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  September 30, 2002
                                ------------------

[ ] 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.)


      2059 Springdale Road, Suite 100, 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:


         11/12/2002    40,657,790 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 September 30, 2002             1
         (unaudited) and December 31, 2001 (audited)

         Consolidated Statements of Operations for the nine months        2
         and three months ended September 30, 2002 (unaudited) and
         the nine and three months ended September 30, 2001 (unaudited)

         Consolidated Statements of Cash Flows for nine months
         ended September 30, 2002 (unaudited) and for the nine months
         ended September 30, 2001 (unaudited)                             3

         Notes to Consolidated Financial Statements                       4

 Item 2. Management's Discussion and Analysis of Financial Condition      5-14
         and Results of Operations

 Item 3. Controls and Procedures                                          14


PART II. OTHER INFORMATION

         Item 1. Legal Proceedings                                        15

         Item 2. Changes in Securities                                    15

         Item 3. Defaults upon Senior Securities                          16

         Item 4. Submission of Matters to Vote of Security Holders        16

         Item 5. Other Information                                        16

         Item 6. Exhibits and Reports                                     17

         Item 7. Signatures                                               18

<PAGE>


<TABLE>
                           SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                                  CONSOLIDATED BALANCE SHEETS

<CAPTION>
                        ASSETS
                                                         September 30,          December 31,
                                                             2002                   2001
                                                           Unaudited              Audited
                                                           ---------              -------

<S>                                                   <C>                     <C>
Current assets:
   Cash and cash equivalents                           $   12,457              $   17,075
   Accounts receivable - trade                             66,903                  13,234
   Accounts receivable - other                                  -                  60,721
   Inventories                                            225,158                 310,857
   Other current assets                                    34,562                 125,446
                                                       ----------               ---------
      Total current assets                                339,080                 527,333
                                                       ----------               ---------

Property and equipment, net                               714,067                 805,727

Deferred Financing costs                                  159,268                 154,268
Other assets                                               25,363                  25,363
                                                       ----------               ---------
      Total assets                                     $1,237,778              $1,512,691
                                                       ==========               =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of capital lease obligation         $  128,413              $   69,615
   Bank Note                                               58,323                  99,535
   Customer Deposits                                      140,596                 289,368
   Short term loan payable                                158,000                 195,000
   Accounts payable                                     1,098,140                 800,460
   Accrued expenses                                       339,340                 152,151
                                                       ----------               ---------
      Total current liabilities                         1,922,812               1,606,129



Long Term liabilities:
Non current portion of bank note                           33,327                       -
Non current portion of capital lease obligation                 -                  58,798
Convertible Debenture                                   1,776,982               1,431,949
                                                       ----------               ---------


      Total liabilities                                $3,733,121              $3,096,876
                                                       ----------               ---------

Commitments

Shareholders' equity (deficit)
   Common stock - .01 par value,
      45,000,000 shares authorized,
      40,783,590 and 20,879,501 issued
      40,657,790 and 20,753,701 outstanding
      in 2002 and 2001 respectively.                      407,836                 208,795
   Additional paid-in capital                          15,536,398              14,681,858
   (Deficit)                                          (18,041,744)            (16,077,005)
                                                       ----------               ---------
                                                       (2,097,510)             (1,186,352)
   Common stock held in treasury,
    at cost                                              (397,833)               (397,833)
                                                       ----------               ---------
   Total shareholders' equity (deficit)                (2,495,343)             (1,584,185)
                                                       ----------               ---------
   Total liabilities and shareholders'
    Equity                                             $1,237,778              $1,512,691
                                                       ==========               =========


   The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
-1-
<PAGE>


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

<CAPTION>

                                                   Nine Months Ended                Three Months Ended
                                                      September 30                      September 30,
                                                   2002          2001                2002          2001
                                                   ----          ----                ----          ----
<S>                                         <C>                  <C>             <C>               <C>

 NET SALES                                   $  812,143          $  506,134      $  156,266        $  133,521
                                             ----------          ----------      ----------        ----------


Operating costs and expenses:

      Cost of sales                             357,611             381,509          80,969            92,983
      Research and development                  593,707           1,107,916         170,636           353,126
      Selling, general
          and administrative                  1,483,794           2,560,369         394,649           719,229
                                             ----------          ----------      ----------        ----------

                                              2,435,112           4,049,794         646,254         1,165,338
                                             ----------          ----------      ----------        ----------

Operating (loss)                             (1,622,969)         (3,543,660)       (489,988)       (1,031,817)

Other income (expenses):
   Sale of NJ NOL                                90,000                              90,000
   Interest Expense                            (120,577)           (253,986)        (50,250)          (28,100)
   Finance Expense                             (311,193)                           (119,989)                -
                                             ----------          ----------      ----------        ----------

Net (loss)                                  $(1,964,739)        $(3,797,646)      $(570,227)      $(1,059,917)
                                             ==========          ==========        ========        ==========



