U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, DC 20549

                              FORM 10-KSB

(Mark One)
[x] Annual report under Section 13 or 13(d) of the Securities Exchange Act
    of 1934 for the fiscal year ended December 31, 2003

[ ] Transition report under section 13 or 15(d) of the Securities Exchange
    Act of 1934 for the transition period from _____________ to ____________.

Commission File Number: 0-10690

                        SCIENCE DYNAMICS CORPORATION
               (Name of Small Business Issuer in its Charter)

                   DELAWARE                         22-2011859
    (State of Other Jurisdiction        (IRS Employer Identification Number)
     Incorporation or organization )

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

Issuer's telephone number: 856-910-1166

Securities registered under Section 12(b) of the Exchange Act:

  Title of each Class                Name of each exchange on which registered
----------------------              -------------------------------------------
        None                                         N/A


Securities registered under Section 12(g) of the Exchange Act:

                     COMMON STOCK, $0.01 PAR VALUE
                          (Title of Class)

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 past 90 days.
Yes [X]  No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [X]

The issuer's revenues for the fiscal year ending December 31, 2003 were
$4,108,510.

As of April 7, 2004, the aggregate market value of the voting common stock
of the registrant held by non-affiliates of the registrant computed by
reference to the average bid and asked price of such common equity on
that date was $8,103,813.

As of April 7, 2004, the issuer had 41,418,655 outstanding shares of
Common Stock.

Transitional small business format  Yes ___    No  X

<PAGE>

PART I
--------------------------------------------------------------------------

ITEM 1. DESCRIPTION OF BUSINESS


GENERAL OVERVIEW
----------------

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 over twenty-five
years.

2003 has been a transition year for the Company, with the continuing
slowdown in deployment of infrastructure in our traditional customer base
and many organizational changes in the Inmate Telephony arena.  Our efforts
were refocused on diversifying our customer base and product offering to
offset the risks associated with the telecommunications market.

Even though the Inmate Telephony business continues to provide revenue for
the company, we have 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 this business and is one of a few companies in this area
with applicable patented technology.

As a result of these efforts, on December 22, 2003, Evercom Systems, Inc.
(Evercom) and Science Dynamic Corp. (SDC) executed a series of agreements
which provide, among other things, that SDC will assist Evercom in
accelerating its development of a next generation IP based inmate telephony
system. In concert with this development effort, SDC 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, SDC will receive a perpetual, royalty-free, non-exclusive
license to use the technology primarily developed by SDC during this
contract term with the condition that SDC may only exploit such technology
outside of the law enforcement market place. Under this contract, SciDyn
engineering resources will be required for the development of the new
platform, design and consultancy services for the next four years.

In conjunction with our efforts to diversify our product offering and
customer base into other business sectors, on March 31, 2003, the Company,
through its newly formed majority owned subsidiary M3 Acquisition Corp.,
acquired certain business assets and assumed certain liabilities of Modern
Mass Media, Inc. ("Modern Mass Media" or "MMM"), a privately held company
based in Florham Park, NJ.  Modern Mass Media is in the business of
providing audio/video technology that includes consultation, custom
engineering, facility design, audio/visual products, installation, testing,
user training and repair service.  The acquisition should expand the product
offerings and capabilities of the Company.

BUSINESS DEVELOPMENT

We have maintained a long and highly reputable position as a supplier of
call control technology to service providers offering Collect-Only calling
to inmates of correctional institutions. We have been a primary supplier to
a major Local Exchange Carrier (LEC) and, in recent years, have expanded our
customer base to include the newly emerging cadre of unregulated companies
offering the same service in today's more highly competitive telecom
environment. Our Commander product line continues to receive high marks as a
versatile and feature rich platform, well prepared to deal with the
increasing demand for investigative tools and security.

