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

(Mark One)

|X| QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
                                      1934

         For the Quarterly Period Ended September 30, 2004


|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

         For the transition period from ______________ to ______________

         Commission file number     000-010690


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

               Delaware                                        22-2011859
------------------------------------  ------------------------------------------
(State or other jurisdiction of             (IRS Employer Identification No.)
  incorporation or organization)

            7150 N. Park Dr, Suite 500, Pennsauken, New Jersey 08109
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (856) 910-1166
--------------------------------------------------------------------------------
                           (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 CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable date: As of December 1, 2004, the issuer
had 53,464,167 outstanding shares of Common Stock.


Transitional Small Business Disclosure Format (Check One):  Yes |_|     No |X|

--------------------------------------------------------------------------------

<PAGE>

               SCIENCE   DYNAMICS CORPORATION

<TABLE>
<CAPTION>

                                      INDEX

                                                                                                          PAGE NO.

<S>                                            <C>                                                            <C>
PART I.       FINANCIAL INFORMATION

              Item 1.    Financial Statements

                         Consolidated Balance Sheets as of September 30, 2004 (unaudited) and
                         December 31, 2003 (audited)                                                          1

                         Consolidated Statements of Operations for nine months ended
                         September 30, 2004  and September 30, 2003 (unaudited) and three months
                         ended September 30, 2004 and September 30, 2003 (unaudited)                          2

                         Consolidated Statements of Cash Flows for nine months ended
                         September 30, 2004 (unaudited) and nine months ended
                         September 30, 2003 (unaudited)                                                       3

                         Notes to Consolidated Financial Statements                                         4 - 6

              Item 2.    Management's Discussion and Analysis or Plan of Operation                          6 - 10

              Item 3.    Controls and Procedures                                                             11

PART II.      OTHER INFORMATION

              Item 1.    Legal Proceedings                                                                   11

              Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                         11

              Item 3.    Defaults upon Senior Securities                                                     11

              Item 4.    Submission of Matters to a Vote of Security Holders                                 11

              Item 5.    Other Information                                                                   11

              Item 6.    Exhibits                                                                            12

Signatures                                                                                                   13
</TABLE>


<PAGE>





PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

                  SCIENCE DYNAMICS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
                                                      September 30, 2004         December 31, 2003
                                                           Unaudited                  Audited
<S>                                                           <C>                       <C>
Current assets:
   Cash and cash equivalents                                  $   5,279              $   21,032
   Accounts receivable - trade                                  513,409                  25,879

   Inventories                                                   70,297                  76.300

   Other current assets                                           2,812                   2,812
                                                     ------------------      ------------------
      Total current assets                                      591,797                 126,023
                                                      ------------------      ------------------

Property and equipment, net                                      64,661                 149,388
Deferred Asset                                                        -                  66,847
Other assets                                                      2,812                   2,812
                                                                      -
                                                     ------------------      ------------------
      Total assets                                           $  659,270              $  345,070
                                                     ==================      ==================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
   Short term payable                                        $  231,813              $   31,860
   Customer deposits                                              5,000                  87,300

   SBA Loan                                                           -                  25,000
   Revolving Credit Line                                        227,998                 336,309
   Liabilities discontinued operations                                -                  45,953
   Loan payable stockholders                                    199,732                 163,192
   Accounts payable                                             869,993               1,062,846
   Accrued expenses                                             736,540                 443,474
   Convertible Debenture (See Note 2)                         1,198,360               1,198,360
   Subscribed Stock Payable                                           -                 200,000
                                                     ------------------      ------------------
      Total current liabilities                               3,469,436               3,594,294

Long Term liabilities:                                                -                       -
Long Term Debt                                                   87,644                 108,847
                                                     ------------------      ------------------

      Total liabilities                                       3,557,080               3,703,141
                                                     ------------------      ------------------
Shareholders' equity - (Deficit)
   Preferred stock - .01 par value
       10,000,000 shares authorized                                   -                       -
        No shares issued
   Common stock - .01 par value,
      200,000,000 and 45,000,000 shares authorized,
      51,264,167 and 41,554,454 issued
      51,138,367 and 41,428,654 outstanding
       in 2004 and 2003 respectively.                           512,642                 415,545


