SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM. 10-KSB





[ X ]		ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE   SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999.



[ ]		TRANSITION REPORT UNDE
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PARACELSIAN, INC.

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(Name of small business issuer in
its charter)





|Delaware
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|(State or other
jurisdiction ofincorporation           or organization) |  | (I.R.S. Employer           Identification No.)
          Technology Park, Ithaca, New York 	14850
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|(Address of principal executive offices)                                |  | Zip Code                                                                                         
|Issuer's telephone number: (607) 257-4224                               |  |                                                                                                  
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|Securities registered under Section           12(b) of the Act: None    |  |                                                                                                  
|Securities registered under Section             12(g) of the Act:       |  |                                                                                                  
|Common Stock, $.01 par value                                            |  |                                                                                                  
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|(Title of class)                                                        |  |                                                                                                  
|Redeemable Common Stock Purchase Warrants                               |  |                                                                                                  
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|(Title of class)                                                        |  |                                                                                                  





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 [ ]



Check if there is no disclosure of delinquent filers in response   to Item 405 of Regulation S-B is not contained in this form, and no disclosure   will
be contained, to the best of registrant's knowledge, in definitive proxy   or information statements incorporated by reference in Part III of this Form   10-KSB or any amendment to this Form 10-KSB. [ ]



Issuer's revenues for its most recent fiscal year were $ 363,013.



The aggregate market value of the voting stock (based on the   closing price of such stock on NASD OTC Electronic
Bulletin Board) held by non-affiliates   of the Registrant at February 23, 2000 was approximately $11,953,393.



There were 20,677,783 shares of Common Stock and 1,736,870 Redeemable   Common Stock Purchase Warrants outstanding at February 23, 2000.







PART I



Item 1. DESCRIPTION OF BUSINESS



Company History



Paracelsian, Inc. ("Paracelsian" or the "Company")
is a Delaware corporation that was incorporated in 1990. The Companys   initial strategy was to refine and commercialize the Ah-IMMUNOASSAY for   environmental applications. Management of the Company at that time believed   that the refined
Ah-IMMUNOASSAY would be effective as an inexpensive and   easy to use test for the screening and monitoring of polluted soil and water   samples. The Company received a patent for this application in October 1993,   and began to develop a program to
commercialize the technology. The result of   this work is the Toxicological Screening Assay system.



In 1994, the Company purchased Pacific Liasons. Pacific Liasons   brought to Paracelsian a close working relationship with health and research   authorities. Pacific Liasons also contributed to Paracelsian a library of
2,764   Traditional Chinese Medicine (TCM) herbal extracts, and access to Chinese medical   and herbal databases which contained clinical and research data on the known   functions, active compounds, and mechanisms of action for each of the 2,764   herbal
extracts.



In 1995, other patented assays developed as a result of the   Companys ongoing research with Ah-IMMUNOASSAY were used to   screen Paracelsians library of TCM herbal extracts for natural compounds
which would be effective in treating different types of cancer.



In January 1998, BioSignia, Inc. (formerly Biomar International,   Inc.), a Delaware corporation with its principal office in Chapel Hill, North   Carolina ("BioSignia"), purchased a significant interest in
the Company   and a new board and management team was installed.



Company Business



Paracelsian is a development stage company, which develops and   applies bioassays to determine the quality of herbal products, to identify therapeutic
compounds from herbal sources, and to monitor environmental toxins. The Companys   bioassays evaluate the effects of given compounds on intracellular signals.



Cellular signaling is one of the basic steps in biology and   is necessary for normal growth of tissues to support life. The Companys   technology enables researchers to observe signal transduction and measure the
  effects of chemicals contained in synthetic or natural compounds, such as herbal   extracts, on cellular processes. In the course of these studies, the Company   can distinguish the effects of such chemicals on targeted cells, thereby screening
compounds within herbs and herbal extracts to identify those with promising   therapeutic effects.



The Company believes that the results of its research coincide   with the need for sound scientific understanding of herbal medicines. The Companys   technology provides tools for the validation of the effects of
herbal medicines   and dietary supplements. In addition, the Company has utilized its technology   to screen and identify active substances contained within its library of traditional   Chinese medicines.



The Company has the ability to develop novel procedures for   detecting biologically relevant activities of complex mixtures of compounds   (such as in the herbal extracts) or of the active constituents thereof. These
procedures are generally referred to as bioassays.



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. Such biological mechanisms   could be, for example, the inhibition of Seratonin re-uptake by brain cells   which can produce a well known and clinically significant anti-depressant effect.   By defining
such mechanisms of action associated with a wide variety of biological   effects, including immune stimulation, anti-inflammatory activity, and anti-oxidant   activity, 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 Quality Assurance Certification,   BioFIT
(Bio-functional Integrity Testing) and for its ongoing product development   activities.



Paracelsian develops bioassay-based products that are used as   diagnostic screening tools in markets where there is a need to quantify, quickly   and easily, the effects of single compounds as well as complex mixtures
of chemicals   on cellular and biochemical function. Once the bioassays are developed for a   specific use, the Company licenses the products and technology to well positioned   commercialization partners within each targeted market. The Company expects
to receive a significant portion of its future revenues from the royalties and   licensing fees generated by the licensing agreements.



To date, the Company has developed specific need-driven bioassay   systems for three markets: (1) herbal supplements (2) environmental testing,   and (3) drug discovery and development.

Table 1    Paracelsian Products,    with Market and Need




|Product                                                        | Market                                         | Need                                                                                    
|-------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------------------------------------------------------
|BioFITQuality AssuranceAssay System                           | Herbal Supplements                             | Establish a quality assurance program           that confirms product bioactivity       
|Ah-IMMUNOASSAY Toxicological Screening           Assay System | Environmental Testing                          | Quick, inexpensive field test for dioxin           pollution                            
|Drug Screening Assay System                                    | Natural Product
Drug Discovery and Development | More effective method for screening natural           compounds for therapeutic benefits





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



In July 1998, the Company entered into an agreement with R.   P. Scherer North America that establishes them as the exclusive marketing and   distribution agent for the BioFIT certification program in the dietary
supplement and OTC market segments in North America. The agreement provided   for payments to the Company for development of assay systems, for product certifications,   for batch to batch testing and for royalties on the sale of BioFIT products.
This agreement has now been modified to limit R.P. Scherers exclusivity   only to the softgel delivery system. The Company will continue to receive royalties   on the sale of all BioFIT certified products by R.P. Scherer and will   continue to
be paid for batch to batch testing. However, the Company is now   free to pursue arrangements with all manufacturers selling other types of delivery   forms including tablets, two part hard shells, foods and beverages, as well   as with raw material
manufacturers. This dramatically increases the Companys   potential revenue and, in the case of finished goods manufacturers, allows the   Company to receive royalties based on a higher selling price than that at which   its royalties from R.P.
Scherer would have been based.



The Company has initiated testing for several raw material suppliers   and finished goods manufacturers. Revenues derived from testing are increasing   and the Company expects that requests for testing will continue to
increase   in 2000. The Company is also in active discussions with several sellers of finished   dietary supplements and sellers of raw materials and expects to complete negotiations   shortly that will result in BioFIT certified products being seen
on   store shelves later this year.



The Company is also continuing its efforts to expand the scope   of the BioFIT program to the rest of the world and is in ongoing discussions   with R.P. Scherer pursuant to a letter agreement signed in March 1999
to take   advantage of this opportunity.



On January 6, 2000 the Company signed a License and Service   Agreement making ExtractsPlus the first supplier of raw materials to offer BioFIT   "Certified Bioactive" herbal products. Under the
Agreement, the Company   will provide testing services to ExtractsPlus both for certification of existing   products and the development of new products. ExtractsPlus will use the Companys   BioFIT "Certified Bioactive" logo in
conjunction with the marketing   and sale of the ExtractsPlus line of herbal products. ExtractPlus will pay the   Company an annual marketing fee and spend an amount equal to or greater than   that fee to promote the BioFIT program through its own
marketing programs.   In addition, Paracelsian will receive payment for certification and batch-to-batch   testing, along with a royalty on the sale of products bearing the BioFIT   logo.



ExtractsPlus is the North American sales and marketing agent   for Emil Flachsmann AG of Zurich, Switzerland, one of the acknowledged premiere   suppliers of herbal extracts in the world. Flachsmann has been producing
pharmaceutical   quality botanical extracts for more than 50 years. ExtractsPlus has been involved   in the development of the market for high quality herbal extracts so the consumer   will be assured of value in their purchase of finished products.



On July 20,1999 the Company signed a Development Agreement with   Kubota Corporation to further develop the Companys patented Ah-IMMUNOASSAY   for use in the monitoring of municipal waste incinerators in
Japan. The Development   Agreement provided for payments to the Company in the amount of $257,000.



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. The Ah-IMMUNOASSAY is used to detect
dioxin contamination   in the environment. This agreement will provide both license fees ($150,000)   and royalties. Kubota, a company with approximately $9 billion of revenue, is   a leader in the control and resolution of environmental contamination
problems   in Japan.



In addition to its agreement with Kubota in Japan, the Company   is also actively involved in discussions with private businesses in Belgium,   Korea and with Ministry of Health and other government agencies in the
Peoples   Republic of China regarding development and implementation of the Ah-IMMUNOASSAY   to monitor food, water and soil. The Company expects these discussions to be   fruitful and result in further applications for its technology with associated
  revenues some time in the year 2000.



The Company also is engaged in internet-based health exchange   between the US and China. The Company currently maintains three websites (www.newcenturynutrition.com,   www.china-med.net, www.tcmpharmacy.com These
websites serve to provide a forum   for the exchange of nutrition, health and related information, and for the trade   of natural products between the US and China.



Within the internet market, the Company is pursuing several   key partnerships with groups in the Peoples Republic of China. It is anticipated   that revenues currently being generated from this segment of the
business will   increase in 2000 assuming that the Company successfully structures this segment   of the business within the first quarter of 2000.



