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, 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.)


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

                      (    856     )     424-0068
          -----------------------------------------------------
                       (Issuer's telephone number)

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.    Yes [x]     No [ ]


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

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

                  APPLICABLE ONLY TO CORPORATE ISSUERS

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


         05/13/2002    29,763,701 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, 2002        1
                 (unaudited)and December 31, 2001 (audited)

                 Consolidated Statements of Operations for three         2
                 months ended March 31, 2002 (unaudited) and three
                 months ended March 31, 2001 (unaudited)

                 Consolidated Statements of Cash Flows for three         3
                 months ended March 31, 2002 (unaudited) and three
                 months ended March 31, 2001 (unaudited)

                 Notes to Consolidated Financial Statements              4

         Item 2. Management's Discussion and Analysis of Financial       4 - 12
                 Condition and Results of Operations

PART II. OTHER INFORMATION

         Item 1. Legal Proceedings                                       13

         Item 2. Changes in Securities                                   13

         Item 3. Defaults upon Senior Securities                         14

         Item 4. Submission of Matters to Vote of Security Holders       14

         Item 5. Other Information                                       14

         Item 6. Exhibits and Reports                                    14

         Item 7. Signatures                                              15


<PAGE>

<TABLE>
                           SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                                  CONSOLIDATED BALANCE SHEETS

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

<S>                                                   <C>                     <C>
Current assets:
   Cash and cash equivalents                           $   19,413              $   17,075
   Accounts receivable - trade                            160,796                  13,234
   Accounts receivable - other                             40,000                  60,721
   Inventories                                            253,044                 310,857
   Other current assets                                    78,896                 125,446
                                                       ----------               ---------
      Total current assets                                550,149                 527,333
                                                       ----------               ---------

Property and equipment, net                               736,175                 805,727

Deferred Financing costs                                  203,214                 154,268
Other assets                                               25,363                  25,363
                                                       ----------               ---------
      Total assets                                     $1,514,901              $1,512,691
                                                       ==========               =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of capital lease obligation         $   89,180              $   69,615
   Line of Credit                                          99,535                  99,535
   Customer Deposits                                      151,114                 289,368
   Short term loan payable                                203,000                 195,000
   Accounts payable                                       836,354                 800,460
   Accrued expenses                                       241,756                 152,151
                                                       ----------               ---------
      Total current liabilities                         1,620,939               1,606,129



Long Term liabilities:
Non current portion of capital lease obligation            39,233                  58,798
Convertible Debenture                                   1,586,676               1,431,949
                                                       ----------               ---------


      Total liabilities                                $3,246,848              $3,096,876
                                                       ----------               ---------

Commitments

Shareholders' equity (deficit)
   Common stock - .01 par value,
      45,000,000 shares authorized,
      29,889,501 and 20,879,501 issued
      29,763,701 and 20,753,701 outstanding
      in 2002 and 2001 respectively.                      298,895                 208,795
   Additional paid-in capital                          15,216,380              14,681,858
   (Deficit)                                          (16,849,389)            (16,077,005)
                                                       ----------               ---------
                                                       (1,334,114)             (1,186,352)
   Common stock held in treasury,
    at cost                                              (397,833)               (397,833)
                                                       ----------               ---------
   Total shareholders' equity (deficit)                (1,731,947)             (1,584,185)
                                                       ----------               ---------
   Total liabilities and shareholders'
    Equity                                             $1,514,901              $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>

                                                       Three Months Ended March 31
                                                   2002                             2001
                                                   ----                             ----
<S>                                         <C>                              <C>

 NET SALES                                   $  469,797                       $  194,113
                                             ----------                       ----------


Operating costs and expenses:

      Cost of sales                             184,805                          136,847
      Research and development                  257,732                          420,522
      Selling, general
          and administrative                    622,325                          901,217
                                             ----------                       ----------

                                              1,064,862                        1,458,586
                                             ----------                       ----------

Operating (Loss)                               (595,065)                      (1,264,473)

Other income (expenses):
   Interest Income                                    -                            4,638
   Interest Expense                             (33,626)                               -
   Finance Expense                             (143,694)                               -
                                             ----------                       ----------

Net (Loss)                                  $  (772,385)                     $(1,259,835)
                                             ==========                       ==========



Net(Loss)per common share
  basic and diluted                         $     (0.03)                     $     (0.07)
                                             ==========                       ==========



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>
                                                             Three Months Ended March 31
                                                             2002                   2001
                                                             ----                   ----
<S>                                                    <C>                  <C>
Cash flows from operating activities:
   Net (Loss)                                           $  (772,385)         $(1,259,835)
                                                        -----------          -----------

