 - 

 268,464          
      
                   Total          Operating expenses 

 324,036          

 428,538          

 706,022          

 881,123          

 24,922,476          
    
 Loss from operations          during the development stage 

 (255,592)          

 (337,197)          

 (570,125)          

 (712,735)          

 (23,487,641)          
    
Interest income (expenses),          net 

 (2,849)          

 - 

 (3,035)          

 16,312          

 499,387          
  
Gain on sale of assets          

 - 

 - 

 - 

 - 

 38,488          
      
 Net loss during the          development stage 

 (258,441)          

 (337,197)          

 (573,160)          

 (696,423)          

 (22,949,766)          
      
Basic and diluted net          loss per share of common stock 

 (0.01)          

 (0.02)          

 (0.02)          

 (0.03)          
      
Weighted average number          of common shares outstanding 

 23,492,182          

 20,761,748          

 23,491,508          

 20,716,647          
          
See          accompanying notes to consolidated financial statements.

**(PAGE  4)**

**Paracelsian,  Inc. and Subsidiary**

(A Development  Stage Company)  Consolidated Statements of Cash Flows  For the six months ended March 31, 2001 and 2000,  And the cumulative period from inception to December 31, 2001  (Unaudited)
  Three          Months Ended          December 31,Cumulative          Period from Inception to December 31,     Cash flows        from operating activities:  
2001 

2000 

2001 
   Net loss        $
(573,160)          

(696,423)          

(22,949,766)
 Adjustments        to reconcile net loss to net cash used in operating activities   Gain on        the sale of assets 
- 

- 

(6,968)
  Non-cash        compensation expense  
- 

- 

1,475,301 
  Other non-cash        expenses 
- 

- 

2,071,985 
  Depreciation        and amortization 
41,446          

114,460          

2,388,791 
  Changes        in assets and liabilities     Interest        receivable  
(19,135)

- 

(45,988)
   Inventories 
926 

- 

- 
   Prepaid        expenses and other current assets 
(15,931)

17,349           

(59,230)
   Accounts        payable  
68,782           

143,420           

431,032 
   Deferred        revenue 
- 

(57,000)

- 
   Accrued        expenses 
203,569          

(89,257)

601,312 
                    Net        cash used in operating activities  
(293,503)          

(567,451)          

(16,093,531)
     Cash flows        from investing activities:   Purchase        of equipment  
(3,805)

- 

(741,671)
 Proceeds        from sale of equipment  
- 

- 

26,968 
 Acquisition        of licensed technology  
- 

- 

(53,656)
 Acquisition        of patents and trademarks  
(3,547)          

- 

(496,719)
 Acquisition        of New Century Nutrition newsletter  
- 

- 

(350,000)
 Acquisition        of option for East West Herbs, Ltd. and related acquisition costs 
- 

- 

(92,866)
 Loan to        East West Herbs, Ltd.  
- 

- 

(340,000)
 Proceeds        from East West Herbs, Ltd.  
- 

- 

42,500
                  Net        cash used in investing activities  
(7,352)          

- 

(2,005,444)
     (page          5)Cash flows        from financing activities:   Sale of common        stock, initial public offering, net of costs 
- 

- 

5,124,014 
 Sale of common        and preferred stock, net of costs  
- 

- 

11,776,088 
 Proceeds from        the sale of common stock 
- 

- 

500,000 
 Proceeds from        the exercise of warrants 
- 

- 

1,219,640 
 Proceeds from        the exercise of options  
- 

- 

68,900 
 Termination        of warrants 
- 

- 

- 
 Purchase of        treasury stock 
- 

- 

(1,342,515)
 Cost of warrant        dividend 
- 

- 

(63,102)
 Increase in capital lease obligation and notes        payable 
- 

- 

115,868 
 Payment on capital lease obligation 
(5,782)          

(22,663)
 Proceeds from advances from related party 
- 

- 

797,350          
 Payments on advances from related party 
- 

- 

(105,473)
 (Decrease) increase in notes payable  
78,478          

541,491          

35,614          
       Net cash        provided by financing activities  
78,478 