In 2000, the Company will continue to pursue the following strategies:   (i) Identify and develop new markets in industries which will benefit from the   adoption of the bioassay testing technologies; (ii) Form
co-development and   licensing partnerships in these new markets with the industry leaders; (iii)   Structure development agreements that will provide up front licensing payments   and on-going royalties from partnership revenues; (iv) Promote the
bioassay   technologies as the "Industry Benchmark"; and (v) Position the Company,   via its internet websites, as a leading partner with China in the area of health   and the trade of health related products and technologies. These strategies
will be executed by focusing the Companys primary activities on the following   four areas:



(1) Quality Assurance. The Company researches the scientific   literature to determine the mechanisms of action for herbal or botanical products   and develops assays to determine the range of activity for each of
the biological   functions the product could affect. The Company then uses its proprietary technology   to evaluate these products based on how they perform in a scientifically selected   battery of functional tests. If the product generates activity
within the proper   range for each of the activities being tested, the product is certified as BIOFIT   , or "Bio Functional Integrity Tested," the Company's trademarked designation.   BIOFIT assays confirm consistent in vitro biological
activities associated   with the benefit claims on the product's label. The Company intends to market   the BIOFIT designation to producers of herbal medicines and dietary supplements   which the Company believes will enable these producers to (i)
differentiate   their products from similarly labeled products based on their products' consistent   delivery of the benefits claimed by their producers; (ii) ensure "batch to batch"   consistency in the production of their products; (iii) eliminate
consumer confusion   as to "which product to buy?"; and (iv) provide more "consistent" products and   information in the herbal and dietary supplement market. The Company has completed   initial BIOFIT certifications for five herbal products. Assays
to test   these products are fully developed. The Company is also working with the trade   associations of the herbal and dietary supplement market to test functional   activity of products.



This new BioFIT Certification Program which utilizes   a unique "functional" approach to quality assurance will provide the natural   products consumers more accurate information when purchasing herbs and other
botanical products. BIOFIT Certification is based on demonstrated biological   activity in the product and goes beyond current analytical techniques that only   measure the presence or absence of certain marker compounds.



The BioFIT process is intended as an additional step in providing   quality assurance, not an all inclusive process. The provision of the BioFIT  Certification of functionality is given only after Paracelsian
has been provided   with appropriate analytical and safety documentation. This insures that the   product is what it says it is, is free from adulterants, contaminants or other   dangerous constituents, and, with the addition of the BioFIT
Certification,   that the product delivers on its promised benefits.



The BioFIT process is not intended to replace or be a substitute   for either human or animal trials or any other long term testing method aimed   at establishing clinical efficacy of subject materials. Rather, it
is intended   to confirm that a minimum level of biological activity, relevant to the positive   clinical effect seen in human and/or animal trials, is present at the time of   production and throughout the entire shelf-life of the herbal product being
evaluated. The superiority of BioFIT is based on its ability to insure consumers   that, when consumed, herbal products provide a consistent, minimum, significant   level of biological activity.



The BioFIT Certification builds on existing quality assurance   systems in several ways. First and foremost it focuses on the single most important   reason consumers purchase herbal products - their ability to
deliver on their   benefit claims. Because standardization does not assure bio-activity, there   is no way for consumers to know that the product is active when consumed. Indeed,   even clinical trials are imperfect in this regard as it is not uncommon
for   a large percentage of study subjects to realize no benefit at all from consuming   the herb, even though the study may be considered successful and the basis for   product claims.



(2) Product Discovery and Development. The Company owns   an extract library of approximately 2,800 Traditional Chinese Medicines and   other plant materials which it has screened using its proprietary screening
technology. Through this screening process, the Company has identified ten (10)   extracts with potent in vitro activity against cancer cells as potential drug   discovery and development candidates. The long term goal of the Company is to   continue to
pursue discussions and to partner with a major pharmaceutical partner   to develop any potential drug candidates in the shortest possible time period.



(3) Environmental Screening. The Companys patented   Ah-IMMUNOASSAY detects potentially toxic dioxins in the environment and   provides quick, accurate and inexpensive results compared to traditional
analytical   techniques. The potential applications for this assay include commercial incinerators,   the organic farming industry and the general field of environmental management.



(4) Internet Health Exchange. The Company currently has   excellent relations with recognized health authorities and organizations within   the Peoples Republic of China. On August 3, 1999 the Company
announced   that T. Colin Campbell, endowed Professor of Nutritional Biochemistry at Cornell   University and one of Americas most esteemed nutrition scientists had   agreed to head up the companys newly created Internet business unit. Dr.
Campbell has long standing relationships with Chinas leading health care   agencies and scientists. This new initiative intends 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 believes that actively participating in an exchange   of health information and products between the US and China, using the Internet   as the primary medium, has significant market potential. Other segments
of the   Companys business, product discovery and development, "BioFIT,   and the Ah-IMMUNOASSAY, may each directly benefit from the Internet segment   of the business.



Future revenues are anticipated to be derived from sales of   the Company's products and services that are currently under development, royalties   in connection with licensing of its technology and ecommerce sales
through its   internet business. There can be no assurance that the Company will be able to   attain such revenues in sufficient amounts to achieve profitable operations.   Results of operations in the future will be influenced by numerous factors,
including the ability of the Company to develop and manage the introduction   of its new services, market acceptance of the Company's services, competition   and the ability to control costs.



Competition



The major competitors for BIOFIT are laboratories that   have expertise working with biological assays. Two industries outside of the   biotech industry that
could potentially compete are clinical testing labs and   toxicology and food safety laboratories. Major laboratories that provide testing   services on a national basis include Smith Klein, Quest Diagnostics, Inc. and   Laboratory Corp of America. These
and other toxicology and food testing laboratories   do not provide biofunctional testing that can demonstrate bioactivity of the   supplement consistent with the benefits claimed. Some manufacturers provide   "batch to batch" testing to insure
manufacturing consistency. None   of the manufacturers test to see if the supplement, when ingested according   to directions, demonstrates bioactivity associated with the benefits claimed   by the manufacturer.



It is well known that both the U.S. Pharmacopoeia and the American   Herbal Products Association have been working hard to establish analytical standards   for herbal dietary supplements. Both organizations have been
presented with   the BioFIT concept and in each case there was an acceptance of the viability   of the concept. The first challenge for both organizations is, however, the   standardization of these products to make sure that they meet standards of
identity,   not functionality. The American Herbal Products Association has made statements   that they believe that functional testing of the type represented by the BioFIT   process is a high priority for the industry in improving the quality of
herbal   products. Neither organization has suggested that standardizing herbals based   on analytical techniques should be the end point of quality assurance. Rather,   both believe it is a step on a more lengthy continuum. Therefore, the activities   of
these and other organizations, the Company Management believes, pose no risk   to the successful implementation and acceptance of the BioFIT concept, either   by industry or by consumers.



The Company is aware of a number of other firms that have developed   environmental field tests, but attempts to develop an antibody-based test for   all dioxins have been unsuccessful. The introduction of the
Ah-IMMUNOASSAY   provides the first receptor-based environmental testing system. Although the   Company is aware there is no single product presently in the marketplace that   competes directly with the Ah-IMMUNOASSAY, organizations in the field
of   environmental testing are potential competitors. Many large companies with extensive   research and development, marketing, financial and other capabilities, as well   as government funded institutions and smaller research firms are engaged in   the
development of diagnostic assays for environmental applications. A significant   majority of the diagnostic tests developed for these companies, however, are   designed for use in laboratories that require sophisticated instrumentation   and skilled
technicians. The Company has designed its Ah-IMMUNOASSAY as   an inexpensive, quick turnaround methodology for use by minimally skilled personnel.   The Ah-IMMUNOASSAY method does not currently compete with laboratory-based   systems. Gas
Chromatography with Mass Spectrometry ("GC/MS") is the   "state of the art" procedure used for identifying and evaluating volatile   and semi-volatile compounds in the environment. The instrumentation required   for this analysis is
extremely expensive and requires highly trained personnel.   Pricing for the GC/MS and other comparable tests average about $4,500 per sample.   The Company believes that the costs of using the Ah-IMMUNOASSAY offer a   significant savings over those
of testing with GC/MS. It also believes that   the Ah-IMMUNOASSAY is as sensitive for detecting small amounts of contaminant   as is the GC/MS method.



There are a number of small biotechnology companies that focus   on drug discovery. The Company competes on the basis of the combination of its   therapeutic focus on anti-proliferative diseases, its novel screening
technology   and its large library of Chinese extracts with data on historical use.



The Company is pursuing a unique strategy (i.e. health exchange)   and expects to be the first and largest ecommerce initiative, in this area,   with appeal to both US and Chinese markets. Although there are a large
number   of major ecommerce websites which offer Western" dietary supplements,   there are a limited number which offer Eastern dietary supplements.



Dependence on a Key Distributor and Certain Industries



The Company has entered into an agreement with a leading manufacturer   of herbal and other dietary supplement products
to serve as the Companys   exclusive agent for the marketing and distribution of its BIOFIT Certification   Program in the soft gel delivery form. The Company has also entered into an   agreement with a leading manufacturer of herbal and other
dietary supplements   to provide BioFIT certified raw materials for all other delivery forms.   This agreement is not exclusive. Failure to launch BIOFIT in a timely manner   or failure to secure an adequate number of customers could have a
material adverse   effect on the Company. The Company's operations could also be materially and   adversely affected by a general economic decline in the herbal and dietary supplement   industries.



The Company has entered into an Agreement with the Kubota Corporation   for the sale of the Companys Ah-IMMUNOASSAY in the Japanese market.   The Licensing Agreement provides the Company with licensing fees
and a royalty   on sales in the Japanese market. In return, the Company provides Kubota with   an exclusive license to manufacture and distribute the Ah-IMMUNOASSAY in   Japan. Future revenues from these licensing fees and royalties are dependant
on meeting Kubotas acceptance criteria for assay performance. Such acceptance   is not guaranteed, if Kubota does not accept, future earnings could be negatively   impacted.



Patents



Much of the value of the Companys research is derived   from the bioassay technologies developed and applied to the work on herbal drug   discovery and cancer
screening programs.Although the concept of using bioassays   as a means of identifying important biological activities is a standard research   procedure in the biotech industry and often times cannot be patented, the Company   has developed significant
experience and proprietary "know-how". Where   possible, the Company has applied for product and process patents. In the course   of its research, the Company obtained 5 US and foreign patents prior to 1999   for the Dioxin Assay Systems which
cover a wide range of commercial applications   for the Ah-IMMUNOASSAY and other assay technologies. During 1999, the Company   was granted two additional patents. There are 2 additional US patents filed   and pending. The Company is actively seeking
partners to fully develop the market   potential of these patents. Patents have a statutory duration of twenty years.



The Company believes that patent protection of materials or   processes it develops and any products that may result from the Company's research   and development efforts are important to the possible commercialization
of these   products. However, there can be no assurance that the Company's patents will   afford adequate protection to the Company or its licensees. Further, there can   be no assurance that any patents that have been or may be issued will provide   the
Company with significant protection from competitors. Other private and   public entities may file applications for patents and other proprietary rights   to technology which could be harmful to the commercialization of the services   and products
developed by the Company. The ultimate scope and validity of patents   which are now owned by or which may be granted to third parties in the future,   the extent to which the Company may wish or be required to acquire rights under   such patents, and the
cost or availability of such rights cannot be determined   by the Company at this time.



