UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997    

OR

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _________




Commission File No. 0-19844


                  PARACELSIAN, INC.           
                  ------------------
(Exact name of small business issuer as specified in its charter)


     Delaware                                              16-1399565
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                         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 11,676,889 shares of Common Stock and 2,111,870 Redeemable
Common Stock Purchase Warrants outstanding at May 9, 1997.

<PAGE>
Paracelsian, Inc. and Subsidiary 

Index



 

Part I - Financial Information

Item 1.   Financial Statements


Consolidated Balance Sheets as of March 31, 1997 (Unaudited) and
September 30, 1996 (Audited). 

Consolidated Statements of Operations for the three months and six
months ended March 31, 1997 and 1996 and the period from inception
(April 15, 1991) to March 31,1997 (Unaudited).        

Consolidated Statements of Stockholders' Equity for the period from
inception (April 15, 1991) to March 31, 1997 (Unaudited).

Consolidated Statements of Cash Flows for the six months ended March
31, 1997 and 1996 and the period from inception (April 15, 1991)
to March 31, 1997 (Unaudited).   

Notes to Consolidated Financial Statements (Unaudited).     

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



PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

Item 6 - Exhibits and Reports on Form 8-K    

Signatures     

<PAGE>

                     Paracelsian, Inc. and Subsidiary                       
                      (A Development Stage Company)
                       Consolidated Balance Sheets        
                         
                              
                                                                        
                                                                
                                         March 31,          September 30,  
                                           1997                  1996      
Assets                                   (Unaudited)           (Audited) 
Current Assets:                                        
Cash and cash equivalents                $2,076,849          $4,171,402     
Prepaid expenses and other
current assets                              533,150             278,367
                                         -----------         -----------
 Total current assets                     2,609,999           4,449,769      
                                        
Equipment, net                              359,167             384,790   
                                        
Other Assets:                                     
Traditional Chinese Medicine extracts,net   544,629             622,419   
Licensing agreements, net                   459,601             555,602   
Patents and trademarks, net                 292,158             258,206   
Option to acquire EastWest Herbs, Ltd.
and related acquition costs                    -                 92,866
Loan to EastWest Herbs, Ltd.                340,000             340,000
                                         -----------         -----------
                                          1,636,338           1,869,093
                                         -----------         -----------
                                         $4,605,554          $6,703,652
                                         ===========         ===========
                                        
Liabilities and Stockholders' Equity                                       
Current Liabilities:                                        
Accounts payable                         $  146,800          $  312,817  
Accrued expenses                             49,301             192,790   
Deferred revenues                            48,758              46,858    
Due to related party                         42,931              77,597
                                         -----------         -----------
Total current liabilities                   287,790             630,062
                                         -----------         -----------
                                        
Commitments and Contingencies                                    
                                        
Stockholders' Equity:                                       
Common stock, $.01 par value;
 20,000,000 shares authorized;
 11,942,367 issued at March 31, 1997
 and 11,935,082 at September 30, 1996       119,420             119,348
Additional paid-in capital               20,335,840          20,348,005     
Deficit accumulated during the
development stage                       (14,794,981)        (13,051,248)
Treasury stock,at cost; 265,478 shares   (1,342,515)         (1,342,515)
                                         ----------          -----------
Total stockholders' equity                4,317,764           6,073,590
                                         -----------         -----------
                                         $4,605,554          $6,703,652
                                         ===========         ===========
                                        
     See accompanying notes to consolidated financial statements.


