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

(Mark One)

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

For the Quarterly Period Ended  June 30, 2001
                                ------------------

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

    For the transition period from ______________ to ______________

    Commission file number        010690
                             ____________________


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

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

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


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

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

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

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


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

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

                  APPLICABLE ONLY TO CORPORATE ISSUERS

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


         08/14/2001    17,783,701 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 June 30, 2001         1
                 (unaudited)and December 31, 2000 (audited)

                 Consolidated Statements of (Loss)Income for the six     2
                 months and three months ended June 30, 2001
                 (unaudited) and the six and three months ended
                 June 30, 2000 (unaudited)

                 Consolidated Statements of Cash Flows for six           3
                 months ended June 30, 2001 (unaudited) and for
                 the six months ended June 30, 2000 (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                         13

         Item 4. Submission of Matters to Vote of Security Holders       13

         Item 5. Other Information                                       13

         Item 6. Exhibits and Reports                                    13

         Item 7. Signatures                                              14

<PAGE>
<TABLE>
                                    SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                                            CONSOLIDATED BALANCE SHEETS

<CAPTION>

PART I.   FINANCIAL INFORMATION
          Item 1. Financial Statements:

                                     ASSETS
<S>                                                                              <C>                <C>
                                                                                    June 30,          December 31,
                                                                                      2001               2000
                                                                                   (Unaudited)         (Audited)
                                                                                    ---------          ----------
Current assets:
  Cash and cash equivalents                                                        $  187,774        $  1,351,641
  Accounts receivable - trade                                                         113,925             102,194
  Accounts receivable - other                                                          48,447              51,401
  Inventories                                                                          78,640              87,623
  Other current assets                                                                 67,562              84,566
                                                                                    ---------          ----------
    Total current assets                                                              496,348           1,677,425
                                                                                    ---------          ----------

Property and equipment, net                                                           974,308           1,005,364
Intangible Assets, net of accumulated
amortization of $1,350,000 in 2001 and
$1,200,000 in 2000.                                                                   150,000             300,000
Other assets                                                                           25,363              25,363
                                                                                    ---------          ----------
   Total assets                                                                    $1,646,019        $  3,008,152
                                                                                    =========          ==========


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Current portion of capital lease obligation                                      $   63,322        $     57,598
  Accounts payable                                                                    490,062             358,820
  Accrued expenses                                                                    161,646             118,059
                                                                                    ---------          ----------
   Total current liabilities                                                          715,030             534,477
                                                                                    ---------          ----------

Convertible Notes                                                                   1,200,000                   -
Non Current portion of capital lease obligation                                        90,422             128,413
                                                                                    ---------          ----------
   Total liabilities                                                                2,005,452             662,890

Commitments

Shareholders' equity -
  Common stock - .01 par value,
   45,000,000 shares authorized,
   17,783,701 issued and 17,657,901 outstanding
   in 2001 and 2000 respectively.                                                     177,837             177,837
   Additional paid-in capital                                                      14,298,021          14,266,787
   (Deficit)                                                                      (14,437,458)        (11,701,529)
                                                                                   ----------          ----------
                                                                                       38,400           2,743,095

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

   Total shareholders' (deficit)/ equity                                             (359,433)          2,345,262
                                                                                   ----------          ----------

   Total liabilities and shareholders' equity                                     $ 1,646,019         $ 3,008,152
                                                                                   ==========          ==========

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

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


                                                               Six Months Ended June 30,         Three Months Ended June 30,

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

<S>                                                          <C>             <C>                <C>               <C>
 NET SALES                                                    $  372,614      $3,547,753        $  178,501        $2,104,271
                                                              ----------      ----------        ----------         ---------


Operating costs and expenses:

      Cost of sales                                              288,526       1,284,270           151,679           712,227
      Research and development                                   754,790         526,534           334,268           270,826
      Selling, general
          and administrative                                   1,839,340       1,408,305           983,123           803,039
                                                              ----------      ----------        ----------         ---------

