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 December 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
          ------------------------------------------------
        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
          CodeIssuer'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
          [  ] No [ X ]
        There
          were 23,929,388 shares of Common Stock outstanding at February 1, 2002
        
        (PAGE
          1)
        Paracelsian,
          Inc. and Subsidiary
        IndexPagePART I. - FINANCIAL
          INFORMATION
        Item 1.  Financial
          StatementsConsolidated Balance
          Sheet as of December 31, 2001 (Unaudited)
      3Consolidated Statements
          of Operations for the three months ended December 31, 2001 
          and 2000 and the cumulative period from inception to December 31, 2001
          (Unaudited)
      4Consolidated Statements
          of Cash Flows for the three months ended December 31, 2001 and 2000
          and the cumulative period from inception to December 31, 2001 (Unaudited)
      5Notes to Consolidated
          Financial Statements (Unaudited)
      6Item. 2 
          Managements Discussion and Analysis of Financial Condition and
          Results of Operations
      9PART II 
          OTHER INFORMATIONItem 1  Legal
          Proceedings
      10Item 6  Exhibits
          and Reports of Form 8-K
      11Signatures
      11




Paracelsian,
          Inc. and Subsidiary
          (A Development Stage Company)
          Consolidated Balance Sheet
          December 31, 2001
          (Unaudited)


December
          31, 2001AssetsCurrent Assets:Cash and cash equivalents
      $
      17,338Prepaid expenses
      
      38,350Other current assets
      
      41,769Total
        current assets
      
      97,457Equipment, net
      
      49,616Interest Receivable,
          net of reserve of $62,465
      
      -Note Receivable,
          net of reserve of $148,750
      
      -Other Assets:Patents and trademarks,
          net
      
      74,611124,227$
      221,684Liabilities
          and Stockholders' DeficitCurrent Liabilities:Accounts payable
      $
      335,395Accrued expenses
      
      637,639Current portion
          of capital lease obligation
      
      1,074Current portion
          of notes payable
      
      137,068Current
        portion of deferred revenue
      
      29,976Advances from related
          party
      
      310,677Total
        current liabilities
      
      1,451,829Long-term portion
          of capital lease obligation
      
      346Long-term
        portion of notes payable
      
      2,029Long-term
        portion of deferred revenue
      
      211,780Other
        long-term liabilities
      
      215,000Total
        current and long-term liabilities
      
      1,880,984Stockholders' DeficitCommon Stock, $.01
          par value; 35,000,000 shares authorized; 23,929,388 shares outstanding
      
      239,294Additional paid-in-capital
      
      25,624,347Deficit accumulated
          during the development stage
      
      (26,180,426)Treasury stock,
          at cost; 265,478 shares
      
      (1,342,515)Total
        stockholders' deficit
      
      (1,659,300)$
      221,684See
        accompanying notes to consolidated financial statements. (PAGE 3)  Paracelsian,
          Inc. and Subsidiary(A Development Stage Company)
          Consolidated Statements of Operations
          For the three months ended December 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 31,2001
      
      2000
      
      2001Revenues:Marketing
        rights - Ah-IMMUNOASSAY®
      
      92,103
      
      63,255
      
      1,084,069Products
      
      1,582
      
      4,198
      
      260,801Product testing
      
      -
      
      -
      
      169,977Product royalties
      
      -
      
      -
      
      1,246Subscription revenue
      
      -
      
      -
      
      31,625Total
        Revenues
      
      93,685
      
      67,453
      
      1,547,718Operating expenses:Research and product
          engineering
      
      (37,788)
      
      122,945
      
      9,416,290General and administrative
      
      180,525
      
      257,646
      
      16,021,267Product launch
          costs
      
      -
      
      -
      
      300,544Cost of products
          sold
      
      9,131
      
      1,395
      
      325,720Total
        Operating expenses
      
      151,868
      
      381,986
      
      26,063,821Loss from operations
          during the development stage
      
      (58,183)
      
      (314,533)
      
      (24,516,103)Other
        income
      
      9,000
      
      
      
      9,000Interest income
          (expenses) net
      
      (11,215)
      
      (186)
      
      428,801Gain on sale of
          assets
      
      1,348
      
      -
      
      25,876Net loss during
          the development stage
      
      (59,050)
      
      (314,719)
      
      (24,052,426)Basic and diluted
          net loss per share of common stock
      
      (0.00)
      
      (0.01)Weighted average
          number of Common Shares outstanding
      
      23,676,588
      
      22,060,316See
        accompanying notes to consolidated financial statements.


