UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, DC   20549
                              FORM 10-QSB

(Mark One)

[x] QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the Quarterly Period Ended  June 30, 1998
                                -------------

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

    For the transition period from ______________ to ______________

    Commission file number        010690
                             ____________________


                           Science Dynamics Corporation
     -------------------------------------------------------------------
      (Exact name of small business issuer as specified in its charter)

                                   Delaware                       
        ------------------------------------------------------------
       (State or other jurisdiction of incorporation or organization)

                                  22-2011859
                      -------------------------------
                     (IRS Employer Identification No.)


          1919 Springdale Road, Cherry Hill, New Jersey   08003
          -----------------------------------------------------
                (Address of principal executive offices)

                      (    609     )     424-0068
          -----------------------------------------------------
                       (Issuer's telephone number)

                                    N/A
      ---------------------------------------------------------------
     (Former name, former address, and former fiscal year, if changed
     since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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 [ ]


            APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
               PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.   Yes [ ]      No [ ]

                  APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of 
common equity, as of the latest practicable date:


         06/30/98    14,535,649 shares of common stock were outstanding.

<PAGE>

         S C I E N C E   D Y N A M I C S   C O R P O R A T I O N

                                   INDEX
                                   -----
                                                                      PAGE NO.
                                                                      --------
PART I. FINANCIAL INFORMATION

 Item 1. Financial Statements

         Consolidated Balance Sheets as of June 30, 1998 (unaudited)
         and December 31, 1997 (audited)                                1
         
         Consolidated Statements of Income (loss) for six months and
         three months ended June 30, 1998 (unaudited) and six months
         and three months ended June 30, 1997 (unaudited)               2

         Consolidated Statements of Cash Flows for six months and
         three months ended June 30, 1998 (unaudited) and six months
         and three months ended June 30, 1997 (unaudited)               3

         Consolidated Statements of Shareholders' Equity for the
         year ended December 31, 1997 (audited) and the six months
         ending June 30, 1998 (unaudited)                               4

         Notes to Consolidated Financial Statements                     5 - 6

 Item 2. Management's Discussion and Analysis of Financial Condition    6 - 11
  and Results of Operations


PART II. OTHER INFORMATION

 Item 1. Legal Proceeding                                               12

 Item 2. Changes in Securities                                          12

 Item 3. Defaults upon Senior Securities                                12

 Item 4. Submission of Matters to Vote of Security Holders              12

 Item 5. Other Information                                              12

 Item 6. Exhibits and Reports                                           12

 Item 7. Signatures                                                     13

<PAGE>
                 SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEETS

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:

                             ASSETS   
                                                June 30       December 31,
                                                  1998            1997
                                               Unaudited        Audited
                                               ---------        -------
Current assets:
   Cash and cash equivalents                  $   23,842    $    21,181
   Accounts receivable - trade                   400,500        613,916
   Inventories                                   553,199        322,530
   Other current assets                           29,254         52,200
                                              ----------    -----------
      Total current assets                     1,006,795      1,009,827
                                              ----------    -----------
Property and equipment, net                      262,342        220,060
Software development costs, net of
 accumulated amortization of $330,115
 in 1998 and $277,992 in 1997                    191,119        243,243
Deferred income taxes                            308,000        308,000
Intangible Assets, net of accumulated
 amortization of $450,000 in 1998 and
 $300,000 in 1997.                             1,050,000      1,200,000
Other assets                                      44,936         39,239
                                              ----------    -----------
      Total assets                            $2,863,192    $ 3,020,369
                                              ==========    ===========


      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                           $  569,670    $   289,188
   Accrued expenses, principally
          payroll related                         77,346         87,046
                                              ----------    -----------
      Total current liabilities                  647,016        376,234
                                              ----------    -----------