   Additional paid-in capital                                15,891,880              15,754,478


   (Deficit)                                                (18,904,499)            (19,130,261)
                                                     ------------------      ------------------
                                                             (2,499,977)            (2,960, 238)

   Common stock held in treasury, at cost                      (397,833)               (397,833)
                                                     ------------------      ------------------
   Total shareholders' equity (Deficit)                      (2,897,810)             (3,358,071)
                                                     ------------------      ------------------
   Total liabilities and shareholders'
    Equity                                                   $  659,270              $  345,070
                                                     ==================      ==================
</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
                                  statements.

                                       1
<PAGE>


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

                                                                       Nine months ended                 Three months ended
                                                                          September 30,                    September 30,
                                                                     2004              2003            2004             2003


<S>                                                                  <C>                <C>             <C>             <C>
 Net sales                                                           $1,740,633         $922,381        $601,427        $ 223,563
                                                                ----------------   --------------  --------------  ---------------



Operating costs and expenses:

      Cost of sales                                                     253,173          211,601          63,653           81,986
      Research and development                                          204,217          303,138          50,794           89,545
      Selling, general
          And administrative                                            964,171        1,032,282         362,911          251,652
                                                                ----------------   --------------  --------------  ---------------
                                                                      1,421,561        1,547,021         477,358          423,183

  Income (loss) from operations                                         319,072         (624,640)        124,069         (199,620)
                                                                ----------------   --------------  --------------  ---------------

     Other Income (expenses)
     NJ NOL Refund                                                            -          146,000               -          146,000
     Other Income                                                        82,000                -          22,000                -
     Interest Expense                                                  (204,732)        (125,013)       (129,325)         (61,168)
     Finance Expense                                                    (66,847)        (103,465)        (21,956)         (22,477)
                                                                ----------------   --------------  --------------  ---------------

  Income (loss) from Continuing operations                              129,493         (707,118)         (5,212)        (137,265)
                                                                ----------------   --------------  --------------  ---------------

   Loss from discontinued operations                                  (189,041)         (297,914)          8,509         (192,957)
   Gain on Sale                                                         285,310                -         285,310                -
                                                                ----------------   --------------  --------------  ---------------
  Income (loss) from Discontinued operations                             96,269         (297,914)        293,819         (192,957)
                                                                ----------------   --------------  --------------  ---------------

Net Income (Loss)                                                     $ 225,762      $(1,005,032)      $ 288,607        $(330,222)
                                                                ================   ==============  =============== ===============

Weighted average shares outstanding Basic                            47,490,590       41,418,655      51,264,167       41,418,655
Weighted average shares outstanding Dilutive                         66,906,732       41,418,655      70,680,309       41,418,655
                                                                ================   ==============  =============== ===============
</TABLE>


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

                                       2
<PAGE>


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

                                                                       Nine months ended September 30,
                                                                          2004                  2003
Cash flows from operating activities:
   Net Income  (loss)                                                    $225,762           (1,005,032)
                                                                 -----------------     -----------------

<S>                                                                       <C>                   <C>
Adjustments to reconcile net Income (loss) to net cash
provided by (used for) operating activities:
   Depreciation                                                            84,727              215,750
   Loss discontinued operations                                           189,041              297,914
   Financing expense non cash                                              66,847               59,744
   Gain on Sale of discontinued operations                               (285,310)                   -
Changes in operating assets and liabilities:

   (Increase) decrease in:
    Accounts receivable                                                  (487,531)               4,651
    Inventories                                                             6,001               79,008
    Other current assets                                                        -               28.275
    Other assets                                                                -               17,370
     Increase (decrease) in:
     Accounts Payable and
        accrued expenses                                                  157,031             (125,074)
     Short term payable                                                                        (96,553)