 <PAGE>

<TABLE>
<CAPTION>


                     Paracelsian, Inc. and Subsidiary          
                      (A Development Stage Company)     
                       Consolidated Statements of Operations      
                                                        
             For the three months and six months ended March 31, 1997 and 1996,  
               And the period from inception to March 31, 1997   
                             (Unaudited)                                       
                                                                                      Cumulative
                                                                                      Period from
                         Three Months Ended              Six Months Ended             Inception to
                         December 31,                       March 31,                 March 31,
                                  1997         1996          1997         1996         1997
<S>                              <C>           <C>       <C>              <C>
Sales:                                                      
Marketing rights                 $   -         $ -       $      -         $   -        $    254,995
Product royalties                     140        -             1,070          -               1,070
Products                            3,525        12,963        3,525          20,306        161,338
Subscription revenues                -            3,487         -              3,636         31,625
                                ----------    --------   -----------      ----------       --------
                  Total sales       3,665        16,450        4,595          23,942        449,028
                                                       

Operating expenses:                                                   
Research and product engineering  448,297       323,022      836,032         566,864      6,053,297
Research concerning Indian herbs     -           -               -             -            375,000
Newsletter expenses and costs        -          180,087          -           197,726        955,586
Cost of products sold                -            6,717          -            10,538         95,023
General and administrative        595,508       570,668      973,723         904,578      6,405,355
Officer stock compensation           -           -               -             -          1,228,275
                                ----------    --------   -----------       ---------    ------------
     Total Operating Expenses   1,043,805     1,080,494    1,809,755       1,679,706     15,112,536
                                ----------    --------   -----------     -----------   -------------
     
 Loss from operations during                                           
    the development stage      (1,040,140)   (1,064,044)  (1,805,160)     (1,655,764)   (14,663,508)

Interest income, net               18,161       1,785         61,427          39,283        368,527
                                ----------    --------   ------------    ------------   ------------
Net loss during the
development stage             $(1,021,979)  $(1,062,259) $(1,743,733)   $(1,616,481)   $(14,294,981)
                                ==========  ==========  =============   ============   =============
                                                       
 Net loss per weighted average                                              
 shares of common share            $(0.10)    $(0.13)         $(0.16)         $(0.20)

 Weighted average number of                                            
 common stock outstanding       10,599,041  8,188,655       10,595,768    8,188,655          
                               ===========  =========       ==========    =========         
                                                       
See accompanying notes to consolidated financial statements.

<PAGE>
                                                      



</TABLE>
<TABLE>
<CAPTION>




                                                            Paracelsian, Inc. and Subsidiary
                                                            (A Development Stage Company)
                                                       Consolidated Statements of Stockholders' Equity
                                                      For the period from Inception to March 31, 1997

                                                                                                Deficit
                                                                                              Accumulated
                                                                                Additional    During the
                                           Preferred Stock      Common Stock        Paid-In   Development    Treasury         
                                           Shares    Amount    Shares     Amount    Capital     Stage         Stock       Total
<S>                                        <C>       <C>      <C>     <C>         <C>        <C>           <C>       <C>   
Issuance of Common Stock April-July 1991      -      $-       806,250 $    8,063  $     -    $       -     $    -    $     8,063
Issuance of Common Stock for licensing,
 technology and consulting services-July 1991                 333,850      3,338                                           3,338
Private placement of Common Stock-                                                 
 August-September 1991, net of costs                          267,288      2,673     369,017                             371,690
Net loss(April 15, 1991 to
 September 30, 1991)                                                                              (133,469)             (133,469
                                             -----------------------------------------------------------------------------------
BALANCE, September 30, 1991                   -        -    1,407,388     14,074     369,017      (133,469)       -      249,622

Redemption of Common Stock-November 1991                     (245,000)    (2,450)                                         (2,450)
Initial Public Offering of Common Stock 
 - February 1992, net of costs                              1,150,000     11,500   5,103,451                           5,114,951
Issuance of Warrants-February 1992                                                     1,000                               1,000
Net loss (year ended September 30, 1992)                                                        (1,221,943)           (1,221,943)
                                             -----------------------------------------------------------------------------------
BALANCE, September 30, 1992                   -          -  2,312,388     23,124   5,473,468    (1,355,412)     -      4,141,180