Adjustments to reconcile net (loss) to
 net cash used for
 operating activities:
   Depreciation                                              83,007               62,363
   Interest expense non cash                                116,470                    -
   Amortization of capitalized software                           -               75,000
Changes in operating assets and liabilities:
   (Increase) decrease in:
    Accounts receivable                                    (147,562)               9,911
    Other receivable                                         20,721              (13,060)
    Inventories                                              57,813                4,156
    Other current assets                                     48,550              (18,887)
   Decrease in:
     Accounts Payable and
       accrued expenses                                     125,498               84,085
       customer deposits                                   (138,254)                   -
                                                        -----------          -----------

Total adjustments                                           166,243              203,568
                                                        -----------          -----------

 Net cash used for
  operating activities                                     (606,142)          (1,056,267)
                                                        -----------          -----------

Cash flows from investing activities:

 Purchase of property and equipment - net                   (13,455)             (69,247)
                                                        -----------          -----------

   Net cash used in investing activities                    (13,455)             (69,247)
                                                        -----------          -----------

Cash flows from financing activities:
 Increase (decrease)in
  Issuance of Convertible Debt                              613,935                    -
  Short term loan Payable                                     8,000                    -
  Payment on capitalized lease                                    -              (18,001)
                                                        -----------          -----------

   Net cash provided
    by financing activities                                 621,935              (18,001)
                                                        -----------          -----------

Net increase (decrease) in
 cash and cash equivalents                                    2,338           (1,143,515)

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

Cash and cash equivalents -
 end of period                                               19,413              208,126


    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 THREE MONTHS ENDED MARCH 31, 2002 AND FOR
        THE THREE MONTHS ENDED MARCH 31, 2001.

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

During calendar year 2001 the global communications market experienced a
tremendous slowdown. Many communications companies, including both traditional
voice and emerging voice/data network carriers, have reduced capital asset
spending to help strengthen their cash flow and profitability. As a result of
this change the potential for growth in the Internet Telephony market has
weakened, and is certainly delayed.

Science Dynamics Corporation (SciDyn) reacted to this unforeseen economic
slowdown over the last three months by retrenching and refocusing efforts in
both the product development and marketing teams to strengthen our position in
the area of inmate call control.  The Commander call control system is our
principal product for the inmate-calling marketplace.  Conscious of the
reduction in capital asset spending, SciDyn has initiated an alternative
to a capital outlay by offering various pricing options to our customers such
as Transaction Based Pricing  in which the Company will derive revenue on a
per call basis.

SciDyn has been developing the necessary back-office operation systems
necessary to provide the complete offering required by many inmate call
control companies in today's market. Back-office services include Billed
Number Screening (BNS), billing data collection, and customer support. Our
system design incorporates various protocols allowing connections of both
SciDyn's products as well as connections to our competitors' products.
Additional services will be introduced over time to increase the value add to
our customers.  Typically, these back-office services are charged on a monthly
or transaction basis and apply to calls made through Commander platforms
installed in the field.  This introduces a new revenue producing operation
that can extend the value of a typical system beyond the initial equipment
sale to a potential three to five year revenue source.

During January 2002, Alan Bashforth evaluated the current business
opportunities and as a result SciDyn implemented overhead reductions.  The
focus was to concentrate on all potential revenue opportunities and eliminate
those that could not produce revenue in the short term.  SciDyn undertook
decisive steps to restructure the company's business and reduce our cost
structure.  SciDyn executed a reduction in force which affected all areas of
SciDyn including upper management, sales and engineering, specifically
the development staff for the IP Telephony Integrator product line.  The sales
revenue potential of the IP product line was deemed to have a long-term sales
cycle with no short-term revenue opportunity.

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 the independent service providers.
This is a segment of the industry that had previously been overlooked as
development centered on the needs of the large Local Exchange Carrier (LEC)
customers.

SciDyn has engaged several upcoming independent inmate call control service
providers that in the past year have been successful in displacing the local
LEC competition in contract awards that were not possible without the strength
and reputation of a system such as the Commander.

-5-
<PAGE>

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.

SciDyn expects operating losses and negative cash flow for the foreseeable
future as we must obtain orders, introduce additional services and create
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 develop
strategic relationships.

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

PRODUCTS
--------

IP Telephony

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

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

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

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

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

-6-
<PAGE>

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).
Currently, development activity in this area has been slowed commensurate with
the overall slowdown in the Voice over IP industry. SciDyn will keep this
product available to meet the needs of this market when activity once again
increases.

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

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

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

In 2001, SciDyn produced several major software releases and updates for
the Commander products that were in keeping with inmate market trends and
current customer requests. Many key enhancements and software additions have
been introduced to SciDyn's solution suite. One addition is DebitCall, a
pre-paid debit calling system that is integrated with the Commander call
control system. Another addition is Live Monitoring. Live Monitoring allows for
real-time monitoring of all inmate telephone activity. Innovative voice
streaming technology delivers audio monitoring to PC speakers with the ease of
Point, Click & Listen functionality. Additionally, integration with several
industry leading recording devices has been provided.

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.

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.

-7-
<PAGE>

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.

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. As Frame Relay becomes more prolific,
so does the need for value added services to maximize the efficiency of the
network.