        Customer Deposits                                                 (82,300)            (286,990)
                                                                 -----------------     -----------------

Total adjustments                                                        (351,494)             194,095
                                                                 -----------------     -----------------

 Net cash provided by (used for)
  operating activities                                                   (125,732)            (810,937)
                                                                 -----------------     -----------------

Cash flows from investing activities:
 Purchase of property and equipment - net                                       -                    -
                                                                 -----------------     -----------------

   Net cash (used) in investing activities                                      -                    -
                                                                 -----------------     -----------------

Cash flows from financing activities:
 Increase (decrease) in
 Short term notes payable                                                 (21,203)             (24,252)
Subscribed Stock                                                                               200,000
Loans from officers                                                        36,540                    -
Conversion of Stock options                                                 3,000                    -
Issuance of Convertible Debt                                                    -              217,000

Short term loans                                                          199,953              175,748
  Net borrowing on Revolving AR credit facility                          (108,311)             203,500
                                                                 -----------------     -----------------


   Net cash (used in) provided by financing activities                    109.979              771,996
                                                                 -----------------     -----------------

   Net increase (decrease) in
   cash and cash equivalents                                              (15,753)             (38,941)

Cash and cash equivalents -
 beginning of period                                                       21,032               43,141
                                                                 -----------------     -----------------

Cash and cash equivalents -
 end of period                                                              5,279                4,200
                                                                 =================     =================
</TABLE>


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

                                       3
<PAGE>

                 SCIENCE DYNAMICS CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.   Operations and Summary of Significant Accounting Policies

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, 2003. 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.

Description of Business

Science Dynamics Corporation (the "Company,  "SciDyn" or "Science Dynamics") was
incorporated  in the State of Delaware in May 1973 and  commenced  operations in
July 1977.  The  Company  has been  developing  and  delivering  technologically
advanced telecommunication solutions for nearly thirty years.

While the  Inmate  Telephony  business  continues  to  provide  revenue  for the
Company,  The Company has been  rebuilding the business by partnering  with many
other  organizations  and providing them with custom  solutions  accented toward
their individual requirements. Science Dynamics still regards itself as a market
leader in the Inmate  Telephony  business and is one of a few  companies in this
area with applicable patented technology.

As a result of the Company's  rebuilding  efforts, on December 22, 2003, Evercom
Systems,  Inc.  (Evercom)  and Science  Dynamic  executed a series of agreements
which provide,  among other things, that Science Dynamics will assist Evercom in
accelerating  its  development  of a next  generation IP based inmate  telephony
system.  In concert with this development  effort,  Science Dynamics has sold to
Evercom certain Intellectual Property that relates to technology known as "voice
over  Internet  protocol".  As  a  condition  of  the  purchase  and  consulting
agreements,   Science   Dynamics   will  receive  a   perpetual,   royalty-free,
non-exclusive  license  to use the  technology  primarily  developed  by Science
Dynamics during this contract term with the condition that Science  Dynamics may
only exploit such technology  outside of the law enforcement market place. Under
this contract,  Science Dynamics' engineering resources will be required for the
development of the new platform,  design and  consultancy  services for the next
four years.

Use of Estimates

The Company's consolidated financial statements have been prepared in accordance
with generally  accepted  accounting  principles in the United States (US GAAP).
The  preparation  of these  financial  statements  requires  the Company to make
estimates  and  judgments  that  affect the  reported  amounts in the  financial
statements and accompanying  notes. These estimates form the basis for judgments
the Company make about the carrying  values of assets and  liabilities  that are

                                       4
<PAGE>
not readily  apparent  from other  sources.  The Company bases its estimates and
judgments on  historical  experience  and on various other  assumptions  that it
believes are  reasonable  under the  circumstances.  However,  future events are
subject  to  change  and the best  estimates  and  judgments  routinely  require
adjustment.  US GAAP  requires the Company to make  estimates  and  judgments in
several  areas,  including  those  related to  impairment of goodwill and equity
investments,  revenue recognition,  recoverability of inventory and receivables,
the useful lives of long lived assets such as property and equipment, the future
realization  of  deferred  income  tax  benefits  and the  recording  of various
accruals.  The  ultimate  outcome  and  actual  results  could  differ  from the
estimates and assumptions used.