Commitments

Shareholders' equity -
   Common stock - .01 par value,
    45,000,000 shares authorized,
    14,661,449 issued and
    14,535,649 outstanding
      in 1998 and 1997 respectively.             146,614        146,614
   Additional paid-in capital                 10,166,429     10,166,429
   Retained earnings (deficit)                (7,699,034)    (7,271,075)
                                              ----------    -----------
                                               2,614,009      3,041,968
   Common stock held in treasury,
    at cost                                     (397,833)      (397,833)
                                              ----------    -----------
   Total shareholders' equity                  2,216,176      2,644,135
                                              ----------    -----------
   Total liabilities and shareholders'
    equity                                    $2,863,192    $ 3,020,369
                                              ==========    ===========

-1-
<PAGE>

<TABLE>
                 SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Continued):
<CAPTION>
                                            Six Months Ended June 30,     Three Months Ended June 30,

                                               1998           1997             1998          1997
                                               ----           ----             ----          ----
<S>                                       <C>            <C>              <C>            <C>  
 NET SALES                                 $ 2,325,306    $ 2,818,512      $   752,599    $ 1,702,032
                                           -----------    -----------      -----------    -----------

Operating costs and expenses:

      Cost of sales                            897,643      1,323,038          295,301        799,352
      Research and development                 613,128        404,394          325,066        207,207
      Selling, general
          and administrative                 1,242,494      1,189,992          634,737        603,273
                                           -----------    -----------      -----------    -----------

                                             2,753,265      2,917,424        1,255,104      1,609,832
                                           -----------    -----------      -----------    -----------

Operating income (loss)                       (427,959)       (98,912)        (502,505)        92,200 


Other income (expenses):
   Interest and other
    investment income                                -         11,774                -          7,780
   Interest expense                                  -        (29,401)               -         (7,292)
                                           -----------    -----------      -----------    -----------


Net Income (Loss)                          $  (427,959)   $  (116,539)     $  (502,505)   $    92,689
                                           ===========    ===========      ===========    ===========


Net Income (Loss) per common share         $     (0.03)   $     (0.01)     $     (0.03)   $      0.01
                                           ===========    ===========      ===========    ===========
</TABLE>
-2-
<PAGE>
<TABLE>
                  SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Continued):
<CAPTION>
                                            Six Months Ended June 30,     Three Months Ended June 30,

                                               1998           1997             1998          1997
                                               ----           ----             ----          ----
<S>                                       <C>            <C>              <C>            <C>  

Cash flows from operating
 activities:
   Net income (loss)                       $  (427,959)   $  (116,539)     $ (502,505)   $   942,689
                                           -----------    -----------      ----------    -----------

Adjustments to reconcile
 net (loss) to net cash
 provided by (used for)
 operating activities:
   Depreciation                                 32,597 	       31,421          17,500         15,548
   Amortization of
    capitalized software                        52,123         52,123          26,061         26,062
   Amortization of
     Intangible assets                         150,000        150,000          75,000         75,000
Changes in operating assets
 and liabilities:
   (Increase) decrease in:
    Accounts receivable                        213,416       (503,032)        432,190       (447,919)
    Inventories                               (230,669)       125,055        (201,893)       185,638
    Other current assets                        22,946         16,628          17,842         10,084
    Other assets                                (5,697)             -            (500)             -
   Increase (decrease) in:
     Accounts payable and
        accrued expenses                      270,782         (68,954)        141,625       (806,473)
                                           -----------    -----------      ----------    -----------

Total adjustments                             505,498        (196,759)        507,825       (942,060)
                                           -----------    -----------      ----------    -----------

 Net cash provided by
  (used for) operating
  activities                                   77,539        (313,298)          5,320       (849,371)
                                           -----------    -----------      ----------    -----------

Cash flows from investing
 activities:
 Purchase of property and
    equipment - net                           (74,878)        (11,723)        (31,402)        (2,187)
                                           -----------    -----------      ----------    -----------
   Net cash (used) in
    investing activities                      (74,878)        (11,723)        (31,402)        (2,187)
                                           -----------    -----------      ----------    -----------