The Company also relies on unpatented proprietary technology   and no assurance can be given that others will not independently develop substantially   equivalent proprietary information or otherwise gain access to the
Companys   proprietary technology or that the Company can meaningfully protect its rights   in such unpatented proprietary technology.



In addition, although all of the Company's employees are parties   to confidentiality agreements which are intended to protect the Company's proprietary   technology, there can be no assurance that any of such employees
will not compromise   any of the Company's proprietary rights.



Government Regulation



As a result of the passage of the Dietary Supplement Health   and Education Act of 1994 ("DSHEA"), the dietary supplement industry   enjoys
substantial regulatory flexibility. The legislation creates a new statutory   class of "dietary supplements" which is a subset of food. This new   class includes vitamins, minerals, herbs, other botanicals, amino acids and   other dietary
substances used to supplement the diet. DSHEA allows herbs and   botanicals to be regulated as dietary supplements so long as no claims are made   that such dietary supplements are intended for the diagnosis, cure, mitigation,   treatment or prevention of
disease in humans or other animals. If manufacturers   or retailers characterize their product in a way which crosses over the line   into claims that are allowed for drugs, the FDA has acted swiftly to remove   the supplements from the market.



In North America the herbal segment of the dietary supplement   market has grown from less than $1 Billion to approximately $4 Billion since   the passage of DSHEA. Manufacturers and retailers of herbal and botanical
supplements   have seized the opportunity to avoid significant regulatory costs and FDA oversight   by identifying their products as a supplement under DSHEA. Large food manufacturers   and pharmaceutical companies are moving into this marketplace with
products   for which they can make structure/function claims.



Most manufacturers who have launched new products under the   DSHEA guidelines have avoided making claims about the efficacy of their product,   but, the resulting lack of information with which to explain the safety
and   efficacy of their products has created a high level of confusion in the minds   of consumers. As a result of the general confusion as to the efficacy of supplements   and the tremendous increase in the number of herbal and botanical products on
the market, consumers are demanding more reliable information. Unlike the regulations   governing the drug manufacturing industries, herbal supplement manufacturers   are not subject to well defined manufacturing guidelines. The dietary supplement
industry has been slow to go beyond identifying the active ingredients in their   products.



The BIOFIT program is designed to: (a) differentiate those   products able to consistently demonstrate bio-activity associated with the benefits   claimed by the manufacturer or retailer, (b) ensure "batch to
batch"   consistency in the production of dietary products, (c) eliminate consumer confusion   as to which product to purchase, and (d) provide a benchmark for evaluating   the consistency of the product.

The BIOFIT Assay allows identification of the herb samples   which have an effect on human immune cells without having to conduct human or   animal clinical trials and offers an inexpensive way of accurately identifying
sources of raw material which have high levels of the relevant bioactivity.   In addition, herbal manufacturers can evaluate, quickly and easily, its competitors   herbal supplements. BIOFIT Quality Assurance Certification bridges the   gap
between chemical assay methods of validation versus the use of animal and   human clinical trials to validate the effectiveness of natural products relative   to the structure and function claims being made.



The Company does not anticipate that its drug discovery program   will be affected by governmental regulations since the Company intends to license   drug compounds to established pharmaceutical companies prior to
extensive testing   and development.



The health care industry is the subject of significant proposed   legislation. The Company cannot predict what new legislation might be enacted   or what regulations might be adopted or amended, or if enacted, adopted
or amended,   the effect thereof on the Companys operations. Any change in applicable   law or regulation may have a material effect on the business of the Company.

Funding of Research and Development

The Company expended $633,595 in 1998 and $744,143 in 1999 on   research and development.

Costs of Environmental Compliance

The Company believes it is in compliance with all applicable   environmental laws and the cost of such compliance to the Company has been minimal.

Employees and Board

The Company employs 13 full and 1 part-time people. None of   the Companys employees are covered by a collective bargaining agreement.   The Company considers its relationship with its employees to be excellent. All   employees of the Company are
signatories to confidentiality agreements that   restrict proprietary right in, and commercial development of, all technology   developed by the employees.

On January 31, 2000 the Company announced that Dr. T. Colin   Campbell was named Chairman, CEO & President. Dr. Campbell replaces Bernard   M. Landes, who served as Chairman, CEO and President the previous two years.   Dr.
Campbell served on the Board of Directors of the Company for several years   prior to taking this new position. On February 8, 2000 the Company announced   that Dr. Max Shaibe has accepted an invitation to serve on the Companys   Board. Dr.
Shaibes appointment to the Board lasts until the annual shareholders   meeting planned for June 2000, when he will stand for election. Dr. Shaibes   background includes significant positions in academia, government and the private
sector. Perhaps most noteworthy, Dr. Shaibe is a co-inventor of the Internet.   In addition Gary G. Chabot has joined the Company as the Chief Financial Officer.

Item 2. 	DESCRIPTION OF PROPERTIES

The Companys executive offices and research facilities   are located at Langmuir Laboratories in Ithaca, New York, and occupy 6,210 square
feet at that location. The Company occupies this space under a one-year lease   from Cornell University, which expires in April 2000, and provides for automatic   renewals. At this time, the Company believes that this space is sufficient for   its
administrative offices as well as the Internet operation, and the current   manufacturing and research and development activities.

Item 3.	LEGAL PROCEEDINGS

In addition to routine litigation that is incidental to its   business, the Company is a party to the following litigation:

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 plaintiffs 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,   if successful, will fully resolve the case in favor of the
Company. The Company   believes that the suit against it is without merit and intends to defend the   case vigorously.



Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY   HOLDERS

None.

PART II



Item 5. MARKET FOR COMMON EQUITY AND RELATED   STOCKHOLD MATTERS

The Companys Common Stock, par value $0.01 per share (the   "Common Stock"), commenced trading on February 11, 1992 on the
over-the-counter   market and was quoted on the National Association of Securities Dealers   Automated Quotation System ("NASDAQ") under the symbol PRLN until   October 7, 1998 when it moved to the over-the-counter Bulletin Board. The
Companys   Redeemable Common Stock Purchase Warrants (the "Warrants") commenced   trading on September 24, 1993 on the over-the-counter market and are quoted   under the symbol PRLNW.

The following table sets forth the high and low bid prices for   the Common Stock and Warrants during the periods indicated as reported by NASDAQ.   The prices reported reflect inter-dealer quotations, may not represent actual
  transactions and do not include retail mark-ups, markdowns or commissions.



|               | Common Stock | Warrant
|-------------- | ------------ | -------
|               | High Bid     | Low Bid
|               |              |        
|Fiscal 1998    |              |        
|First Quarter  | 15/32        | 3/32   
|Second Quarter | 17/32        | 5/32   
|Third Quarter  | 27/32        | 13/32  
|Fourth Quarter | 1-11/32      | 19/32  
|               |              |        
|Fiscal 1999    |              |        
|First Quarter  | 1-1/8        | 5/32   
|Second Quarter | 2            | 21/32  
|Third Quarter  | 1-1/32       | 7/16   
|Fourth Quarter | 35/64        | 17/64  





As of February 23, 2000, the Company had 20,677,783 shares of   Common Stock outstanding held by 329 record holders. As of such date, the Company   had 1,736,870 Warrants outstanding and 63 record
holders of Warrants.



The Company did not pay cash dividends on the Common Stock during   the two fiscal years ended September 30, 1999. It is the present policy of the   Company to retain earnings, if any, to finance the development and
growth of   its business. Accordingly, the Company does not anticipate that cash dividends   will be paid until earnings of the Company warrant such dividends, and there   can be no assurance that the Company can achieve such earnings or any earnings.

Item 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL   CONDITION AND RESULTS OF OPERATIONS

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 has now completed development of its BioFIT   (Bio Functional Integrity Tested) "functional" Quality assurance program   for herbal and other complex natural products. This unique quality
assurance   program is able to certify consistent bio-functionality of herbal and other   dietary supplements. This new "functional" approach to quality assurance   will assist consumers in selecting herbs and other botanical and complex natural
  products, including nutraceuticals, based on their demonstrated biological activity,   rather than relying, as in the past, on a chemical analysis of their principal   constituents. Chemicals analysis has not been demonstrated to be a consistent
measure of functionality for herbal products, and often presumed actives or   marker compounds used for standardization do not predict biological activity.   The BioFIT certification ensures that products exhibit a high enough   level of biological
activity in mechanisms relevant to the claimed product benefit,   when compared to products used in successful clinical trials, to suggest that   the product will deliver on its benefit claims.



The Company filed a broad patent application covering its unique   approach to quality assurance in July of 1998. The patent application is being   prosecuted by Kenyon & Kenyon of New York, one of the nations
most   respected law firms specializing in intellectual property.



In July 1998, the Company entered into an agreement with R.P.   Scherer North America that establishes them as the exclusive marketing and distribution   agent for the BioFIT certification program in the dietary
supplement   and OTC market segments in North America. The agreement provided for payments   to the Company for development of assay systems, for product certifications,   for batch to batch testing and for royalties on the sale of BioFIT products.
This agreement has now been modified to limit R.P. Scherer exclusivity only   to the softgel delivery system. The Company will continue to receive royalties   on the sale of all BioFIT certified products by R.P. Scherer and will   continue to be paid
for batch to batch testing. However, the Company is now   free to pursue arrangements with all manufacturers selling other types of delivery   forms including tablets, two part hard shells, foods and beverages, as well   as with raw material
manufacturers. This dramatically increases the Companys   potential revenue and, in the case of finished goods manufacturers, allows the   Company to receive royalties based on a higher selling price than that at which   its royalties from R.P.
Scherer would have been based.



The Company has initiated testing for several raw material suppliers   and finished goods manufacturers. Revenues derived from testing are increasing   and the Company expects that requests for testing will continue to
increase   in the coming months. The Company is also in active discussions with several   sellers of finished dietary supplements and sellers of raw materials and expects   BioFIT certified products on store shelves later this year.



On July 20,1999 the Company signed a Development Agreement with   Kubota Corporation to further develop The Companys patented Ah-IMMUNOASSAY   for use in the monitoring of municipal waste incinerators in
Japan. The Company   signed a final Licensing Agreement with the Kubota Corporation on January 18,   2000 for the sale of the Companys Ah-IMMUNOASSAY in the Japanese market.   The Ah-IMMUNOASSAY is used to detect dioxin contamination in
the environment.   The Licensing Agreement provides the Company with licensing fees and a royalty   on sales in the Japanese market. In return, the Company provides Kubota with   an exclusive license to manufacture and distribute the Ah-IMMUNOASSAY
in Japan.