2.      Earnings Per Common Share

Basic weighted  average earnings per common share ("EPS) is computed by dividing
income available to common shareholders by the weighted average number of common
shares  outstanding  for the  period.  For the  nine  and  three  months  ending
September 30, 2004, the Company's basic weighted average shares  outstanding was
47,490,590 and 51,264,167 respectively. The following is calculation of dilutive
earnings per share
<TABLE>
<CAPTION>

<S>                                                                                    <C>                <C>
Basic weighted average shares outstanding at September 30, 2004                       47,490,590         51,264,167
Upon potential exercise of Convertible                                                17,829,475         17,829,475
debenture
Diluted effect of employee stock options                                               1,586,667          1,586,667
                                                                                ----------------   ----------------

Diluted outstanding                                                                   66,906,732         70,680,309
shares
                                                                                ----------------   ----------------
</TABLE>

Diluted  earnings per share reflects the potential  dilution that could occur if
securities or other  contracts to issue common stock were exercised or converted
into common  stock.  The shares  attributable  to the  exercise  of  outstanding
options and convertible debentures were excluded from the calculation of diluted
loss per share in the nine and three months  ended  September  30,  2003.  These
items were not calculated because the effect was anti dilutive.
<TABLE>
<CAPTION>

                                                          Nine Months Ended September 30,     Three Months Ended September 30,
                                                              2004            2003              2004              2003
<S>                                                  <C>            <C>                      <C>             <C>
  Income (loss) from continuing operations           $    129,493   $     (707,118)          $    (5,212)    $    (137,265)
  Income (loss) from discontinued operations         $     96,269   $     (297,914)          $   293,819     $    (192,957)
  Net Income                                         $     25,762   $   (1,005,032)          $   288,607     $    (330,222)
  (loss)

  Weighted average shares outstanding Basic            47,490,590       41,418,655            51,264,167        41,418,655
  Weighted average shares outstanding Dilutive         66,906,732       41,418,655            70,680,309        41,418,655

  Net income (loss) per basic share:
  Income (loss) from continuing operations           $       0.00   $        (0.01)         $       0.00      $      (0.00)
  Income (loss) from discontinued operations         $       0.00   $        (0.02)         $       0.00      $      (0.00)
  Net Income                                         $       0.00   $        (0.02)         $       0.00      $      (0.00)
  (loss)

  Net Income (loss) per diluted share:
  Income (loss) from continuing operations           $       0.00   $        (0.01)         $      (0.00)     $      (0.00)
  Income (loss) from discontinued operations         $       0.00   $        (0.01)         $       0.00      $      (0.00)
  Net Income                                         $       0.00   $        (0.02)         $       0.01      $      (0.00)
  (loss)
</TABLE>


Note 2 Convertible Notes Payable

In June 2004 the  Company was unable to meet the  present  payment  terms of its
outstanding  convertible  notes.  The Company has  obtained an  amendment to the
Company's  credit  facility,  which cures the payment  violation and extends the
terms until December 31, 2004.

                                       5
<PAGE>

Note 3 -  Discontinued operations

On September 1, 2004,  The Company  completed  the sale of its Modern Mass Media
operations for the assumed debt of $1,102,518.  The gain on the sale recognized,
was $285,310.

Modern Mass Media's operations are reported as a discontinued  operation and the
consolidated  financial  statements  for all prior periods have been adjusted to
reflect this presentation.

Note 4 - Related Party

Alan Bashforth,  President and CEO of the Company,  and Paul Burgess, COO of the
Company,  formed  Strategic  Telecom  Financing,  which  purchased  $107,070  of
equipment from Science  Dynamics.  They are leasing this equipment to two of The
Company's customers who were unable to obtain financing with an outside company.
The terms of the sales  would have been the same if our  customers  were able to
other financing arrangements. The leasing agreements are for 4 and 5 years at an
interest rate of 18% payable  monthly.  Science Dynamics has been paid for these
sales.