                                                               2,882,656       3,219,109         1,424,070         1,786,092
                                                              ----------      ----------        ----------         ---------

Operating (loss) income                                       (2,510,042)        328,644        (1,245,569)          318,179

Other (expenses):
   Interest income                                                 4,638           8,438             4,638             5,540
   Interest expense                                             (230,524)              -          (230,524)                -
                                                              ----------      ----------        ----------         ---------


Net (loss) income                                            $(2,735,928)     $  337,082       $(1,471,455)        $ 323,719
                                                              ==========      ==========        ==========         =========



Net loss per common share and net
income per share-basic and diluted                            $    (0.15)     $     0.02       $    (0.08)         $    0.02
                                                              ==========      ==========        ==========         =========


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


                                                             Six Months Ended June 30,
                                                                   2001           2000
                                                                   ----           ----

<S>                                                           <C>           <C>
Cash flows from operating activities:
 Net (loss)Income                                              $(2,735,928)  $  337,082
                                                               -----------   ----------

Adjustments to reconcile net (loss)income to
 net cash used for
 operating activities:
  Depreciation                                                     140,231       59,880
  Amortization of
  Intangible assets                                                150,000      150,000
  Interest expense                                                 212,524            -
Changes in operating assets
 and liabilities:
 (Increase) decrease in:
  Accounts receivable                                              (11,731)  (1,413,777)
  Other receivable                                                   2,954        1,962
  Inventories                                                        8,983      (31,536)
  Other current assets                                              17,004      (79,065)
  Other assets                                                           -        3,821
 Increase (decrease) in:
  Accounts Payable and
   accrued expenses                                                174,829        8,701
                                                               -----------   ----------

Total adjustments                                                  694,794   (1,300,014)
                                                               -----------   ----------
Net cash used for operating activities                          (2,041,134)    (962,932)
                                                               -----------   ----------


Cash flows from investing activities:

 Purchase of property and equipment - net                         (109,176)    (305,384)
                                                               -----------   ----------
  Net cash used in investing activities                           (109,176)    (305,384)
                                                               -----------   ----------

Cash flows from financing
 activities:
 Increase (decrease) in
  Issuance of Convertible debt, net                              1,018,710            -
  Payment on capitalized leases                                    (32,267)           -
 Issuance of common stock and warrants                                   -    1,724,057
                                                               -----------   ----------


  Net cash provided
   by financing activities                                         986,443    1,724,057
                                                               -----------   ----------

Net (decrease) increase in
 cash and cash equivalents                                      (1,163,867)     455,741

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

Cash and cash equivalents -
 end of period                                                   $ 187,774   $1,130,534
                                                               ===========   ==========


</TABLE>
-3-
<PAGE>


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

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

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

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

These interim statements should be read in conjunction with the
audited financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000.  The Company presumes that users of the interim
financial information herein have read or have access to the
audited financial statements for the preceding fiscal year and that
the adequacy of additional disclosure needed for a fair
presentation may be determined in that context. The results of
operations for any interim period are not necessarily indicative of
the results for the full year.

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

Per-share data has been computed on the basis of the weighted
average number of shares of common stock outstanding during the
period. Common equivalent shares, including warrants and stock
options, are included in the calculation of diluted earnings per
common and common equivalent shares to the extent that they are
dilutive and excluded to the extent they are anti-dilutive.


Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
        RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 2001 AND FOR
        THE THREE MONTHS ENDED JUNE 30, 2001.

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

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

-4-
<PAGE>

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

During 2000, the Company changed the size and structure of its sales force.
The sales team has increased from two UK based sales people in 1999 to a 8-
person team (6 in the US and 2 in the UK) led by our new Vice President of
Sales and Marketing.  This team was fully in place by October 2000.  Given
typical sales lead times and the current state of the Telco market, we do
not anticipate significant revenues to be generated by the new team until
the second half of 2001.