Warrant dividend-September 1993                                                      436,898     (500,000)               (63,102)
Net loss (year ended September 30, 1993)                                                        (2,022,614)           (2,022,614)
                                             -----------------------------------------------------------------------------------

BALANCE, September 30, 1993                   -          -  2,312,388     23,124   5,910,366    (3,878,026)     -      2,055,464
                                            
Net loss (year ended September 30, 1994)                                                        (1,940,262)           (1,940,262)
                                             -----------------------------------------------------------------------------------
BALANCE,  September 30, 1994                  -          -  2,312,388     23,124   5,910,366    (5,818,288)     -        115,202

Issuance of Common Stock for acquisition 
 of Pacific Liaisons - October 1994                         1,116,666     11,167   1,632,833                           1,644,000
Exercise of Warrants                                          221,200      2,212     716,644                             718,856
Common Stock purchase by Officer 
 -January 1995                                                705,000      7,050   1,311,075                           1,318,125
Issuance of Common Stock for services 
 rendered-January 1995                                         33,330        333      21,167                              21,500
 -April 1995                                                  200,000      2,000     373,000                             375,000
Issuance of Common Stock for conversion of
  short-term liabilities-June 1995                             13,000        130      48,849                              48,979
Issuance of Common Stock 
 -August 1995, net of costs                                   300,000      3,000     749,625                             752,625
Issuance of Preferred Stock-September 1995
  Series A, net of costs                    10,700    107                            361,018                             361,125
  Series B, net of costs                    10,000    100                            399,900                             400,000
  Series C, net of costs                     5,000     50                            218,422                             218,472
Net loss(year ended September 30, 1995)                                                         (3,031,196)           (3,031,196)
                                             -----------------------------------------------------------------------------------
BALANCE, September 30, 1995                 25,700    257   4,901,584     49,016  11,742,899    (8,849,484)     -      2,942,688

Issuance of Series B Preferred Stock,
 net of costs                               76,651    767                          3,999,233                           4,000,000
Exercise of Warrants                                           73,318        733     154,676                             155,409
Issuance of Common Stock for services
 rendered-October 1995                                         33,336        331      42,669                              43,000
Purchase of Treasury Stock-November 1995                                                                   (1,342,515)(1,342,515)
Conversion of Preferred Stock             (102,351) (1,024) 5,371,010     53,710     (52,686)                             -
Issuance of Common Stock
 for conversion of short-term liabilities 
 -January 1996                                                  2,500         25       9,975                              10,000  
Issuance of Common Stock                                        
 for services rendered-February 1996                           25,000        250      27,875                              28,125
Issuance of Warrants and Options																			
 for services rendered-February 1996                                                 132,500                             132,500  
Issuance of Common Stock
 -June 1996,net of costs                                      733,334      7,333   1,965,663                           1,972,996
Sale of Warrants-June 1996                                                           35,000                              35,000  
Issuance of Common Stock                                                                                            
 -July 1996,net of costs                                       91,667        917     250,075                             250,992
Issuance of Common Stock
 for services rendered-July 1996                                5,000         50       4,950                               5,000  
Exercise of Options-September 1996                             15,000        150      37,350                              37,500  
Issuance of Common Stock 
 -September 1996, net of costs                                683,333      6,833   1,997,826                           2,004,659  
Net loss(year ended September 30, 1996)                                                         (4,201,764)           (4,201,764)
                                             -----------------------------------------------------------------------------------
BALANCE,  September 30, 1996                  -      -     11,935,082    119,348  20,348,005   (13,051,248) (1,342,515) 6,073,590

Issuance of Common Stock 
 for services rendered-January 1997                             7,285         72      22,835                               22,907
Termination of Warrants February 1997                                                (35,000)                            (35,000)
Net loss (six months ended                                                                     
March 31, 1997)                                                                                 (1,743,733)           (1,743,733)
                                             -------------------------------------------------------------------------------------