Net(loss)per common share
  basic and diluted                         $     (0.06)        $     (0.21)      $   (0.02)      $     (0.06)
                                             ==========          ==========        ========        ==========



The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

-2-
<PAGE>



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

<CAPTION>
                                                           Nine Months Ended September 30
                                                             2002                   2001
                                                             ----                   ----
<S>                                                    <C>                  <C>
Cash flows from operating activities:
   Net (loss)                                           $(1,964,739)         $(3,797,646)
                                                        -----------          -----------

Adjustments to reconcile net (loss) to
 net cash used for
 operating activities:
   Depreciation                                             255,115              189,453
   Financing expense non cash                               311,193              212,524
   Amortization of intangible assets                              -              225,000
Changes in operating assets and liabilities:
   (Increase) decrease in:
    Accounts receivable                                     (53,669)              38,566
    Other receivable                                         60,721                1,401
    Inventories                                              85,699             (157,573)
    Other current assets                                     90,884               (2,214)
   Increase (Decrease) in:
     Accounts Payable and
       accrued expenses                                     484,869              383,437
       customer deposits                                   (148,772)             420,200
                                                        -----------          -----------

Total adjustments                                         1,056,040            1,310,794
                                                        -----------          -----------

 Net cash used for
  operating activities                                     (908,699)          (2,486,852)
                                                        -----------          -----------

Cash flows from investing activities:

 Purchase of property and equipment - net                  (133,455)            (120,062)
                                                        -----------          -----------

   Net cash used in investing activities                   (133,455)            (120,062)
                                                        -----------          -----------

Cash flows from financing activities:
 Increase (decrease)in
  Line of Credit                                             (7,885)              97,741
  Issuance of Convertible Debt                            1,082,421            1,362,710
  Short term loan Payable                                   (37,000)                   -
  Payment on capitalized lease                                    -              (47,225)
                                                        -----------          -----------

   Net cash provided
    by financing activities                               1,037,536            1,413,226
                                                        -----------          -----------

Net increase (decrease) in
 cash and cash equivalents                                   (4,618)          (1,193,688)

Cash and cash equivalents -
 beginning of period                                         17,075            1,351,641
                                                        -----------          -----------

Cash and cash equivalents -
 end of period                                           $   12,457          $   157,953


    The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

-3-

<PAGE>




                SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                (unaudited)
Item 1.

       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, 2001.  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 NINE MONTHS ENDED SEPTEMBER 30, 2002 AND
        FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002.

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

Science Dynamics made significant efforts in the past twelve months to react
to the tremendous slowdown in the global communications market.  The focus
was to concentrate on all potential revenue opportunities and eliminate
those that could not produce revenue in the short-term. This resulted in
drastic reductions in the workforce especially in the area of Voice over
Internet technologies.  The sales revenue potential of the IP product line
was deemed to have a long-term sales cycle with no short-term revenue
opportunity.
Unforeseen was the continued decline in the telecom market combined with the
step response to critical failures in major telecom industry giants.  This
has set in motion an uncertain future for this sector along with predictable
reductions in capital spending.

These reductions along with refocused efforts on core business markets helped
sustain SciDyn during the early portion of 2002.  SciDyn set in motion an
early effort to enter new avenues for sustained revenue during this period of
reduced capital spending.  These include new sales models for the Commander
Call Control System including lease and transaction based offerings.  These
new financing options have opened the door to allow many vendors access to
the Commander product line.  In addition to forging new customer
relationships, many of the traditional SciDyn customers such as the major
long distance and local exchange carriers, are exploring how these financing
options allow them to continue to improve operational costs in an
increasingly competitive market without the up-front capital expenditure.

New SciDyn revenue initiatives included the launching of an operations center
to provide value-added enhancements to key industry services.  These services
focus on the needs of the corrections market and extend the value of a
typical equipment sale into a multi-year contract for transaction-based
services.  The operations center is now in full production mode and the
initial invoicing commenced during the latter part of June.  In the first
five months of operation the operations center has experienced a growth of
133% in daily transactions processed.

SciDyn is also exploring other established markets that are considered more
viable in the short term following the telecom disruption currently facing
the industry.  One such market is the pre-paid and debit calling card
industry.  SciDyn is embracing this industry by offering a new entry-level
product for pre-paid and debit card carriers.  The new product known as
MinuteMan offers advanced pre-paid services comparable with many of the
legacy systems on the market today at a price that is targeted at allowing
providers the chance to transition from a pure resale mode into the first
step of creating a network infrastructure.

Over the past year, several new software releases have been produced for the
Commander I and II models that have repositioned the product for a greater
segment of the inmate call control market. This has opened the door to allow
the Commander product to fill the needs of all service providers, both large
and small.  Heretofore, the Commander product was designed solely for the
needs of the large Local Exchange Carrier (LEC) customers.

SciDyn has recently engaged several nascent independent inmate call control
service providers that are now competing equitably with LECs.  These smaller
companies are winning contracts on the merits, strength and reputation of
the Commander platform.