Item 2.       Management's Discussion and Analysis or Plan of Operation.

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.

Business Overview

     During  the  third  quarter  of 2004 the  Company  continued  its  plans to
increase  profitability  and  secure  long-term  growth  of its core  technology
business.  The  Company's  Software  division  continues to produce a net profit
while  the  Audio  Visual  division  produced  losses.  The  company's  focus on
developing  its core software  business is showing  increased  interest from its
customers as evidenced by increasing revenue. The Company is continually looking
to  improved  results  through  development  of  profitable  sales from its core
technology and stringent cost controls.

     While the software division currently continues to generate the majority of
revenue from the Company's Commander product line, there is an increasing demand
for those products  utilizing VoIP  technology.  The company is focused on these
higher margin products and services,  leveraging our expertise and technology to
address the growing demand for enhanced capability in this area.

     The  Company's  management  intends  to strive to  minimize  the  Company's
exposure  to low margin  business  and divest the  Company of  unprofitable  and
unsustainable assets.

                                       6
<PAGE>

     The  Company  plans  to grow its  technology  business  activates,  both by
organic  and  acquisitive  means.  The  Company  believes  that this is the best
strategy to achieve top line growth that is capable of  maintaining  sustainable
high margins to help increase bottom line profitability.

Products

     The Company's  products continue to expand and develop in the communication
and  technology  sectors with major emphasis on new IP,  Internet,  intranet and
telephony solutions building on its well-founded  expertise in Internet Protocol
telephony.   The  Company  is   concentrating   its  future  in  the  "converged
communications"  arena.  IP  Telephony  is  now  an  established,  accepted  and
respected voice medium, with users demanding the deployment of many services and
functions that this  technology  promises.  The Company's focus is on developing
and  deploying  these  services  and  functions  on its  Intelligent  Peripheral
products built on its "BubbleLINK(R)"  technology.  This technology architecture
is now  being  developed  to  facilitate  demanding  applications  on  the  next
generation VoIP media servers and application servers.  This move is expected to
reduce  the  company's  dependence  on  hardware  suppliers,  and  increase  the
acceptance and potential  marketplace for our software  products.  The Company's
many years of  experience  working with the Regional  Bell  Operating  Companies
(RBOC's)  has  brought  it  the  capability  to  integrate  security,   process,
reliability  and control  together  with complex  billing  methodologies  to its
product set.

     Science  Dynamics regards itself as a market leader in the Inmate Telephony
business  and is one of a few  companies in this area with  applicable  patented
technology.  To maximize revenue  potential,  the Company intends to license its
technology  and take on custom  development  projects  for other  organizations.
Science  Dynamics is now entering a phase where the Company will begin  actively
developing  new  relationships  for the  deployment  of its IP based  technology
across many other  business  sectors.  The  Company  also plans to deploy its IP
technology  through  partnering  with  others  in the  development  of  new  and
innovative  systems for specific  vertical  markets  through  joint  ventures or
acquisitions of companies with similar technologies.  The Company is continually
evaluating  different  alternatives  for raising  additional  capital  needed to
execute these strategies. However, there is no assurance that additional capital
will be available to the Company on acceptable  terms,  if at all. The inability
to obtain  required  additional  funds  could  require  the Company to reduce or
curtail operations.

     The  Company's  management  believes  it has made  significant  progress in
lowering  the  Company's  Selling  General  &  Administrative   and  Research  &
Development  expenses.  Management  intends to  continue to drive down costs and
take decisive steps to restructure the Company's business. At September 30, 2004
the Company had a total of nine employees.

RESULTS OF OPERATIONS

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

Nine Months ended  September  30, 2004  (unaudited)  compared to the Nine Months
ended September 30, 2003 (unaudited).