Even with SciDyn's favorable reputation as a supplier within the
telecommunications sector, the continued uncertainty surrounding the sector
requires SciDyn to focus on expanding its existing product line to encompass
a more diverse customer base.  This will enable SciDyn to reduce its
exposure to certain sector declines while capitalizing on other sector
gains.  As SciDyn expands product offerings into other sectors, the Company
will also move from primarily offering products to offering a mix of
products and services that will generate consistent recurring revenue
streams.  Some of the key areas SciDyn intends to focus on expanding are:

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1. OEM Licensing - This would include licensing existing technology
   SciDyn has developed to other equipment manufacturers either to
   incorporate into their existing product offering or for resale.
2. Voice and Data Security Products - SciDyn's current product offering
   provides feature rich call control technology that can be expanded to
   serve additional markets.
3. Network Based Technology Services - With the acquisition of Modern
   Mass Media's assets, SciDyn has access to a diverse Fortune 500
   customer base who currently are being provided Audio Visual services
   from Modern Mass Media.  This service offering can be expanded to
   include a full suite of technology services.

The first step in realizing this strategy requires enhancing existing
product lines to address the needs of other sectors.  SciDyn continues to
maintain its reputable position as a supplier of call control technology to
service providers offering Collect-Only calling to inmates of correctional
institutions.  SciDyn's Commander product line continues to receive high
marks as a versatile and feature-rich platform, well prepared to deal with
the increasing demand for investigative tools and security.  With the advent
of a more security sensitive environment, the Commander has positioned
SciDyn to address the growing needs in this expanding market.  This has
created two opportunities for SciDyn. Firstly, to license the technology to
other vendors and secondly, to modify the product to meet the needs of other
markets.

With SciDyn's recent acquisition of Modern Mass Media's assets, SciDyn will
continue to develop products and services that will build on Modern Mass
Media's long standing relationship with its Fortune 500 customer base.
SciDyn's engineering expertise coupled with Modern Mass Media's ability to
provide continual high quality service, enables the combined companies to
provide a full suite of products and services to an existing customer base.
 This will allow SciDyn to move from primarily a product based offering to a
mix of products and services, resulting in a more consistent recurring
revenue stream.  In addition to providing an expanded product and service
offering, the acquisition will create the opportunity to take advantage of
operating synergies between the two companies, enabling not only increased
revenue opportunities but also a reduction in overall operating costs.

Modern Mass Media currently provides high quality audio visual services to
Fortune 500 clients in the northeastern U.S.  The company is well positioned
to provide additional technology based services that will enable SciDyn to
enhance the existing service offerings of Modern Mass Media.  New services
will include a full suite of network based services that will enable SciDyn
to maximize product margins while having a minimal impact on operating
expenses.  With the majority of the new services being network based, the
geographical reach of the service offering will be improved without
incurring large expenses to expand facilities currently required to deliver
services to a geographically disperse customer base.

PRODUCTS
--------

IP Telephony

SciDyn has continued efforts in the development of Voice over Internet
technology.  The focus of these efforts revolves around upgrading existing
product technology and adapting the technology into new and existing
applications.  IP technology is being deployed within the Commander system
at specific installations.  This is a major step in the Inmate phone control
industry, and SciDyn is at the forefront of this technology.  SciDyn is also
in the process of adding direct IP trunking capability to the MinuteMan
platform.  Additionally SciDyn will be enhancing the MinuteMan with a
complete Radius interface to allow any Voice Over IP gateway that supports
this common protocol to use the MinuteMan as a centralized platform to
create and manage pre and post paid services.

Commander Call Control System

The Commander call control system is built on SciDyn's unique BubbleLINK(T)
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.


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

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

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

The DebitCard feature set provides flexible capability in card creation and
management.  DebitCard supports specialized tariffs and call timing.  By
being totally integrated with the Commander, no external network facility is
necessary.  This provides complete control and security when using pre-paid
cards.  As with all of the Commander feature sets, integrity of the system
is not compromised with the use of pre-paid cards.

