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, 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:


         03/31/98    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 March 31, 1998 unaudited            1
  and December 31, 1997 (audited)

  Consolidated Statements of Operations for three months                2
  ended March 31, 1998 (unaudited) and three months 
  ended March 31, 1997 (unaudited)

  Consolidated Statements of Cash Flows for three months                3
  ended March 31, 1998 (unaudited) and three months
  ended March 31, 1997 (unaudited)

  Consolidated Statements of Shareholders' Equity for the               4
  year ended December 31, 1997 (audited) and the three
  months ended March 31, 1998 (unaudited)

 Item 2. Management's Discussion and Analysis of Financial Condition    5 - 9
  and Results of Operations


PART II. OTHER INFORMATION

 Item 1. Legal Proceeding                                               9

 Item 2. Changes in Securities                                          9

 Item 3. Defaults upon Senior Securities                                9

 Item 4. Submission of Matters to Vote of Security Holders              10

 Item 5. Other Information                                              10

 Item 6. Exhibits                                                       10

 Item 7. Signatures                                                     10

<PAGE>
                 SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEETS

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:

                             ASSETS   
                                                 March 31,     December 31,
                                                    1998           1997
                                                 Unaudited       Audited
                                                 ---------       -------
Current assets:   
   Cash and cash equivalents                   $    49,924    $    21,181 
   Accounts receivable - trade                     832,690        613,916 
                                                         -              - 
   Inventories                                     351,306        322,530 
   Other current assets                             47,096         52,200 
                                               -----------    -----------
      Total current assets                       1,281,016      1,009,827 
                                               -----------    -----------
Property and equipment, net                        248,440        220,060 
Software development costs, net of   
 accumulated amortization of $304,053   
 in 1998 and $277,992 in 1997                      217,181        243,243 
Deferred income taxes                              308,000        308,000 
Intellectual Property, net of accumulated                                 
 amortization of $375,000 in 1998 and   
 $300,000 in 1997                                1,125,000      1,200,000
Other assets                                        44,436         39,239 
                                               -----------    -----------
      Total assets                             $ 3,224,073    $ 3,020,369
                                               ===========    =========== 
   
   
            LIABILITIES AND SHAREHOLDERS' EQUITY   
   
Current liabilities:   
   Accounts payable                            $   396,942    $   289,188 
   Accrued expenses, principally    
          payroll related                          108,450         87,046 
                                               -----------    -----------
      Total current liabilities                    505,392        376,234 
   
Commitments:   
   
Shareholders' equity -   
   Common stock - .01 par value,   
    25,000,000 shares authorized, 14,661,449   
    issued, 14,535,649 outstanding in   
    1998 and 1997 respectively                     146,614        146,614 
   Additional paid-in capital                   10,166,429     10,166,429 
  (Deficit)                                     (7,196,529)    (7,271,075)
                                               -----------    -----------
                                                 3,116,514      3,041,968 
   Common stock held in treasury,   
    at cost                                       (397,833)      (397,833)
                                               -----------    -----------
   Total shareholders' equity                    2,718,681      2,644,135
                                               -----------    ----------- 
   Total liabilities and shareholders'   
    equity                                     $ 3,224,073    $ 3,020,369 
                                               ===========    =========== 
   

-1-
<PAGE>

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

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

                                               Three Months Ended March 31,
                                                       1998           1997
                                                       ----          -----
 NET SALES                                      $ 1,572,707    $ 1,116,480 
                                                -----------    -----------
       
Operating costs and expenses:   
   
      Cost of sales                                 602,342        523,686 
      Research and development                      288,062        197,187 
      Selling, general    
          and administrative                        607,757        586,720 
                                                -----------    -----------
   
                                                  1,498,161      1,307,593
                                                -----------    ----------- 
   
Operating Income                                     74,546       (191,113)
   
Other income (expenses):   
   Interest and other    
    investment income                                     -          3,994 
   Interest expense                                       -        (22,110)
                                                -----------    -----------

Income (Loss) before taxes                           74,546       (209,229)
   