                                                    Nine Months Ended
                                                      September 30,
                                                    2004           2003
                                                    ----           ----

 Sales                                        1,740,633             922,381

 Net Income (Loss)                              225,762          (1,005,032)

 Net Income  (Loss) Per Share                     $0.00             $ (0.02)


                                       7
<PAGE>

<TABLE>
<CAPTION>


                                                  OPERATING EXPENSES                 PERCENT OF SALES

                                                           Nine Months Ended September 30,

                                                 2004             2003              2004           2003
                                                 ----             ----              ----           ----
<S>                                             <C>              <C>               <C>             <C>
 Cost of Goods Sold                             253,173          211,601           14.5%           22.9%

 Research & Development                         204,217          303,138           11.7%           32.9%

 Sales, General & Admin.                        964,171        1,032,282           55.4%          111.9%

 Total Operating Costs and Expenses
                                              1,421,561        1,547,021           81.6%          167.7%
</TABLE>

     Sales for the nine months  ended  September  30, 2004 were  $1,740,633,  an
increase of $818,252 from sales of $922,381 for the nine months ended  September
30, 2003. The increase of $415,000 can be attributed to the Company's consulting
contracts  with Evercom and T-Netix  together with its licensing  agreement with
T-Netix,  $200,000 is attributable to an exclusive license on three way calling.
Core sales for the nine  months  ended  September  30,  2004 were  predominantly
derived from two  products:  the  MinuteMan  Calling  Platform and the Commander
Product Line.

     Cost of Goods Sold increased to $253,173 in the nine months ended September
30, 2004 from  $211,601 in the  corresponding  nine months ended  September  30,
2003.  The  increase of 19.6% is  significantly  less than the 470%  increase in
sales due to minimal cost  associated  with the Company's  consulting  contracts
with Evercom and T-Netix and licensing  agreement with T-Netix.  In addition our
focus is to sell systems with greater than 20 lines.  These systems have a lower
hardware cost per line and therefore have a much higher product margin.

     Research &  Development  expenses  decreased to $204,217 in the nine months
ended  September 30, 2004 as compared to $303,138 in the comparable  nine months
ended  September  30, 2003.  The decrease in research and  development  expenses
during the nine months of 2004 was due to the limited  resources  available  for
product  development.  Management  believes that continual  enhancements  of the
Company's products will be required to enable SciDyn to maintain its competitive
position.  SciDyn intends to focus its principal future product  development and
resources  on  developing  new,  innovative,  technical  products  and  updating
existing products in the communications area.

     Sales, General & Administrative  expenses decreased to $964,171 in the nine
months ended September 30, 2004, compared to $1,032,282 in the nine months ended
September 30, 2003. The decrease is due to the Company's  continued cost cutting
measures.

     Interest  Expense  consists of interest paid and accrued on the Convertible
Notes, and the interest due for the loan from a stockholder and short term loan.

     Finance  Expense in the nine months ended  September  30, 2004 and 2003 was
$66,847 and $103,465  respectively  which consists of  amortization of financing
costs.


                                       8
<PAGE>
Three Months ended September 30, 2004  (unaudited)  compared to the Three Months
ended September 30, 2003 (unaudited).

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

                                                  Three Months Ended

                                                    September 30,

                                                     2004            2003
                                                     ----            ----
  Sales                                            601,427         223,563

  Net Income (Loss)                                288,607        (192,957)

  Net Income  (Loss) Per Share                       $0.00         $ (0.01)
<TABLE>
<CAPTION>


                                         OPERATING EXPENSES                          PERCENT OF SALES

                                                             Three Months Ended
                                                               September 30,
                                                  2004             2003            2004            2003
                                                  ----             ----            ----            ----
<S>                                             <C>              <C>              <C>             <C>
Cost of Goods Sold                              63,653           81,986           10.6%           36.7%

Research & Development                          50,794           89,545            8.4%           40.1%

Sales, General & Admin.                        362,911          251,652           60.3%          112.6%

Total Operating Costs and Expenses
                                               477,358          423,183           79.3%          189.4%
</TABLE>


     Sales for the three  months  ended  September  30,  2004 was  $601,427,  an
increase of $377,864 from sales of $223,563 for the three months ended September
30, 2003. The increase of $125,000 can be attributed to the Company's consulting
contracts  with  Evercom  and  T-Netix  and  $200,000  came  from its  licensing
agreement with T-Netix. Core sales were predominantly derived from two products:
the MinuteMan Calling Platform and the Commander Product Line.