During 2003, Scidyn commenced deployment of its next generation Commander
system. This next Commander system operates on the latest technology and
provides greater capabilities for new features, including SciDyn's first
internal recording solution, now a fully integrated component providing
great cost savings over the traditional recording equipment used today.
Commander Systems are no longer assembled exclusively from components
purchased from a single vendor. Our software has now been successfully
ported to support multiple vender's equipment and currently two vendors have
been selected as sources for components of the next generation Commander.
This provides SciDyn greater flexibility,  reliability and pricing in
producing and supporting new systems.

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

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

Early 2003 saw the introduction of a new Commander system targeted at multi-
facility with centralized control.  This solution allows Inmate phone
providers to offer all of the Commander features including the extensive
call control, debit, and pre-paid solutions to the smallest facilities.
Utilizing SciDyn's VoIP technology, this system provides an aggregated point
of switching and control for the provider, minimizing on-site equipment and
maintenance costs.  The Commander will still maintain all, per facility
branding and rating without the need for dedicated switching equipment at
the institution.

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


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<PAGE>


MinuteMan

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

MinuteMan development is continuing based on requirements from customers and
other industry trends.  Enhancements to the original MinuteMan include
expanded rating capabilities for specialized charges and dynamic rates.

New applications for the MinuteMan were released this year expanding the
service offerings of the platform beyond traditional Pre-Paid calling cards
to account based calling and calling card services, making the MinuteMan a
versatile revenue source for the owner and operator. The latest releases of
the MinuteMan also provide greater flexibility in system integration with
support for various database technologies.  including Microsoft SQL Server,
the open source MYSQL server, and the original embedded data engine of the
MinuteMan.  All applications developed for the MinuteMan will operate on any
of the supported database solutions.  This allows system owners to operate
at a cost and performance level which they feel appropriate.

A specialized version of MinuteMan has been developed and deployed for use
in the Inmate Marketplace.  This version provides an Inmate Phone Service
provider with a centralized system to switch and manage pre-paid calling
from all of its contracted facilities.  This Version of MinuteMan
capitalizes on SciDyn's years of experience in inmate phone control to
provide a full featured pre-paid switch without compromising the security
and fraud protection required for this specialized calling application.

Video over Frame Relay

The market for the VFX continues to be the international arena in which
customers benefit from the most substantial cost savings versus peak long
distance rates. Scidyn maintains a small but steady revenue stream from the
VFX.

Error Correction Algorithm

To date a suitable entity has not been identified to exploit this new
technology in the near term.  SciDyn's near term strategy and capital
priorities preclude it from investing additional time and funds into
exploiting this patent independently.


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<PAGE>


PRODUCT DEVELOPMENT
-------------------

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

Our products have primarily been designed and developed by our internal
engineering staff. We consider the features and performance of our products
to be generally competitive to those of other available applications.

We believe that continual enhancements of our products will be required to
enable us to maintain our competitive position. We intend to focus our
principal future product development efforts on developing new, innovative,
technical products and updating existing products in the communications
arena to enable us to take advantage of opportunities resulting from the
expected direction of technology.

We continue to refine our 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 our existing products such as the
Commander family of inmate products, the MinuteMan pre-paid card system, and
the IntegratorC-2000(R) Series of IP Telephony gateway products. Management
believes that the product design strategy will keep us competitive in the
changing communications marketplace.


INTEGRATION OF PRODUCTS
-----------------------

We continue to maintain a primary focus on the development and use of
software technology. Most hardware requirements are filled through the use
of OEM components. New vendors are routinely evaluated for several critical
product components. The general goal is to maintain a multi-source solution
for critical components.

We strive to integrate the highest quality components from various vendors
to allow us to bring the best solutions to market. Some of the components
include chassis, telephony interfaces and other critical computer
components.

Product integration involves careful testing to ensure compatibility with
existing system configurations and reliability in accordance with product
objectives.