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

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

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

PRODUCTS
--------

IP Telephony

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

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

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

-5-
<PAGE>

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

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

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

Commander Inmate Telephone Control System (ITCS)

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

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

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

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

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


-6-
<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.

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

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

Three countrywide frame relay networks are presently under construction in
China. Trials are continuing and we continue to anticipate possible business
opportunities.  With some expected further development of the VFX family and
some investment in the promotion of the product line we continue to
anticipate an overall increase in sales over the next twelve months.

Error Correction Algorithm

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

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


Voice Response System

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

Future Product Development

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

-7-
<PAGE>

We believe that continual enhancements of our products will be required to
enable the Company to maintain its competitive position. The Company intends
to focus its principal future product development efforts on developing new,
innovative, technical products and updating existing products in the
communications arena to enable the Company to take advantage of
opportunities resulting from the expected direction of technology.
The Company continues to refine its core BubbleLINK(R) software architecture.
This software architecture provides the foundation for hosting applications
for various Telephony and transaction oriented processes.  Currently the
BubbleLINK(R) architecture supports existing Company products such as the
Commander family of inmate products, and the IntegratorC-2000(R) Series of IP
Telephony gateway products.  Management believes that the product design
strategy will keep the Company competitive.



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

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

        Six Months ended June 30, 2001 (unaudited) compared to the
        Six Months ended June 30, 2000 (unaudited).

                                                    Six Months Ended
                                                       June 30,
                                                   2001            2000
                                                   ----            ----
           Sales                                  372,614       3,547,753
           Net Loss / Income                   (2,735,928)        337,082
           Net Loss / Income Per Share             $(0.15)         $ 0.02


                                    OPERATING EXPENSES       PERCENT OF SALES

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

          Cost of Goods Sold        288,526   1,284,270         77%      36%

          Research & Development    754,790     526,534        203%      15%

          Sales, General & Admin. 1,839,340   1,408,305        494%      40%

          Total Operating Costs
          and Expenses           $2,882,656  $3,219,109        774%      91%




Sales for the six-month period ending June 30, 2001 were $372,614 a decrease
of $3,175,139 from sales of $3,547,753 for the three-month period ended June
30, 2000. The Company's revenue in 2000 was predominantly derived from the
Integrator Product Line.  Those results were due to the deployment of the
Cascadent Supply Agreement during 2000.  This Agreement was terminated
during the first quarter of 2001  upon SciDyn receiving official
notification that Cascadent was placed into receivership.  The loss of this
contract is directly related to the decrease in sales for the first half of

-8-
<PAGE>

the year.  SciDyn has received word that  Cascadent will not emerge from
receivership.  Our former president, chief executive officer and chairman of
the board, Alan Bashforth, became president of Cascadent subsequent to his
serving as an officer of Science Dynamics.  Mr. Bashforth continues to serve
as a member of our board of directors.

Cost of Goods sold decreased to $288,526 in the first six months of 2001
from $1,284,270 in the corresponding six-month period of 2000.  The decrease
in the cost of goods sold was directly related to the decrease in sales
revenue.  The percentage increase of cost of goods sold as a percentage of
sales was due to the change in mix of sales between the quarters with high
margin integrator equipment sales in 2000 compared to lower margin legacy
products and services in 2001.

Research & Development expenses increased to $754,790 in the first six
months of 2001 as compared to $526,534 in the comparable six-month period of
2000.  The increase in research and development expenses is related to
continued work on adding additional functionality to our product mix,
specifically introducing VoIP, live monitoring and recording  to our
Commander II series. We believe our success will depend, in part, on our
ability to develop and introduce new products and enhancements to our
existing products.  We continue to work on expanding our engineering team
and intend to continue to make significant investments in research and
development.