Provision for Income Taxes                                -              -
   
Net Income (Loss)                               $    74,546    $  (209,229)
                                                ===========    ===========
      
Net Income (Loss) per common share              $      0.01    $     (0.02)
                                                ===========    ===========
   
-2-
<PAGE>

                  SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

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

                                                Three Months Ended March 31,
    
                                                       1998           1997
                                                       ----           ----
Cash flows from operating     
 activities:    
   Net Income                                   $    74,546    $  (209,229)
                                                -----------    -----------
Adjustments to reconcile     
 net income (loss) to net cash    
 (used for) operating activities:    
   Depreciation                                      15,097         15,873 
   Amortization of capitalized software              26,062         26,061 
   Amortization of intellectual property             75,000         75,000 
Changes in operating assets and liabilities:     
   (Increase) decrease in:    
    Accounts receivable                            (218,774)       (55,113)
    Inventories                                     (28,776)       (60,583)
    Other current assets                              5,104          6,544 
    Other assets                                     (5,197)             - 
 Increase (Decrease) in:    
    Accounts payable and accrued expenses           129,158         667,518 
    Interest Payable                                      -          70,002 
                                                 ----------     -----------
Total adjustments                                    (2,326)        745,302 
    
     Net cash provided by 
      operating activities:                          72,220         536,073 
                                                 ----------     -----------
    
Cash flows from investing activities:    
   Capitalized software                                   -               -
   Purchase of property and equipment - net         (43,477)         (9,536)
                                                 ----------     -----------
     Net cash (used) 
      in investing activities:                      (43,477)         (9,536)
                                                 ----------     -----------
Cash flows from financing activities:    
Increase (decrease) in     
   Issuance of common stock and warrants                  -               -
                                                 ----------     ----------- 
    
     Net cash provided by financing activities            -               -
                                                 ----------     ----------- 
Net increase (decrease) in    
   cash and cash equivalents                         28,743         526,537 
    
Cash and cash equivalents -     
   beginning of period                               21,181         830,229 
                                                 ----------     -----------
    
Cash and cash equivalents -     
   end of period                                 $   49,924    $  1,356,766
                                                 ==========     =========== 
    
-3-
<PAGE>
<TABLE>
                  SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                    FOR THE YEAR ENDED DECEMBER 31, 1997 AND
                        THREE MONTHS ENDED MARCH 31, 1998

PART 1. FINANCIAL INFORMATION
        Item 1. Financial Statements (Continued):
<CAPTION>
                                     Common Stock          Additional      Retained
                                     ------------             Paid-In       Earnings
                                 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 Income                              -            -              -        74,546            -           -
                               ----------    ---------   ------------   -----------      -------   ---------

Balance      
 March       
 31, 1998                      14,661,449    $ 146,614   $ 10,166,429   $(7,196,529)     125,800   $ 397,833 
                               ----------    ---------   ------------   -----------      -------   ---------
              
       The Company issued 2,605,588 shares of its common stock in 1997.  Shares issued in 1997
              were used to satisfy the Company's long-term debt and related interest.   

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

PART I
Item 1. (continued)

        Basis of Presentation
        ---------------------

        The financial statements included in the Form 10-QSB have been
        prepared by the Company, without audit, pursuant to the rules and
        regulations of the Securities and Exchange Commission.  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.

        The financial statements presented herein, as of March 31, 1998 
        reflect, in the opinion of management, all adjustments necessary for
        a fair presentation of financial position and the results of 
        operations for the periods presented. The results of operations for 
        any interim period are not necessarily indicative of the results for 
        the full year.

        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.

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

        Income [loss] per share is based on the weighted average number of
        common shares outstanding for the periods presented. 

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND 
        RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998.
 
        Business Overview
        -----------------
  
        Science Dynamics Corporation designs, develops and markets a variety
        of Telecommunication systems, 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.  