Cash flows from financing
 activities:
 Increase (decrease) in
  notes payable                                     -               -               -              -

 Issuance of common stock
  and warrants                                      -               -               -              -
                                           -----------    -----------      ----------    -----------
   Net cash (used in) provided
    by financing activities                         -               -               -              -
                                           -----------    -----------      ----------    -----------
Net increase (decrease) in
 cash and cash equivalents                      2,661        (325,021)        (26,082)      (851,558)

Cash and cash equivalents -
 beginning of period                           21,181         830,229          49,924      1,356,766
                                           -----------    -----------      ----------    -----------

Cash and cash equivalents -
 end of period                           $     23,842     $   505,208         $ 23,842    $  505,208
                                           ===========    ===========      ===========   ===========

</TABLE>

-3-
<PAGE>
<TABLE>
                  SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                    FOR THE YEAR ENDED DECEMBER 31, 1997 AND
                        SIX MONTHS ENDED JUNE 30, 1998

PART 1. FINANCIAL INFORMATION
        Item 1. Financial Statements (Continued):
<CAPTION>
                                     Common Stock           Additional      
                                     ------------             Paid-In      
                                 Shares         Amount        Capital      (Deficit)      Shares        Amount
                                 ------         ------        -------      ---------      ------        ------
<S>                            <C>          <C>           <C>          <C>              <C>          <C>       
Balance
 December
 31, 1996                       12,055,861    $ 120,558  $ 9,615,191     (6,249,045)       125,800     $397,833
                                ----------      -------    ---------      ---------        -------      -------

Issuance of common
stock to pay long term
debt and related interest        2,605,588       26,056      551,238              -              -            -

Net loss                                 -            -            -     (1,022,030)             -            -
                                ----------      -------    ---------      ---------        -------      -------
Balance
 December
 31, 1997                       14,661,449      146,614   10,166,429     (7,271,075)       125,800      397,833
                                ----------      -------    ---------      ---------        -------      -------

Net loss                                 -            -            -       (427,959)             -            -
                                ----------      -------    ---------      ---------        -------      -------

Balance
 June
 30, 1998                       14,661,449    $ 146,614  $10,166,429    $(7,699,034)       125,800     $397,833
                                ----------      -------    ---------      ---------        -------      -------

</TABLE>
-4-
<PAGE>
                 SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

PART I
Item 1. (continued)

        Basis of Presentation
        ---------------------
        The unaudited financial statements included in the Form 10-QSB have
        been prepared in accordance with generally accepted accounting
        principles for interim financial information and with the instructions
        to Form 10-QSB and Item 310(b) of Regulation SB. The financial
        information furnished herein reflects all adjustments, which in the
        opinion of management are necessary for a fair presentation of the
        Company's financial position, the results of operations and the cash
        flows for the periods presented.

        Certain information and footnote disclosures, normally included in
        financial statements prepared in accordance with generally accepted 
        accounting principles, have been condensed, or omitted, pursuant to
        such rules and regulations. 

        These interim statements should be read in conjunction with the 
        audited financial statements and notes thereto included in the 
        Company's Annual Report on Form 10-KSB for the fiscal year ended
        December 31, 1997.  The Company presumes that users of the interim
        financial information herein have read or have access to the audited
        financial statements for the preceding fiscal year and that the 
        adequacy of additional disclosure needed for a fair presentation may 
        be determined in that context. The results of operations for any
        interim period are not necessarily indicative of the results for the 
        full year. 

        Income per share 
        ----------------

        Per-share data has been computed on the basis of the weighted average
        number of shares of common stock outstanding during the periods. 
        Shares issuable upon exercise of common stock options and warrants are
        not included for the periods presented, as they would be anti-dilutive.