BALANCE, March 31, 1997    
                                              -     $-      11,942,367  $ 119,420 $20,335,840 $(14,794,981) $(1,342,515)$4,317,764
                                             =====================================================================================

                                               See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>


<TABLE>
<CAPTION>
                     Paracelsian, Inc. and Subsidiary              
                      (A Development Stage Company)           
                  Consolidated Statements of Cash Flows      
          For the six months ended March 31, 1997 and 1996          
           And the Period From Inception to March 31, 1997   
                        (Unaudited)


                                                                                   Cumulative     
                                                                                   Period from    
                                            Six Months Ended                       Inception to   
                                              March 31,                            March 31,  
                                            1997             1996                     1997

<S>                                         <C>              <C>                  <C>
Cash flows from operating activities:                                                     
Net loss                                      $(1,743,733)     $(1,616,481)         $(14,294,981) 
Adjustments to reconcile net loss to net cash                                                  
 (used in)  operating activities:                                                
Non-cash compensation expense                      -               -                 1,228,275     
Other non-cash expenses                         170,656          17,130              1,311,314     
Depreciation and amortization                   147,510         176,524                925,114  
Changes in assets and liabilities                                          
(Increase) in prepaid expenses and
 other current assets                          (254,783)        (75,015)              (503,730)
(Decrease) Increase in accounts payable        (143,112)       (453,582)               501,320  
(Decrease) Increase in due to related party     (34,667)           -                    42,930   
Increase in deferred revenues                     1,900            -                    48,758   
(Decrease)Increase in accrued expenses         (143,486)         55,358                 49,304

                                              --------------------------------------------------
  Net cash (used in)  operating activities   (1,999,715)     (1,896,066)           (10,691,696)    
                                                       
Cash flows from investing activities:                                                     
Purchase of investments                            -               -                (6,719,089)   
Redemption of investments                          -               -                 6,719,089     
Purchase of equipment                           (16,887)        (38,775)              (732,186)     
Proceeds from sale of equipment                    -               -                    20,000   
Acquisition of licensed technology                 -               -                   (50,000) 
Acquisition of patents and trademarks           (42,951)       (109,951)              (347,754)     
Acquisition of New Century Nutrition newsletter    -           (350,000)              (350,000)     
Acquisition of option for EastWest
 Herbs Ltd. and related costs                      -               -                   (92,866)
    Loan to EastWest Herbs Ltd                     -               -                  (340,000)
                                              --------------------------------------------------
  Net cash used in investing activities         (59,838)       (498,726)            (1,892,806)
                                              -------------------------------------------------
                                                       
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                                      -          4,000,000             10,330,109
Proceeds from the exercise of warrants             -            155,409                666,295  
Proceeds from the exercise of options              -               -                    37,500   
Proceeds from the sale of warrants              (35,000)           -                      - 
Purchase of treasury stock                         -         (1,342,515)            (1,342,515)   
Cost of warrant dividend                           -               -                   (63,102) 
Payments on equipment contract                     -               -                   (90,950)
                                              -------------------------------------------------
Net cash provided by financing activities       (35,000)      2,812,894             14,661,351
                                              -------------------------------------------------
                                                       
Net increase (decrease) in cash
 and cash equivalents                        (2,094,553)        418,102              2,076,849
                                                       
Cash and cash equivalents,
 beginning of period                          4,171,402       1,416,022                   -
                                              -------------------------------------------------
                                                       
Cash and cash equivalents, end of period     $2,076,849      $1,834,124             $2,076,849    
                                             ==================================================

Supplemental disclosure:                                                   
Cash paid during the period for interest         $1,785         $7,019                $16,585  
                                                =======         ======                ========

