UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _________
Commission File No. 0-19844
PARACELSIAN, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 16-1399565
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
222 Langmuir Laboratories, Cornell Technology Park,
Ithaca, New York 14850
(Address of principal executive offices) Zip Code
Issuer's telephone number: (607) 257-4224
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X _ No ____
There were 11,676,889 shares of Common Stock and 2,111,870 Redeemable
Common Stock Purchase Warrants outstanding at February 7, 1997.
<PAGE>
Paracelsian, Inc. and Subsidiary
Index
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1996 (Unaudited) and
September 30, 1996 (Audited). 3
Consolidated Statements of Operations for the three months ended
December 31, 1996 and 1995 and the period from inception
(April 15, 1991) to December 31, 1996 (Unaudited). 4
Consolidated Statements of Stockholders' Equity for the period from
inception (April 15, 1991) to December 31, 1996 (Unaudited) 5
Consolidated Statements of Cash Flows for the three months ended
December 31, 1996 and 1995 and the period from inception
(April 15, 1991) to December 31, 1996 (Unaudited). 7
Notes to Consolidated Financial Statements (Unaudited). 8
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations. 11
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE>
Paracelsian, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Balance Sheets
December 31, September 30,
1996 1996
Assets (Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $3,321,854 $4,171,402
Prepaid expenses and other
current assets 344,834 278,367
----------- -----------
Total current assets 3,666,688 4,449,769
Equipment, net 369,354 384,790
Other Assets:
Traditional Chinese Medicine extracts,net 583,524 622,419
Licensing agreements, net 507,601 555,602
Patents and trademarks, net 272,415 258,206
Option to acquire EastWest Herbs, Ltd.
and related acquition costs 92,866 92,866
Loan to EastWest Herbs, Ltd. 340,000 340,000
----------- -----------
1,796,406 1,869,093
----------- -----------
$5,832,448 $6,703,652
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 238,174 $ 312,817
Accrued expenses 127,386 192,790
Deferred revenues 54,789 46,858
Due to related party 60,263 77,597
----------- -----------
Total current liabilities 480,612 630,062
----------- -----------
Commitments and Contingencies
Stockholders' Equity:
Common stock, $.01 par value;
20,000,000 shares authorized;
11,935,082 issued 119,348 119,348
Additional paid-in capital 20,348,005 20,348,005
Deficit accumulated during the
development stage (13,773,002) (13,051,248)
Treasury stock,at cost; 265,478 shares (1,342,515) (1,342,515)
---------- -----------
Total stockholders' equity 5,351,836 6,073,590
----------- -----------
$5,832,448 $6,703,652
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>
Paracelsian, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Operations
For the three months ended December 31, 1996 and 1995,
And the period from inception to December 31, 1996
(Unaudited)
Cumulative
Period from
Three Months Ended Inception to
December 31, December 31,
1996 1995 1996
Sales:
Marketing rights $ - $ - $ 254,995
Product royalties 930 - 930
Products - 7,342 157,813
Subscription revenues - 150 31,625
---------- -------- -----------
930 7,492 445,363
Operating expenses:
Research and product engineering 347,066 243,844 5,605,000
Research concerning Indian herbs - - 375,000
Newsletter expenses and costs - 17,638 955,586
Cost of products sold - 3,821 95,023
General and administrative 418,883 333,910 5,809,847
Officer stock compensation - - 1,228,275
---------- -------- -----------
765,949 599,213 14,068,731
---------- -------- -----------
Loss from operations during
the development stage (765,019) (591,721) (13,623,368)
Interest income, net 43,265 37,499 350,366
---------- -------- ------------
Net loss during the
development stage $(721,754) $(554,222) $(13,273,002)
========== ========== =============
Net loss per weighted average
shares of common share $(0.06) $(0.11)
Weighted average number of
common stock outstanding 11,669,604 5,024,851
=========== =========
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Paracelsian, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
For the period from Inception to December 31, 1996
Deficit
Accumulated
Additional During the
Preferred Stock Common Stock Paid-In Development Treasury
Shares Amount Shares Amount Capital Stage Stock Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common Stock April-July 1991 - $- 806,250 $ 8,063 $ - $ - $ - $ 8,063
Issuance of Common Stock for licensing,
technology and consulting services-July 1991 333,850 3,338 3,338
Private placement of Common Stock-
August-September 1991, net of costs 267,288 2,673 369,017 371,690
Net loss(April 15, 1991 to
September 30, 1991) (133,469) (133,469
-----------------------------------------------------------------------------------