     Cost of Goods Sold decreased to $63,653 in the three months ended September
30, 2004 compared to $81,986 in the  corresponding  three months ended September
30, 2003.  The decrease can be attributed to the minimal costs  associated  with
the our consulting contracts and the licensing agreement.  In addition our focus
is to sell  systems  with  greater  than 20 lines.  These  systems  have a lower
hardware cost per line and therefore have a much higher product margin.

     Research &  Development  expenses  decreased to $50,794 in the three months
ended  September 30, 2004 as compared to $89,545 in the comparable  three months
ended  September  30, 2003.  The decrease in research and  development  expenses
during  the  three  months  ended  September  30,  2004  was due to the  limited
resources available for product development.  Management believes that continual
enhancements  of the  Company's  products  will be required to enable  SciDyn to
maintain its competitive position.  SciDyn intends to focus its principal future
product  development  and resources on  developing  new,  innovative,  technical
products and updating existing products in the communications area.

     Sales, General & Administrative expenses increased to $362,911 in the three
months ended September 30, 2004,  compared to $251,652 in the three months ended
September 30, 2003.  The majority of the increase was due to  additional  travel
related expenses in the three months ended September 30, 2004.

                                       9
<PAGE>

     Interest  Expense  consists of interest  paid and accrued on the  Company's
outstanding  convertible  notes,  the interest due for a loan from a stockholder
and other short term loans.

     Finance  Expense in the three months ended  September 30, 2004 and 2003 was
$21,956 and $22,477  respectively  which consists of  amortization  of financing
costs.

LIQUIDITY AND CAPITAL RESOURCES:

     Cash and cash  equivalents  decreased to $5,279 at September  30, 2004 from
$21,032 at December 31, 2003. Net cash used in operating activities was $125,732
for the nine  months  ended  September  30,  2004  compared  to  $810,937 in the
corresponding  nine months  ended  September  30,  2003.  Net used in  operating
activities resulted from increase in accounts receivable, a decrease in customer
deposits,  off set by an increase in accounts payable and net income of $225,762
.. Payment  arrangements  have been made with several  vendors to extend payments
over the next year. At the present time the Company is having difficulty meeting
some of those  arrangements.  The accrued expenses consist  primarily of accrued
interest due on the Company's convertible notes and short term notes.

     Net cash used in investing activities - There was no cash used for the nine
months ended  September  30, 2004,  and ended  September  30, 2003.  The lack of
investing in capital equipment is attributable to budgetary restraints.

     Net  cash  provided  by  financing  activities  in the  nine  months  ended
September  30, 2004  amounted to $109,979  compared to $771,996  provided in the
corresponding  nine months ended  September 30, 2003.  Due to the Company's need
for liquidity,  management negotiated two short-term notes for $190,000 that are
collateralized  by the future sale of the New Jersey Net Operating  Loss.  These
notes  are  expected  to be paid  directly  from the sale of the  Company's  Net
Operating  Losses with  approximately  $110,000  of  interest.  The  proceeds of
$190,000  short-term note and additional  loans from officers were offset by the
repayment of $108,311 on the Company's  revolving credit facility and $21,203 of
payments on long term debt .

     In June 2004 the Company was unable to meet the  present  payment  terms of
its  convertible  notes held by Laurus  Master  Funds,  Ltd.  On August 23, 2004
Laurus Master Fund waived any payment defaults under these notes until September
3, 2004 . On November 19, 2004 the waiver was extended  until December 31, 2004.
Management  is currently  working  with Laurus to develop a suitable  conversion
schedule.

