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  March 31, 2001
                                ------------------

[ ] 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)

                      (    856     )     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:


         04/25/2001    17,657,901 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 March 31, 2001        1
                 (unaudited)and December 31, 2000 (audited)

                 Consolidated Statements of Operations for three         2
                 months ended March 31, 2001 (unaudited) and three
                 months ended March 31, 2000 (unaudited)

                 Consolidated Statements of Cash Flows for three         3
                 months ended March 31, 2001 (unaudited) and three
                 months ended March 31, 2000 (unaudited)

                 Notes to Consolidated Financial Statements              4

         Item 2. Management's Discussion and Analysis of Financial       4 - 11
                 Condition and Results of Operations

PART II. OTHER INFORMATION

         Item 1. Legal Proceedings                                       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>
<TABLE>
                                    SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                                            CONSOLIDATED BALANCE SHEETS

<CAPTION>

PART I.   FINANCIAL INFORMATION
          Item 1. Financial Statements:

                                     ASSETS
<S>                                                                              <C>                <C>
                                                                                   March 31,          December 31,
                                                                                      2001               2000
                                                                                    Unaudited          Audited
                                                                                    ---------          -------
Current assets:
  Cash and cash equivalents                                                        $  208,126        $  1,351,641
  Accounts receivable - trade                                                          92,283             102,194
  Accounts receivable - other                                                          64,461              51,401
  Inventories                                                                          83,467              87,623
  Other current assets                                                                103,453              84,566
                                                                                    ---------          ----------
    Total current assets                                                              551,790           1,677,425
                                                                                    ---------          ----------

Property and equipment, net                                                         1,012,248           1,005,364
Intangible Assets, net of accumulated
amortization of $1,275,000 in 2001 and
$1,200,000 in 2000.                                                                   225,000             300,000
Other assets                                                                           25,363              25,363
                                                                                    ---------          ----------
   Total assets                                                                    $1,814,401        $  3,008,152
                                                                                    =========          ==========


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Current portion of capital lease obligation                                      $   61,353        $     57,598
  Accounts payable                                                                    354,568             358,820
  Accrued expenses                                                                    206,396             118,059
                                                                                    ---------          ----------
   Total current liabilities                                                          622,317             534,477
                                                                                    ---------          ----------

Long-term  portion of capital lease obligation                                        106,657             128,413
                                                                                    ---------          ----------

Commitments

Shareholders' equity -
  Common stock - .01 par value,
   45,000,000 shares authorized,
   17,783,701 issued and 17,657,901 outstanding
   in 2001 and 2000 respectively.                                                     177,837             177,837
   Additional paid-in capital                                                      14,266,787          14,266,787
   (Deficit)                                                                      (12,961,364)        (11,701,529)
                                                                                   ----------          ----------
                                                                                    1,483,260           2,743,095

   Common stock held in treasury, at cost                                            (397,833)           (397,833)
                                                                                   ----------          ----------

   Total shareholders' equity                                                       1,085,427           2,345,262
                                                                                   ----------          ----------

   Total liabilities and shareholders' equity                                     $ 1,814,401         $ 3,008,152
                                                                                   ==========          ==========

</TABLE>
-1-
<PAGE>
<TABLE>
                                            SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                                          (UNAUDITED)
                                                           ---------

PART I.   FINANCIAL INFORMATION
          Item 1. Financial Statements(Continued):
<CAPTION>


                                                            Three Months Ended March 31,

                                                                  2001            2000
                                                                  ----            ----

<S>                                                          <C>             <C>

NET SALES                                                     $ 194,113       $ 1,443,482
                                                              ---------         ---------


Operating costs and expenses:

      Cost of sales                                             136,847           572,042

      Research and development                                  420,522           255,707

       Selling, general and administrative                      901,217           605,266
                                                              ---------         ---------

                                                              1,458,586         1,433,015
                                                              ---------         ---------

