SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB
                                 AMENDMENT NO. 1

    [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
         OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998

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


                           Commission File No. 0-19844
                                               -------

                                PARACELSIAN, INC.
             ------------------------------------------------------
                 (Name of small business issuer in its charter)


                Delaware                               16-1399565
--------------------------------------------------------------------------------
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                Identification No.)


    222 Langmuir Laboratories, Cornel Technology Park, Ithaca, New York 14850
--------------------------------------------------------------------------------
                    (Address of principal executive offices)          Zip Code

                    Issuer's telephone number: (607) 257-4224
--------------------------------------------------------------------------------

           Securities registered under Section 12(b) of the Act: None

              Securities registered under Section 12(g) of the Act:

                          Common Stock, $.01 par value
--------------------------------------------------------------------------------
                                (Title of class)

                    Redeemable Common Stock Purchase Warrants
--------------------------------------------------------------------------------
                                (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 [ ]

<PAGE>

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 $ 55,730.

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 December 22, 1998 was approximately $7,637,595.

There were  18,690,253  shares of Common Stock and 1,736,870  Redeemable  Common
Stock Purchase Warrants outstanding at December 22, 1998.

                                    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.

         Nine individuals serve as directors,  with three elected to serve a one
year  term  until  the  Annual  Meeting  of   Shareholders  in  1999  ("Class  I
Directors"),  three elected to serve a two year term until the Annual Meeting of
Shareholders in 2000 ("Class II Directors"),  and three elected to serve a three
year term until the Annual Meeting of  Shareholders in the year 2001 ("Class III
Directors"),  or until their successors are elected and qualified. Other than Mr
Israelsen,  all of  the  current  Board  members  were  appointed  to the  Board
following  the  Biomar   International,   Inc.  ("Biomar")   investment  in  the
Corporation  on January 14, 1998. Mr Israelsen was nominated for election to the
Board at the 1998 annual meeting.

         Listed  below  are the names of the Class I  Directors,  together  with
their ages at December 31, 1998, and their principal occupations during the past
five years.

    NAME AND AGE                       PRINCIPAL OCCUPATION OVER LAST FIVE YEARS

T. Nelson Campbell         34          Chairman,   Biomar  International,   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).

James J. Dunseith          65          Retired in 1991;  formerly  President and
                                       Chairman of Shields Asset Management, New
                                       York.

Hira Gurtoo                60          President,     Professional     Financial
                                       Advisers,  Inc., Amherst,  New York since
                                       1992; Cancer Research Scientist,  Roswell
                                       Park Cancer Institute,  Buffalo, New York
                                       until February 1998.

         Listed  below are the names of the Class II  Directors,  together  with
their ages at December 31, 1998, 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  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.

Robert A. Buchanan, MD     66          Medical       Consultant,       Dainippon
                                       Pharmaceutical  U.S.A. Group, Teaneck, NJ
                                       since    1996;    Medical     Consultant,
                                       IBRD-Rostrum  Global,  Inc.,  Irvine,  CA
                                       from 1992 to 1997; prior to that, Medical
                                       Consultant,   Mylan  Pharmaceutical  Co.,
                                       Morgantown,  West  Virginia  from 1992 to
                                       1994.

Thomas D. Livingston       46          President and Co-founder,  TLC Management
                                       Corp.   since   1992;   Chief   Financial
                                       Officer,   Biomar   International,   Inc.
                                       Chapel Hill, North Carolina since 1997.

         Listed below are the names of the Class III  Directors,  together  with
their ages at December 31, 1998, and their principal occupations during the past
five years.

 NAME AND AGE                          PRINCIPAL OCCUPATION OVER LAST FIVE YEARS

T. Colin Campbell          64          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,  Biomar
                                       Intentional,  Inc.,  Chapel  Hill,  North
                                       Carolina.

Bernard M. Landes          49          President  and  Chairman  of  the  Board,
                                       Paracelsian  since February,  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).

Loren Israelsen            43          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.

         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").

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 except
for Mr. Dunseith who filed his initial statement of beneficial ownership late.