        New Accounting Pronouncements
        -----------------------------

        The Company adopted Statement of Financial Accounting Standards 
        No. 128, "Earnings Per Share" ("SFAS No. 128") for the year ended 
        December 31, 1997.  SFAS No. 128 requires the Company to change its 
        method of computing, presenting and disclosing earnings per share 
        information. Upon adoption, all prior period data presented must be 
        restated to conform to the provisions of SFAS No. 128.  The Company 
        has presented basic earnings per share.  The basic earnings per 
        common share would be the same as the net loss per share shown in the
        Statements of Operations included in Item 1 of Part I of this Quarterly
        Report on Form 10-QSB.  As the computation of diluted earnings per 
        common share would be anti-dilutive, the diluted earnings per common 
        share would be the same as the basic income per common share.
-5-
<PAGE>

        In June 1997, the Financial Accounting Standards Board issued
        Statement of Financial Accounting Standards No. 130, "Reporting 
        Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes 
        standards for the reporting and displaying of comprehensive income and
        its components (revenues, expenses, gains and losses) in a full set of
        general-purpose financial statements. SFAS No. 130 requires the
        disclosure of an amount that represents total comprehensive income and
        the components of comprehensive income in a financial statement.  The
        adoption of SFAS No. 130 required no additional disclosure for the
        Company and did not have a material effect on the Company's financial
        position or results of operations. 

        In June 1997, the Financial Accounting Standards Board issued
        Statement of Financial Accounting Standards No. 131, "Disclosures 
        about Segments of an Enterprise and Related Information" ("SFAS
        No. 131"). SFAS No. 131 establishes standards for determining an
        entity's operating segments and the type and level of financial 
        information to be disclosed in both annual and interim financial 
        statements. SFAS No. 131 also establishes standards for related 
        disclosures about products and services, geographic areas and major
        customers. The pronouncement is effective for periods beginning after
        December 15, 1997. The adoption of SFAS No. 131 required no additional
        disclosure for the Company and did not have a material effect on the
        Company's financial position or results of operations. 

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND 
        RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 1998 AND FOR THE
        THREE MONTHS ENDED JUNE 30, 1998. 
 
        Business Overview
        -----------------
  
        Science Dynamics Corporation designs, develops and markets a variety
        of Telecommunication products and applications, including intelligent
        call processing platforms which provide telecommunications service
        capabilities to the public switched telephone network.  These platforms
        are sophisticated software based systems that satisfy a wide range of
        computer telephony integration applications. 

        Two new reseller agreements were signed for the VFX 250S product
        during the latter part of the period with Memotec Communications, Inc.
        and AdvancedTech Communications, Inc.  The VFX-250 product provides
        users of frame relay a cost-effective method of video conferencing 
        over their existing network.  The VFX-250 is capable of supporting 
        any continuous data bit-stream traffic over a Frame Relay network. 
        The system has been successfully tested with the Frame Relay product 
        lines of manufacturers in this field, which should provide additional
        opportunities for this technology. The sales from these contracts are
        not reflected in the sales revenues for the current period.  The 
        Company estimates a three-month sales cycle measured from the time 
        the product is demonstrated to their prospective customers, to the 
        time orders are actually placed. 
-6-
<PAGE>

        A new version of the device has recently been developed incorporating
        a number of features requested by customers to increase flexibility
        and compatibility with existing frame relay networks. As additional  
        contracts are obtained, management anticipates a continual roll out 
        of the product improving the revenue stream as the current year 
        progresses. 

        The development effort on the Integrator C-2000 (tm) series has 
        progressed markedly in the second quarter.  The Integrator family of
        products provides Voice over IP capabilities such as IP-Telephony 
        Gateways.  The Integrator converts voice from circuit switched public
        networks and PBX devices to packetized data that can be transported 
        over standard local or wide area networks.  The system utilizes 
        advanced compression technology to allow more efficient use of 
        bandwidth for greater capacities and reduced costs over traditional 
        telecom systems.  Using an Integrator, call traffic can be transported
        over a private wide area network or the Internet to locations around
        the world bypassing the current costs of International or Inter 
        Exchange carriers. 