535,709 

18,103,721 
  Net increase        (decrease) in cash and cash equivalents 
(222,377)

(31,742)

4,746 
Cash and cash        equivalents, beginning of period  
227,123           

72,754           

-
  Cash and cash        equivalents, end of period $
4,746          

41,012          

4,746 
    Supplemental        disclosures:$
16,086 

3,421 

97,400 
 Cash paid during        the period for interest     Supplemental        disclosure of non-cash investing & financing activities: $
- 

- 

1,733,212 
 Fair value        of assets acquired, net of cash acquired  
- 

- 

83,212 
 Less –        liabilities assumed  
- 

- 

1,644,000 
 Less –        issuance of common stock  Net cash paid         
6,000 
    Warrant dividend         
- 

- 

500,000 
 Issuance of        common stock/warrants for services and to reduce short-term liabilities         
- 

- 

1,455,432 
 Purchase of        equipment  
- 

- 

90,950 
 Issuance of        common stock for licensing and Technology rights  
- 

- 

89,850 
  $
- 

- 

3,338 
   See accompanying        notes to consolidated financial statements(Page          6)
**(PAGE 5)**

**Paracelsian,          Inc. and Subsidiary**

(A Development          Stage Company)

NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS           March 31, 2001 

(Unaudited)

1.                  BASIS OF PRESENTATION:

The consolidated financial          statements included herein have been prepared in accordance with generally          accepted accounting principles without audit, pursuant to the rules          and regulations of the Securities and Exchange Commission applicable          to quarterly reporting on Form 10-QSB and reflect, in the opinion of          the Company, all adjustments necessary to present fairly the financial          position and results of operations for Paracelsian, Inc. and its consolidated          subsidiary. All such adjustments are of a normal and recurring nature.          Certain information and footnote disclosures normally included in financial          statements, prepared in accordance with generally accepted accounting          principles, have been condensed or omitted as permitted by such regulations.          These consolidated financial statements and related notes should be          read in conjunction with the consolidated financial statements and related          notes included in the Company's Annual Report on Form 10-KSB for the          fiscal year ended September 30, 2000.

2.                  ORGANIZATION, BUSINESS, AND RISK FACTORS:

Organization and          Business

Paracelsian is a development          stage company, which develops and applies bioassays to monitor environmental          toxins, to determine the quality of herbal products, and to identify          therapeutic compounds from herbal sources (www.paracelsian.com). 

The Company has developed          a highly sensitive, user friendly, cost effective testing system for          the detection and quantification of highly toxic environmental chemicals          generally known as dioxin and dioxin-like compounds. It is called the          Ah-IMMUNOASSAY® Kit (AH-1 Method).

Since the discovery          of the dioxin compounds, during the late 1950s, extensive research has          been undertaken into their chemical and biological properties. And as          more information becomes available, it is now clear that the original          and narrowly defined group of dioxins is becoming more expansive to          include many other highly toxic, chemically similar compounds. 

Dioxin, although singular          in name, is actually comprised of at least 17 chemical variants or congeners          of a larger dioxin family. These chemicals are highly toxic, with the          most active congener (TCDD) being the most toxic chemical ever discovered.          The number of chemicals with dioxin-like activity is even much larger          still than the 17 original polychlorodibenzo-p-dioxin (PCDD) families,          such as the polychlorodibenzofurans (PCDF), the polychlorinated biphenyls          (PCBs), the polybrominated biphenyls (PBBs), the polycyclic aromatic          hydrocarbons (PAHs), the heterocyclic amines (HAs), among others.

Probably no other group          of chemicals has invoked more public health concern and received more          media attention than these dioxin and dioxin-like substances, both because          of their widespread distribution and their capability for serious toxicity          (e.g., cancer, birth defects, diabetes, hormone disruption, immunologic          dysfunction, etc.). The Environmental Protection Agency (EPA) of the          United States has concluded, for example, that more than 100 of these          dioxins and dioxin-like chemicals are likely human carcinogens.