SciDyn continues to embrace the benefits and competitive advantages that a
converged voice/data network holds for communications carriers in many
market sectors. As such, SciDyn will continue to maintain a forward pace in
the development of integrated voice over data technology.

-5-
<PAGE>

SciDyn expects operating losses and negative cash flow for the foreseeable
future, as we must obtain orders, continue to introduce additional services
and offer optional procurement methods. We believe that increasing our
revenues will depend in large part on our ability to offer products that are
attractive to our customers, increase customer awareness of our product
offerings by developing effective marketing and promotional activities and
developing strategic relationships.

We intend to continue to increase the scope of our operations while also
facing the challenge of maximizing resources effectively.


PRODUCTS
--------

Commander Call Control System

The Commander call control system is built on SciDyn'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 models are designed for the small to midsize 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.

Commander call control systems are supported by an integrated array of
administrative and investigative programs that provide a management solution
suite. All programs interact in real-time with Commander calls and databases
via an Ethernet Local Area Network (LAN) or a Wide Area Network (WAN).

Commander provides state of the art call control and some of the first tools
targeted at investigation and law enforcement in the inmate telephone
control industry.  The Commander Live Monitoring, Debit and Recording
continue to be some of the leading features required within the industry
today.

The latest software release for Commander enhances the debit capability of
the product by providing an extensive pre-paid card system.  The new
DebitCard feature set provides flexible capability in card creation and
management.  DebitCard supports specialized tariffs and call timing.  By
being totally integrated with the Commander, no external network facility is
necessary.  This provides complete control and security when using pre-paid
cards.  None of the Commander call control functions are jeopardized when a
pre-paid card is used.

Currently under development is the next generation Commander system. This
next generation Commander will be produced on the latest technology and
provide greater capabilities for new features. This generation of Commander
system will introduce SciDyn's first totally internal recording solution.
This new recording component will provide great cost savings over the
traditional recording equipment used today. This generation of Commander
will no longer be assembled exclusively from components purchased from a
single vendor. Currently two vendors have been selected to source components
in the next generation Commander. This will provide SciDyn greater
flexibility and reliability in producing and supporting new systems.

Also in development is the integration of new biometric technology
interfaces to the Commander.  Biometric technology is fast becoming a
realistic tool for increasing system security at many levels.  SciDyn and
the Commander product will lead the industry with practical and effective
biometric solutions.

-6-
<PAGE>

Development will also continue in the area of more powerful investigative
tools. The Investigator's File Cabinet will provide a single repository for
storing call records, recordings and other documents related to a specific
case or investigation.

Development has begun on a new Commander system targeted at multi-facility
centralized control.  This solution will allow Inmate phone providers a
method to bring all of the Commander features including the extensive call
control, debit, and pre-paid solutions to the smallest facilities.  This
system provides an aggregated point of switching and control for the
provider.  This minimizes on-site equipment and maintenance costs.  The
Commander will still maintain per facility branding and rating without the
need for dedicated switching equipment at the institution.

SciDyn continues to explore opportunities with the major telephone companies
in providing the Commander inmate phone control system with call transaction
(price per call) programs. Management believes that the recent and continued
drive to develop new capabilities for the Commander will establish the
Commander and SciDyn as the leader in inmate telephone control.

IP Telephony

One of the impacts of IP Telephony has been that of driving the convergence
of the IT and telecom markets. This together with the dramatic over capacity
in the bandwidth market place and the corresponding reduction of demand in
the IP telephony and networking product has meant that Scidyn has taken the
decision not to compete directly against the large manufacturers of such
equipment. SciDyn's modular approach to the design of these "next
generation" products has positioned it well to now focus on adding value
and driving toward the promise of enhanced functionality that these
converged networks can ultimately provide. Building on it's core
BubbleLINK(R) technology the company is continuing to develop products,
concepts and services that will bring such enhanced value added propositions
to those systems provided by the larger suppliers of networking equipment.

The SciDyn modular architecture 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. The IP
Integrator gateway product line addresses the various market segments. The
IntegratorC-2100(R) Series focus is corporate enterprises, the IntegratorC-
2300(R) Series focus is large ISPs and Telco Carriers and the IntergratorC-
2500(R) Series focus is intended to address the needs of PTT/Telco Carriers.

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.

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.

During 2001 the Integrator product was enhanced with additional
capabilities. System enhancements included support for SNMP, Radius
Authentication and Interoperability testing with various other vendor
products. The system hardware was revised and a cost reduction cycle was
executed to lower the per-port cost and conversely the entry-level price of
the IntegratorC-2300(R).

Due to the slowdown of Internet Telephony networks, development efforts in
this area have been re-directed to align with areas in which Internet
telephony has managed to sustain growth.  Specifically the enterprise
marketplace including IP-PBX and inter-office gateway applications.  SciDyn
is exploring this market and developing technology to supplement these
applications.  SciDyn expects to make new product announcements in this area
later this year or in early 2003.