        Currently in development are new service modules for the Integrator
        C2000 VoIP family of products.  The SS7 Interface will allow an 
        Integrator Gateway to connect to Carrier networks as an End Office  
        Gateway.  The H323 Interface, which has been inaugurated into the 
        platform, allows interoperability between Gateways of various vendors
        as well as desktop clients such as Microsoft(r) NetMeeting.

        Additional products in development are the AdminManager II, a totally
        new graphical user interface for the Commander II Windows NT Inmate
        Phone Control System.  This new AdminManager will provide enhanced 
        capabilities as well as exploit the real time features of the
        Commander II system. 

        The Company continues its momentum in identifying specific 
        opportunities for its innovative and robust technology that will
        expand our international presence in the rapidly evolving 
        telecommunications industry.

        Year 2000 Technology
        --------------------

        The Company is in the process of evaluating any potential impact of
        the Year 2000 issue on the Company's computer systems.  The Company
        is presently assembling a list and is analyzing its internally
        developed software, purchased software and hardware.  The Company
        currently plans to complete its analysis by the end of 1998 and will
        make required modifications to any identified problem areas.  At this
        time, management does not anticipate there will be any material 
        effect on the Company's financial position or results of operation.
 -7-
<PAGE>
        Results of Operations
        ---------------------
  
        The following table summarizes the basic results of operations for
        the periods indicated in the Consolidated Statement of Operations.

        Six Months ended June 30, 1998 compared to the Six Months ended 
        June 30, 1997 (unaudited). 

                                        For the Six Months Ended June 30,
                                                   1998            1997
                                                   ----            ----
         Sales                               $2,325,306      $2,818,512  
         Net Loss                              (427,959)       (116,539)
         Net Loss Per Share                      $(0.03)          $(.01)


                                   OPERATING EXPENSES       PERCENT OF SALES
                                   ------------------       ----------------
                                     1998        1997         1998      1997
                                     ----        ----         ----      ----

Cost of Goods Sold               $897,643  $1,323,038         38.6%     46.9%

Research & Development            613,128     404,394         26.4%     14.3%

Selling, General & Admin        1,242,494   1,189,992         53.4%     42.2%

Total Operating Costs
and Expenses                   $2,753,265  $2,917,424        118.4%    103.4%


        Sales for the six-month period of 1998 were $2,325,306 a decrease of
        $493,206 from sales of $2,818,512 in the corresponding period in 1997.
        The decrease in revenues was attributable to a lack of sales of the
        Commander II inmate call control system and the initiatory
        period of the Video-Over-Frame Relay VFX 250S product contracts in
        the second quarter both of which were anticipated to support the
        revenue stream.  Management of the Company believes that historically,
        interim results and period-to-period comparisons have been neither 
        predictable nor an accurate measure of the annual performance of the
        Company. The Company has experienced, and expects to continue to
        experience, period-to-period fluctuations in the near-term.  
        Fluctuations in system sales revenues have historically resulted from
        the revenues of the Company being reliant on a limited product line
        and customer base and the desire of the customer to accelerate or 
        delay the date of delivery. These factors tend to distort the 
        operating results of an interim period. Additionally, sales are not
        made or recognized evenly throughout the fiscal year or any interim
        period, thus making meaningful interim period comparisons difficult.
        These fluctuations also have a significant impact on profitability 
        in any interim period as a result of the relatively fixed nature of 
        operating costs and selling, general and administrative expenses. 
-8-
<PAGE>
        Cost of Goods sold decreased to $897,643 in the first six months of
        1998 from $1,323,038 in the corresponding six-month period of 1997. 
        The decrease in the cost of goods sold was related to the decrease
        in sales revenue. 