The Company is also actively involved in discussions with private   businesses in Belgium, Korea and with the Ministry of Health and other government   agencies in the Peoples Republic of China regarding development and
implementation   of the Ah-IMMUNOASSAY to monitor food, water and soil, in addition to municipal   waste incinerators. The Company expects these discussions to be fruitful and   result in further applications for its technology with associated
revenues some   time in the year 2000.



In 2000 the Company will complete discussions with two leading   health care agencies of the government of the Peoples Republic of China.   These discussions, it is expected, will lead to a unique alliance leading
to   the worlds most complete and unique Internet site for information, services   and products combining the wisdom of Traditional Chinese Medicine with the latest   cutting edge Western nutritional science.

Results of Operations

The Companys fiscal 99 net loss of $2,028,000 is   approximately $20,000 more than the fiscal 98 loss of $2,008,000. Revenues   increased by $307,000
primarily as a result of $163,000 received from the Kubota   Corporation for development work on the Ah-Immunoassy and $100,000 received   from R.P. Scherer for development fees under the BioFIT program. Operating   expenses increased by $305,000 as
a result of increases in cost associated with   the development of the BioFIT program and the development of the Internet   project. Additionally, 1999 costs include $78,000 of non-cash compensation associated   with the vesting of stock options
previously granted to the Chief Executive   Officer.

Liquidity and Capital Resources

As of September 30, 1999, the Company had cash of $73,000 and   a net working capital deficit of $113,000. Management believes that revenues   from both its
BioFIT program and its Ah-IMMUNOASSAY will accelerate   throughout the coming year and that the Company will achieve positive cash flow   from operations during 2000. Until such revenues are realized on a sustained   basis, the Company will
require additional capital to meet its obligations and   continue operations. BioSignia, the Companys largest shareholder, has   advanced interim funds subsequent to year end. Management is currently seeking   a capital infusion of at least $1
million to strengthen its working capital   position and bridge its needs until the revenue stream is sustained. Current   monthly cash requirements in order to sustain meaningful operations are approximately   $110,000. Management will continue to
evaluate the most cost effective means   of raising any additional needed capital. Although management is confident of   its ability to raise needed capital, there can be no assurance that additional   financing will be available on acceptable terms or at
all.

Item 7. FINANCIAL STATEMENTS

Independent Auditors Report.

Consolidated Balance Sheet as of September 30, 1999.

Consolidated Statements of Operations for the years ended September   30, 1999 and 1998, and the cumulative period from April 15, 1991 (inception)   to September 30, 1999.

Consolidated Statements of Stockholders Equity for the   years ended September 30, 1999 and 1998 and the cumulative period from April   15, 1991 (inception) to September 30, 1999.

Consolidated
Statements of Cash Flows for the years ended September   30, 1999 and 1998 and the cumulative period from April 15, 1991 (inception)   to September 30, 1999.

Notes to Consolidated Financial Statements.





The Board of Directors and Stockholders   Paracelsian, Inc.:

We have audited the accompanying consolidated balance sheet of
Paracelsian,   Inc. and subsidiary (a development stage enterprise) as of September 30, 1999,   and the related consolidated statements of operations, stockholders' equity,   and cash flows for the years ended September 30, 1999 and 1998 and for the
period   from April 15, 1991 (inception) to September 30, 1999. These consolidated financial   statements are the responsibility of the Company's management. Our responsibility   is to express an opinion on these consolidated financial statements based on
  our audits. The cumulative statements of operations, stockholders' equity, and   cash flows for the period April 15, 1991 (inception) to September 30, 1999 include   amounts for the period from April 15, 1991 (inception) to September 30, 1991   and for
each of the years in the four-year period ending September 30, 1995,   which were audited by other auditors whose report has been furnished to us,   and our opinion, insofar as it relates to the amounts included for the period   April 15, 1991 (inception)
through September 30, 1995 is based solely on the   report of the other auditors.

We conducted our audits in accordance with generally accepted auditing standards.   Those standards require that we plan and perform the audit to obtain reasonable   assurance about whether the financial statements are free of material
misstatement.   An audit includes examining, on a test basis, evidence supporting the amounts   and disclosures in the financial statements. An audit also includes assessing   the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe   that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors,   the consolidated financial statements referred to above present fairly, in all   material respects, the financial position of Paracelsian, Inc. and subsidiary   (a
development stage enterprise) as of September 30, 1999 and the results of   their operations and their cash flows for the years ended September 30, 1999   and for the period April 15, 1991 (inception) to September 30, 1999, in conformity   with generally
accepted accounting principles.



/s/KPMG LLP  Raleigh, NC  March 3, 2000



PARACELSIAN, INC. AND SUBSIDIARY

(A Development Stage Company)Consolidated Balance SheetSeptember 30, 1999



|Assets                                                       |                                                            | 1999                             
|------------------------------------------------------------ | ---------------------------------------------------------- | ---------------------------------
|                                                             |                                                            |                                  
|Current Assets:                                              |                                                            |                                  
|                                                             | Cash and cash equivalents                                  | $                                
|                                                             | Inventory                                                  |                                  
|                                                             | Prepaid expenses
and other current assets                  |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|Equipment, net                                               |                                                            |                                  
|                                                             |                                                            |                                  
|Other Assets:                                                |                                                            |                                  
|                                                             | TCM extracts on-hand                                       |                                  
|                                                             | Patents and trademarks, net                                |                                  
|                                                             | Note receivable                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             | Liabilities and Stockholders' Equity                       |                                  
|Current Liabilities:                                         |                                                            |                                  
|                                                             | Accounts payable                                           | $                                
|                                                             | Accrued expenses                                           |                                  
|                                                             | Current portion of
capital lease obligation                |                                  
|                                                             | Current portion of notes payable                           |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|Deferred Revenue                                             |                                                            |                                  
|Long term portion of capital lease obligation                |                                                            | 8,549                            
|Long term portion of notes payable                           |                                                            | 14,768                           
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|Commitments and Contingency         (Note 7)                 |                                                            |                                  
|                                                             |                                                            |                                  
|Stockholders' Equity:                                        |                                                            |                                  
|                                                             | Common stock, $.01 par value: 35,000,000 shares authorized |                                  
|                                                             |                                                            | and 20,662,783 shares outstanding
|                                                             | Additional paid-in capital                                 |                                  
|                                                             | Deficit
accumulated during the development stage           |                                  
|                                                             | Treasury stock, at cost; 265,478 shares                    |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|                                                             |                                                            |                                  
|See accompanying notes to consolidated financial statements. |                                                            |                                  





PARACELSIAN, INC. AND SUBSIDIARY     (A Development Stage Company) Consolidated Statements of OperationsFor the years ended September 30, 1999 and 1998    and cumulative period from April 15, 1991 (inception) to September 30, 1999

















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PARACELSIAN, INC. AND SUBSIDIARY     (A Development Stage Company)Consolidated Statements of Stockholders' Equity    For the years Ended September 30, 1999 and 1998 and the CumulativeFor the period from April 15, 1991 (inception) to September     30, 1999





|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            | Deficit     |       |      
|----------------------------------------------------------- | --------- | - | ------- | ---------- | - | --------------- | ------------ | ------------ | ----------- | ------------ | ------ | ---------- | ----------- | ----- | -----
|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            | Accumulated |       |      
|                                                            |           |   |         |            |   |                 |              |              |             |              |        | Additional | During the  |       |      
|                                                            |           |   |         |            |   | Preferred Stock | Common Stock | Paid-in      | Development | Treasury     |       
|                                                            |           |   |         |            |   | Shares          |              | Amount       | Shares      |              | Amount | Capital    | Stage       | Stock | Total
|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            |             |       |      
|Issuance of Common Stock                                    | -         | $ | -       | 5,419,339  | $ | 54,193          | 8,858,056    |             |            | 8,912,249   
|Redemption of Common Stock                                  | -         |   | -       | (245,000)  |   | (2,450)         |             |             |            | (2,450)     
|Initial Public Offering, Net of Costs                       |          |   |        | 1,150,000  |   | 11,500          | 5,103,451    |             |            | 5,114,951   
|Issuance of Warrants & Options                              |          |   |        |           |   |                | 168,500      |             |            | 168,500     
|Warrant Divided                                             | -         |   | -       |           |   |                | 436,898      | (500,000)    |            | (63,102 )   
|Termination of warrants                                     | -         |   | -       |           |   |                | (35,000)     |             |            | (35,000)    
|Issuance of Preferred Stock                                 | 102,351   |   | 1,024   |           |   |                | 4,978,573    |             |            | 4,979,597   
|Purchase of Treasury Stock                                  |          |   |        |           |   |                |             |             | (1,342,515) | (1,342,515) 
|Conversion of Preferred Stock                               | (102,351) |   | (1,024) | 5,371,000  |   | 53,710          | (52,686)     |             |            |            
|Preferred Dividends and BeneficialConversion Feature        | -         |   |        |           |   |                | 1,628,000    | (1,628,000)  |            |            
|Repayment of Officer Stock Subscription Receivable          | -         |   |        |           |   |                | 89,850       |             |            | 89,850      
|Exercise of Warrants and Options                            |          |   |        | 309,518    |   | 3,095           | 908,670      |             |            | 911,765     
|Net loss                                                    |          |   |        |           |   |                |             | (16,492,997) |            | (16,492,997)
|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            |             |       |      
|Balance, September 30, 1997                                 |          |   |        | 12,004,867 |   | 120,048         | 22,084,312   | (18,620,997) | (1,342,515) | 2,240,848   
|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            |             |       |      
|Issuance of Common Stock                                    | -         |   | -       | 3,771,429  |   | 37,715          | 476,285      |             |            | 514,000     
|Exercise of warrants                                        | -         |   | -       | 2,871,429  |   | 28,714          | 491,286      |             |            | 520,000     
|Surrender of shares                                         | -         |   | -       | (705,000)  |   | (7,050)         | 7,050        |             |            |            
|Net loss                                                    |           |   |         |           |   |                |             | (2,008,214)  |            | (2,008,214) 
|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            |             |       |      
|Balance, September 30, 1998                                 | -         | $ | -       | 17,942,725 |   | 179,427         | 23,058,933   | (20,629,211) | (1,342,515) | 1,266,634   
|                                                            |           |   |         |            |   |                 |              |              |             |             
|Issuance
of Common Stock       for services rendered        | -         |   | -       | 223,717    |   | 2,237           | 154,045      | -            | -           | 156,282     
|Issuance of Common Stock for debt conversion                | -         |   | -       | 234,305    |   | 2,343           | 161,345      | -            | -           | 163,688     
|Issuance of Common Stock                                    | -         |   | -       | 2,262,036  |   | 22,620          | 954,759      | -            | -           | 977,379     
|Net loss                                                    | -         |   | -       | -          |   | -               | -            | (2,028,277)  | -           | (2,028,277) 
|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            |             |       |      
|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            |             |       |      
|Balance, September 30, 1999                                 | -         | $ | -       | 20,662,783 | $ | 206,627         | 24,329,082   | (22,657,488) | (1,342,515) | 535,706     
|                                                            |           |   |         |            |   |                 |              |              |             |              |        |            |             |       |      
|                                                            |           |   |         |            |   |                 |              |              |             |             
|See accompanying notes to consolidated financial statements |           |   |         |            |   |                 |              |              |            