(PAGE 4)



Paracelsian,
          Inc. and Subsidiary(A Development Stage Company) 
          Consolidated Statements of Cash Flows
          For the three months ended December 31, 2001 and 2000,
          and the cumulative period from inception to December 31, 2001
          (Unaudited)CumulativePeriod
          fromThree
          Months Ended
      
      Inception
          toDecember
          31 ,
      
      December
          31 ,2001
      
      2000
      
      2001Cash
        flows from operating activities:Net loss
      
      (59,050)
      
      (314,719)
      
      (24,052,426)Adjustments to
          reconcile net loss to net cash used in operating activities:Loss (gain) on
          the sale of assets
      
      (1,348)
      
      -
      
      (25,876)Non-cash compensation
          expense
      
      -
      
      -
      
      1,619,657Other non-cash
          expenses
      
      (72,741)
      
      -
      
      1,954,756Depreciation and
          amortization
      
      10,253
      
      20,774
      
      2,420,601Write-off
        of patents and trademarks
      
      -
      
      -
      
      160,363Contributed
        capital
      
      -
      
      -
      
      80,000Write-off
        of note and interest receivable
      
      -
      
      -
      
      359,965Changes in assets
          and liabilities:Interest
        receivable
      
      -
      
      (9,845)
      
      (62,465)Inventories
      
      -
      
      926
      
      -Prepaid expenses
          and other current assets
      
      (43,959)
      
      (47,530)
      
      (80,119)Accounts payable
      
      (18,323)
      
      53,465
      
      335,395Deferred revenue
          and other long-term liabilities
      
      32,508
      
      -
      
      456,756Accrued expenses
      
      17,389
      
      71,369
      
      710,380Net
        cash used in operating activities:
      
      (135,271)
      
      (225,560)
      
      (16,195,754)Cash
        flows from investing activities:Purchase
        of equipment
      
      (1,464)
      
      (3,805)
      
      (742,182)Proceeds
        from sale of equipment
      
      1,348
      
      -
      
      39,176Acquisition
        of licensed technology
      
      -
      
      -
      
      (53,656)Acquisition
        of patents and trademarks
      
      (16,615)
      
      (3,282)
      
      (524,099)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 loan to East West Herbs, Ltd.
      
      -
      
      -
      
      42,500Net
        cash used in investing activities
      
      (16,731)
      
      (7,087)
      
      (2,021,127)Cash
        flows from financing activities:Sale
        of common stock, initial public offering, net of costs
      
      -
      
      -
      
      5,124,014Sale
        of common and preferred stock, net of costs
      
      -
      
      -
      
      11,776,088Proceeds
        from the sale of common stock
      
      -
      
      -
      
      500,000Proceeds
        from the exercise of warrants
      
      -
      
      -
      
      1,219,640Proceeds
        from the exercise of options
      
      -
      
      -
      
      68,900Purchase
        of treasury stock
      
      -
      
      -
      
      (1,342,515)Cost
        of warrant dividend
      
      -
      
      -
      
      (63,102)Increase
        in capital lease obligations and notes payable
      
      -
      
      -
      
      31,212Payment
        on capital lease obligations
      
      (96)
      
      (4,240)
      
      (29,792)Proceeds
        from advances from related party
      
      -
      
      -
      
      916,150Payments
        on advances from related party
      
      -
      
      -
      
      (105,473)Increase
        in notes payable
      
      6,490
      
      44,791
      
      139,097Net
        cash provided by financing activities
      
      6,394
      
      40,551
      
      18,234,219Net
        increase (decrease) in cash and cash equivalents
      
      (145,608)
      
      (192,096)
      
      17,338Cash
        and cash equivalents, beginning of period
      
      162,946
      
      227,123
      
      -Cash
        and cash equivalents, end of period
      $
      17,338
      
      35,027
      
      17,338Supplemental
        disclosures:Cash
        paid during the period for interest
      $
      3,214
      
      11,174
      
      102,654Supplemental
        disclosure of non-cash investing & financing activities:Fair
        value of assets acquired, net of cash acquired
      $
      -
      
      -
      
      1,733,212Less
        - liabilities assumed
      
      -
      
      -
      
      83,212Less
        - issuance of common stock
      
      -
      
      -
      
      1,644,000Net
        cash paid
      
      -
      
      -
      
      6,000Warrant
        dividend
      
      -
      
      -
      
      500,000Issuance
        of common stock/warrants for services and to reduce liabilities
      
      -
      
      -
      
      1,599,788Purchase
        of equipment
      
      -
      
      -
      
      90,950Purchase
        of officer stock subscription receivable
      
      -
      
      -
      
      89,850Issuance
        of common stock for licensing and technology rights
      
      -
      
      -
      
      3,338See
        accompanying notes to consolidated financial statements


(PAGE 5)



|Paracelsian,
          Inc. and Subsidiary(A
          Development Stage Company)
        NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS 
          December 31, 2001
          (Unaudited)
        1.	BASIS OF
          PRESENTATION:

      The unaudited consolidated
        financial statements included herein have been prepared in accordance
        with accounting principles generally accepted in the United States of
        America, 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. The results of operations for the three month period
        ended December 31, 2001 are not necessarily indicative of the results
        to be expected for the full year. Certain information and footnote disclosures
        normally included in financial statements, prepared in accordance with
        unaudited accounting principles generally accepted in the United States
        of America, have been condensed or omitted as permitted by such regulations.
        These unaudited 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, 2001.