SOURCES AND AVAILABILITY OF MATERIAL
------------------------------------

Although most materials are available from a number of different suppliers
on an off-the-shelf basis, several suppliers are the sole source of each of
certain components. If a supplier should cease to deliver a component,
another source would have to be developed. We believe we would be able to do
so by acquiring a substitute part or module that could require a hardware or
software change in the unit in order to provide satisfactory performance,
although added costs and delays of unknown amount and duration could be
experienced.


SALES AND MARKETING
-------------------

The Company's sales and marketing resources are positioned to market
individually through targeted sales activities.  Due to the highly
competitive telecom environment, the Company has focused on the next
generation independent companies providing the same services as the major
Local Exchange Carriers.

With the recent acquisition of the Modern Mass Media assets, SciDyn is
currently developing a comprehensive sales and marketing plan that will
leverage the Modern Mass Media customer base while taking advantage of the
developments SciDyn has made with the Commander and MinuteMan product lines.


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<PAGE>


RESEARCH & DEVELOPMENT
----------------------

Research efforts are focused on adapting new technology to current and
potential products. Efforts in research cover new techniques in software
development and component technologies. Research also covers emerging
hardware technologies and improvements in current technology.

Existing products are currently being redesigned to integrate the latest
generation of specific key components. These changes will increase the
capability of products such as the Commander and provide new features while
reducing overall cost of the product. As penetration into existing markets
increases and as we make initial steps into new markets, increases in
research expenditures will become necessary.

During the past year, we successfully launched a new service offering based
on the back office needs of our customers.  This effort involved creating
the systems and procedures to offer 24 by 7 transaction services delivered
over the Internet and telephone networks.  This operations center runs in a
totally automated manner and requires minimal daily maintenance.

The majority of the research and development activities are conducted at our
facility using our array of telephony resources and the technical expertise
of our engineering staff. We anticipate that an increase in future research
and development expenditures will be necessary to remain competitive in the
rapidly changing telecommunications industry.


INTELLECTUAL PROPERTY
---------------------

It is our practice to apply for patents as new products or processes
appropriate for patent protection are developed. We applied for a patent on
our three-way Call Detection System and on January 21, 1998 received a
Notice of Allowance from the U.S. Patent Office. The formal United States
Patent was received in June 1998. We hold other patents related to some of
our other products. No assurance can be given as to the scope of the patent
protection.

In 2001 we started the patent application process on the use of IP Telephony
as it relates to certain call control applications. The process is often
slow but we expect it to be completed in a routine manner and timeframe.

We believe that the rapid technological developments in the
telecommunications industry may limit the protection afforded by patents.
Since a patent generally defines what and how to competitors, that
information often allows mutations by rivals to circumvent the original
patent. Accordingly, we believe that our success will be dependent upon our
engineering competence, service, and the quality and economic value of our
products.

We also own trademarks, copyrighted material and intellectual property
relating to proprietary technology utilized in the development of some of
the products.


CUSTOMER SUPPORT
----------------

Our technical support staff provides telephone support to our customers
using a computerized call tracking and problem reporting system. We also
provide initial installation and training for our products. We have
instituted an annual maintenance contract entitling customers to software
updates, technical support and technical bulletins.


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INDUSTRY
--------

There is a trend within the Industry to privatize jails and there are a
number of entities emerging to administer such facilities. In some cases,
these private entities operate with some autonomy with respect to selecting
call control vendors. In other cases, the governing body retains such
oversight. We are reviewing this changing landscape in order to position the
Company to capitalize on opportunities as they materialize.

IDC estimates the market for prepaid calling cards will expand from $3.4
billion in 2000 to $5.3 billion at the end of 2005, which represents a
compound annual growth rate of 9.2 percent over the forecast period.  This
growth is expected to be driven by increased awareness and adoption of
prepaid calling cards by U.S. consumers as well as increased minutes of use.

Most organizations utilizing integration services have restrained capital
expenditures and focused on maintaining infrastructure as an alternative to
large scale upgrades.  This trend has expanded to complete outsourcing of
maintenance and support functions traditionally kept in-house.  The trend in
outsourcing is expected to continue as corporations are focused on
minimizing capital expenditures.