PARACELSIAN, INC. AND SUBSIDIARY(A Development Stage Company)Consolidated Statements of Cash FlowsFor the years ended September 30, 1999 and 1998  and cumulative period from April
15, 1991 (inception) to September 30, 1999





|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             | Cumulative   
|---------------------------------------------------- | ------------------------------------------------------ | ------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------- | --------------------------------- | --------- | ------------------------------ | -------------------- | ----------- | ------------ | ----------- | -------------
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             | Period from  
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             | Inception to 
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             | September 30,
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             | 1999         | 1998        | 1999         
|Cash flows from operating activities:                |                                                        |                                                                     |                                      |                                            
|                                                     | Net loss                                               |                                                                     |                                      |                                             |                                   |           | $                              | (2,028,277)          | (2,008,214) | (20,529,488)
|                                                     | Adjustments to reconcile net loss to net cash          |                                                                     |                                      |                                             |                                  
|                                                     |                                                        | used in operating activities:                                       |                                      |                                             |                                   |          
|                                                     |                                                        |                                                                     | Gain on sale of assets               |                                             |                                  | (6,968)   | (6,968)                       
|                                                     |                                                        |                                                                     | Non-cash compensation expense        |                                             | 162,795                           | 14,000    | 1,405,070                     
|                                                     |                                                        |                                                                     | Other non-cash expenses              |                                             |                                  | 116,683   | 2,071,985                     
|                                                     |                                                        |                                                                     | Depreciation and amortization        |                                             | 419,471                           | 439,872   | 2,106,316                     
|                                                     |                                                        |                                                                     | Changes in assets and liabilities:   |                                             |                                   |           |                               
|                                                     |                                                        |                                                                     |                                      | (Increase) decrease in inventory            |                                   |          | (15,366)                       | (171,689)           
|                                                     |                                                        |                                                                     |                                      | (Increase) decrease in prepaid              |                                   |           |                                |                     
|                                                     |                                                        |                                                                     |                                      |                                             | expenses and other current assets |           | 33,139                         | (22,740)   
;    | (51,038)   
|                                                     |                                                        |                                                                     |                                      | (Decrease) increase in accounts payable     |                                   | 79,269    | (199,067)                      | 148,904             
|                                                     |                                                        |                                                                     |                                      | (Decrease) increase in
due to related party |                                   |          | (18,557)                       |                    
|                                                     |                                                        |                                                                     |                                      | (Decrease) increase in deferred revenue     |                                   | 57,000    |                               | 57,000              
|                                                     |                                                        |                                                                     |                                      | (Decrease) increase in accrued expenses     |                                   | 198,801   | (18,326)                       | 209,032             
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           | Net
cash used in               |                      |             |              |            
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                | operating activities |             | (1,077,802)  | (1,781,683) | (14,760,876) 
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|Cash flows from investing activities:                |                                                        |                                                                     |                                      |                                            
|                                                     | Purchase of equipment                                  |                                                                     |                                      | (3,767)                                     | (1,215)                           | (737,168)
|                                                     | Proceeds from sale of equipment                        |                                                                     |                                     | 6,968                                       | 26,968                           
|                                                     | Acquisition of licensed technology                     |                                                                     |                                     |                                            | (53,656)                         
|                                                     | Acquisition of patents and trademarks                  |                                                                     | (55,043)                             | (77,626)                                    | (485,622)                        
|                                                     | 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)                        
|                                                     | Payment from East West Herbs, Ltd.                     |                                                                     |                                     | 42,500                                      | 42,500                           
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           | Net
cash used in investing     |                      |             |              |            
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                | activities           |             | (58,810)     | (29,373)    | (1,989,844)  
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|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       |                                                                     | 945,979                              | 500,000                                     | 11,776,088                       
|                                                     | Proceeds from the exercise of warrants                 |                                                                     |                                     | 520,000                                     | 1,186,295                        
|                                                     | Proceeds from the exercise of options                  |                                                                     | 31,400                               |                                            | 68,900                           
|                                                     | Termination of warrants                                |                                                                     |                                      |                                            |                                  |          
|                                                     | Purchase of treasury stock                             |                                                                     |                                     |                                            | (1,342,515)                      
|                                                     | Cost of warrant dividend                               |                                                                     |                                     |                                            | (63,102)                         
|                                                     | Increase in capital lease obligation and notes payable |                                                                     |                                     | 115,868                                     | 115,868                          
|                                                     | Payment on capital lease
obligations                   |                                                                     | (5,608)                              | (5,155)                                     | (10,763)                         
|                                                     | Payments on notes payable                              |                                                                     | (12,947)                             | (18,364)                                    | (31,311)                         
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           | Net
cash provided by (used in) |                      |             |              |            
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                | financing activities |             | 958,824      | 1,112,349   | 16,823,474   
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|Net increase (decrease) in cash and cash equivalents |                                                        | (177,788)                                                           | (635,707)                            | 72,754    
;                           
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|Cash and cash equivalents, beginning of period       |                                                        | 250,542                                                             | 886,249                              |                                           
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|Cash and cash equivalents, end of period             | $                                                      | 72,754                                                              | 250,542                              | 72,754                                     
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|Supplemental disclosures:                            |                                                        |                                                                     |                                      |                                             |                                  
|                                                     | Cash paid during the period for interest               | $                                                                   | 6,359                                | 7,778                                       | 33,421                           
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|Supplemental disclosure of non-cash investing and    |                                                        |                                                                     |                                      |                                            
|                                                     | financing activities:                                  |                                                                     |                                      |                                             |                                   |           |                               
|                                                     |                                                        | Fair value of assets acquired, net of cash
acquired                 | $                                    |                                            | 31,212                            | 1,733,212
|                                                     |                                                        | Less - liabilities assumed                                          |                                      |                                            | 31,212                            | 83,212   
|                                                     |                                                        | Less - issuance of common stock                                     |                                      |                                            |                                  | 1,644,000
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           | Net cash paid                  | $                    |            |             | 6,000      
|                                                     |                                                        |                                                                     |                                      |                                             |                                   |           |                                |                      |             |              |             |              
|                                                     |                                                        | Warrant dividend                                                    |                                      |                                             | $                                 |          |                               | 500,000             
|                                                     |                                                        | Issuance of common stock/warrants for services                      |                                      |                                             |                                   |          
|                                                     |                                                        |                                                                     | and to reduce short-term liabilities | $                                           | 319,970                           | 14,000    | 885,201                       
|                                                     |                                                        | Purchase of equipment                                               | $                                    |                                            |                                  | 90,950   
|                                                     |                                                        | Repayment of officer stock subscription
receivable                  | $                                    |                                            |                                  | 89,850   
|                                                     |                                                        | 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 StatementsSeptember 30,
1999 and 1998





(1)	Organization, Business, And Risk Factors



> (a)	Organization and Business
> Paracelsian, Inc., (the "Company") is a bio-science     and technology company that utilizes its proprietary screening technology     to identify novel therapeutic compounds from herbal and other botanical sources     and to
> define and/or confirm the biological mechanisms through which traditional     herbs and other botanicals provide the therapeutic or functional benefits     suggested by their traditional use. This technology has been developed by     the Company to
> identify potential products that inhibit the biological signals     generated by targeted cells that result in controlled or uncontrolled growth     and division. The Companys screening technology evaluates the effects     of herbal and other
> botanical products on intracellular signals referred to     as "Signal Transduction Technology."  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 and measure the effects
> of chemicals contained in synthetic or natural compounds, and chemicals occurring     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 promising favorable 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 (Pacific), 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 Company's screening     technology to identify potential candidates for drug or dietary supplement     development. 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.  (b)	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.

(Continued)



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes to Consolidated Financial StatementsSeptember   30, 1999
and 1998





> 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 $2,028,000 and $2,000,000 for the years     ended September 30, 1999 and 1998, respectively, and has a working capital
>   deficit of approximately $113,000 as of September 30, 1999. The Company continues     to expend funds on product research and development and general and administrative     expenses, however, efforts have been focused on developing a recurring revenue
>   stream. Management anticipates that revenues from its BioFIT quality     assurance program and that revenues associated with its Ah-IMMUNOASSAY     will accelerate throughout 2000 leading to positive cash flow from operations     during the
> fiscal year. Additionally, management is seeking a near term capital     infusion of at least $1 million and believes that its efforts will be successful.     Management believes that the combination of additional capital and its anticipated     revenue
> stream will enable the Company to continue its operations and emerge     from the development stage in 2000.





(2)	Significant Accounting Policies



> (a)	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. This subsidiary has had no activity     for the years ended
> September 30, 1999 and 1998.  (b)	Cash and Cash Equivalents  Cash equivalents consist of highly liquid investments with     an original maturity of three months or less. The Company had no cash equivalents
>  as of September 30, 1999 and 1998.



(Continued)

Paracelsian, Inc. and Subsidiary(A Development Stage Company)
Notes to Consolidated Financial StatementsSeptember   30, 1999 and 1998



(c) 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.



> Inventory represents tablets of Andrographis paniculataheld for resale at
> cost.  In the opinion of management the inventory held by the Company     as of September 30, 1999 will be recovered by the sale of the Andrographis     paniculata tablets during the year ending September 30, 2000.



(e)	Net   Loss Per Share

> During the year ended September 30, 1998, the Company adopted
>     SFAS No. 128, Earnings Per Share ("SFAS No. 128"). In accordance     with this statement, primary net loss per common share is replaced with basic     loss per common share which is calculated by dividing net loss by the weighted-     average number of
> common shares outstanding for the period. Fully diluted     net loss per common share is replaced with diluted net loss per common share     reflecting the maximum dilutive effect of common stock issuable upon exercise     of stock options, stock
> warrants, stock subscriptions, and conversion of preferred     stock. The computation of net loss per share is as follows:



|                                    | Year Ended September 30,
|----------------------------------- | ------------------------
|                                    |                         
|                                    |                         
|Net loss to common stockholders     |                         
|                                    |                         
|Weighted average shares outstanding |                         
|Basic and Diluted                   |                         
|                                    |                         
|Net loss per share of common stock  |                         
|Basic and  Diluted                  |                         
|                                    |                         



(Continued)





Paracelsian, Inc. and Subsidiary(A
Development Stage Company)Notes to Consolidated Financial StatementsSeptember   30, 1999 and 1998





(f)	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 lives of the assets which range from 15 to     17 years. Accumulated amortization of the patents and trademarks totaled $277,026     and $257,517 at September 30, 1999 and 1998,
> respectively.