BALANCE, September 30, 1991 - - 1,407,388 14,074 369,017 (133,469) - 249,622
Redemption of Common Stock-November 1991 (245,000) (2,450) (2,450)
Initial Public Offering of Common Stock
- February 1992, net of costs 1,150,000 11,500 5,103,451 5,114,951
Issuance of Warrants-February 1992 1,000 1,000
Net loss (year ended September 30, 1992) (1,221,943) (1,221,943)
-----------------------------------------------------------------------------------
BALANCE, September 30, 1992 - - 2,312,388 23,124 5,473,468 (1,355,412) - 4,141,180
Warrant dividend-September 1993 436,898 (500,000) (63,102)
Net loss (year ended September 30, 1993) (2,022,614) (2,022,614)
-----------------------------------------------------------------------------------
BALANCE, September 30, 1993 - - 2,312,388 23,124 5,910,366 (3,878,026) - 2,055,464
Net loss (year ended September 30, 1994) (1,940,262) (1,940,262)
-----------------------------------------------------------------------------------
BALANCE, September 30, 1994 - - 2,312,388 23,124 5,910,366 (5,818,288) - 115,202
Issuance of Common Stock for acquisition
of Pacific Liaisons - October 1994 1,116,666 11,167 1,632,833 1,644,000
Exercise of Warrants 221,200 2,212 716,644 718,856
Common Stock purchase by Officer
-January 1995 705,000 7,050 1,311,075 1,318,125
Issuance of Common Stock for services
rendered-January 1995 33,330 333 21,167 21,500
-April 1995 200,000 2,000 373,000 375,000
Issuance of Common Stock for conversion of
short-term liabilities-June 1995 13,000 130 48,849 48,979
Issuance of Common Stock
-August 1995, net of costs 300,000 3,000 749,625 752,625
Issuance of Preferred Stock-September 1995
Series A, net of costs 10,700 107 361,018 361,125
Series B, net of costs 10,000 100 399,900 400,000
Series C, net of costs 5,000 50 218,422 218,472
Net loss(year ended September 30, 1995) (3,031,196) (3,031,196)
-----------------------------------------------------------------------------------
BALANCE, September 30, 1995 25,700 257 4,901,584 49,016 11,742,899 (8,849,484) - 2,942,688
Issuance of Series B Preferred Stock,
net of costs 76,651 767 3,999,233 4,000,000
Exercise of Warrants 73,318 733 154,676 155,409
Issuance of Common Stock for services
rendered-October 1995 33,336 331 42,669 43,000
Purchase of Treasury Stock-November 1995 (1,342,515)(1,342,515)
Conversion of Preferred Stock (102,351) (1,024) 5,371,010 53,710 (52,686) -
Issuance of Common Stock
for conversion of short-term liabilities
-January 1996 2,500 25 9,975 10,000
Issuance of Common Stock
for services rendered-February 1996 25,000 250 27,875 28,125
Issuance of Warrants and Options
for services rendered-February 1996 132,500 132,500
Issuance of Common Stock
-June 1996,net of costs 733,334 7,333 1,965,663 1,972,996
Sale of Warrants-June 1996 35,000 35,000
Issuance of Common Stock
-July 1996,net of costs 91,667 917 250,075 250,992
Issuance of Common Stock
for services rendered-July 1996 5,000 50 4,950 5,000
Exercise of Options-September 1996 15,000 150 37,350 37,500
Issuance of Common Stock
-September 1996, net of costs 683,333 6,833 1,997,826 2,004,659
Net loss(year ended September 30, 1996) (4,201,764) (4,201,764)
-----------------------------------------------------------------------------------
BALANCE, September 30, 1996 - $- 11,935,082 $ 119,348 $20,348,005 $(13,051,248)$(1,342,515)$6,073,590
Net loss (three months ended (721,754) (721,754)
December 31, 1996)
-------------------------------------------------------------------------------------
BALANCE, December 31, 1996
- $- 11,935,082 $ 119,348 $20,348,005 $(13,773,002)$(1,342,515)$5,351,836
=====================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Paracelsian, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the three months ended December 31, 1996 and 1995
And the Period From Inception to December 31, 1996
(Unaudited)
Cumulative
Period from
Three Months Ended Inception to
December 31, December 31,
1996 1995 1996
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(721,754) $(554,222) $(13,273,002)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Non-cash compensation expense - - 1,228,275
Other non-cash expenses 38,895 20,000 1,179,553
Depreciation and amortization 73,755 68,262 851,359
Changes in assets and liabilities
(Increase) in prepaid expenses and
other current assets (66,466) (29,531) (315,413)
(Decrease) Increase in accounts payable (74,643) (127,328) 569,789
(Decrease) Increase in due to related party (17,334) - 60,263
Increase in deferred revenues 7,931 - 54,789
(Decrease)Increase in accrued expenses (65,403) 4,509 127,387
--------------------------------------------------
Net cash (used in) operating activities (825,018) (618,310) (9,516,999)
Cash flows from investing activities:
Purchase of investments - - (6,719,089)
Redemption of investments - - 6,719,089
Purchase of equipment (5,819) (11,538) (721,118)
Proceeds from sale of equipment - - 20,000
Acquisition of licensed technology - - (50,000)
Acquisition of patents and trademarks (18,711) (21,301) (323,514)