Operating (Loss) / Income                                    (1,264,473)           10,467

Other income/expenses:
 Interest income                                                  4,638             2,898
                                                              ---------         ---------

Net (Loss) / Income                                          (1,259,835)           13,365
                                                              =========         =========


Net (Loss) / Income per common share
  basic and diluted                                         $     (0.07)       $     0.00
                                                              =========         =========


</TABLE>
-2-
<PAGE>
<TABLE>
                          SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (UNAUDITED)
                                          ---------
<CAPTION>
PART I.   FINANCIAL INFORMATION
          Item 1. Financial Statements(Continued):


                                                             Three Months Ended March 31,
                                                                   2001           2000
                                                                   ----           ----

<S>                                                           <C>           <C>
Cash flows from operating activities:
 Net (Loss)/Income                                             $(1,259,835)  $   13,365
                                                               -----------   ----------

Adjustments to reconcile net (loss)/ income to
 net cash  used for
 operating activities:
  Depreciation                                                      62,363       24,509
  Amortization of capitalized software                              75,000       76,910
Changes in operating assets and liabilities:
 (Increase) decrease in:
  Accounts receivable                                                9,911     (497,164)
  Other receivable                                                 (13,060)      12,689
  Inventories                                                        4,156      134,373
  Other current assets                                             (18,887)     (25,890)
 Increase (decrease) in:
  Accounts Payable and
   accrued expenses                                                 84,085     (272,368)
                                                               -----------   ----------

Total adjustments                                                  203,568     (546,940)
                                                               -----------   ----------
Net cash used for operating activities                          (1,056,267)    (533,576)
                                                               -----------   ----------


Cash flows from investing activities:

 Purchase of property and equipment                                (69,247)    (158,256)
                                                               -----------   ----------
  Net cash used in investing activities                            (69,247)    (158,256)
                                                               -----------   ----------

Cash flows from financing activities:
 Increase (decrease) in
  Payment on capitalized leases                                    (18,001)           -
 Issuance of common stock                                                -      153,907
                                                               -----------   ----------


   Net cash (used in) provided
   by financing activities                                         (18,001)     153,907
                                                               -----------   ----------

Net decrease in
 cash and cash equivalents                                      (1,143,515)    (537,925)

Cash and cash equivalents -
 beginning of period                                             1,351,641      674,793
                                                               -----------   ----------

Cash and cash equivalents -
 end of period                                                   $ 208,126   $  136,868
                                                               ===========   ==========




</TABLE>
-3-
<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, 2000.  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.

-4-
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
        RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 2001 AND FOR
        THE THREE MONTHS ENDED March 31, 2000.

        Business Overview
        -----------------

In 1998, management made a strategic decision to divert most of our
development efforts towards the IP system.   Advances in public and private
IP-based networks now enable businesses to use the Internet Protocol (IP) to
by-pass the Public Switched Telephone Network (PSTN) for national and
international long distance voice, fax, and video communications.

The Company continues to gain knowledge and experience in enhancing the
development of the system for IP Telephony.  The Company has revised its
development and implementation of the products accordingly to the direction
of the marketplace.  Management believes that the penetration of the IP
Telephony market along with renewed interest and development in the
Commander II call control series will provide significant growth potential.

During 2000, the Company changed the size and structure of its sales force.
The sales team has increased from two UK based sales people in 1999 to a 10-
person team (8 in the US and 2 in the UK) led by our new Vice President of
Sales and Marketing.  This team was fully in place by October 2000.  Given
typical sales lead times and the current state of the Telco market, we do
not anticipate significant revenues to be generated by the new team until
the second half of 2001.