                                       2
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The cash and cash equivalent  compensation  paid by the  Corporation  during the
fiscal  year  ended  September  30,  1998 to its chief  executive  officer is as
follows:
<TABLE>
<CAPTION>
                                                                         Long Term Compensation
                                                                       --------------------------
                                    Annual Compensation                  Awards          Payouts
                                    -------------------                ----------       ---------
                                                     Other             Restricted
                                                     Annual            Stock    Option/ LTIP     All Other
Name                                Salary  Bonus    Compensation      Awards   SARS    Payouts  Compensation
and Position               Year     ($)     ($)      ($)(1)            ($)      (#)     (#)      ($)
-------------------------------------------------------------------------------------------------------------
<S>                        <C>    <C>         <C>       <C>             <C>    <C>        <C>     <C>
Bernard M. Landes          1998   115,769    -0-       -0-             -0-     800,000   -0-     -0-
President and CEO
</TABLE>

(1) The value of non-cash  compensation  paid to the chief executive  officer of
the Corporation during the fiscal years disclosed did not exceed 10% of his cash
compensation.

The  following  table  contains  information  with  respect to stock  options to
purchase  shares of the  Common  Stock  granted to the chief  executive  officer
during 1998.

                  Option/SAR Grants in Last Fiscal Year
                           Individual Grants
                  -------------------------------------
                  Number of         Percent of
                  securities          total
                  underlying        Options/SARs
                  Options/          granted to     Exercise or
                    SARs            employees      base price     Expiration
Name              Granted(#)        in 1998(%)     ($/Share)         Date  
----              ----------        ----------     ---------         ----  

Bernard M. Landes  800,000           100            0.22           1/15/08


The  following  table  contains  information  with  respect to stock  options to
purchase shares of the Common Stock held by the chief  executive  officer during
1998.
<TABLE>
<CAPTION>

                     Aggregated Option Exercises in 1998 and September 30, 1998, Option Values
                     -------------------------------------------------------------------------

                                                         Number of Unexercised       Value of Unexercised
                        Shares                                 Options               In-the-Money Options
                     Acquired on         Value            at September 30, 1998     at September 30, 1998(1)
Name                 Exercise(#)       Realized($)      Exercisable/Unexercisable  Exercisable/Unexercisable
----                 -----------       -----------      -------------------------  -------------------------

<S>                      <C>               <C>             <C>       <C>              <C>       <C>     
Bernard M. Landes       -0-               -0-              100,000 / 700,000          $40,500 / $283,500
</TABLE>

(1) Value  represents  the  difference  between  the fair  market  value and the
exercise price for the unexercised options at September 30, 1998.

                                       3
<PAGE>

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, 1998 (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 1998 is $175,000 and he is eligible for a bonus of
up to $50,000.  The Officer was also granted  100,000 shares of the Common Stock
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.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         To the Corporation's  knowledge,  as of December 22, 1998, 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:

                                  SHARES                   PERCENT OF
NAME OF                           CURRENTLY                SHARES
SHAREHOLDER                       BENEFICIALLY OWNED       BENEFICIALLY OWNED(2)
-----------                       ------------------       ---------------------

Biomar International, Inc.        6,025,575 (1)            32.24%
100 Europa Drive, Suite 599
Chapel Hill, NC 27514

T. Colin Campbell                 6,292,255  (1)           33.67%
100 Europa Drive, Suite 599
Chapel Hill, NC 27514

T. Nelson Campbell                6,318,420  (1)           33.80%
100 Europa Drive, Suite 599
Chapel Hill, NC 27514

The Travelers Insurance Company   1,390,000                 7.16%
205 Columbus Boulevard
Hartford, CT 06183

(1)      Dr. Campbell and Mr. Campbell are the principal  shareholders of Biomar
         and their total shares  beneficially  owned include the Shares owned by
         Biomar.
(2)      The calculation of the percentage of class  beneficially owned is based
         on the 18,690,253  Shares which were issued and outstanding at December
         22, 1998.