Acquisition of New Century Nutrition newsletter - (350,000) (350,000)
Acquisition of option for EastWest
Herbs Ltd. and related costs - - (92,866)
Loan to EastWest Herbs Ltd - - (340,000)
--------------------------------------------------
Net cash used in investing activities (24,530) (382,839) (1,857,498)
-------------------------------------------------
Cash flows from financing activities:
Sale of common stock, initial public
offering, net of costs - - 5,124,014
Sale of common and preferred stock,
net of costs - 4,000,000 10,330,109
Proceeds from the exercise of warrants - 155,409 666,295
Proceeds from the exercise of options - - 37,500
Proceeds from the sale of warrants - - 35,000
Purchase of treasury stock - (1,342,515) (1,342,515)
Cost of warrant dividend - - (63,102)
Payments on equipment contract - - (90,950)
-------------------------------------------------
Net cash provided by financing activities - 2,812,894 14,696,351
-------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (849,548) 1,811,745 3,321,854
Cash and cash equivalents,
beginning of period 4,171,402 1,416,022 -
-------------------------------------------------
Cash and cash equivalents, end of period $3,321,854 $3,227,767 $3,321,854
==================================================
Supplemental disclosure:
Cash paid during the period for interest $1,785 $243 $14,800
======= ===== ========
Supplemental disclosure of non-cash investing and financing activities:
Fair value of assets acquired,
net of cash acquired $ - $ - $1,702,000
Less - liabilities assumed - - (52,000)
Less - issuance of common stock - - (1,644,000)
-------------------------------------------------
Net cash paid $ - $ - $6,000
=================================================
Warrant dividend $ - $ - $500,000
Issuance of common stock to reduce
short-term liabilities $ - $ - $497,074
Purchase of equipment $ - $ - $90,950
Issuance of common stock for
licensing and technology rights $ - $ - $3,338
=================================================
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
Paracelsian, Inc. and Subsidiary
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. MANAGEMENT REPRESENTATION
The condensed consolidated financial statements included herein have
been prepared by Paracelsian, Inc. and subsidiary (the "Company")
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission applicable to quarterly reporting on Form
10-QSB and reflect, in the opinion of the Company, all adjustments
necessary to present fairly the financial information for Paracelsian,
Inc. and its consolidated subsidiary. All such adjustments are of a
normal and recurring nature. Certain information and footnote
disclosures normally included in financial statements, prepared in
accordance with generally accepted accounting principles, have been
condensed or omitted as permitted by such regulations. These
consolidated financial statements and related notes should be read in
conjunction with the consolidated financial statements and related
notes included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended September 30, 1996.
2. ORGANIZATION, BUSINESS, AND RISK FACTORS:
Organization and Business
The Company is a biotechnology company that markets and develops
products from technology related to the detection of signals from the
exterior of a cell to its nucleus (signal transduction). These signals
result in the activation or suppression of specific genes and culminate
in cell division or death.
Cell division is the one of the basic steps in biology necessary for
normal growth of tissues to support life. The Company's technology
enables researchers to observe signal transduction pathways and measure
the effects of chemicals contained in synthetic and natural compounds,
such as 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 therapeutic effects. (This proprietary technology, including
the components, methods, procedures and know-how employed in this
screening process, is referred to herein as the "Screening
Technology".)
In October 1994, Pacific Liaisons, a partnership engaged in identifying
and acquiring biologically active drugs, natural products and foods
from Eastern Asia, merged with a wholly-owned subsidiary of the Company
and the Company now maintains a large library of natural medicinal
extracts. These extracts are being processed with the p34 screening
assay. The Company also has access to the informational database
related to the medicinal extracts, which contains, among other things,
a history of the usage of each extract.
In November 1995, the Company purchased substantially all the assets
related to New Century Nutrition, a newsletter promoting disease
prevention through nutrition. In December 1996, the Company decided to
cease publication of the newsletter and seek potential buyers for the
newsletter and/or its subscriber list. All costs associated with the
ceasation of publication have been included in the financial statements
of September 30, 1996.