(g)	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 at September 30, 1999:



|                                | Useful Lives |   | 1999   
|------------------------------- | ------------ | - | -------
|Laboratory equipment            | 10 Years     | $ | 536,203
|Office furniture and equipment  | 10 Years     |   | 87,559 
|Computer equipment              | 10 Years     |   | 143,271
|                                |              |   |        
|                                |              |   | 767,033
|Less - accumulated depreciation |              |   | 563,255
|                                |              |   |        
|                                |              | $ | 203,778
|                                |              |   |        





> Depreciation expense of $70,632 and $72,782 was charged to     operations for the years ended September 30, 1999 and 1998, respectively.



(h)	Income   Taxes

> Deferred tax assets and liabilities are recognized for the     future tax consequences attributable to differences
> between financial statement     carrying amounts of existing assets and liabilities and their respective tax     bases and operating loss and tax credit carryforwards. Deferred tax assets     and liabilities are measured using enacted tax rates expected
> to apply to     taxable income in the years in which those temporary differences are expected     to be recovered or settled. The effect on deferred tax assets and liabilities     of a change in tax rates is recognized in income in the period that
> includes     the enactment date.

(Continued)



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes to Consolidated Financial StatementsSeptember   30, 1999 and 1998





(i)	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.

(j) Reclassifications

> Certain accounts have been reclassified from the prior year     to conform
> with current year presentation. The reclassification had no effect     on net loss or deficit accumulated during the development stage as previously     reported.

(3)	Acquisitions



> (a)	East West Herbs, Ltd.  On April 9, 1996, the Company signed an option to
> acquire     East West Herbs Ltd. of Kingham, England. East West Herbs Ltd. marketed and     distributed traditional Chinese medicines in the United Kingdom and throughout     Europe. Under terms of the option, the Company had the right to acquire all
> of the outstanding shares of East West Herbs Ltd. on or before April 6, 1997     for $780,000 in cash and shares of the Company with a value of approximately     $2,400,000 for a total proposed acquisition price of $3.2 million. Consideration     for the
> option was made in the form of an option fee of $20,000 and a working     capital loan of $340,000. The loan was to be used by East West Herbs Ltd.     for inventory purchases, continuing research and development including the     clinical trials of two
> herbal products for cancer patients and corporate working     capital. In 1997 the Company elected not to exercise its option.



(Continued)



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes to Consolidated Financial StatementsSeptember 30, 1999 and 1998



> The loan originally provided for repayment in eight equal     quarterly installments of $42,500 plus interest at the LIBOR rate.
> Since making     the first installment payment and related accrued interest, East West Herbs     Ltd. has not made additional payments and is currently in default on the obligation.     The parties continued to negotiate the terms of a work-out agreement
> that     would provide an extension of time (up to two years) for principal repayment,     change the interest rate to prime plus 2% and further collateralize the repayment     obligation. In 1998, management determined that this note was impaired.
> Accordingly,     the Company has classified the entire obligation as non-current, deferred     the recognition of related interest income until collected, and has provided     a reserve of $148,750 for collectibility. Minor payments were made to the
> trustee in the transaction during 1999. Subsequent to September 30, 1999,     the Company received information from their attorneys that the loan     may indeed be collectible through a guarantor, and they are aggressively pursing     collection.
> However, the eventual collectibility of the loan will be subject     to the financial resources of the loan's guarantor.



(b) Pacific   Liaisons

> During October 1994, a wholly-owned subsidiary of the Company
>   acquired Pacific Liaisons for approximately $1.6 million in common stock.     The acquisition has been accounted for using the purchase method and the accompanying     statement of operations includes the results of operations of Pacific Liaisons
> from October 25, 1994. The allocation of the purchase price was based on an     independent appraisal of certain assets acquired which include TCM extracts     and a licensing agreement. The approximately 2,800 TCM extracts could be sold     outright or
> utilized in various research and development applications using     the Company's screening technology. It is the Company's intention to continue     to sell/license the extracts to established pharmaceutical and biotechnology     companies. Effective
> October 1, 1995, the Company elected to begin amortizing     the cost of the TCM extracts on a straight line basis over a five-year period,     which represents the estimated period over which the extracts will be used     in the Company's research and
> development efforts. Amortization expense of     the extracts totaling $155,580 is included in research and product engineering     expense in the accompanying consolidated statements of operations for each     of the years ended September 30, 1999 and 1998
>  .  Through a licensing agreement with the Institute of Nutrition     and Food Hygiene, an institute within the Chinese Academy of Preventive Medicine,     the Company has the exclusive right to acquire up to 10,000 additional
> extracts.     The licensing agreement is being amortized over a period of five years commencing     in October 1994. Amortization of the license agreement totaling $192,000 is     included in research and product engineering expense in the accompanying
> consolidated     statements of operations for each of the years ended September 30, 1999 and     1998. As of September 30, 1999, the licensing agreement is fully amortized.

(Continued)



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes
to Consolidated Financial StatementsSeptember   30, 1999 and 1998





(4)	Stockholders' Equity



> (a)	Common
> Stock Offerings  In January 1998, the Company sold 3,571,429 shares of common     stock for $500,000 to BioSignia, Inc. ("BioSignia"). BioSignia also     received warrants to purchase an additional 2,871,429 shares of
> common stock     at a price of $520,000. In August 1998, BioSignia exercised its warrants.     BioSignia became the major shareholder and has three of its representatives     serving on the six member Board of Directors. BioSignia is controlled by T.
> Colin Campbell a director of the Company and Chairman and CEO effective January,     2000, and his son, T. Nelson Campbell, a former Vice President of the Company     and current director. The Company used the proceeds for working capital and     research
> and development.  (b)	Other Transactions  During the years ended September 30, 1999 and 1998, the Company     issued 223,717 and 100,000 shares of common stock, respectively, in exchange     for
> services rendered. During the year ended September 30, 1999, the Company     issued 234,305 shares for the conversion of short-term liabilities. The transactions     have been valued based on the estimated fair value of the common stock on     the date
> issued.  On September 8, 1993, the Company granted a warrant dividend.     The Company distributed to each stockholder, excluding one of the Company's     founders, one redeemable common stock purchase warrant for each share of the
>   Company's common stock owned, entitling the holder to purchase an additional     share of common stock for $3.25 per share. On October 12, 1994, the Company     granted 375,000 warrants to one of the Company's founders, under similar terms.     The
> warrants were originally valued at $500,000. These warrants were originally     scheduled to expire on September 7, 1998. The Company extended the expiration     of the warrants to September 6, 2000. The warrants are callable at a redemption     price of
> $.05 per warrant, if the Company's common stock trades at $4.75 or     higher for 15 consecutive days. As of September 30, 1999, a total of 294,518     redeemable warrants have been exercised, none have been redeemed and 1,736,870     remain outstanding.  Additionally, in connection with certain private placement     transactions during fiscal 1996, the Company issued common stock warrants     exercisable for an aggregate of 1,883,333 shares of common stock at prices
> ranging from $3.25 to $4.50 per share and varying other terms and restrictions.  During fiscal 1999, in connection with certain private placement     transactions, the Company issued common stock warrants exercisable for an     aggregate of 350,000 shares of common stock at $1.00 per share, expiring on
>   June 1, 2000 and warrants exercisable for an aggregate of 350,000 shares,     of common stock at $1.20 per share, expiring on June 1, 2001.

(Continued)





Paracelsian, Inc. and Subsidiary(A Development Stage Company)
Notes to Consolidated Financial StatementsSeptember   30, 1999 and 1998





(5)	Common Stock Options

> In 1991, the Company adopted a Stock Option Plan (the Plan).     Under the Plan, directors, key employees and consultants of the Company are     eligible to receive grants of options which are intended to qualify as incentive     stock options, within
> the meaning of Section 422 of the Internal Revenue Code     of 1986, as amended (the Code), or which are non-qualified stock options.     In addition, non-employee directors of the Company may receive grants of options     according to a formula which
> upon the adoption of the Plan provided for an     initial grant of an option to purchase 5,000 shares of common stock and annual     grants of options to purchase 2,500 shares of common stock for each person     who is subsequently elected or re-elected
> and for each year of service thereafter     as a director. The Plan is administered by a committee (the Committee) designated     by the Board of Directors of the Company. The exercise price per share for     the options granted under the plan may not be
> less than the fair value of     the Company's common stock on the date of grant. The exercise price and the     term are fixed by the Committee, subject to the terms of the Plan.  Changes in the status of options under the Plan are summarized     as follows:



|                                                        |   | Year Ended September 30,
|------------------------------------------------------- | - | ------------------------
|                                                        |   | 1999                    
|                                                        |   |                         
|Options outstanding.at beginning of period              |   | 422,500                 
|Granted                                                 |   | -                       
|Forfeited                                               |   | 7,500                   
|Exercised                                               |   | (25,000)                
|                                                        |   |                         
|Outstanding at end of period                            |   | 390,000                 
|                                                        |   |                         
|Number of options at end of period         -            |   |                         
|Exercisable                                             |   | 390,000                 
|Available for grant                                     |   | -                       
|                                                        |   |                         
|Average exercise price of options           outstanding | $ | 1.55                    
|                                                        |   |                         
|Average exercise price of options         granted       | $ | -                       
|                                                        |   |                         
|Average exercise price of options           forfeited   | $ | 1.08                    
|                                                        |   |                         
|Average exercise price ofoptions exercisable            | $ | 1.55                    



(Continued)



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes to Consolidated Financial StatementsSeptember   30, 1999 and 1998