      (PAGE
        6)
      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 1950s, 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 BioFITTM 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 BioFITTM Program.
        The Company is
          continuing to work with its Chinese colleagues, during the appropriate
          market conditions, to expand the scope of the BioFITTM 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 Peoples 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 BioFITTM 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.
      The Company has a
        10 year agreement with Kubota Corporation (Kubota) of Japan that establishes
        Kubota as the exclusive marketing and distribution agent for Paracelsian's
        Ah-IMMUNOASSAY® Environmental Certification program in Japan. For
        the period ended December 31, 2001, the Company recognized approximately
        $7,500 in license revenue under this agreement.
      The Company has a
        License Revocation Agreement with Dow Chemical Company (DOW) that modified
        the entirety of the License Agreement dated January 19, 1995. Under the
        agreement the Company agreed to pay DOW 10% of all sublicense fees of
        the proprietary information which formed the basis of the License Agreement
        and 10% of any sales of any products derived from the proprietary information
        which are the subject of the License Agreement. The maximum total value
        for any and all such payments shall not exceed $250,000. As of December
        31, 2001, $66,675 has been accrued as payments under this agreement.
      The Company has signed
        an Exclusive License Agreement with the Cornell Research Foundation, Inc.
        (CRF) for the exclusive license to make, have made, use or sell Licensed
        Products throughout the world. This agreement pertains to the manufacture
        and sales of Paracelsian's Ah-IMMUNOASSAY® Kits. This agreement stipulates
        that Paracelsian will pay to CRF a royalty of 3% of any sales of the Kits.
        As of December 31, 2001, $15,502 has been accrued as royalty payments.
        The Agreement also states that the Company shall reimburse CRF for any
        patent costs incurred by CRF associated with the Licensed Products. The
        Company has accrued $64,928 for patent expenses.
        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
        $59,000 for the three months ended December 31, 2001 and had a working
        capital deficit of approximately $1,354,000. Operating expenses decreased
        by approximately $230,000 (73%) from the prior year first quarter as a
        result of decreases in a variety of expenses including salaries, office
        expense, consultant fees and depreciation and amortization, as part of
        the companys program to control costs and optimize the use of its
        resources and due to a change in accounting estimate of approximately
        $73,000 related to reimbursement of patent costs by Cornell Research Foundation,
        Inc. Management believes that revenues from its Ah-IMMUNOASSAY® will
        increase throughout the year and will enable the Company to achieve positive
        cash flow.
      In December 2001,
        the Company made an offer to acquire the assets of East West Herbs (USA)
        in exchange for the note receivable and accrued interest owed to the Company.
        The offer was accepted and the parties are in the process of preparing
        an Asset Purchase Agreement.
      Management is seeking
        an investment of at least $1 million to strengthen its working capital
        position, and active discussions with interested parties are continuing.
        Current monthly cash requirements in order to sustain meaningful operations
        are approximately $80,000. Management will continue to evaluate the most
        cost effective means of raising any needed capital. Although management
        is confident of its ability to raise the capital, there can be no assurance
        that additional financing will be available on acceptable terms or at
        all.
        ITEM
          2.		Management's Discussion and Analysis of Financial Condition
          and Results of Operations 
          Three months ended December 31, 2001 as compared to the 
          three months ended December 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 the 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 initial $150,000 License Fee. The License Agreement
        also calls for a second payment of $150,000 within (30) days of the third
        anniversary of the Agreement. Kubota after using and evaluating the Ah-IMMUNOASSAY®
        Kits concluded that the methodology is effective for their purposes, and
        Kubota paid the $150,000 on August 8, 2001, seventeen months sooner.
      On October 1, 2001
        Kubota and the Company announced an agreement where Kubota will pay the
        Company $350,000, earmarked for upgrading the Ah-IMMUNOASSAY® Kits.
        The first payment of $175,000 was made in September 2001 and the second
        payment of $40,000 was made in December 2001. The third payment of $90,000
        will be made in March 2002 and the fourth and final payment of $45,000
        will be made in September 2002. Under the terms of the agreement, the
        Company is required to compensate Kubota beginning in January 2003 based
        on sales of the Ah-IMMUNOASSAY® Kits. The Company has accounted for
        the proceeds under the agreement as other long-term liabilities.
        Results of Operations