Development Stage Company and Risk Factors
The Company is a development stage company as defined in Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting by
Development Stage Enterprises." Since inception, the Company has been
primarily engaged in research, product engineering and raising capital.
The Company, as a development stage enterprise, has yet to generate
significant revenues and has no assurance of substantial future
revenues. Even if marketing efforts are successful, it may take
several years before significant revenues are realized. The Company is
subject to a number of risks that may affect its ability to become an
operating enterprise or impact its ability to remain in existence,
including risks related to successful development and marketing of its
products, patent protection of proprietary technology, competition from
substitute products (including technologies that may not yet have been
developed), dependence on key employees and the need to obtain
additional funds that may not be available to it.
As shown in the accompanying financial statements, the Company incurred
a net loss of approximately $722,000 for the three months ended
December 31, 1996 and has working capital of approximately $3,186,000
at that date. The Company continues to expend funds on product
research and development and general and administrative expenses and
has not generated significant revenues.
3. SIGNIFICANT ACCOUNTING POLICIES:
Consolidation
The consolidated financial statements of the Company include the
accounts of Paracelsian, Inc. and its wholly owned subsidiary ParaComm,
Inc. formerly known as Para Acquisition Corp. All intercompany
balances and transactions have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments with an
original maturity of three months or less. Cash equivalents as of
December 31, and September 30, 1996 approximated $3,322,000 and
$4,171,000 respectively.
Research and Product Engineering
Company-sponsored research and product engineering expenditures have
been charged to expense as incurred. These costs consist primarily of
employee salaries and direct laboratory costs. The cost of extracts
used in research and development activities is expensed as consumed.
Net Loss Per Share
Net loss per share was computed by dividing net loss for the period by
the weighted average number of shares of common stock outstanding
during the period. Common stock equivalents are not included in the
computation of average shares outstanding because the effect of such
inclusion would be to decrease the loss per share.
Patents and Trademarks
The Company has acquired or applied for certain patent and trademark
rights. Costs associated with the acquisition and application for
these rights have been capitalized and are being amortized on the
straight-line method over the estimated legal life of the assets which
range from 15 to 17 years. Accumulated amortization of the patents and
trademarks totaled $63,247 and $58,747 at December 31, and September30,
1996, respectively.
Equipment and Depreciation
Equipment is stated at cost and is depreciated over the estimated
useful lives of the assets using the straight-line method. Equipment
consists of the following as of:
Useful December 31, September 30,
Lives 1996 1996
----- ------------ -------------
Laboratory Equipment 10 Years $500,623 $563,577
Office Furniture and
Equipment 5 Years 88,095 73,273
Computer Equipment and
Software 5 Years 133,033 104,820
--------- --------
721,751 741,670
Less-Accumulated Depreciation 336,961 285,115
--------- --------
$384,790 $456,555
========== ==========
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.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Three Months Ended December 31, 1996 as compared to the Three
Months Ended December 31, 1995
During the first quarter of the fiscal year ending September 30, 1997
the Company generated revenues of $ 930 of royalty income from the
exclusive license agreement with Calbiochem-Novabiochem International
for the licensing of products utilizing the cdk 1 Assay technology.
This represents an 88% decrease from the first quarter of fiscal 1996
when revenue of $ 7,500 was generated by the sales of the Company's
ELISA(trademark). The agreement with Calbiochem-Novabiochem International,
signed in April 1996, will generate revenues consisting of an accelerating
step royalty that increases to ten percent on net sales in excess of $1
million.
A portion of the Company's strategy is to develop certain of its
products to a point where its value can be clearly established and then
license marketing and other rights to third parties. To this end, the
Company completes sufficient product development so that prospective
licensees can more readily recognize the value of completing the
product's development and its ultimate commercialization.
In addition, the Company's strategy is to directly market those
products which it believes can be marketed without significant
marketing expenditures and without the time-consuming process of
having such products approved by regulatory agencies such as the Food
and Drug Administration.
It is the Company's experience that a product's value to a prospective
licensee varies significantly depending on the remaining product
development risk perceived by the prospect. The Company, therefore,
tailors its development plans for each product based on the interest of
prospective licensees and the critical risk factors perceived. The
Company also adjusts its plans as conditions change during the course
of development. As novel technologies become better understood by the
Company, perceived risks are frequently reduced. Similarly, as the
Company introduces novel technologies and approaches, significant
effort is expended to verify the scientific basis and document the
findings.
Since the Company's inception (April 15, 1991) through December 31,
1996, it has invested $ 5,605,000 in product research, development and
engineering. The amount expended in the first quarter of fiscal 1997,
$347,000, as compared to $244,000 in the first quarter of fiscal 1996
represents an increase of 42%. This increase was attributable to
expanded clinical studies of ANDROVIR(trademark), the compassionate use trial of
PN27,1 and increased personnel expenses.