> During fiscal 1996, 15,000 options were granted pursuant     to the plan and an additional 200,000 (for a total of 215,000) were granted     to consultants providing communications services to the Company. The fair     value of these options of $107,500
> was being amortized over the two year period     ended September 30, 1997 during which time the services were performed. The     amortization of the options issued to the consultants of $72,500 are included     in general and administrative expenses in
> the accompanying consolidated statements     of operations for the cumulative period from inception to September 30, 1997.  On January 23, 1995, the Company approved a stock purchase     by the Company's President and then Chief Executive Officer to purchase an     aggregate of 705,000 shares of the Company's common stock at a price of $.05
> and $.56 per common share for 245,000 and 460,000 shares of common stock,     respectively. In connection with this transaction, the Company recognized     a one-time, non-cash compensation expense of approximately $1,228,000 in the     year ended
> September 30, 1995. In conjunction with the purchase of these shares,     the Company extended a note to the officer for $230,000, due December 31,     1995. Subsequently, this note was extended until December 31, 1997. In January     1998, the shares of
> stock were returned to the Company and the note was forgiven.  On January 15, 1998 the Company granted 100,000 shares of     stock and options to acquire 800,000 shares at an exercise price of $.22 per     share, which represented the estimated fair value of common stock at the close
>  of business on January 14, 1998, to the Chief Executive Officer. The options     included various vesting requirements having to do with the Companys     stock price and time served. At September 30, 1999, 100,000 options had been     exercised,
> 50,000 were exercisable and 700,000 were outstanding. Upon the     expiration and non-renewal of the Officers contract in January, 2000,     non-vested options totaling 650,000 shares expired.  Stock option grants are set at the closing price of the Companys     common stock on the date of grant and the related number of shares granted     are fixed at that point in time. Therefore, under the principles of
> APB Opinion     No. 25, the Company does not recognize compensation expense associated with     the grant of stock options except as follows: 500,000 of the 800,000 options     granted to the Chief Executive Officer on January 15, 1998 had variable terms
>    whereby the number of shares exercisable were dependent on the future price     of the Companys stock. Consequently, when 100,000 of the shares were     exercised in 1999 according to the terms, compensation expense totaling $78,000     was
> recognized for the difference between the quoted market price and the     exercise price of the shares.  SFAS No. 123, Accounting for Stock-Based Compensation,     requires the use of option valuation models to provide supplemental information     regarding options granted after 1995. Pro forma information regarding net
>     loss and loss per share shown below was determined as if the Company had accounted     for its employee stock options and shares sold under its stock purchase plan     under the fair market value method of that statement.  In order to disclose the pro forma net loss related to the     vested options, the fair value of the options was estimated at the date of     grant using a Black-Scholes option pricing model with the following
> weighted-average     assumptions for 1999 and 1998, respectively: risk-free interest rates of 5.50%     and 5.25%; dividend yields of 0% and 0%; volatility factors of the expected     market price of the Companys common stock of 101.5% and 102.5%
> and expected     term of the options of 1 year and 2.1 years, respectively.

(Continued)



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes to
Consolidated Financial StatementsSeptember   30, 1999 and 1998





> For purposes of pro forma disclosures, the estimated fair     value of the options is amortized over the options
> vesting periods. The Companys     pro forma information is as follows :



|                          |   | September 30,
|------------------------- | - | -------------
|                          |   | 1999         
|                          |   |              
|Pro forma net loss        | $ | (2,036,343)  
|Pro forma loss per share: |   |              
|Basic and diluted         |   | (0.11)       





(7)	Income Taxes

> The income tax effect of temporary differences that gives     rise to the deferred tax asset/(liability) as of September 30, 1999 is approximately     as follows:

|                                |   | 1999            
|------------------------------- | - | ----------------
|                                |   |                 
|Net operating loss carryforward | $ | 6,281,000       
|Patents and trademarks          |   | (75,000)        
|Inventory                       |   | -               
|Asset impairments               |   | 51,000      
|Accelerated depreciation        |   | (70,000)        
|                                |   |                 
|                                |   | 6,187,000       
|Less - valuation allowance      |   | (6,187,000)     
|                                |   |                 
|Net deferred tax asset          | $ | -               
|                                |   |                 



(Continued)



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes to Consolidated Financial StatementsSeptember   30, 1999 and 1998





> A valuation allowance of $6,187,000 was recorded at September     30, 1999 to offset the related
> net deferred tax asset due to the uncertainty     of realizing the related tax benefit.  At September 30, 1999, the Company has net operating loss     carryforwards for federal income tax purposes of approximately $18,475,000     which are available to offset future federal taxable income, if any, and expire
> 2006 through 2019. For the time period between April 15, 1991 (inception)     and September 30, 1999, an ownership change may have occurred. Management     has not determined the impact the change of ownership rules will have on the     ultimate
> realizability of the tax benefits associated with the net operating     loss carryforwards.

(7)	Commitments And Contingency

> Lease and Rental Commitments  The Company has entered into noncancellable
> operating leases     for executive offices and laboratory facilities from an entity owned by Cornell     University covering approximately 6,000 square feet and expiring in April     2000. Such leases provide for automatic renewals for a one year term.
> Amounts     charged to expense at September 1999 and 1998 totaled approximately $90,000     and $79,000, respectively.  Capital Leases  The Company is obligated under a capital lease for equipment     that expires in 2001. At September 30, 1999 the gross amount of equipment     recorded under the
> capital lease is as follows:



|Equipment                     | $ | 34,998
|----------------------------- | - | ------
|Less accumulated depreciation |   | 14,209
|                              |   |       
|                              | $ | 20,789
|                              |   |       



(Continued)



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes to Consolidated Financial StatementsSeptember 30, 1999 and 1998





> Amortization of assets held under capital leases is included     with depreciation expense. Future minimum capital lease payments as of September     30, 1999 are as follows:



|2000                                                                       | $ | 13,789
|-------------------------------------------------------------------------- | - | ------
|2001                                                                       |   | 7,471 
|2002                                                                       |   | 1,152 
|2003                                                                       |   | 480   
|                                                                           |   |       
|                                                                           |   | 22,892
|Less amount representing interest (at 13.1% per           annum)           |   | 2,443 
|                                                                           |   |       
|Present value of net minimum capital lease payments                        |   | 20,449
|Less current installments of obligations under           capital leases    |   | 11,900
|                                                                           |   |       
|Obligations under capital leases, excluding current           installments | $ | 8,549 
|                                                                           |   |       





> Notes Payable  The Company has one note payable due in equal monthly installments     of $4,321, bearing interest at 8.45%
> per annum, the note is due in June, 2000.     The balance of the note payable at September 30, 1999 was $33,655.  A suit filed by the Company in April, 1997 against a former     officer and director of the Company and related counter claims were dismissed     by the court pursuant to a settlement agreement between the parties in early
>   1998. Under the terms of the settlement, the Company canceled a $56,000 loan     made to the former officer and further agreed to pay him $26,000 over sixty     monthly installments, with interest at 8.5% per annum. The balance of the     note payable
> at September 30, 1999 was $19,689.  Future minimum payments related to notes payable are as     follows:    2000
> $        38,5762001        
> 5,3462002                5,8062003                3,6162004 and thereafter                -



Paracelsian, Inc. and Subsidiary(A Development Stage Company)Notes to Consolidated Financial StatementsSeptember 30, 1999 and 1998

> Contingency  During 1993, an action was commenced against the Company,     a Company Vice President and a shareholder and former employee of the Company.     The complaint seeks
> money damages for alleged misappropriation of proprietary     information and unfair competition. The parties have exchanged documents and     conducted the depositions of certain key witnesses. Discovery is now complete     and the Company awaits
> scheduling of a trial date. Management believes that     the action is without merit and is vigorously opposing the allegations and     that the ultimate resolution of this litigation will not have a material adverse     effect on the Companys
> financial position or results of operations.

(8)	Subsequent Events

> In January, 2000, the Company entered into an agreement with     Kubota Corporation of Japan that establishes Kubota as the exclusive
> marketing     and distribution agent for Paracelsians Ah-IMMUNOASSAY Environmental     Certification program in Japan. The agreement calls for the Company to receive     $150,000 upon acceptance by Kubota based upon achievement of certain
> milestones.     Under the terms of this agreement these milestones must be achieved prior     to September, 2000. Kubota is also obligated to pay the Company a royalty     of 5% of net sales. Kubota has the option to cancel this agreement with 30     days
> written notice to the Company. If Kubota chooses to continue the relationship,     an additional license fee of $150,000 is due within 30 days of the third anniversary     of the agreement. Additionally, beginning in the fourth year of the agreement     a
> minimum monthly royalty of $30,000 has been established.  Subsequent to fiscal year end, the Company has received short-term     working capital advances from Biosignia aggregating approximately $450,000     through February 2000. These advances were to provide additional operating
>     capital. The advances have no stated interest rate and the repayment terms     are unspecified.



Item 8.CHANGES   IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III





ITEM 9. 	DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND   CONTROL PERSONS IN COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The Corporation's Bylaws provide that the Board shall be   divided into three classes, each containing as nearly equal a number of directors   as possible, each elected to staggered three-year terms of office and thereafter   directors elected to
succeed those directors in each class shall be elected   for a term of office of three years.



Seven individuals serve as directors, with three elected   to serve a one year term until the Annual Meeting of Shareholders in 2000 ("Class   I Directors"), three elected to serve a two year term until the Annual
Meeting   of Shareholders in 2001 ("Class II Directors"), and three elected to serve a   three year term until the Annual Meeting of Shareholders in the year 2002 ("Class   III Directors"), or until their successors are elected and qualified.

Listed below are the names of the Class I Directors, together   with their ages at December 31, 1999, and their principal occupations during   the past five years.



|Name and Age       |    | Principal Occupation Over Last Five Years                                                                                                                                                                                                                                                                                                                                        
|------------------ | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |    |                                                                                                                                                                                                                                                                                                                                                                                  
|T. Nelson Campbell | 35 | Chairman, BioSignia, Inc. Chapel         Hill, North Carolina since 1996; prior to that, Vice President, Paracelsian,         Inc. from 1995 to 1996; prior to that, President, Pacific Liaisons,
Ithaca,         NY (until its merger into Paracelsian in 1995).                                                                                                                
|                   |    |                                                                                                                                                                                                                                                                                                                                                                                  
|Hira Gurto         | 61 | President, Professional Financial Advisers,         Inc., Amherst, New Yorksince 1992; Cancer Research Scientist, Roswell         Park Cancer Institute, Buffalo, New York until February         1998
 .                                                                                                                                                                        
|                   |    |                                                                                                                                                                                                                                                                                                                                                                                  
|Dr.Mac Shaibe      | 66 | Chairman of ReGenesis Foundation for UNDP         and President and CEO of Technology Transfer International. Served a Director         of Standards at the Bureau of Labor Statistics,
provided high-level consultation         services to the United Nations on a variety of issues and served as the         Chief Advisor on Science Policy to the Prime Minister of Israel.