        Research & Development expenses increased to $613,128 in the first
        six months of 1998 as compared to $404,394 in the comparable six-month
        period of 1997.  The increased costs are attributable to the 
        development of new products and enhancements and the reallocation of
        duties of certain personnel as the development efforts were focused
        to expand our product offerings into the VFX-250 and the IP Telephony
        marketplace. The Company expects to continue to invest significant
        resources in new product development and engineering. 

        Sales, General & Administrative expenses increased to $1,242,494 in 
        the first six months of 1998, compared to $1,189,993 in the
        corresponding period of 1997.  The horizontal analysis of the 
        expenses is complicated due to interrelated elements such as the 
        increased costs of the international office offset by the reallocation
        of personnel costs and associated expenses into research and
        development as the company envisioned and refined its new product
        development strategy. 

        Three Months ended June 30, 1998 compared to the Three Months ended 
        June 30, 1997 (unaudited).

                                         For the Quarter Ended June 30,
                                                   1998            1997
                                                   ----            ----
         Sales                                 $752,599      $1,702,032  
         Net Loss                             $(502,505)        $92,689
         Net Loss Per Share                      $(0.03)           $.01


      
                                   OPERATING EXPENSES       PERCENT OF SALES
                                   ------------------       ----------------
                                     1998        1997         1998      1997
                                     ----        ----         ----      ----

Cost of Goods Sold               $295,301    $799,352         39.2%     47.0%

Research & Development            325,066     207,207         43.2%     12.2%

Selling, General & Admin          634,737     603,273         84.3%     35.4%

Total Operating Costs
and Expenses                   $1,255,104  $1,609,832        166.7%     94.6%

-9-
<PAGE>

        Cost of Goods sold in the three months ended June 30, 1998 was
        $295,301 as compared to $799,352 in the corresponding period of 1997.
        The decrease in absolute dollars is directly attributable to the low
        sales captured in the second quarter of 1998.

        Research & Development expenses, as a percentage of revenue, increased
        to 43.2% in the second quarter of 1998 compared with 12.2% in the
        second quarter 1997.  The expenses in absolute dollars increased
        $117,859 in the second quarter 1998, compared to the corresponding 
        quarter of 1997.  This increase in R&D was due in part to the continual
        development of new software enhancements to serve our existing markets,
        reallocation of personnel activities and developing new technologies
        for expansion into the international marketplace. Due to the
        technological nature of the Company's business and the anticipated 
        expansion into new applications, management expects to continue to 
        expend significant resources for continued development and engineering
        expenses. 

        Sales, General & Administrative expenses, as a percentage of sales, 
        increased in the second quarter of 1998 over the same period in 1997,
        and represents a 84.3% of sales as compared with 35.4% of sales for
        the same period of 1997 due to the lower sales revenue.  The expenses
        in absolute dollars increased $31,464 in 1998 over the corresponding 
        quarter in 1997. As the company embarked on its research and 
        development objectives, personnel costs were redirected, counteracted
        by the increased expenses of establishing the international office to
        enhance and expand the sales effort into the international marketplace.
 

        LIQUIDITY AND CAPITAL RESOURCES: 
        -------------------------------

        Cash and cash equivalents marginally increased to $23,842 for the 
        period ended June 30, 1998 from $21,181 at December 31, 1997.  The 
        working capital for the six-month period amounted to $359,779 compared
        to $633,593 at December 31, 1997.  The current ratio is 1.6 to 1 for
        the period ended June 30, 1998 compared to 2.7 to 1 at
        December 31, 1997.

        Net cash provided by operating activities was $77,539 for the six 
        months period ended June 30, 1998 compared to $313,298 net cash used
        for operating activities in six month ended June 30, 1997.  Net cash
        provided by operating activities was $5,320 for the quarter ended  
        June 30, 1998 compared to net cash used for operating activities of
        $849,371 in the comparable quarter of 1997.  The change was
        attributable to several material factors including the net loss in
        the current period, the increase in accounts payable and an increase
        in the inventory due to the delay of anticipated orders during the
        period.