The Company's net sales results for the three month period ending March 31,
2001 were $194,113 a decrease of $1,249,369 from sales of $1,443,482 for the
three month period ended March 31, 2000. The Company's revenue in 2000 was
predominantly derived from the Integrator Product Line.  The results were
due to the beginning of the deployment of the Cascadent Supply Agreement
during 2000.  This Agreement was terminated upon SciDyn receiving official
notification that Cascadent was placed into receivership.  The loss of this
contract is directly related to the decrease in sales for the first quarter,
moreover, we expect the loss of this contract to negatively effect the
second quarter of 2001 as well.  SciDyn does not have information as to when
or if Cascadent will emerge from receivership.

 The strategy for 2001 is to generate sales revenue from the IP system via
the efforts of our expanded sales team and to reinvigorate the Commander I
and II product lines, as well as, to exploit the VFX-250S product. Although
the sales of the VFX-250S did not reach the anticipated level, the market
awareness of the functionality and quality of the product has been
recognized.  The sales for this product have been primarily in South
America, with future sales opportunities generating from China and Russia.
The sales and marketing team will continue to pursue additional venues for
this product producing a base line source of revenue in the coming year.

The Company is continuously exploring new niche opportunities, introducing
new product offerings and marketing and sales initiatives to increase market
share and value for our customers.  The focus of our strategy included
providing the core technology needed to deliver a broad range of telephony
services; targeting key growth markets worldwide; promoting strategic
relationships between our customers; delivering added value through customer
support and services; and continuing to actively pursue business alliance
candidates that complement or support the Company's core competencies.

-5-
<PAGE>

Management believes that current products and development strategy teamed
with SciDyn's strong telecommunications background will provide a solid
product to meet customer needs and the advancements required for the packet
based telecom revolution.

PRODUCTS
--------

IP Telephony

One of the current impacts of IP Telephony is the way it is driving the
convergence of the IT and telecom markets.  Both of these traditional
markets are now seeing a paradigm shift to IP Telephony.  IP Telephony is
crossing traditional parameters and amalgamating historically separated
disciplines on an IP network.  This means the carriers and companies of the
world are starting to send voice over the packet networks that previously
were used only for data.   This is an opportunity for dynamic companies to
take their experience and expertise and apply it in markets not
traditionally open to them.

By crossing borders, IP Telephony allows companies like Science Dynamics to
diversify from their traditional core technology and enhance and develop
bridges between the existing data and telecom infrastructures.

The difference between the current circuit-switched PSTN, which provides a
dedicated end-to-end connection, and the packet switched IP network, which
provides a virtual connection, is the enhancement of bandwidth utilization.
By sharing bandwidth as data networks do, new operators should have the
potential to provide a reduction in cost as compared to traditional circuit-
switched PSTN operators.  The focus in today's market is to integrate these
two very different forms of communication throughout the world.

SciDyn's IP Telephony products aim to enhance the new operators' abilities
to combine the technologies of the new IP-based networks with the
traditional feature-rich circuit networks without forfeiting the key
functionality of IP network-adaptability.

The SciDyn system features a modular architecture that permits our customers
to add new product and service features without significant cost or
development time. Based on publicly available data provided by large
telecommunications service providers, we believe our modular architecture
enables the provision of new and existing communications services at a lower
cost than the provision of communications services by traditional telephone
companies.

SciDyn offers its proprietary BubbleLink(R) software architecture throughout
its current IP Telephony Gateway product line. This includes our high
capacity versatile IntegratorC-2308(R), which has one of the smallest
footprints in the industry.

Commander Inmate Telephone Control System (ITCS)

The Commander product lines are built on the Company's unique BubbleLINK(R)
software architecture.  This open system platform is a combination of
integrated Computer Telephony (CTI) hardware and software, which can handle
thousands of call transactions per hour and provide correctional facility
officials with effective tools to manage and control inmate telephone calls
using the Commander system software.

The Commander I products are designed for the small to mid sized municipal
and county correctional facilities requiring control for up to 40 inmate
telephone lines.  The Commander I base system provides telephone control for
4 lines and can be expanded in 4 line increments. This modular design
provides a cost effective solution with an abundance of inmate phone control
features.