-7-
<PAGE>

MinuteMan

The MinuteMan product, built on SciDyn's core BubbleLINK(R) technology, is a
complete turnkey system providing all aspects of a pre-paid and debit card
platform.  MinuteMan provides PSTN interface, card databases, IVR and SMDR
collection.  The MinuteMan is ideal for smaller pre-paid card vendors that
want to break free from the resale only mode of the card business.
MinuteMan is also the ideal front end for VoIP carriers that are looking to
complete their offerings for low cost international traffic.  Most VoIP
Gateways do not offer a robust solution for pre-paid calling.  Most of these
carriers have been forced to purchase or lease expensive adjunct systems to
integrate pre-paid solutions into their VoIP networks.  The MinuteMan
provides all of the necessary functions to convert an existing VoIP toll
bypass network into a full-featured international pre-paid network.

MinuteMan development is continuing based on requirements from customers and
other industry trends.  Enhancements to the original MinuteMan include
expanded rating capabilities for specialized charges and dynamic rates.
Initial installations of the MinuteMan are scheduled for completion before
the end of this year.

Voice Response System

SciDyn'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 non-BubbleLINK(R) product has
reached its mature stage of the product life cycle and has been discontinued.
A base line revenue stream will be generated from support of this product.

SciDyn maintains a small but steady revenue from the maintenance of VRS and
VRI platforms. There are currently several hundred of these systems still
actively installed and operational. SciDyn is currently investigating the
need to provide a technology upgrade to customers using these traditional
platforms.

Product Development

New applications are also being investigated within our product development
team. We believe that new vertical markets exist and can be penetrated with
ongoing platform enhancements.  We believe that the robust capabilities of
our current technology along with the ability to integrate a voice over
packet interface can combine traditional network systems with new market
requirements.

SciDyn's products have primarily been designed and developed by its internal
engineering staff. SciDyn 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 SciDyn to maintain its competitive position. SciDyn 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.

SciDyn 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, the MinuteMan pre-paid card system, and
the IntegratorC-2000(R) Series of IP Telephony gateway products. Management
believes that the product design strategy will keep SciDyn competitive in
the changing communications marketplace.

-8-
<PAGE>

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.

SciDyn continues to market the VFX-250S products in markets where ISDN and
leased-line services are not available or are cost prohibitive. As Frame
Relay becomes more prolific, so does the need for value added services to
maximize the efficiency of the network.

In June, a contract was signed with Mercury Corporation for exclusive rights
to distribute the VFX within Korea. The first systems have been shipped and
are currently undergoing the approval process in Korea.  We have had
additional sales in Germany, China, Mexico, Brazil, Peru and Canada,
extending the reach of the VFX across six continents. We expect continued
sales from these opportunities to proceed steadily throughout the year.

Error Correction Algorithm

In 1999, SciDyn 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 (FEC) is designed to reduce costly retransmission and can
be utilized across various data transport mediums.

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.

We intended to make the patent available to others on a royalty basis.
SciDyn has explored the use of its FEC patent with several entities during
the past few years.  We have continually been advised that the prime
difficulty of incorporating this new method of Error Correction is that it
is so different in approach and incompatible with the long used Reed-Solomon
Error correction system.  It is difficult to supplant Reed-Solomon,
particularly in today's Telecom environment.  In spite of the advantages of
lower cost, smaller footprint, because of fewer components, and the inherent
better correction performance, uprooting R-S would be a major undertaking.
The SciDyn FEC must be at both ends of the data stream. This, in turn, means
that only new installations are candidates for the Company's system.

To date a suitable entity has not been identified to exploit this new
technology in the near term.  SciDyn's near term strategy and capital
priorities preclude it from investing additional time and funds into
exploiting this patent independently. As stated in previous reports its
carrying value of $89,700 has been written off.  SciDyn believes that the
underlying patent may still have practical applications.


-9-
<PAGE>


RESULTS OF OPERATIONS
---------------------

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

Nine Months ended September 30, 2002 (unaudited) compared to the Nine
Months ended September 30, 2001 (unaudited).


                                                     Nine Months Ended
                                                        September 30,
                                                   2002            2001
                                                   ----            ----

           Sales                                 $812,143        $506,134

           Net (Loss)                          (1,964,739)     (3,797,646)

           Net (Loss) Per Share                    $(0.06)         $(0.21)


                                    OPERATING EXPENSES       PERCENT OF SALES

                                      2002        2001         2002      2001
                                      ----        ----         ----      ----

          Cost of Goods Sold     $  357,611   $ 381,509          44%      75%

          Research & Development    593,707   1,107,916          73%     219%

          Sales, General & Admin  1,483,794   2,560,369         183%     505%

          Total Operating Costs
          and Expenses           $2,435,112  $4,049,794         300%     799%



Sales for the nine months ended September 30, 2002 were $812,143 an increase
of $306,009 from sales of $506,134 for the nine months ended September 30,
2001. Our revenue in 2002 was predominantly derived from the Commander
Product Line with sales of the VFX Product Line.