The Company intends to incur continuing product research, development
and engineering expenses at a slightly higher amount than expenditures
in the first quarter of fiscal 1997. A significant amount of this
effort during the second quarter of fiscal 1997 will be directed at the
National Cancer Institute as part of the CRADA. The proposed terms of
the CRADA are included in an agreement signed by the parties in
December 1996. Under the proposed terms, the parties have agreed to
share certain, extensive proprietary data, methods and models for use
in evaluating the efficacy of certain of the Company's compounds
against HIV and certain cancers.
General and administrative expenses totaled $ 5,810,000 during the
period from inception to December 31, 1996. Of this amount $ 419,000
was incurred in the first quarter of fiscal 1997 and $334,000 in the
first quarter of fiscal 1996, an increase of 26%. These expenses
relate to the administration of the research, development and product
engineering activities and support services including raising capital,
arranging for facilities, hiring employees, market analysis and the
development and administration of the Company's business and marketing
plans. The increase from the prior year period is attributable to
additional consultant and other professional fees incurred in the
current quarter. The Company expects general and administrative
expenses in the second quarter of fiscal 1997 to grow slightly over
expenditures in the first quarter of fiscal 1997.
The Company has incurred net losses of $13,273,000 as a development
stage company from inception to December 31, 1996, of which $722,000
was incurred in the first quarter of fiscal 1997 and $554,000 was
incurred in first quarter of fiscal 1996. The net loss per share of
common stock amounted to $.06 for the quarter ended December 31, 1996
and $.11 for the quarter ended December 31, 1995. The Company
anticipates that losses will continue throughout fiscal 1997,
increasing slightly from the amount in the first quarter of fiscal 1997
for the reasons described above.
Liquidity and Capital Resources
At December 31, 1996, the Company had cash and cash equivalents of
$3,322,000 as compared to $4,171,000 at September 30, 1996.
The Company expects to incur additional research and development and
product engineering expenses, including personnel costs and costs
related to preclinical testing and clinical trials. During fiscal 1997
product launch expenses are expected for the products resulting from
the clinical trials. In February 1997, the Company entered into a
strategic alliance with East West Herbs, Ltd. Under the terms of this
alliance, East West has undertaken the major tasks associated with the
marketing and launch of the Company's first product. Additionally,
East West will supervise the sourcing, manufacturing and distribution
of this product in the U. S. In connection with this agreement the
Company paid to East West a management fee of $200,000 for the one year
term of this alliance.
The Company intends to seek additional funding sources of capital and
liquidity through collaborative agreements. In addition, the Company is
continually evaluating various financing alternatives including public
and private sources of debt and equity. The Company believes that it
will be successful in these endeavors, however, there can be no
assurance that such additional financing will be available on
acceptable terms or at all. If additional financing is not available,
the Company anticipates that its available cash and existing sources of
funding will be adequate to satisfy its operating cash and capital
requirements through fiscal 1997. The Company's future capital
requirements will depend on many factors, including continued
scientific progress in its research and development programs, the
magnitude of such programs and its acquisition plans.
<PAGE>
PART II. OTHER INFORMATION
Item 6(a). Exhibits
None.
Item 6(b). Reports on Form 8-K.
The following reports were filed on Form 8-K during the
quarter ended December 31, 1996:
Date Item Reported
November 8, 1996 Item 4: Changes in Registrants Certifying Accountant
December 13, 1996 Item 5: Other Events
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: February 10, 1997
PARACELSIAN, INC.
By:/s/KEITH A. RHODES By:/s/JOHN G. BABISH By:/s/ARTHUR A. KOCH, JR.
Keith A. Rhodes John G. Babish Arthur A. Koch,Jr.
Chairman of the Board, Vice President and Vice President and
President, Member of Member of the Office Member of the Office
the Office of the of the Chief Executive of the Chief Executive
Chief Executive
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST
QUARTER 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 3,321,854
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,666,688
<PP&E> 721,751
<DEPRECIATION> 336,033
<TOTAL-ASSETS> 5,832,448
<CURRENT-LIABILITIES> 480,612
<BONDS> 0
0
0
<COMMON> 119,348
<OTHER-SE> 5,232,488
<TOTAL-LIABILITY-AND-EQUITY> 5,832,448
<SALES> 930
<TOTAL-REVENUES> 930
<CGS> 0
<TOTAL-COSTS> 765,949
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (721,754)
<INCOME-TAX> (721,754)
<INCOME-CONTINUING> (721,754)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (721,754)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