Sales, General & Administrative expenses increased to $1,839,340 in the
first six months of 2001, compared to $1,408,305 in the corresponding period
of 2000.  The increase is related to the addition of sales and
administrative staff during the second half of 2000 and increased consulting
fees during 2001.   SciDyn has increased its sales and marketing department
from 2 people in the first quarter of 2000 to eight in the second quarter of
2001. The major directive is to carry out a full-scale sales and marketing
program to bring the company above the radar screen to promote awareness and
recognition of SciDyn in the marketplace.  We expect to incur substantial
expenditures related to sales and marketing activities, the recruitment of
additional sales and marketing personnel and the expansion of our domestic
and international distribution channels.

Interest Expense increased to 230,524 for the period ended June 30, 2001 as
compared to $0 for the same period in 2000. The Company entered into a
$1,200,000 Convertible Note on May 22, 2001, this Note contained a
"beneficial conversion feature" (see the Liquidity section below for a
description of the Note).  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  $212,524, 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.  The remaining $18,000 in interest
expense is accrued interest on the Convertible Notes.

        Three Months ended June 30, 2001 (unaudited) compared to the
        Three Months ended June 30, 2000 (unaudited).

                                                    Three Months Ended
                                                         June 30,
                                                   2001            2000
                                                   ----            ----
           Sales                                  178,501       2,104,271
           Net Loss / Income                   (1,471,455)        323,719
           Net Loss / Income Per Share             $(0.08)         $ 0.02


-9-
<PAGE>

                                    OPERATING EXPENSES       PERCENT OF SALES

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

          Cost of Goods Sold        151,679     712,227         85%      34%

          Research & Development    334,268     270,826        187%      13%

          Sales, General & Admin    938,123     803,039        526%      38%

          Total Operating Costs
          and Expenses           $1,424,070  $1,786,092        798%      85%



Sales for the three-month period ending June 30, 2001 were $178,501 a
decrease of $1,925,770 from sales of $2,104,271 for the three-month period
ended June 30, 2000. The Company's revenue in 2000 was predominantly derived
from the Integrator Product Line.  The results were due the deployment of
the Cascadent Supply Agreement during 2000.  This Agreement was terminated
during the first quarter of 2001 upon SciDyn receiving official notification
that Cascadent was placed into receivership.  The loss of this contract is
directly related to the decrease in sales for the second quarter.  SciDyn
has received word that Cascadent will not emerge from receivership.  Our
former president, chief executive officer and chairman of the board, Alan
Bashforth, became president of Cascadent subsequent to his serving as an
officer of Science Dynamics.  Mr. Bashforth continues to serve as a member
of our board of directors.

Cost of Goods sold decreased to $151,679 during the second quarter of 2001
from $712,227 in the corresponding three-month period of 2000.  The decrease
in the cost of goods sold was directly related to the decrease in sales
revenue.  The percentage increase of cost of goods sold as a percentage of
sales was due to the change in mix of sales between the quarters with high
margin integrator equipment sales in 2000 compared to lower margin legacy
products and services in 2001.

Research & Development expenses increased to $334,268 during the three month
period of 2001 as compared to $270,826 in the comparable three-month period
of 2000.  The increase in research and development expenses during the first
six months of 2001 is related to continued work on adding additional
functionality to our product mix, specifically introducing VoIP, live
monitoring and recording to our Commander II series. We believe our success
will depend, in part, on our ability to develop and introduce new products
and enhancements to our existing products.  We continue to work on expanding
our engineering team and intend to continue to make significant investments
in research and development.

Sales, General & Administrative expenses increased to $938,123 during the
three month period of 2001, compared to $803,039 in the corresponding period
of 2000.  The increase is related to the addition of sales and
administrative staff during the second half of 2000.  SciDyn has increased
its sales and marketing department from 2 people in the first quarter of
2000 to eight in the second quarter of 2001. The major directive is to
initiate and promote a full-scale sales and marketing program to bring the
company above the radar screen to promote awareness and recognition of
SciDyn in the marketplace.  We expect to incur substantial expenditures
related to sales and marketing activities, the recruitment of additional
sales and marketing personnel and the expansion of our domestic and
international distribution channels.