      The Company's net
        loss for the first quarter of fiscal 2002 was approximately $59,000 compared
        to approximately $315,000 in the first quarter of fiscal 2001. Revenues
        for the three-month period were approximately approximately $94,000 in
        2002 as compared to approximately 67,000 in 2001. The $27,000 increase
        in revenues is attributable to revenues for the Ah-IMMUNOASSAY® Kits.
        Operating expenses for the three-month period were approximately $152,000
        compared to approximately $382,000 for the first fiscal quarter of the
        prior year. The decrease of approximately $230,000 (60%) is due to a decrease
        in a number of expense categories including payroll, office expense, consultant
        fees, depreciation and amortization and a change in accounting estimate
        of approximately $73,000. The management team is continuing to operate
        with modest staff levels and has been focusing on continuing to optimize
        its resources, increasing its customer base and generating revenues.
      (PAGE
        9)Liquidity &
          Capital Resources

      As of December 31,
        2001, the Company had cash of $17,338 and a net working capital deficit
        of $1,354,000. 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. Management believes that
        the additional financing coupled with its expected revenues from the Ah-IMMUNOASSAY®
        will enable the Company to increase sales, to further improve its operating
        efficiency and to continue its operations into the future.

      In January and February
        2001 the Company issued three Convertible Promissory Agreements in the
        amounts of $50,000, $30,000 and $10,000. The Agreements mature in one
        year from the issuance date and each holder may convert the Agreement
        into shares of Restricted Common Stock of the Company at any time up to
        and including the maturity date but not thereafter. The $50,000 Agreement
        expired on February 15, 2002 and was extended to August 15, 2002. The
        $30,000 Agreement expired on January 10, 2002 and was extended to July
        10, 2002 and the $10,000 Agreement expired on January 9, 2002 and was
        extended to July 9, 2002.
      In December 2001,
        the Company made an offer to acquire the assets of East West Herbs (USA)
        in exchange for the note receivable and accrued interest owed to the Company.
        The offer was accepted and the parties are in the process of preparing
        an Asset Purchase Agreement.
      Management is seeking
        an investment of at least $1 million to strengthen its working capital
        position, and active discussions with interested parties are continuing.
        Current monthly cash requirements in order to sustain meaningful operations
        are approximately $80,000. Management will continue to evaluate the most
        cost effective means of raising any needed capital. Although management
        is confident of its ability to raise the capital, there can be no assurance
        that additional financing will be available on acceptable terms or at
        all.
        Management and
          The Board
        The management
          of the Company will be focusing their efforts on growing its customer
          base, producing ongoing revenues and controlling expenses. On November
          13, 2001 Mac Shaibe resigned from the Board. The Board is pursuing a
          replacement for Mr. Shaibe.
        Short-Term Advances
        BioSignia, Inc.,
          the Company's largest shareholder, has advanced interim funds to the
          Company for working capital purposes. The Company agrees to repay the
          funds, together with quarterly interest at an annual rate of prime plus
          2% and its obligation to satisfy the indebtedness matures on September
          1, 2002. Through December 31, 2001 $348,885 has been advanced, including
          accrued interest.
        Forward Looking
          Statements

      Certain statements
        in this Form 10-QSB "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-QSB.
        PART II		OTHER
          INFORMATION
        Item 1.		Legal
          Proceedings
        Hadyk, et al.
          V. John G. Babish, et al.

      In addition to routine
        litigation that is incidental to its business, the Company is a party
        to the following litigation:
      (PAGE
        10)Hadyk,
          et al. V. John G. Babish, et al.: This case was commenced in New
          York State Supreme Court (Onondaga County) in June 1993 by certain persons,
          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 allege, among other things, that in 1990, prior to the
          Company's incorporation, a partnership has been formed with Messrs.
          Babish and Heslop to commercialize products that the Company was developing.
          Damages, an accounting and an injunction are being sought against the
          Company. By decision dated September 14, 1994, the Court dismissed certain
          of the plaintiffs claims against the Company while permitting
          a claim alleging unfair competition to proceed. Discovery has 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 Judge, on March 7, 2001 signed an order
          dismissing all of the plaintiffs refining claims against the Company.
          In December 2001, the plaintiffs filed an appeal. The Company intends
          to be fully responsive to the appeal and is confident of the summary
          judgment motion being upheld.
        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	February
          15, 2002
        PARACELSIAN,
          INC.
        
        PARACELSIAN, INC.
        By:/s/
          NoriYoshi Inoue
                                                                                                        
           -------------------------------------
                                                                                                        
          NoriYoshi Inoue
                                                                                                        
          President,
                                                                                                        
          Chief Executive Officer
        By/s/
          GARY G. CHABOT
                                                                                                        
          ---------------------------------
                                                                                                        
          Gary G. Chabot
                                                                                                        
          Principal Accounting Officer
        

      (PAGE
        11)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------