-6-
<PAGE>

SciDyn has recently introduced its VoIP technology to its Commander call
control system.  This enhancement reduces the hardware and operation costs
of running the SciDyn solution.  The new configuration allows all of
SciDyn's technology to be housed at one central location reducing the amount
of lines that SciDyn clients will need in order to move the same traffic,
moreover, the VoIP component allows for a reduction in the per minute
charges incurred by our client which enhances profitability.

The Commander I and II call control systems can be configured using one or
more AdminManager workstations. The AdminManager provides real-time
administration of the Commander through an Ethernet Local Area Network (LAN)
or a Wide Area Network (WAN).

In 1999, the company released a new Commander II AdminManager software
module. This new software module provides the Commander II with a
sophisticated Graphical User Interface (GUI) with new inmate phone control
features. These new features were based on recommendations by several of the
Company's customers. The Company completed the Inmate debit system and GUI
interface capability on Commander in April 2001.  We expect to complete the
Commander II Integrated Recording by the end of the second quarter 2001. The
Company continues to explore opportunities with the major telephone
companies in providing the Commander II inmate phone control system with
call transaction (price per call) programs.


Video over Frame Relay

In 1997, SciDyn launched its new way to carry video conferencing.  The VFX-
250S is a hardware based Frame Relay Access Device (FRAD) designed to carry
video streams through the frame relay network.  As the largest data network
protocol in the world, frame relay seemed an obvious choice for adding video
connectivity to its wide complement of features.

Traditionally, video conferencing has been carried via leased lines or ISDN
circuits.  In the US market, due to the proliferation of ISDN availability,
video conferencing has been able to take off with a relatively high growth
curve.  This is not true in the international markets where leased lines and
ISDN circuits are either not readily available or prove to be rather costly.
Video conferencing suite manufacturers such as PictureTel, the industry
leader, found markets outside of ISDN enabled networks have proven to be
slow and tedious.

By leveraging the proliferation of frame relay networks throughout the
world, SciDyn intends to market the VFX-250S products in markets where ISDN
and leased line services are not available.  This has proven very successful
in the past in markets such as Brazil.

Three countrywide frame relay networks are presently under construction in
China. Trials are continuing and we continue to anticipate possible business
opportunities in the mid part of 2001.

There are a number of large-scale projects quoted late last year, which have
not yet been awarded.  These include opportunities in China and Russia.
Brazil continues to proceed steadily and is anticipated to provide sales.
With some expected further development of the VFX family and some investment
in the promotion of the product line we continue to anticipate an overall
increase in sales over the next twelve months.


-7-
<PAGE>

Error Correction Algorithm

In 1999, the Company acquired the "Error Detection and Correction System for
Use with Address Translation Memory Controller" patent, in exchange for
172,029 shares of common stock then valued at $100,000.  Such a patent
provides the Company with the ability to embed in certain technology an
error correction method that should substantially reduce data transmission
errors.  This correction device is designed to reduce costly retransmission
and can be utilized across various data transport mediums.

The patent, which we intend to make available to others on a royalty basis,
can be utilized on virtually any data transmitting system, from fiber optics
to satellite transmission.  Since both transmitting and receiving stations
must utilize the same algorithm, the Company's primary task is to initially
convince new or redesigned applications to utilize SciDyn's patent for each
end of the application.  As stated in previous quarterly reports SciDyn
continues to pursue a third party to undertake the implementation of this
algorithm.  To date a suitable entity has not been identified to exploit
this new technology in the near term.  Since SciDyn's near term strategy and
capital priorities preclude it from investing additional time and funds into
exploiting this patent independently, its carrying value of $89,700 has been
written off during 2000.  SciDyn believes that the underlying patent may
still have practical applications and is pursuing the outright sale of the
patent to interested third parties.