Cost of Goods Sold decreased to $357,611 in the nine months ended September
30, 2002 from $381,509 in the corresponding nine months ended September 30,
2001.  The decrease in the cost of goods sold was related to the decrease in
overhead.  The percentage decrease of cost of goods sold as a percentage of
sales was due to the increase in sales and improved margins on the Commander
and VFX product lines.

Research & Development expenses decreased to $593,707 in the nine months
ended September 30, 2002 as compared to $1,107,916 in the comparable nine
months ended September 30, 2001.  The decrease in research and development
expenses during the first nine months of 2002 was due to the reduction in
the development staff for the IP Telephony Integrator product line.  The
sales revenue potential of the IP product line was long term and we had to
reduce our expenses to survive in this very difficult market place.  We
believe that continual enhancements of our products will be required to
enable SciDyn to maintain its competitive position. SciDyn intends to focus
its principal future product development efforts on developing new,
innovative, technical products and updating existing products in the
communications arena which will enable the Company to explore other
established markets that are considered "safe" from the telecom disruption
currently facing the industry.
One such market is the pre-paid and debit calling card industry.   In June,
we introduced the MinuteMan Calling Card/Billing System, which is described
above in the product section.

-10-
<PAGE>

Sales, General & Administrative expenses decreased to $1,483,794 in the nine
months ended September 30, 2002, compared to $2,560,369 in the nine months
ended September 30, 2001.  The decrease is related to a reduction in force
and other cost saving initiatives.

Interest Expense in the first nine months ended September 30, 2002 is
interest accrued on our convertible notes, paid on the line of credit and
the interest due for the loans from two stockholders.

Finance Expense in the first nine months ended September 30, 2002 was
$311,193.  The finance expense includes $216,819 relating to the recognition
of a debt discount resulting from a beneficial conversion feature embedded
in the convertible notes issued between February 6, 2002 and October 16,
2002.  The finance expense also includes the amortization of the finance
cost.

Per Emerging Issues Task Force (EITF) Number 98-5, "Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios," this beneficial conversion feature was
assigned an intrinsic value of  $216,819, as calculated under the provisions
of the EITF. This amount was immediately expensed, as the Notes were
convertible into common shares of the Company at the time of the signing of
the Agreement.


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 September 30, 2002 (unaudited) compared to the Three
Months ended September 30, 2001 (unaudited).

                                                    Three Months Ended
                                                       September 30,
                                                   2002            2001
                                                   ----            ----

           Sales                                 $156,266        $133,521

           Net (Loss)                            (570,227)     (1,059,917)

           Net (Loss) Per Share                    $(0.02)         $(0.06)


                                    OPERATING EXPENSES       PERCENT OF SALES

                                      2002        2001         2002      2001
                                      ----        ----         ----      ----

          Cost of Goods Sold     $   80,969  $  92,983           52%      70%

          Research & Development    170,636     353,126         109%     264%

          Sales, General & Admin    394,649     719,229         253%     539%

          Total Operating Costs
          and Expenses           $  646,254  $1,165,338         414%     873%

-11-

<PAGE>

Sales for the three months ended September 30, 2002 were $156,266 an
increase of $22,745 from sales of $133,521 for the three months ended
September 30, 2001. Our revenue in the three months ended September 2002 was
predominantly derived from the Commander Product Line with sales of the VFX
Product Line progressively increasing.   Contributing factors to the sales
performance in the third quarter ended September 30, 2002 were the overall
reduction in capital spending for products and services in the telecom
industry and the continued economic downturn. The sales results in the third
quarter of 2001 were due to a combination of the slowdown in
telecommunications spending and the loss of the Cascadent contract.

Cost of Goods Sold decreased to $80,969 in the three months ended September
30, 2002 from $92,983 in the corresponding three months ended September 30,
2001.  The decrease in the cost of goods sold was related to the decrease in
overhead.  The percentage decrease of cost of goods sold as a percentage of
sales was due to the increase in sales and improved margins on the
Commander.

Research & Development expenses decreased to $170,636 in the three months
ended September 30, 2002 as compared to $353,126 in the comparable three
months ended September 30, 2001.  The decrease in research and development
expenses during the three months ended September 2002 was due to the
reduction in the development staff for the IP Telephony Integrator product
line.  The sales revenue potential of the IP product line was long term and
we had to reduce our expenses to survive in this very difficult market place.
We believe that continual enhancements of our products will be required to
enable SciDyn to maintain its competitive position. SciDyn intends to focus
its principal future product development efforts on developing new,
innovative, technical products, updating existing products in the
communications arena, which will enable us to explore other established
markets.  The MinuteMan Calling Card/Billing System, which is described above
in the product section, was introduced in June to address the pre-paid and
debit calling card industry.


Sales, General & Administrative expenses decreased to $394,649 in the three
months ended September 30, 2002, compared to $719,229 in the three months
ended September 30, 2001.  The decrease is related to a reduction in force
and other cost saving initiatives that were implemented.


Interest Expense is interest accrued on our convertible notes, paid on the
line of credit and the interest due for the loans from the two stockholders.