Interest Expense increased to 230,524 for the period ended June 30, 2001 as
compared to $0 for the same period in 2000. The Company entered into a
$1,200,000 Convertible Note on May 23, 2001, this Note contained a
"beneficial conversion feature"  (see the Liquidity section below for a
description of the Note).  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  $212,524, 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.  The remaining $18,000 in interest
expense is accrued interest on the Convertible Notes.

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<PAGE>


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

Cash and cash equivalents decreased to $187,774 for the period ended June
30, 2001 from $1,351,641 at December 31, 2000.  Net cash used for operating
activities was $2,041,134 for the six months period ended June 30, 2001
compared to $962,932 cash used for operating activities in the six month
period ended June 30, 2000.

Net cash used in investing activities was $109,176 during the six-month
period of 2001 compared to $305,384 in the corresponding six-month period of
2000.

On May 22, 2001, we issued $1,200,000 principal amount of 8% convertible
debentures, due May 22, 2003, to three investors pursuant to a Subscription
Agreement dated May 22, 2001.  Interest only payments are due quarterly
commencing September 30, 2001, and the principal is due in one lump sum on
May 22, 2003, or upon certain events of default.  The conversion price for
the convertible debentures is the lesser of 85% of the average of the three
lowest closing prices for the common stock for the 30 trading days prior to
but not including May 22, 2001, or 85% percent of the average of the three
lowest closing prices for the common stock for the 30 trading days prior to
but not including the conversion date. The maximum number of shares of
common stock that any subscriber or group of affiliated subscribers may own
after conversion at any given time is 4.99%.   The number of shares of
common stock issuable upon conversion of the convertible debentures is
1,470,588, based on a conversion price of $0.816 per share.  We are required
to register 200% of this amount, for a total of 2,941,176 shares.  The
actual conversion price will depend on the market price of our common stock
prior to the conversion.  In addition to the convertible debentures, we also
issued warrants to purchase 872,727 shares of common stock.  These warrants,
which expire May 22, 2006, have an exercise price of $1.4339 per share.

Net cash provided by financing activities during the six-month period ended
June 30, 2001 was $986,443 this is related to the convertible debt described
above, offset by the payment on capitalized leases.  Net cash provided by
financing for the six-month period ended June 30, 2000 was $1,724,057.  This
amount is related to the sale of 200,650 common shares at $8.50 per share
which netted $1,570,149, the finders fee from this transaction included the
issuance of 13,115 warrants to purchase common shares.  The remaining
increase in financing activities of $153,908 was related to the exercise of
stock options by employees of the Company.

We have been notified by Nasdaq that we are not in compliance with the
Marketplace rules.  A plan outlining how the Company intends to comply with
listing requirements was submitted on June 15, 2001, to date the Company has
not received word from Nasdaq as to their decision.

The sales revenue shortfall in the first six months, due to a combination of
the slowdown in telecommunications spending and the loss of the Cascadent
contract, has greatly impacted cash on hand. The Company's currently
anticipated levels of revenue and cash flow are subject to many uncertainties
and cannot be assured. The amount of funds required by the Company will depend
on many factors, including the extent and timing of sales, product costs,
engineering and customer/technical support requirements. The inability to
obtain the required financing and to generate sufficient cash from operations
could require the Company to reduce or eliminate expenditures for marketing of
its products and research and development, or curtail its operations.

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<PAGE>

Forward Looking and Cautionary Statements

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

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<PAGE>


PART II.OTHER INFORMATION

SCIENCE DYNAMICS CORPORATION AND SUBSIDIARIES
_____________________________________________

Item 1. Legal Proceedings

        No material developments

Item 2. Changes in Securities

        None.

Item 3. Defaults Upon Senior Securities

        None.

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

        None.

Item 5. Other Information

        None.

Item 6. Exhibits and Reports

       (a) Reports on Form 8-K
           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

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


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


 BY:  /s/ Robert O'Connor      Vice President and       August 14,2001
      ---------------------    Principal Financial      ---------------
      Robert O'Connor          Officer


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