Waste incineration          is a major source of these chemicals. Paper mill bleaching and varied          industrial syntheses also add significant amounts to the environment.          Following release into the air, perhaps also into waste water or sludge,          these chemicals then settle on plant material, soil, and water where          they are likely to persist for very long periods of time. As a consequence,          they tend to accumulate either onto particulate matter (such as found          at the bottom of bodies of water), or into body fat reservoirs of animals          and fishes which feed on the plants. And because of their stability          and persistence, these chemicals accumulate to relatively high levels          in animal based foods.

Investigating the distribution          and toxicities of these chemicals has been challenging, both because          of the ever-growing number of chemicals with dioxin-like activity and          the difficulty of predicting toxicities. Because of these complexities,          analysis of these chemicals has been very expensive, with the results          being difficult to interpret.

More recently, simpler          analytical methods have been developed, such as the AH-1 Method, based          on the use of biologically based concepts. Dioxins and dioxin-like chemicals          (also called ligands), enter the cell and bind to a protein in the cytoplasm          called Ah receptor (AhR), thus giving a ligand-AhR complex. This complex,          by dropping and adding some smaller proteins (e.g., AhR translocator          or ARNT, hsp-90 protein) is said to be transformed, thus enabling it          to enter the nucleus to bind to a specific dioxin receptor element (or          enhancer) (DRE) of DNA. This interaction with DNA occurs upstream of          genes which then are activated to produce certain enzymes, some of which          are highly correlated with the subsequent toxicity. 

The AH-I Method takes          advantage of these facts. It is generally acknowledged, for example,          that AhR binding appears to be essential for the development of toxicity          by these chemicals. It is as if ligand binding of AhR is the main traffic          intersection through which these chemicals pass on their way to produce          their respective toxicities. 

In the AH-I Method,          where an excess of AhR protein is provided, the amount of AhR-ligand          complex that transforms is dependent on the amount of dioxin ligand          present in the sample being assayed. The amount of the transformed complex          is detected by using an antibody specific for the Ah-I protein component          of the complex, thus giving the Immunoassay name to the method. (For          the scientifically minded reader, there really are two antibodies: the          first interacts with the ARNT protein in the complex while the second,          containing an enzyme that catalyzes the formation of the color reaction,          binds to the first antibody. The color being produced in the reaction          shows how much of the complex is present.). 

Dioxin is a toxic chemical          group of widespread public health concern, and more information is needed,          especially on the distribution of this material in the environment.          More survey data are needed not only to identify potential hot spots          but also to allay unwarranted concerns. Until now, such survey work          has been prohibitively expensive, but with the introduction of simpler          and much more cost effective bioassay methods, such as the AH-1 Method,          it is now possible to gather far more information in order to make wiser          decisions.

The herbal supplement          market presents the opportunity to commercialize a quality assurance          program that identifies the bioactivity present in herbal products,          which are complex mixtures of substances. This product is a significant          advance versus current practices for verifying the quality and the bioactivity          of herbal products. This is the Company's BioFIT Quality Assurance Certification          Program. 

Typically, the Company          will investigate the effect of a compound or mixture of compounds on          a disease (such as cancer) or a symptom (such as depression). The Company          scientists conduct in depth research of the scientific literature and          review the results of successful clinical trials to establish the best          scientific explanation for the positive results seen in such trials.          Based on their review, they identify the biological mechanism which,          if activated, would best explain the positive clinical results. By defining          such mechanisms of action associated with a wide variety of biological          effects the Company scientists can then test a wide variety of natural          materials in "in vitro" models which demonstrate these effects          for the purpose of either discovering or confirming these biological          activities. Such discovery or confirmation provides the Company with          the basis for its BioFIT Program.

The Company is continuing          to work with its Chinese colleagues, during the appropriate market conditions,          to expand the scope of the BioFIT program to the rest of the world.          