Finance Expense in the three months ended September 30, 2002 was $119,989.
The finance expense includes $81,642 relating to the recognition of a debt
discount resulting from a beneficial conversion feature embedded in the
convertible note issued between July 5, 2002 and October 16, 2002.  The
finance expense also includes the amortization of the finance cost.

Per Emerging Issues Task Force (EITF) Number 98-5, "Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios," this beneficial conversion feature was
assigned an intrinsic value of $81,642, as calculated under the provisions
of the EITF. This amount was immediately expensed, as the Notes were
convertible into common shares of the Company at the time of the signing of
the Agreement.


-12-
<PAGE>


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

Cash and cash equivalents decreased to $12,457 for the nine months ended
September 30, 2002 from $17,075 at December 31, 2001.  Net cash used for
operating activities was $908,699 during the nine months ended September 30,
2002 compared to $2,486,852 in the corresponding nine months ended September
30, 2001.

Net cash used in investing activities was $133,455 for the nine months ended
September 30, 2002 compared to $120,062 in the corresponding nine months
ended September 30, 2001.

Net cash provided by financing activities in the nine months ended September
30, 2002 amounted to $1,037,536.  This compares to $1,413,226 in the
corresponding nine months ended September 30, 2001.

The cash requirements for funding our operations have greatly exceeded cash
flows from operations. We have satisfied our capital needs primarily through
issuance of convertible debentures and equity financing.   Our liabilities
consist of over extended accounts payable, arrearages to the landlord and we
are in default on the capital lease obligation.   We are attempting to
negotiate payment arrangements with our vendors, landlord and an alternate
arrangement with the leasing company.  We cannot guarantee that any of these
discussions will be successful.   If we are unable to obtain successful
negotiations, our business may well be severely affected.

The short-term loan payable consists of loans from two stockholders.  One
stockholder has exchanged debt for equity.  The equipment against the
customer deposits have not been shipped to date as the customer has two
delivered systems they have not yet deployed.

The bank line of credit has been converted to a loan and shall be repaid
over a term of three years during which we shall make equal monthly payments
of $3,046.79 each, including interest, which for the purpose of maintaining
level monthly payments has been calculated at the assumed rate of 6.25% per
annum.  Monthly payments shall commence on the tenth (10th) day of July 2002
and continue on the same day of each month thereafter during the term with a
final payment to be due and payable on the tenth (10th) day of June 2005.
This final payment shall consist of all unpaid principal and any interest
which shall have accrued thereon.

We are seeking and continually investigating other business ventures and
strategic relationships that may have applications directly related to our
product offerings. Due to general economic conditions, rapid technological
advances being made in the telecom industry and shortages of available
capital we believe other companies will be seeking joint ventures and
partnerships to augment their sales potential. We anticipate that we may be
able to participate in only limited potential business ventures because we
have nominal assets and limited financial resources. However, we believe
perceived benefits of our technology will provide the interest to
implementing joint ventures.

Our failure to develop strategic relationships could inhibit our ability to
grow. We believe that, in order to market our technology, we need to enter
into strategic relationships and business ventures to develop commercial
applications of our technology directed at other vertical markets. We intend
to concentrate on identifying preliminary prospective business
opportunities, which may be brought to our attention through present
affiliations and relationships. We do not presently have any agreements
relating to strategic relationships, we may never enter into such
agreements, and our failure to develop such relationships could impair our
ability to grow.

We may be unable to respond to the rapid technological changes in our
industry. Rapidly changing technologies, frequent new product and service
introductions and evolving industry standards characterize the telecom and
telecommunications industries. Our future success will depend on our ability
to adapt to rapidly changing technologies by continually improving the
performance, features and reliability of our services, particularly with
respect to other companies.

The sales revenue shortfall has greatly impacted cash on hand. SciDyn's
currently anticipated levels of revenue and cash flow are subject to many
uncertainties and cannot be assured. In order to have sufficient cash to
meet our anticipated cash requirements for the next twelve months we must
increase sales to provide cash flow from operations. We have reduced our
expenses and continue to investigate further cost cutting initiatives.
However, SciDyn does not have sufficient cash on hand to continue its
operations without successfully raising additional funds to implement the
business plan. The inability to generate sufficient cash from operations or
to obtain the required additional funds could require SciDyn to reduce or
curtail operations. While negotiations are underway to secure additional
funds, SciDyn cannot guarantee that such negotiations will be successful.

On August 21, 2002, we were notified by a note holder, Laurus Master Fund,
Ltd., that we are in default on our notes because we do not have enough shares
of common stock registered or authorized to convert such notes into shares of
common stock if requested.  Laurus Master Fund, Ltd. has orally indicated to
us that it will not take action at this time and declare all sums under such
notes due immediately if we increase our authorized common stock and file a
registration statement covering the shares of common stock underlying all of
the notes we issued to Laurus Master Fund, Ltd.  In response to such request,
we have filed a definitive proxy to increase our authorized common stock and
plan on filing a registration statement to cover the shares of common stock
underlying the Laurus notes by early December.