Supplemental disclosure of non-cash investing and financing activities:                                                      
Fair value of assets acquired,
 net of cash acquired                            $ -               $ -              $1,702,000
Less - liabilities assumed                         -                 -                 (52,000)  
Less - issuance of common stock                    -                 -              (1,644,000)
                                              -------------------------------------------------
  Net cash paid                                  $ -               $ -                  $6,000
                                              =================================================
Warrant dividend                                 $ -               $ -                $500,000      
Issuance of common stock to reduce
 short-term liabilities                          $ 22,907          $ 38,125           $519,981
Purchase of equipment                            $ -               $ -                 $90,950  
Issuance of common stock for
 licensing and technology rights                 $ -               $ -                  $3,338
                                              =================================================         
                                                       
                See accompanying notes to consolidated financial statements






  
   
Paracelsian, Inc. and Subsidiary
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1997 AND 1996



1.    MANAGEMENT REPRESENTATION

The consolidated financial statements included herein have been
prepared by Paracelsian, Inc. and subsidiary  (the "Company") 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 information 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, 1996.

2.    ORGANIZATION, BUSINESS, AND RISK FACTORS:

Organization and Business

The Company is a biotechnology company that markets and develops
products from technology related to the detectionobservation of
transmissions of signals from the exterior of a cell to its nucleus
(signal transduction).  These signals which results in the activation
or suppression of specific genes and culminates in cell division or
death (signal transduction).  

Cell division is one of the basic steps in biology necessary for
normal growth of tissues to support life.  The Company's technology
enables researchers to observe signal transduction pathways and measure
the effects of chemicals contained in synthetic and natural compounds,
and chemicals ocurring in nature such as herbs and combinations of
herbal extracts, on cell division.  In the course of these
observations, the Company can distinguish the effects of such chemicals
on targeted cells, thereby screening compounds to identify those with
promisingfavorable therapeutic effects.  (This proprietary technology,
including the components, methods, procedures and know-how employed in
this screening process, is referred to herein as the "Screening
Technology".)  

In October 1994, Pacific Liaisons, a partnership engaged in identifying
and acquiring biologically active drugs, natural products and foods
from Eastern Asia, merged with a wholly-owned subsidiary of the Company
and the Company now  maintains a large library of natural medicinal
extracts.  These extracts are being processed with the p34 screening
assay.  The Company also has access to the informational database
related to the medicinal extracts, which contains, among other things,
a history of the usage of each extract.

In November 1995, the Company purchased substantially all the assets
related to New Century Nutrition, a newsletter promoting disease
prevention through nutrition.  In December 1996, the Company decided to
cease publication of the newsletter and seek potential buyers for the
newsletter and/or its subscriber list.  All costs associated with the
cessation of publication have been included in the financial statements
of September 30, 1996. 

Development Stage Company and Risk Factors

The Company is 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.  Even if marketing efforts are successful, it may take
several years before significant revenues are realized.  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, 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 consolidated financial statements, the
Company incurred a net loss of approximately $1,683,000 for the six
months ended March 31, 1997 and has working capital of approximately
$2,371,000 at that date.  The Company continues to expend funds on
product research and development and general and administrative
expenses and has not generated significant revenues.

3. SIGNIFICANT ACCOUNTING POLICIES:

Consolidation
The consolidated financial statements of the Company include the
accounts of Paracelsian, Inc. and its wholly owned subsidiary ParaComm,
Inc. formerly known as Para Acquisition Corp.  All intercompany
balances and transactions have been eliminated.

Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments with an
original maturity of three months or less.  Cash equivalents as of
March 31, 1997 and September 30, 1996 approximated $2,077,000 and
$4,171,000 respectively.

Research and Product Engineering
Company-sponsored research and product engineering expenditures have
been charged to expense as incurred.  These costs consist primarily of
employee salaries and direct laboratory costs.  The cost of extracts
used in research and development activities is expensed as consumed.

Net Loss Per Share
Net loss per share was computed by dividing net loss for the period by
the weighted average number of shares of common stock outstanding
during the period.  Common stock equivalents are not included in the
computation of average shares outstanding because the effect of such
inclusion would be to decrease the loss per share.