The Patent, which has been issued in the United States with application in
many foreign countries, is for a data transmission system for use in a mass
memory system, which includes an EDAC that corrects all single component
errors and detects all double component errors.  High-speed operation
permits use of the EDAC on address and control lines as well as on data
lines.  In memory systems, which use virtual memory addressing, further
efficiency and economy is achieved by incorporating a partial implementation
of the EDAC encoding in the same virtual memory address translation unit in
which the virtual memory address is calculated.

At the present time there is one issued patent. There are many upgrades to
the patented material that can be patented, which are now trade secrets.
These include both revisions to the algorithm and implementation approaches.

Voice Response System

The Company's Voice Response System (VRS) is an automatic intercept product
designed to provide a cost-effective solution for implementing announcement
capabilities at the central office location.  This product has reached its
mature stage of the product life cycle and has been discontinued.

Future Product Development

The Company's products have primarily been designed and developed by its
internal engineering staff.   The Company considers the features and
performance of its products to be generally competitive to those of other
available applications.

We believe that continual enhancements of our products will be required to
enable the Company to maintain its competitive position. The Company intends
to focus its principal future product development efforts on developing new,
innovative, technical products and updating existing products in the
communications arena to enable the Company to take advantage of
opportunities resulting from the expected direction of technology.

-8-
<PAGE>

The Company continues to refine its core BubbleLINK(R) software architecture.
This software architecture provides the foundation for hosting applications
for various Telephony and transaction oriented processes.  Currently the
BubbleLINK(R) architecture supports existing Company products such as the
Commander family of inmate products, and the IntegratorC-2000(R) Series of IP
Telephony gateway products.  Management believes that the product design
strategy will keep the Company competitive in the emerging Internet
Telephony market.



         Results of Operations
        ---------------------

        The following table summarizes the basic results of operations for
        the periods indicated in the Consolidated Statement of Operations.

        Three Months ended March 31, 2001 (unaudited) compared to the
        Three Months ended March 31, 2000 (unaudited).

                                                    Three Months Ended
                                                       March 31,
                                                   2001            2000
                                                   ----            ----
           Sales                                  194,113       1,443,482
           Net (Loss)/Income                   (1,259,835)         13,365
           Net (Loss)/Income Per Share             $(0.07)         $ 0.00


                                    OPERATING EXPENSES       PERCENT OF SALES

                                      2001        2000         2001      2000
                                      ----        ----         ----      ----

          Cost of Goods Sold        136,847     572,042         70%      39.6%

          Research & Development    420,522     255,707        217%      17.8%

          Sales, General & Admin    901,217     605,266        464%      41.9%

          Total Operating Costs
          and Expenses           $1,458,586  $1,433,015        751%      99.3%


Sales for the three month period ending March 31, 2001 were $194,113 a
decrease of $1,249,369 from sales of $1,443,482 for the three month period
ended March 31, 2000. The Company's revenue in 2000 was predominantly
derived from the Integrator Product Line.  The results were due to the
beginning of the deployment of the Cascadent Supply Agreement during 2000.
This Agreement was terminated during the first quarter of 2001  upon SciDyn
receiving official notification that Cascadent was placed into receivership.
The loss of this contract is directly related to the decrease in sales for
the first quarter, moreover, we expect the loss of this contract to
negatively effect the second quarter of 2001 as well.  SciDyn does not have
information as to when or if Cascadent will emerge from receivership.

-9-
<PAGE>

Cost of Goods sold decreased to $136,847 in the first three months of 2001
from $572,042 in the corresponding three-month period of 2000.  The decrease
in the cost of goods sold was directly related to the decrease in sales
revenue.  The percentage increase of cost of good sold as a percentage of
sales was due to the change in mix of sales between the quarters with high
margin integrater equipment sales in 2000 compared to lower margin VFX and
contract labor sales in 2001.