Forward Looking Statements
--------------------------

The Company is making this statement in order to satisfy the "safe harbor"
provisions contained in the Private Securities Litigation Reform Act of
1995.

This Form 10-QSB includes forward-looking statements relating to the
business of SciDyn. Forward-looking statements contained herein or in other
statements made by SciDyn are made based on management's expectations and
beliefs concerning future events impacting SciDyn and are subject to
uncertainties and factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of which are
beyond the control of the Company, that could cause actual results of the
Company to differ materially from those matters expressed in or implied by
forward-looking statements. The Company believes that the following factors,
among others, could affect its future performance and cause actual results
of the Company to differ materially from those expressed in or implied by
forward-looking statements made by or on behalf of the Company:  (a) the
effect of technological changes; (b) increases in or unexpected losses; (c)
increased competition; (d) fluctuations in the costs to operate the
business; (e) uninsurable risks; and (f) general economic conditions.



Item 3.	CONTROLS AND PROCEDURES.

As of September 30, 2002, an evaluation was performed under the supervision
and with the participation of the Company's management, including the
Principal Executive Officer and the Principal Accounting Officer, of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures.  Based on that evaluation, the Company's
management, including the Principal Executive Officer and the Principal
Accounting Officer, concluded that the Company's disclosure controls and
procedures were effective as of September 30, 2002.  There have been no
significant changes in the Company's internal controls or in other factors
that could significantly affect internal controls subsequent to
September 30, 2002.

-14-
<PAGE>


PART II. OTHER INFORMATION

SCIENCE DYNAMICS CORPORATION AND SUBSIDIARIES
---------------------------------------------

Item 1. Legal Proceedings

        No material developments.

Item 2. Changes in Securities

RECENT SALES OF UNREGISTERED SECURITIES

       The securities described below represent our securities sold by us for
       the period ending September 30, 2002 that were not registered under
       the Securities Act of 1933, as amended, (the "Securities Act") all of
       which were issued by us pursuant to exemptions under the Securities
       Act. Underwriters were involved in none of these transactions.

       Private Placements of Common Stock and Warrants for Cash

       None.

       Sales of Debt and Warrants for Cash

       From January 1, 2002 to September 30, 2002, we entered into securities
       purchase agreements with one accredited investor, Laurus Master Fund,
       Ltd. for the issuance of 8% convertible debentures in the aggregate
       amount of $1,164,853.


               Date                 Conv Notes
            -------------------------------------
             2/6/2002              $    50,000
             2/8/2002              $    94,000
            2/13/2002              $    30,000
            2/20/2002              $   131,500
            3/25/2002              $   147,380
            3/27/2002              $    98,800
            3/28/2002              $    75,250
             4/1/2002              $    35,950
            6/20/2002              $   106,000
             7/5/2002              $   105,000
            7/12/2002              $    40,000
            7/23/2002              $    45,000
            7/29/2002              $   100,000
             8/5/2002              $    56,000
             8/8/2002              $    49,973


             Total 2002:           $ 1,164,853
            -------------------------------------


-15-
<PAGE>

       The debentures are convertible into common stock at a conversion price
       of the lower of 85% of the average of the three lowest closing bid
       prices for the common stock thirty days prior to the closing date or
       85% of the average of the three lowest closing bid prices for the
       common stock thirty days prior to conversion.  We paid a fund
       management fee of 8%.  The offering of convertible debentures was
       exempt from registration under Rule 506 of Regulation D and under
       Section 4(2) of the Securities Act. No advertising or general
       solicitation was employed in offering the securities. All persons were
       accredited investors, represented that they were capable of analyzing
       the merits and risks of their investment.

       Option Grants

       None.

       Issuances of Stock for Services or in Satisfaction of Obligations

       None.


Item 3. Defaults Upon Senior Securities

        On August 21, 2002, we were notified by a note holder, Laurus Master
        Fund, Ltd., that we are in default on our notes because we do not
        have enough shares of common stock registered or authorized to
        convert such notes into shares of common stock if requested.  Laurus
        Master Fund, Ltd. has orally indicated to us that it will not take
        action at this time and declare all sums under such notes due
        immediately if we increase our authorized common stock and file a
        registration statement covering the shares of common stock underlying
        all of the notes we issued to Laurus Master Fund, Ltd.  In response
        to such request, we have filed a definitive proxy to increase our
        authorized common stock and plan on filing a registration statement
        to cover the shares of common stock underlying the Laurus notes by
        early December.

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

        None.

Item 5. Other Information

        On October 16, 2002, we entered into securities purchase agreement
        with one accredited investor, Laurus Master Fund, Ltd. for the
        issuance of 8% convertible debenture in the amount of $66,667.  The
        debenture is convertible into common stock at a conversion price of
        the lower of 85% of the average of the three lowest closing bid
        prices for the common stock thirty days prior to the closing date or
        85% of the average of the three lowest closing bid prices for the
        common stock thirty days prior to conversion.  We paid a fund
        management fee of 8%.  In addition, we entered into a Security
        Agreement with Laurus Master Fund, Ltd, in order to secure all of
        our obligations to it.  Pursuant to this Security Agreement, we
        granted a security interest in all of our assets, including the
        following: all accounts, inventory, equipment, goods, documents,
        instruments, contract rights, general intangibles, chattel paper,
        supporting obligations, investment property, letter-of-credit right,
        and trademarks and trade styles.