        Science Dynamics has targeted two addressable markets with the 
        Integrator C-2000 product ranges and the VFX-250 products.  The 
        Integrator C-2300 was on display at CeBit 1998 in Hannover, Germany
        during the first quarter.  The VFX-250 products were introduced in
        fiscal year 1997.

-5-
<PAGE>
        The Integrator C-2000 series is well positioned to meet the needs of
        the IP Telephony market.  These systems are currently under
        development and furnish service providers with a cost-effective 
        method of supplying voice and fax over Intranet, Internet and 
        Extranet.

        The VFX-250 products have proven their success in a new market, which
        bridges the markets of Videoconferencing and Frame Relay. The Company
        shipped the first 100 units of the VFX-250S to ACT Networks, Inc. in
        the first quarter.

        Currently in development are new software modules for the Integrator
        platform. These include a Speech Recognition module, and an Alarm
        Processor.  The Voice over IP development is progressing with field
        trials in progress.  Additional projects include a new release of the
        CIMS (Centralized Intercept Management System).  CIMS was developed
        several years ago under MS-DOS as a replacement for the CIDBAS product
        sold in the 1980's.  The new release, called CIMS II will be a Windows
        NT product based on the Integrator platform technology.  The VFX250
        products are undergoing enhancements that will provide greater 
        flexibility and configuration options.

        There are additional contracts currently under negotiation, which we
        believe will be consummated in the near future.  The VFX products are
        expected to provide a base of revenue throughout 1998 and in future
        years.
 
        The telecommunications industry is rapidly changing to provide a
        variety of services, such as voice, video and data, converged into an
        analogous network.  Management believes that the Company can
        capitalize on these changes in the industry by providing technological
        solutions that integrate with the existing infrastructure and enable
        companies to offer these various services.

        Through the development of innovative software-based products and
        solutions the Company intends to further its market acceptance of the
        Company's offerings and continue to take advantage of the expanding
        industry.
 
        Results of Operations
        ---------------------

        The following table summarizes the condensed results of operations 
        during the first quarter of 1998 compared to the corresponding
        quarter of 1997 (unaudited).

        Three Months ended March 31, 1998 compared to the Three Months ended
        March 31, 1997 (unaudited).


                                        For the Quarter Ended March 31,
                                                   1998            1997
                                                   ----            ----
         Sales                               $1,572,707      $1,116,480  
         Net Income (Loss)                      $74,546       $(209,229)
         Net Income (Loss) Per Share              $0.01           $(.02)
-6-
<PAGE>

 Three Months ended March 31, 1998 compared to the Three Months ended 
 March 31, 1997 (unaudited). (Continued)

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

Cost of Goods Sold               $602,342    $523,686         38.3%     46.9%

Research & Development            288,062     197,187         18.3%     17.7%

Selling, General & Admin          607,757     586,720         38.6%     52.5%

Total Operating Costs
and Expenses                   $1,498,161  $1,307,593         95.2%    117.1%


        Sales revenues for the quarter ended March 31, 1998 were $1,572,707
        as compared to $1,116,480 in the corresponding quarter of 1997 which
        represents an increase of 40.9%. This increase is attributable to the
        increased sales efforts of the internal sales force in both the U.S.
        office, primarily with the sales of the Commander II and the
        international office with the VFX product lines.


        Cost of Goods Sold as a percentage of sales revenue for the three
        months ended March 31, 1998 was 38.3% as compared to 46.9% for the
        three months ended March 31, 1997. The increase of $78,656 in the 
        cost of goods sold in absolute dollars is a result of the increase 
        in sales revenue for the first quarter of 1998.  This change is
        attributable to the change of product offerings and enhancements and
        by establishing alliances with a limited number of quality OEM 
        vendors resulting in maximization of purchasing power.  Gross profit 
        increased $377,571 in absolute dollars for the first quarter of 1998
        and as a percentage 61.7% for the three months ended 1998, as 
        compared to 53.1% for the three months ended 1997, due to the
        increase in sales revenue.