Patents and Trademarks
The Company has acquired or applied for certain patent and trademark
rights.  Costs associated with the acquisition and application for
these rights have been capitalized and are being amortized on the
straight-line method over the estimated legal life of the assets which
range from 15 to 17 years.  Accumulated amortization of the patents and
trademarks totaled $66,247 and $58,747 at March 31, 1997 and
September 30, 1996, respectively.

Equipment and Depreciation
Equipment is stated at cost and is depreciated over the estimated
useful lives of the assets using the straight-line method.  Equipment
consists of the following as of:

                                Useful    March 31,   September 30,
                                Lives       1997         1996

Laboratory Equipment            10 years  $511,691     $500,623
Office Furniture and Equipment  10 years    86,345       88,095
Computer Equipment and Software  5 years   133,852      133,033
                                          ---------     -------
                                          $731,888     $721,751
Less Accumulated Depreciation              372,721      336,961
                                          ---------    --------
                                          $359,167     $384,790
                                          =========    ========

          
Use of Estimates
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements.  Estimates also
affect the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.


4. SUBSEQUENT EVENTS:

On April 9, 1997 the Company's option to acquire East West Herbs, Ltd.
of Kingham, England expired.


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


     Three Months Ended March 31, 1997 as compared to the Three Months 
                        Ended March 31, 1996

For the three month period ending March 31, 1997 the Company generated
revenues of $3,500 from the sale of the Company's ELISA(trademark) kits and $140
of royalty income from the exclusive license agreement with
Calbiochem-Novabiochem International for the licensing of products
utilizing the cdk 1 Assay technology. This represents a 77% decrease
from the three month period ending March 31, 1996 when sales of $
13,000  were generated from the sales of the Company's ELISA(trademark) kits and
$3,500 of subscription revenue from New Century Nutrition  newsletter. 

A portion of the Company's strategy is to develop certain of its
products to a point where its value can be clearly established and then
license marketing and other rights to third parties.  To this end, the
Company completes sufficient product development so that prospective
licensees can more readily recognize the value of completing the
product's development and its ultimate commercialization.

In addition, the Company's strategy is to directly market those
products which it believes can be marketed without significant
marketing expenditures and without the time-consuming process of 
having such products approved by regulatory agencies such as the Food
and Drug Administration.

It is the Company's experience that a product's value to a prospective
licensee varies significantly depending on the remaining product
development risk perceived by the prospect.  The Company, therefore,
tailors its development plans for each product based on the interest of
prospective licensees and the critical risk factors perceived.  The
Company also adjusts its plans as conditions change during the course
of development.  As novel technologies become better understood by the
Company, perceived risks are frequently reduced.  Similarly, as the
Company introduces novel technologies and approaches, significant
effort is expended to verify the scientific basis and document the
findings.  

Since the Company's inception (April 15, 1991) through March 31, 1997,
it has invested $ 6,053,000 in product research, development and
engineering.  The amount expended in the second quarter of fiscal 1997,
$448,000, as compared to $323,000 in the second quarter of fiscal 1996
represented an increase of 39%.  This increase was attributable to the
continued expanded clinical studies of ANDROVIR(trademark), the compassionate
use trial of PN27,1 and increased personnel expenses. 

The Company intends to incur continuing  product research, development
and engineering expenses at a slightly higher amount than expenditures
in the second quarter of fiscal 1997.  A significant amount of this
effort during the remainder of  fiscal 1997 will be directed at the
National Cancer Institute as part of the CRADA. The proposed terms of
the CRADA are included in an agreement signed by the parties in
December 1996.  Under the proposed terms, the parties have agreed to
share certain, extensive proprietary data, methods and models for use
in evaluating the efficacy of certain of the Company's compounds
against HIV and certain cancers. 
 