Listed below are the names of the Class II Directors, together   with their ages at December 31, 1999, and their principal occupations during   the past five years.

|Name and Age         |    | Principal Occupation Over Last Five Years                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-------------------- | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                     |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Lianping He          | 51 | President, Chinese Service Center for Scholarly         Exchange, Inc. and President, New York Service Center for Chinese Study         Fellows, Inc. since 1995; prior to that, Director, Chinese Education
Association         for International Exchange, Inc. and Vice President, Chinese Service President,         for Scholarly Exchange, both of Beijing, China since 1993; prior to that,         Director, US-China Exchange and First Secretary, Chinese Embassy,
Washington,         D.C.
|                     |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Thomas D. Livingston | 47 | President and Co-founder, TLC         Management Corp. since 1992; Chief Financial Officer, Biosignia, Inc.         Chapel Hill, North Carolina since 1997.                                                                                                                                                                                                                                                                                                                                          



Listed below are the names of the Class III Directors, together   with their ages at December 31, 1999, and their principal occupations during   the past five years.

|Name and Age      |    | Principal Occupation Over Last Five Years                                                                                                                                                                                                                                                                                                                     
|----------------- | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                  |    |                                                                                                                                                                                                                                                                                                                                                               
|T. Colin Campbell | 65 | Jacob Gould Schurman Professor of Nutritional         Sciences, Cornell University, Ithaca. NY; Founder and Director, Pacific         Health Laboratories (Nasdaq Symbol PHLI) since 1995; Founder 	and Director,
  Biosignia, Inc., Chapel Hill, North Carolina.                                                                                             
|                  |    |                                                                                                                                                                                                                                                                                                                                                               
|Loren Israelsen   | 44 | President, LDI Group (dietary         supplement and phytomedicine consultants) since 1996; also, Executive         Director, Utah Natural Products Alliance since 1992; prior to 1996, private
     practice of law.                                                                                                                                         
|                  |    |                                                                                                                                                                                                                                                                                                                                                               
|Bernard M. Landes |    | President and Chairman of the Board, Paracelsian         since January 15, 1998; prior to that, Vice President and General Manager,         Alacer Corporation, Foothill Ranch, CA (manufacturer of dietary
supplements)         since 1995; prior to that, Director of Marketing, Health Valley Foods,         Irwindale, CA (manufacturer of natural foods).





Other than Dr. Campbell and Mr. Campbell, who are father and   son, no proposed director or principal officer is related to another director   or
officer. Other than Dr. Campbell, no proposed director is a director of any   company with a class of securities registered pursuant to Section 12 of the   Securities Exchange Act of 1934, as amended (the "Exchange Act").

On February 8, 2000 Dr. Mac Shaibe accepted an invitation   to serve on the Companys Board. Dr. Shaibe is Chairman of ReGeneses Foundation   for UNDP and President and CEO of Technology Transfer International. He
served   as Director of Standards at the Bureau of Labor Statistics, provided high-level   consultation services to the United Nations on a variety of issues and served   as the Chief Advisor on Science Policy to the Prime Minister of Israel.

Reports of Beneficial Ownership

Directors and principal officers of the Corporation are   required by federal law to file reports with the Securities Exchange Commission   regarding the
amount of and changes in their beneficial ownership of the Shares.   To the Corporations knowledge, all such required reports have been timely   filed.

ITEM 10.	EXECUTIVE COMPENSATION

The cash and cash equivalent compensation paid by the Corporation   during the fiscal year ended September 30, 1999 to its chief executive officer
is as follows:





|Annual Compensation                        | Long Term Compensation
|------------------------------------------ | ----------------------
|                                          
|                                           |                       
|                                          
|                                           |                       
|                                           |                       
|Name and Position                          | Year                  
|                                          
|Bernard M. Landes        President and CEO | 1999                  





The following table contains information with respect to stock   options to purchase shares of the Common Stock held by the chief executive office   during 1999.





|Aggregated Options Exercises in 1999 and September 30, 1999,         Options Values
|-----------------------------------------------------------------------------------
|                                                                                   
|Name                                                                               
|                                                                                   
|Bernard M. Landes                                                                  





(1) Value represents the difference between the fair market   value and the exercise price for the
unexercised options at September 30, 1999.

Employment Agreement

The Corporation entered into an employment contract with   Bernard M. Landes (the "Officer") to be President and Chief Executive Officer   of the Corporation as of
January 15, 1999 (the "Agreement"). The initial employment   term under the Agreement is for one year. On each anniversary of the effective   date of the Agreement, the term of the Agreement shall automatically be extended   for an additional one year
period beyond the then effective expiration date   unless written notice from the Corporation or the Officer is received 90 days   prior to the anniversary date advising the other that the Agreement shall not   be further extended. In addition, the
Officer has the option to terminate the   Agreement upon sixty days' written notice to the Corporation. Under the Agreement,   the Officer receives an annual cash salary, with annual adjustments and discretionary   bonuses as determined by the Board. The
Officer's compensation pursuant to the   Agreement for 1999 is $183,750 and he is eligible for a bonus of up to $50,000.   The Officer was also granted 100,000 shares of the Common Stock upon his initial   employment in January 1998 and granted options to
acquire an additional 800,000   shares provided certain performance criteria are satisfied. Under the Agreement,   the Officer is entitled to all fringe benefits, which are generally provided   by the Corporation for its employees.

On January 14, 2000 the Company and the Officer agreed,   under a signed Compensation Agreement, that the Agreement shall be extended   for a period ending January 21, 2000 ("Effective Date"). Upon the
Effective Date, the Officers Agreement was not renewed.

ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS   AND MANAGEMENT

To the Corporation's knowledge, as of February 23, 2000   listed below are the only shareholders of
the Corporation that owned more than   five percent of the Shares. The following table sets forth certain information   as to these shareholders:





|Name of Shareholder                                                                         | Shares CurrentlyBeneficially Owned | Percent of SharesBeneficially Owned(2)
|------------------------------------------------------------------------------------------- | ---------------------------------- | --------------------------------------
|                                                                                           
|BioSignia, Inc        100 Europa Drive, Suite 599        Chapel Hill, NC 27514              | 5,713,565 (1)                      | 27.63%                                
|                                                                                            |                                    |                                       
|T. Colin Campbell        100 Europa Drive, Suite 599        Chapel Hill, NC 27514           | 5,745,223 (1)                      | 27.78%                                
|                                                                                            |                                    |                                       
|T. Nelson Campbell        100 Europa Drive, Suite 599        Chapel Hill, NC 27514          | 6,030,825 (1)                      | 29.17%                                
|                                                                                            |                                    |                                       
|The Travelers Insurance Company          205 Columbus Boulevard          Hartford, CT 06183 | 1,390,000                          | 6.72%                                 





(1)	Dr. Campbell and Mr. Campbell are the principal shareholders   of
BioSignia and their total shares beneficially owned include the Shares owned   by BioSignia.

(2)	The calculation of the percentage of class beneficially       owned is based on the 20,677,783 Shares which were issued and outstanding       at February 23, 2000.

The following table
shows, as of February 23, 2000, the number   of Shares owned by each director and by all directors and principal officers   of the Corporation as a group. The address of each of the named individuals   below is c/o Paracelsian, Inc., 222 Langmuir
Laboratories, Cornell Technology   Park, Ithaca, New York 14850.



|Name of Beneficial Owner                                           | Shares Currently         Beneficially Owned(1) | Percent of SharesBeneficially Owned(2)
|------------------------------------------------------------------ | ---------------------------------------------- | --------------------------------------
|                                                                  
|T.
Colin Campbell                                                  | 5,745,223                                      | 27.78%                                
|T. Nelson Campbell                                                 | 6,030,825                                      | 29.17%                                
|Hira Gurtoo                                                        | 22,392                                     | *                                     
|Lianping He                                                        | 10,646                                     | *                                     
|Loren Israelson                                                    | 4,000                                          | *                                     
|Thomas D.
Livingston                                               | 232,510                                        | 1.12%  
                          
|                                                                   |                                                |                                       
|All Directors and Principal Officers         as a group (7persons) | 6,332,031                                      | 30.62%                                





All Directors and	Principal

Officers as a Group (7 persons)		6,332,031			30.62%

*	Denotes beneficial ownership of less than one percent   of the Shares.

(1)	To the Corporations's knowledge, each person has       sole voting and investment power over the Shares shown as beneficially owned       by such person, except for the following shares which the individual
indicates       that he or she shares voting and/or investment power: Dr. Colin Campbell        5,745,223 Shares; Mr. Nelson Campbell  6,030,825 Shares; and       directors and principal officers as a group  6,332,031 shares. Dr.
Campbell and Mr. Campbell are the principal shareholders of BioSignia, Inc.       and their total shares beneficially owned include the Shares owned by BioSignia,       Inc.

(2)	The calculation of the percentage of class beneficially       owned is based on the 20,677,783 Shares which were issued and outstanding       at February 23, 2000 plus the number of Shares capable of being issued to
      that individual (if any) and to directors and principal officers as a group       within 60 days of the voting record date upon the exercise of stock options       held by each of them (if any) and by the group, respectively.

ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 13.	EXHIBITS AND REPORTS ON FORM 8-K

None.



SIGNATURES

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



|PARACELSIAN, INC.                                      | Date: | March 3, 2000
|------------------------------------------------------ | ----- | -------------
|By:/s/ T. COLIN CAMPBELL                               |       |              
|-------------------------------------                  |       |              
|T. Colin CampbellPresident and Chief Executive Officer |       |              



In accordance with the
Exchange   Act, this amended report has been signed below by the following persons on behalf   of the Registrant and in the capacities and on the dates indicated.

|Signature                                                                                  | Title                                                                                                                                                                             | Date         
|------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------
|                                                                                           |                                                                                                                                                                                   |              
|/s/ T. COLIN CAMPBELL-------------------------------------T. Colin Campbell                | Chairman of the Board,         Chief Executive Officer and Director (Principal Executive Officer)
        and Chief Financial Officer(Principal Financial and Accounting Officer) | March 3, 2000
|                                                                                           |                                                                                                                                                                                   |              
|/s/ GARY G. CHABOT-------------------------------------          Gary G.
Chabot            | Chief Financial Officer        (Principal Financial and Accounting Officer)                                                                                                       | March 3, 2000
|                                                                                           |                                                                                                                                                                                   |              
|/s/ NELSON CAMPBELL        ------------------------------------- 
T. Nelson Campbell       | Director                                                                                                                                                                          | March 3, 2000
|                                                                                           |                                                                                                                                                                                   |              
|/s/ HIRA GURTOO        -------------------------------------         Hira Gurtoo           | Director                                                                                                                                                                          | March 3, 2000
|                                                                                           |                                                                                                                                                                                   |              
|/s/ LIANPING HE        -------------------------------------        Lianping He            | Director                                                                                                                                                                          | March 3, 2000
|                                                                                           |                                                                                                                                                                                   |              
|/s/ THOMAS D. LIVINGSTON        -------------------------------------Thomas D.
Livingston. | Director                                                                                                                                                                          | March 3, 2000
|                                                                                           |                                                                                                                                                                                   |              
|/s/ MAC SHAIBE                                                                             | Director                                                                                                                                                                          | March 3, 2000
|-------------------------------------Mac Shaibe                                            |                                                                                                                                                                                   |