        Research and Development costs increased to $288,062 for the first
        quarter of 1998 as compared to $197,187 in the first quarter of 1997.
        As the Company modified its method of operations, the activities of
        personnel with adeptness were diverted into research and development
        contributing to the increase in the first quarter of 1998. Independent
        subcontractors are also being utilized in the areas of research and 
        development, to enhance the Company's market position.  The Company 
        believes that research and development is critical in achieving a 
        competitive position and expects to continue to expend funds, as 
        necessary, in this area.

-7-
<PAGE>

        Selling, General & Administrative expenses increased $21,037 for the
        three months ended March 31, 1998, over the same period in 1997, an
        increase of 3.5%.  This increase is attributed to the opening of the
        international office to market and sell products globally offset by
        the cost reduction measurers implemented in the U.S. by management.  

        Total Operating Costs and Expenses were $1,498,161 for the three
        months ended March 31, 1998 as compared to $1,307,593 for the three
        months ended 1997.  The increase was a result of the costs associated
        with the growth in sales revenue.  

        No provision for income tax was recorded for the quarter ended
        March 31, 1998.  As a result of the operating losses for the years
        ended December 31, 1990 and 1992 - 1997 the Company has available to 
        offset future taxable income a net operating loss of $8,361,058 
        expiring 2005 - 2012.  In addition, research credits expiring 
        2005 - 2012 are available to offset future taxes.

        Management believes that the strategic transformation to a software
        development and integration company has enhanced its probability of
        success in achieving established objectives.  The Company plans to
        focus resources, people, time and capital, into product initiatives
        that yield the greatest return. 


        LIQUIDITY AND CAPITAL RESOURCES:
        -------------------------------
 
        During the first quarter of 1998, the Company generated cash from 
        internal operations to satisfy its working capital requirements.  As
        of March 31, 1998, the Company's working capital amounted to $775,624
        compared to $633,593 at December 31, 1997.  The working capital ratio
        of the Company was approximately 2.5 to 1 as of March 31, 1998 
        compared to 2.7 to 1 at December 31, 1997.

        Net cash provided by operating activities was $72,220 compared to 
        cash provided for operating activities of $536,073 in the first three 
        months of 1997.  Accounts receivable increased $218,774 and inventory
        increased $28,776, with accounts payable and accrued expenses 
        increasing $129,158.  These increases were attributable to the 
        increase in sales and the purchase of materials to fill these orders,
        respectively.

        Net cash used in investing activities increased to $43,477 in
        March 31, 1998, compared to $9,536 in the corresponding period of  
        1997.  The Company's higher quarterly 1998 capital expenditures
        resulted from the acquisition of development and test equipment to 
        facilitate its aggressive development efforts and equipment necessary 
        to furnish the international sales and marketing facility.
 
        The Company continually monitors and adjusts expense levels to support 
        the revenue stream.  The Company believes that its existing working
        capital and funds anticipated to be derived from operations will 
        satisfy the Company's projected working capital and capital 
        expenditure requirements through December 31, 1998.

        Management believes that the telecommunications industry will 
        experience significant technological advances to improve the quality 
        of service and reduce costs.  The Company is poised to meet these 
        challenges by continuing to employ new technologies when they become 

-8-
<PAGE>
        available, diversifying its product offerings and by constantly 
        enhancing its software applications.

        The Company will continue to seek growth opportunities by investigating
        other businesses and ventures that relate to its present activities 
        for potential business combinations. As of March 31, 1998, the Company
        had not entered into a firm commitment for any such transactions.  
        In the event a complementary candidate is identified, the Company may
        need to seek additional financing through some form of debt or equity 
        arrangement.

        Certain statements contained in this 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.


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 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 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.

-9-
<PAGE>

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

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports

         None.

Item 7.  Signatures 

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


SCIENCE DYNAMICS CORPORATION 


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

DATED:  May 5, 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    President, CEO and Director  May 5, 1998
      ---------------------    
      Alan C. Bashforth  


BY:   /s/ Joy C. Hartman       Exec. Vice President, CFO    May 5, 1998
      ---------------------    Treasurer, Secretary and
      Joy C. Hartman           Director

-10-