The Company is engaged          in an internet-based health exchange between the US and China and currently          maintains the website www.newcenturynutrition.com. The Company has excellent          relations with recognized health authorities and organizations within          the Peoples Republic of China. This website serves to provide a forum          for the exchange of nutrition, health and related information. At its          core is the New Century Nutrition website where renowned researchers,          teachers and physicians from both countries can discuss their philosophies,          research findings and health advice. Other components of the site include          an herbal resource center featuring herbal databases from China, a nutrition          resource center featuring healthy recipes and a technology center featuring          the Ah-IMMUNOASSAY® Kit and the BioFIT Program. Our goal is to combine          the best of Chinese medical practice with the best of Western practice          creating new opportunities for information on health and disease prevention.

Development Stage          Company and Risk Factors

The Company is considered          to be a development stage company as defined in Statement of Financial          Accounting Standards No. 7, "Accounting and Reporting by Development          Stage Enterprises." Since inception, the Company has been primarily          engaged in research, product engineering and raising capital.

The Company, as a development          stage enterprise, has yet to generate significant revenues and has no          assurance of substantial future revenues. The Company is subject to          a number of risks that may affect its ability to become an operating          enterprise or impact its ability to remain in existence, including risks          related to successful development and marketing of its products, patent          protection of proprietary technology, government regulation, competition          from substitute products (including technologies that may not yet have          been developed), dependence on key employees and the need to obtain          additional funds that may not be available to it.

As shown in the accompanying          financial statements, the Company incurred a net loss of approximately          $573,000 for the six months ended March 31, 2001 and had a working capital          deficit of approximately $1,270,000 at March 31, 2001. Operating expenses          decreased by $152,000 (17%) as a result of decreases in a variety of          expense categories, as part of the company's continual program to control          and cut costs. Management believes that revenues from the sale of Ah-IMMUNOASSAY®          Kits will accelerate throughout the coming year, and coupled with a          continual program to control costs, the Company will achieve positive          cash flow from operations during 2001. Until such revenues are realized          on a sustained basis, the Company will require additional capital to          meet its obligations and continue operations. 

**(PAGE          7)**

ITEM 2.                     Management's Discussion and Analysis of Financial Condition and Results          of Operations

Six months          ended March 31, 2001 as compared to the 

Six months          ended March 31, 2000

As a development stage          enterprise, the Company, since inception, has been primarily engaged          in research, product engineering, and capital formation. As such, the          Company has not generated significant revenues to date on a recurring          basis.

The Company signed          a final Licensing Agreement on January 21, 2000 with Kubota Corporation          for the sale of Paracelsian's Ah-IMMUNOASSAY® in the Japanese market          and began manufacturing and selling kits to Kubota. This 'bioassay'          based kit is rugged, user-friendly, portable, analytically sensitive,          and low cost when compared with existing methodology. The agreement          with Kubota will provide revenues from the sale of kits and royalties.          

On June 15, 2000 the          Company announced that in accordance with the License Agreement, Kubota          agreed to pay the $150,000 License Fee. This payment signifies Kubota's          acceptance of the Ah-IMMUNOASSAY® Kit. Kubota and Paracelsian will          now focus their efforts to market, sell and distribute the kit throughout          Japan. On June 17, 2000 Kubota placed an initial order for 120 Ah-IMMUNOASSAY®          Kits, and have placed monthly orders since June 2000.

On November 2, 2000          the Environmental Protection Agency (EPA) held an open meeting for public          comment on the Dioxin Reassessment Report. Approximately 50 people from          around the US were scheduled to present their comments to the Science          Advisory Board Dioxin Reassessment Review Committee. Dr. T. Colin Campbell,          President & CEO of Paracelsian, reported to the committee his concerns          about including in the report all of the dioxin and dioxin-like chemicals          because of their capability for serious toxicity. On May 18, 2001 the          EPA announced that the report will be sent to EPA Administrator Christie          Whitman. The report concluded that chlorinated dioxin is an air pollutant          that should be more tightly controlled. The findings could provide the          basis for federal regulators to impose limits on dioxin that go beyond          current voluntary controls.