        Net cash used in investing activities was $74,878 during the six-month
        period of 1998 compared to $11,723 in the corresponding six-month
        period of 1997.  Net cash used in investing activities in the current
        quarter of 1998 was $31,402 compared to $2,187 in the 1997 quarter 
        ended June 30, 1997.  The increase in the capital expenditures was to
        establish a simulated testing environment and for engineering
        development tools.
-10-
<PAGE>

        The Company continually pursues cost cutting measures and, during the
        latter part of the quarter, has successfully subleased the vacated
        portion of its office space in Cherry Hill, N.J. to Pro Circuits, Inc.,
        a manufacturer of circuit board assemblies and is one of the vendors
        the Company utilizes to assemble PC boards.  Under the leasing
        arrangement, during the initial months, the tenant will renovate the
        building in lieu of rent.  The utilities will be prorated with the
        rental commencing in September.  Management estimates a reduction in
        overhead of approximately $10,000 monthly.

        The Company is currently negotiating a line of credit to subsidize its
        working capital needs to bridge the periods of revenue fluctuation. 
        Management cannot give assurance as to the success of these efforts
        but believes that negotiations will have a positive outcome.  The
        Company believes that funds generated by operations and the additional
        borrowings available under the credit facility will be sufficient to
        meet its current working capital needs. The Company continues to 
        explore strategic alliances and or partnerships to accelerate its 
        growth potential which may require some form of debt or equity 
        financing. 

        Certain statements contained in the 10QSB concerning the Company's 
        business outlook on future performance and statements concerning
        assumptions made or expectations as to any future events, conditions
        or other matters are "forward-looking statements" as that term is 
        defined under the Federal Securities Laws.  Forward-looking 
        statements are subject to risks, uncertainties and other factors,
        which may cause actual results to differ materially from those set
        forth in this report.  The Company may encounter competitive, 
        technological, financial and business challenges making it more
        difficult to market its products and services, the impact of which
        may in turn affect the Company's results of operations and financial
        position. 

-11-
<PAGE>

PART II. OTHER INFORMATION

SCIENCE DYNAMICS CORPORATION AND SUBSIDIARIES
_____________________________________________

Item 1. Legal Proceedings

        No material developments.
 
Item 2. Changes in Securities

        There has been no change or modification in the constituent 
        instruments defining the rights of holders of neither the 
        corporation's sole class of registered security nor any modification
        of the rights evidenced by such class by issuance or modification of
        any other class of securities. 

Item 3. Defaults Upon Senior Securities

        There has been no default of any nature upon any form neither of 
        senior security nor in payment of interest or sinking or purchase
        fund installment with respect to any indebtedness of the registrant, 
        nor any other form of default upon any financial obligation. 

Item 4. Submission of Matters to a Vote of Security Holders

        None.

Item 5. Other Information

        None.

Item 6. Exhibits and Reports

        None.

-12-
<PAGE>

Item 7. Signatures 

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, registrant has duly caused this report to be signed in 
its behalf by the undersigned thereunto duly authorized. 


SCIENCE DYNAMICS CORPORATION 


BY:     /s/Alan C. Bashforth 
        ---------------------------------
        Alan C. Bashforth, CEO, President, Director


BY:     /s/Joy C. Hartman 
        ---------------------------------
        Joy C. Hartman, Exec. Vice President,
        CFO, Treasurer, Secretary and Director


DATED:  August 10, 1998 
        ---------------------------------
          

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

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

BY:   /s/ Alan C. Bashforth    CEO, President, Director     August 10, 1998
      ---------------------    
      Alan C. Bashforth  


BY:   /s/ Joy C. Hartman       Exec. Vice President, CFO    August 10, 1998
      ---------------------    ,Treasurer, Secretary and
      Joy C. Hartman           Director

-13-