Successful trials have been completed in China, Korea and Mexico. Contract
negotiations are currently in progress with a large distributor in Korea. We
expect sales from these opportunities to proceed steadily throughout the year.
Due to the resurgence in video conferencing as an alternative to air travel
we anticipate an overall increase in sales over the next twelve months.

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 is designed to reduce costly retransmission and can be
utilized across various data transport mediums.

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

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

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

-8-
<PAGE>


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 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 Develpoment

New applications are also being investigated within our product development
team. We believe that new vertical markets exist and can be penetrated with on
going platform enhancements. One such area is a former market for SciDyn, the
network announcer platform. SciDyn still maintains a large number of legacy
systems in this market. 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, and the IntegratorC-2000(R) Series of
IP Telephony gateway products. Management believes that the product design
strategy will keep SciDyn competitive in the emerging Internet Telephony market.


-9-
<PAGE>

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

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

Three Months ended March 31, 2002 (unaudited) compared to the Three Months
ended March 31, 2001 (unaudited).


                                                    Three Months Ended
                                                         March 31,
                                                   2002            2001
                                                   ----            ----

           Sales                                  469,797         194,113

           Net (Loss)                            (772,385)     (1,259,835)

           Net (Loss) Per Share                    $(0.03)         $(0.07)


                                    OPERATING EXPENSES       PERCENT OF SALES

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

          Cost of Goods Sold        184,805    136,847           39%      70%

          Research & Development    257,732     420,522          55%     217%

          Sales, General & Admin    622,325     901,217         133%     464%

          Total Operating Costs
          and Expenses           $1,064,862  $1,458,586         227%     751%



Sales for the three months ended March 31, 2002 were $469,797 an increase of
$275,684 from sales of $194,113 for the three months ended March 31, 2001. The
Company's revenue in 2002 was predominantly derived from the Commander Product
Line with sales of the VFX Product Line progressively increasing.  The sales
results in the first quarter of 2001 were the result of the loss of the
Cascadent contract.

Cost of Goods sold increased to $ 184,805 in the three months ended
March 31, 2002 from $136,847 in the corresponding three months ended
March 31, 2001.  The increase in the cost of goods sold was directly related
to the increase in sales revenue.  The percentage decrease of cost of good
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 $257,732 in the three months
ended March 31, 2002 as compared to $420,522 in the comparable three months
ended March 31, 2001.  The decrease in research and development expenses during
the first three 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 the Company had to reduce
its 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 to enable the Company
to take advantage of opportunities resulting from the expected direction of
technology.

-10-
<PAGE>

Sales, General & Administrative expenses decreased to $622,325 in the three
months ended March 31, 2002, compared to $901,217 in the three months ended
March 31, 2001. The decrease is related to a reduction in force and other
cost saving initiatives that were implemented during the quarter ending
March 31,2002.

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

Finance Expense in the first three months ended March 31, 2002 was $143,694.
The finance expense includes $116,470 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 April 1, 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  $116,470, 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.

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

Cash and cash equivalents decreased to $19,413 for the three months ended
March 31, 2002 from $208,126 at March 31, 2001.  Net cash used for operating
activities was $606,142 during the three months ended March 31, 2002
compared to $1,056,267 in the corresponding three months ended
March 31, 2001.

Net cash used in investing activities was $13,455 for the three months
ended March 31, 2002 compared to $69,247 in the corresponding three months
ended March 31, 2001. This decrease was primarily attributable to a
reduction in capital expenditures.

Net cash provided by financing activities in the three months ended
March 31, 2002 amounted to $621,935.  This compares to $18,001 in the
corresponding three months ended March 31, 2001.  Cash used in financing
activities in the previous period represented payments on capital lease
obligations.

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. Our liabilities consist of over extended
accounts payable and we attempt to negotiate payment arrangements with our
vendors. The short-term loan payable is loans from two stockholders. Initial
discussions are in process to exchange debt for equity. The bank line of credit
is due for renewal in June and a meeting will be arranged to discuss the
continuance of the line of credit. The Company cannot guarantee that any of
these discussions will be successful.  If we are unable to negotiate with our
vendors, the stockholders and the bank, our business may well be severely
affected.  Equipment against the customer deposits have been shipped and the
remainder is anticipated to be completed in the second quarter.

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.

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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.


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.


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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 March 31, 2002 that were not registered under the Securities
Act of 1933, as amended, 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 April 1, 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 $662,880.

               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

             Total 2002:           $ 662,880
            -------------------------------------

The debentures were 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.  The commission for the transactions was 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.


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<PAGE>

Item 3. Defaults Upon Senior Securities

None

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

None.

Item 5. Other Information

None

Item 6. Exhibits and Reports

None


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<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: May 14 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              May 14, 2002
        ---------------------   Chairman of the Board
        Alan C. Bashforth       Secretary


BY:     /s/ Joy C. Hartman      CFO                        May 14, 2002
        ---------------------
        Joy C. Hartman


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