The Ah-IMMUNOASSAY®          Kits are continuing to be sold to the Kubota Corporation for the sale          and distribution of the Ah-IMMUNOASSAY® in Japan. Kits have also          been sold to Cypress Diagnostics in Belgium for the testing of animal          feed. The University of Liege in Belgium has purchased kits for animal          serum and tissue screening. SGS Agrilab in Antwerp, Belgium is the worlds          largest inspection organization with 340 laboratories worldwide. SGS          is waiting for the University of Liege screening results, and predicts          a large market in Belgium. The Danish Veterinary and Food Administration          have purchased kits for the testing of fish, milk and fat. MCS Diagnostics          is testing our kit for use in the German milk program. Dynex Technologies          is using the kit for animal feed, food and environmental samples in          the Czech and Slovak Republics. KNJ Engineering is using the kit with          one of their customers, LG Chemical of Korea. KNJ sells dioxin-sampling          equipment to incinerators and other applications in Korea. The Company          has also begun discussions with Marubeni for exclusive distribution          in Korea. Solutia has purchased the kit for testing organic material,          and Scientific Supply Company purchased the kit for soil, milk powder          and feed samples. Sales have also been made to Bristol Myers Squibb          and Lockheed Martin. 

Additionally, the Company          has a note receivable outstanding, including accrued interest, with          a balance outstanding of $370,000. The Company is continuing its efforts          to collect the entire amount of this receivable. The Company also has          an inventory of Andrographis paniculata that it is attempting to sell          through its Internet sites (www.newcenturynutrition.com and www.paracelsian.com/).          Andrographis is an annual plant that grows in much of Asia. Modern research          has examined the effect of Andrographis on various viral infections          and general immunological functions, and the research has indicated          very promising results. Because this inventory has been slow moving,          the Company has written it off completely. However, the Company will          continue with its efforts to sell this inventory. If it is successful          in its efforts, the retail value could approximate $400,000. 

The Company's plan          is to continue to advance the Ah-IMMUNOASSAY ® technology so as to be the premier screening and monitoring methodology          within the worldwide marketplace. To fund certain of its continual development          expenses the Company, in January 2001, received an initial approval          for a grant from the New York State Energy Research and Development          Authority which could result in funding up to $180,000 (unaudited).           

Management is also          aggressively seeking an investment of at least $1,000,000 to strengthen          its working capital position, and active discussions with a number of          interested parties are continuing. Current monthly cash requirements          in order to sustain meaningful operations are approximately $65,000          and management fully expects to meet its financial obligations as described          above. 

The actions described          above represent the Company's plans to generate cash flow, thereby enabling          the Company to continue to operate as a going concern. There is no assurance          that these efforts will be successful. 

**Results of Operations**

The Company's net loss          for the second quarter of fiscal 2001 was approximately $258,000 compared          to $337,000 in the second quarter of fiscal 2000. Revenues for the three-month          period were $68,000 in 2001 as compared to $91,000 in 2000. Operating          expenses for the three-month period were approximately $347,000 compared          to $429,000 for the first fiscal quarter of the prior year. The decrease          of $82,000 (19%) is due to a decrease in a number of expense categories,          as part of the company's continual program to control and cut costs.          The management team is continuing to operate with modest staff levels          and has been focusing on continuing to optimize the use of its resources,          increasing its customer base and generating revenues.

**Liquidity &          Capital Resources**

As of March 31, 2001,          the Company had cash of $4,700 and a net working capital deficit of          $1,270,000. Management believes that it can continue to raise additional          capital, to support its operations until such time as the revenue stream          is sufficient to realize positive cash flow in 2001. Management believes          that the additional financing coupled with its expected revenues from          the Ah-IMMUNOASSAY®, the collection of the outstanding note receivable          and the sale of its inventory of Andrographolide will enable the Company          to further improve its operating efficiency and to continue its operations          into the future.