     The cash  requirements  for funding the  Company's  operations  continue to
exceed cash flows from operations.  The Company has satisfied its operating cash
flow deficiencies primarily through debt financing.

     Management has successfully  negotiated  payment  arrangements with some of
the Company's vendors and is attempting to negotiate  payment  arrangements with
other  vendors.  Some of the  payment  arrangements  that  have  been  made  are
currently in arrears.  No default  notifications have been received to date. The
Company  cannot  guarantee  that any of these  discussions  will  continue or be
successful.   If  management  is  unable  to  successfully   negotiate   payment
arrangements, the Company's business may be severely adversely affected.

     While SciDyn believes that its current cash flows are sufficient to pay the
current  expenses  that the  Company  incurs,  the Company is unable to pay past
accounts  payable,  accrued  expenses  and  convertible  notes from current cash
flows. In order to satisfy all of the Company's  obligations that are due in the
next twelve  months,  SciDyn must obtain  additional  financing  through debt or
equity.  There is no assurance  that  additional  financing will be available on
acceptable  terms,  or at all. The  inability to obtain the required  additional
funds could require SciDyn to reduce or curtail operations.

                                       10
<PAGE>

Item 3.       Controls and Procedures.

     As of the end of the  period  covered  by  this  report,  Science  Dynamics
conducted an evaluation, under the supervision and with the participation of its
principal  executive  officer/principal  financial  officer,  of  the  Company's
disclosure  controls  and  procedures  (as  defined in Rule  13a-15(e)  and Rule
15d-15(e) of the Exchange Act).  Based upon this evaluation,  Science  Dynamics'
principal  executive  officer/principal  financial  officer  concluded  that the
Company's  disclosure  controls  and  procedures  are  effective  to ensure that
information required to be disclosed by the Company in the reports that it files
or  submits  under the  Exchange  Act is  recorded,  processed,  summarized  and
reported, within the time periods specified in the Commission's rules and forms.
There was no significant  change in Science  Dynamics'  internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of the evaluation.

PART II. OTHER INFORMATION

Item 1.       Legal Proceedings

     None.

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds

     In April 1, 2004 the Company issued  1,080,000  options to employees  under
the 2002  Employee  Stock Option Plan at price of $.18 per share.  This issuance
was exempt from registration requirements of the Securities Act of 1933 pursuant
to Section 4(2) of such Securities Act.

     In April  2004 the  Company  issued  196,079  shares  of  common  stock for
settlement  of  $30,000  in  notes  payable.   This  issuance  was  exempt  from
registration requirements of the Securities Act of 1933 pursuant to Section 4(2)
of such Securities Act.

Item 3.       Defaults Upon Senior Securities

     In June 2004 the Company was unable to meet the  present  payment  terms of
its  convertible  notes held by Laurus  Master  Funds,  Ltd.  On August 23, 2004
Laurus Master Fund waived any payment defaults under these notes until September
30, 2004. On November 19, 2004 the waiver was extended until December 31, 2004.

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

     None.

Item 5.       Other Information

     None.


                                       11
<PAGE>

Item 6.       Exhibits and Reports on Form 8-K



         Exhibit No.       Description of Exhibit

         3.1      Articles of Incorporation (1)
         3.2      By-Laws (1)
        31.1      Certification  by Alan C. Bashforth,  Chief Executive  Officer
                  and acting Chief Financial Officer, pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002.
        32.1      Certification  by Alan C. Bashforth,  Chief Executive  Officer
                  and acting Chief Financial Officer, pursuant to Section 906 of
                  the Sarbanes-Oxley Act of 2002.

(1)  Incorporated by reference to the Company's  Registration  Statement on Form
S-18, File Number 33-20687, effective April 21, 1981.

                                       12
<PAGE>

                                   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
                ----------------------
                    Alan C. Bashforth
                CEO/President/Acting CFO

DATED:          November 30, 2004



                                       13