        The offering of the convertible debenture was exempt from
        registration under Rule 506 of Regulation D and under Section 4(2)
        of the Securities Act. No advertising or general solicitation was
        employed in offering the securities. All persons were accredited
        investors, represented that they were capable of analyzing the
        merits and risks of their investment.

-16-
<PAGE>


Item 6. Exhibits and Reports


(a)     Exhibits.
Exhibit Number           Description
--------------           -----------

10.1                     Security Agreement with Laurus Master Fund, Ltd.

99.1                     Certification of the Chief Executive Officer of
                         Science Dynamics Corporation Pursuant to 18
                         U.S.C. Section 1350, As Adopted Pursuant to Section
                         906 of the Sarbanes-Oxley Act of 2002.

99.2                     Certification of the Chief Financial Officer of
                         Science Dynamics Corporation Pursuant to 18
                         U.S.C. Section 1350, As Adopted Pursuant to Section
                         906 of the Sarbanes-Oxley Act of 2002.

(b) No reports on Form 8-K were filed during the fiscal quarter ended
    September 30, 2002.


-17-
<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
       ---------------------
       CEO/President

DATED: November 13,2002
       ----------------


In accordance with the Securities 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              November 13, 2002
        ---------------------   Chairman of the Board      -----------------
        Alan C. Bashforth       Secretary


BY:     /s/ Joy C. Hartman      CFO                        November 13, 2002
        ---------------------                              -----------------
        Joy C. Hartman


-18-
<PAGE>


                                 CERTIFICATION

    I, Alan C. Bashforth, CEO and President, certify that:

1.  I have reviewed this quarterly report on Form 10-QSB of Science Dynamics
    Corporation;

2.  Based on my knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in all
    material respects the financial condition, results of operations and cash
    flows of the registrant as of, and for, the periods presented in this
    quarterly report;

4.  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as
    defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
    have:

a)  designed such disclosure controls and procedures to ensure that
    material information relating to the registrant, including its
    consolidated subsidiaries, is made known to us by others within those
    entities, particularly during the period in which this quarterly
    report is being prepared;

b)  evaluated the effectiveness of the registrant's disclosure controls and
    procedures as of a date within 90 days prior to the filing date of this
    quarterly report (the "Evaluation Date"); and

c)  presented in this quarterly report our conclusions about the
    effectiveness of the disclosure controls and procedures based on our
    evaluation as of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based
    on our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's Board of Directors (or persons performing the
    equivalent functions):

a)  all significant deficiencies in the design or operation of
    internal controls which could adversely affect the registrant's
    ability to record, process, summarize and report financial data and
    have identified for the registrant's auditors any material weaknesses
    in internal controls; and

b)  any fraud, whether or not material, that involves management or
    other employees who have a significant role in the registrant's
    internal controls; and

6.  The registrant's other certifying officers and I have indicated in this
    quarterly report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies and material
    weaknesses.

November 13, 2002

/s/Alan C. Bashforth, CEO and President
Alan C. Bashforth, CEO and President


-19-
<PAGE>


                            CERTIFICATION

    I, Joy C. Hartman, Chief Financial Officer, certify that:

1.  I have reviewed this quarterly report on Form 10-QSB of Science Dynamics
    Corporation;

2.  Based on my knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in all
    material respects the financial condition, results of operations and cash
    flows of the registrant as of, and for, the periods presented in this
    quarterly report;

4.  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as
    defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
    have:

a)  designed such disclosure controls and procedures to ensure that
    material information relating to the registrant, including its
    consolidated subsidiaries, is made known to us by others within those
    entities, particularly during the period in which this quarterly
    report is being prepared;

b)  evaluated the effectiveness of the registrant's disclosure controls and
    procedures as of a date within 90 days prior to the filing date of this
    quarterly report (the "Evaluation Date"); and

c)  presented in this quarterly report our conclusions about the
    effectiveness of the disclosure controls and procedures based on our
    evaluation as of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based
    on our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's Board of Directors (or persons performing the
    equivalent functions):

a)  all significant deficiencies in the design or operation of
    internal controls which could adversely affect the registrant's
    ability to record, process, summarize and report financial data and
    have identified for the registrant's auditors any material weaknesses
    in internal controls; and

b)  any fraud, whether or not material, that involves management or
    other employees who have a significant role in the registrant's
    internal controls; and

6.  The registrant's other certifying officers and I have indicated in this
    quarterly report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies and material
    weaknesses.


November 13, 2002


/s/ Joy C. Hartman
Joy C. Hartman, Chief Financial Officer

-20-