**Management and The          Board**

The management of the          Company will be focusing its efforts on bringing the Company products          and services to market in a timely manner, producing ongoing revenues          and controlling expenses. 

**Short Term Advances**

BioSignia, Inc., the          Company's largest shareholder, has advanced interim funds to the Company          for working capital purposes. The Company agreed to repay the funds,          together with interest at an annual rate of 10%, at the earlier of 30          days from the date of the advance or the receipt by the Company of proceeds          from the sale of stock. On June 19, 2000, the Board of Directors agreed          to accept BioSignia's offer to convert $500,000 of debt into common          stock of Paracelsian at $.40 per share. Through March 31, 2001, the          principal portion of advances from BioSignia aggregated $191,877.

**Patents**

The Japanese Patent          Office in March 2001 issued to the Company Patent # 3144689 for the          detection of dioxin-like compounds through the use of the Paracelsian's          Ah-IMMUNOASSAY® Kit. This patent, which is equivalent to US patent          # 6,127,136 is Paracelsian's sixth patent related to the Ah-IMMUNOASSAY®          Kit

**Forward Looking          Statements**

Certain statements          in this Form 10-Q "Management's Discussion and Analysis of Financial          Condition and Results of Operations" constitute "forward looking          statements" within the meaning of the Private Securities Litigation          Reform act of 1995. Such forward looking statements involve known and          unknown risks, uncertainties and other factors which may cause the actual          results, performance or achievements of the Company to be materially          different from any future results, performance or achievements expressed          or implied by such forward looking statements. Such factors include,          among others, the following: success of operating initiative, advertising          and promotional efforts, acceptance of new product offerings, availability,          changes in business strategy or development plan, availability and terms          of capital, labor and employee benefit costs, and other factors specifically          referred to in this 10-Q.

**(PAGE          9)**

PART II                     OTHER INFORMATION

Item 1.                       Legal Proceedings

Hadyk, et al. V.          John G. Babish, et al.

On February 14, 2001          the *Hadyk, et al. V. John G. Babish, et al.* case that was commenced in the New York State Supreme          Court (Onondaga County) in June 1993 by certain persons against the          Company was dismissed.  

This case was commenced          by certain person, individually and doing business as In Vitro Bioanalytic          Systems, against the Company, Dr. John G. Babish, a former officer and          director of the Company, and Edward Heslop, a founding shareholder of          the Company, primarily as an action for money damages and injunctive          relief against the Company for alleged misappropriation of proprietary          information and unfair competition. The plaintiffs alleged, among other          things, that in 1990, prior to the Company's incorporation, a partnership          had been formed with Messrs. Babish and Heslop to commercialize products          that the Company was developing. Damages, an accounting and an injunction          were being sought against the Company. By decision dated September 14,          1994, the Court dismissed certain of the plaintiffs claims against the          Company while permitting a claim alleging unfair competition to proceed.          Discovery had been temporarily stayed pending resolution of a motion          for summary judgment brought by certain of the Company's co-defendants.          That motion was successfully and fully resolved, and the Court, on February          14, 2001, ruled in favor of the Company. The Court not only exonerated          the Company of any wrongdoing, but also agreed with the plaintiffs fundamental          premise that they had a property interest in the technology at issue          in this case. 

Item 6(a)                     Exhibits                      

None

Item 6(b)                     Reports on Form 8-K

None

SIGNATURES

                          In accordance with Section 13 or 15 (d)          of the Securities and Exchange Act, the registrant caused this report          to be signed on its behalf by the undersigned, thereunto duly authorized.

Date               May 21, 2001

                                                                                                         PARACELSIAN, INC.

                                                                                                                                                                                                         By:/s/          T. COLIN CAMPBELL                                                                                                                   -------------------------------------                                                                                                                  T. Colin Campbell                                                                                                                  President,                                                                                                                  Chief Executive Officer

                                                                                              By/s/          GARY G. CHABOT                                                                                                                  ---------------------------------                                                                                                                  Gary G. Chabot                                                                                                                  Principal Accounting Officer

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