General and administrative expenses totaled $ 6,393,000 during the
period from inception to March 31, 1997.  Of this amount $ 584,000 was
incurred in the second quarter of fiscal 1997 and $571,000 in the
second quarter of fiscal 1996, representing an increase of 2%.  These
expenses relate to the administration of the research, development and
product engineering activities and support services including raising
capital, arranging for facilities, hiring employees, market analysis
and the development and administration of the Company's business and
marketing plans.  The increase from the prior year period is
attributable to additional consultant and other professional fees
incurred in the current quarter.  The Company expects general and
administrative expenses in the third quarter of fiscal 1997 to grow
slightly over expenditures in the second quarter of  fiscal 1997.

The Company has incurred net losses of $14,234,000 as a development
stage company from inception to March 31, 1997, of which $961,000 was
incurred in the second quarter of fiscal 1997 and $1,062,000 was
incurred in the second quarter of fiscal 1996.   The net loss per share
of common stock amounted to $.09 for the quarter ended March 31, 1997
and $.13 for the quarter ended March 31, 1996.   The Company
anticipates that losses will continue throughout fiscal 1997,
increasing slightly from the amount in the second quarter of fiscal
1997 for the reasons described above.

Liquidity and Capital Resources

At March 31, 1997, the Company had cash and cash equivalents of
$2,077,000 as compared to $4,171,000 at September 30, 1996. 
The Company expects to incur additional research and development and
product engineering expenses, including personnel costs and costs
related to preclinical testing and clinical trials.

In April 1997, the Company was advised by the Food and Drug Administration
that the dietary supplement marketing of AndroVir(trademark) for HIV positive
individuals and of AndroCar(trademark) to persons with cancer would constitute
claims that the products are intended to treat persons with serious
diseases and thus intended for drug use and not dietary supplement
use.  As a result of this advice, the Company is modifying its proposed
marketing plan to ensure that any products introduced as dietary supplements
meet regulatory requirements for this product category.

If the Company ultimately determines to proceed with a product launch prior
to the end of fiscal 1997, the Company believes that the initial
funding required for such launch could be provided out of the Company's
existing cash.

The Company intends to seek additional funding sources of capital and
liquidity through collaborative agreements. In addition, the Company is
continually evaluating various financing alternatives including public
and private sources of debt and equity.   There can be no assurance
that such additional financing will be available on acceptable terms or
at all.  If additional financing is not available, the Company
anticipates that its available cash and existing sources of funding
will be adequate to satisfy its operating cash and capital requirements
only until September 1997.  The Company's future capital requirements
will depend on many factors, including continued scientific progress in
its research and development programs, the magnitude of such programs
and its acquisition plans.


PART II.  OTHER INFORMATION


Item 1 Legal Proceedings

On April 25, 1997 the Company filed a complaint in the U.S. District
Court for the Northern District of New York against John G. Babish, a
former officer and director of the Company.  The complaint alleges that
Mr. Babish engaged in a pattern of wrongful conduct by which he sought
to unjustly enrich himself and to seize control of the Company at the
expense of the Company and its shareholders.  That conduct included in
part the manipulation of the Company's stock price, trading in the
Company's stock on inside information, breach of fiduciary and
contractual duties, theft of Company property, and usurpation of
corporate opportunities.

The Company seeks compensatory and exemplary damages, injunctive relief
and recovery of litigation costs and fees.

The complaint has been served and filed.  However, defendant's answer
is not yet due.

The Company has obtained a temporary restraining order prohibiting the
defendant alone or in cooperation with others from transferring any of
the stock or assets of or other interests in the Company, from issuing
a press release, or contacting stock brokers or major shareholders with
the intent to affect the price of plaintiff's stock or from
disseminating any trade secrets or other confidential information of
the plaintiffs.  A hearing on the Company's application for a
preliminary injunction against defendant is scheduled for May 19, 1997.


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 Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. 

Date: May 12, 1997
       
                                   PARACELSIAN, INC.


                                   By:  /s/KEITH A. RHODES 
                                        Keith A. Rhodes    
                                        Chairman of the Board and
                                        President 
          


</TABLE>