                                       4
<PAGE>

         The  following  table shows,  as of December  22,  1998,  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                          SHARES CURRENTLY          PERCENT OF SHARES
BENEFICIAL OWNER                 BENEFICIALLY OWNED(1)     BENEFICIALLY OWNED(2)
----------------                 ---------------------     ---------------------

Robert A. Buchanan, MD                 9,095                         *

T. Colin Campbell                  6,292,255                       33.67%

T. Nelson Campbell                 6,318,420                       33.80%

James J. Dunseith                     18,246                         *

Hira Gurtoo                            9,095                         *

Lianping He                            5,846                         *

Loren Israelson                        4,000                         *

Bernard M. Landes                    203,000                        1.08%

Thomas D. Livingston                 208,095                        1.11%

All Director and  Principal
Officers as a Group (9 persons)    7,153,477                       38.07%

         *  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 - 6,025,575  Shares;  Mr. Nelson Campbell - 6,025,575  Shares;
         and directors and principal officers as a group - 6,025,575 Shares. Dr.
         Campbell and Mr. Campbell are the principal  shareholders of Biomar and
         their total  shares  beneficially  owned  include  the Shares  owned by
         Biomar.

(2)      The calculation of the percentage of class  beneficially owned is based
         on the 18,690,253  Shares which were issued and outstanding at December
         22,  1998 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.

                                       5
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)  EXHIBITS.

         EXHIBIT NO.                DESCRIPTION
         -----------                -----------

         3(i)                       Amendment to Articles of Incorporation

         10.1                       Stock Purchase  Agreement  among the Company
                                    and certain investors dated January 14, 1998

         10.2                       Registration   Rights  Agreement  among  the
                                    Company and certain  investors dated January
                                    14, 1998

         10.3                       Stock Purchase  Agreement  among the Company
                                    and John A. Williams dated December 15, 1998

         (a) REPORTS ON FORM 8-K.

         July 9, 1998:              Reported  an  agreement  with  R.P.  Scherer
                                    North  America,  a division of R.P.  Scherer
                                    International Corporation,  that established
                                    R.P.  Scherer North America as the exclusive
                                    marketing   and   distribution   agent   for
                                    Paracelsian's    BioFIT   (Bio    Functional
                                    Integrity Testing)  Certification program in
                                    the  Dietary   Supplement   and  OTC  market
                                    segments in North America.

         August 12, 1998:           Announced  (i)  a  second   agreement   that
                                    extended  the R.P.  Scherer  agreement  on a
                                    worldwide basis; and (ii)announced  that its
                                    Board of  Directors  approved  an  extension
                                    through  September 6, 1999,  of the publicly
                                    traded  warrants for common stock which were
                                    a dividend in September  1993.  The warrants
                                    were set to expire on September 6, 1998.  In
                                    addition  to  extending  the  warrants,  the
                                    Board of Directors  approved  changes to the
                                    exercise price of the warrants. The exercise
                                    price  was  reduced   from  $3.25  to  $1.75
                                    through  December  1998.  The exercise price
                                    will  increase to $2.50 from January 1, 1999
                                    to April 30,  1999 and to $3.25  from May 1,
                                    1999 to September 6, 1999.

                                       6
<PAGE>

                                   SIGNATURES

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

Date:             January 27, 1999

PARACELSIAN, INC.

By:               /s/ BERNARD M. LANDES
                  -----------------------------------------
                  Bernard M. Landes
                  President and Chief Executive Officer

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

<TABLE>
<CAPTION>

         Signature                                   Title                              Date
         ---------                                   -----                              ----

<S>                                        <C>                                         <C> 
/s/ BERNARD M. LANDES                       President, Chief Executive Officer and      January 27, 1999
-----------------------------------         Chairman of the Board
    Bernard M. Landes                       Director

/s/ T. NELSON CAMPBELL                      Director                                    January 27, 1999
-----------------------------------
    T. Nelson Campbell
                                            Director                                    January __, 1999
-----------------------------------
    James J. Dunseith

/s/ HIRA GURTOO                             Director                                    January 27, 1999
-----------------------------------
    Hira Gurtoo

/s/ LIANPING HE                             Director                                    January 27, 1999
-----------------------------------
    Lianping He

/s/ ROBERT A BUCHANAN, MD                   Director                                    January 27, 1999
-----------------------------------
    Robert A. Buchanan, MD

/s/ THOMAS D. LIVINGSTON                    Director                                    January 27, 1999
-----------------------------------
    Thomas D. Livingston.

/s/ T. COLIN CAMPBELL                       Director                                    January 27, 1999
-----------------------------------
    T. Colin Campbell
                                            Director                                    January __, 1999
-----------------------------------
     Loren Israelsen
</TABLE>