Research & Development expenses increased to $420,522 in the first three
months of 2001 as compared to $255,707 in the comparable three-month period
of 2000.  The increase in research and development expenses during the first
three months of 2001 is related to continued work on adding additional
functionality to our product mix, specifically introducing VoIP to our
Commander II series. We believe our success will depend, in part, on our
ability to develop and introduce new products and enhancements to our
existing products.  We continue to work on expanding our engineering team
and intend to continue to make, significant investments in research and
development.

Sales, General & Administrative expenses increased to $901,217  in the first
three months of 2001, compared to $605,266 in the corresponding period of
2000.  The increase is related to the addition of sales and administrative
staff during the second half of 2000.  SciDyn has increased its sales and
marketing department from 2 people in the first quarter of 2000 to ten in
the first quarter of 2001. The major directive is to initiate and promote a
full-scale sales and marketing program to bring the company above the radar
screen to promote awareness and recognition of SciDyn in the marketplace.
We expect to incur substantial expenditures related to sales and marketing
activities, the recruitment of additional sales and marketing personnel and
the expansion of our domestic and international distribution channels.

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

Cash and cash equivalents decreased to $208,126 for the period ended March
31, 2001 from $1,351,641 at December 31, 2000.  Net cash used for operating
activities was $1,056,267 during the three-month period ended March 31, 2001
compared to $533,576 in the corresponding period of 2000.  Net cash used for
operating activities reflects the net loss marginally offset by non cash
items and an increase in accrued expenses.

Cash used in investing activities was $69,247 for the three-month period
ended March 31, 2001 compared to $158,256 in the corresponding period of
2000.  The outlay reflects the continual investment in computer related
equipment to further development efforts.

Cash used in financing activities in the three-month period ended March 31,
2001, amounted to $18,001 which represented payments on capital lease
obligations.  This compares to $153,907 in cash provided by financing
activities in the previous period which was raised through the issuance on
Common Stock pursuant to the Company's employee stock option plan.

Although the Company expects to close upon a loan which will provide working
capital shortly, until the loan is closed, there is no guarantee that the
Company will receive such funds.  If the Company does not receive the funds
in the near term it will prevent the Company from continuing to operate at
current capacity.

-10-
<PAGE>

Forward Looking and Cautionary Statements

Except for the historical information and discussions contained herein,
statements contained in this Form 10-QSB may constitute "forward looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements involve a number of risks, uncertainties and
other factors that could cause actual results to differ materially,
including the company's failure to continue to develop and market new and
innovative products and services and to keep pace with technological change;
competitive pressures; failure to obtain or protect intellectual property
rights; issues on the company's business, financial condition or results of
operations; quarterly fluctuations in revenues and volatility of stock
prices; the company's ability to attract and retain key personnel; currency
and customer financing risks; dependence on certain suppliers; changes in
the financial or business condition of the company's distributors or
resellers; the company's ability to successfully manage acquisitions and
alliances; legal, political and economic changes and other risks,
uncertainties and factors discussed elsewhere in this Form 10-QSB, in the
company's other filings with the Securities and Exchange Commission or in
materials incorporated therein by reference.


-11-
<PAGE>

PART II.OTHER INFORMATION

SCIENCE DYNAMICS CORPORATION AND SUBSIDIARIES
_____________________________________________

Item 1. Legal Proceedings

        No material developments

Item 2. Changes in Securities

        None

Item 3. Defaults Upon Senior Securities

        None

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

        None

Item 5. Other Information

        None

Item 6. Exhibits and Reports

       (B)On March 15, 2001 a Form 8K was filed concerning an Equity Line
          with the Alpha Capital Group.

-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.



      SIGNATURE                TITLE                        DATE
      ---------                -----                        ----

 BY:  /s/ Joy C. Hartman       CEO and President            05/15/01
      ---------------------                                 -----------------
      Joy C. Hartman


 BY:  /s/ Robert O'Connor      Vice President and           05/15/01
      ---------------------    Chief Accounting Officer     -----------------
      Robert O'Connor


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