_d._ HEPPIACEAE AND PANNARIACEAE. The next stage in the development of Phycolichens takes place through the algae, _Scytonema_ and _Nostoc_, losing not only their gelatinous sheaths, but also, to a large extent, their characteristic forms. Chains of cells can frequently be observed, but accurate and certain identification of the algal genus is only possible by making separate cultures of the gonidia. _Scytonema_ forms the gonidium of the squamulose Heppiaceae consisting of the single genus _Heppia_. The ground tissue of the species is either wholly of plectenchyma with algae in the interstices, or the centre is occupied by a narrow medulla of loose filaments. In the allied family Pannariaceae, a number of genera contain _Scytonema_ or _Nostoc_, while two, _Psoroma_ and _Psoromaria_, have bright-green gonidia. The thallus varies from crustaceous or minutely squamulose, to lobes of fair dimension in _Parmeliella_ and in _Hydrothyria venosa_, an aquatic lichen. Plectenchyma appears in the upper cortex of both of these, and in the proper margin of the apothecia, while the under surface is frequently provided with rhizoidal filaments. These two families form a transition between the gelatinous, and mostly homoiomerous thallus, and the more developed entirely heteromerous thallus of much more advanced structure. The fructification in all of them, gelatinous and non-gelatinous, is a more or less open apothecium, sometimes immarginate, and biatorine or lecideine, but often, even in species nearly related to these, it is lecanorine with a thalline amphithecium. Rarely are the sporiferous bodies sunk in the tissue, with a pseudo-perithecium, as in _Phylliscum_. It would be difficult to trace advance in all this group on the lines of fruit development. The two genera with bright-green gonidia, _Psoroma_ and _Psoromaria_, have been included in Pannariaceae owing to the very close affinity of _Psoroma hypnorum_ with _Pannaria rubiginosa_; they are alike in every respect except in their gonidia. _Psoromaria_ is exactly like _Psoroma_, but with immarginate biatorine apothecia, representing therefore a lower development in that respect. These lichens not only mark the transition from gelatinous to non-gelatinous forms, but in some of them there is an interchange of gonidia. The progression in the phylum or phyla has evidently been from blue-green up to some highly evolved forms with bright-green algae, though there may have been, at the beginning, a substitution of blue-green in place of earlier bright-green algae, Phycolichens usurping as it were the Archilichen condition.