COMPETITION
-----------

The competitive field is somewhat convoluted in that there are traditional
equipment manufacturers who have breached their traditional roles to become
service providers. Several companies have recently positioned themselves to
prime bid several big contracts. Traditional Tier I network service
providers who have used these platforms in the past in their role as prime
bidders, find themselves competing with their selected vendor. While this
might appear to be an anomaly, it is becoming commonplace and clearly an
example of how desirable these inmate call control contracts are. This is a
relatively small but highly profitable marketplace with only a handful of
viable competitors.

There are six major competitors in the call control platform field. We
realize the stiffness of our competition but believe we have the skills,
resources and technology to garner a substantial portion of this business.
With efforts directed toward transaction pricing and our keen awareness of
this transitioning competitive landscape, we anticipate being able to
capture a significant portion of the equipment business and a piece of each
related transaction as well.

Competition in integration services comes from three primary sources:

   1. Regional audio visual resellers.
   2. IT services companies focusing on integration services.
   3. Video Teleconferencing companies aligned with telecommunication
      service providers.

Each of these competitors provides specialized service but only the Video
Teleconferencing companies are positioned to provide a centralized network
based outsourcing service.  This gap in the market is an opportunity Scidyn
and M3 are well positioned to pursue.


CUSTOMERS
---------

During 2003, the Company was successful in diversifying our customer base.
Currently no one customer accounts for more than 10% of total sales.  This
is a significant improvement over 2002 when three customers accounted for an
aggregate of 55% of total sales.   Due to our acquisition of the Modern Mass
Media assets, the telecommunications sector now accounts for less than 50%
of our sales, providing us with both customer and industry diversification.

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EMPLOYEES
---------

As of December 31, 2003, SciDyn and its subsidiaries employed thirty-one
persons on a full time basis. SciDyn supplements full-time employees with
subcontractors and part-time individuals, consistent with workload
requirements. The Company's continued success depends heavily upon its
ability to retain highly qualified and competent personnel. The Company is
operating in a high growth industry, which is experiencing fierce
competition for experienced and talented personnel. SciDyn continues to
provide its employees with appropriate equity-linked incentives to advance
the interests of the Company and its stockholders.


GOVERNMENT APPROVAL
-------------------

The Federal Communications Commission (FCC) requires that some of the
Company's products meet Part 15 and Part 68 of the code of Federal
Regulations (CFR). Part 15 (subpart B) deals with the suppression of radio
frequency and electro-magnetic radiation to specified levels. Part 68 deals
with protection of the telephone network. Other than FCC requirements, there
is no known Company effect resulting from existing or probable Government
regulations requiring approval.


COMPLIANCE WITH ENVIRONMENTAL LAWS
----------------------------------

Company operations do not pollute or involve discharge of material into the
environment. As a result, no expenditure is budgeted or required for
environment protection or restoration. SciDyn is concerned about protecting
the environment and participates in recycling programs.


ITEM 2. DESCRIPTION OF PROPERTY

Science Dynamics, pursuant to a three-year lease commencing June 1, 2003,
leases a 3,000 square foot office in an industrial park in Pennsauken, New
Jersey, utilized for office space and testing of our products and other
corporate activities.  As of January 2004, Modern Mass Media is on a month to
month lease in Florham Park, New Jersey.


ITEM 3.  LEGAL PROCEEDINGS

The Company is not now a party to any litigation and no action against the
Company has been threatened or is known to be contemplated by any
governmental agency or subdivision or any other entity.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None


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PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock is traded on the Over the Counter Bulletin Board
(OTCBB) as of August 24, 2001. The symbol for the Company's Common Stock is
"SIDY". The Company's Common Stock has been traded publicly since April 22,
1981. The "high" and "low" bid quotations for the Company's Common Stock for
each quarterly period for the fiscal years ended December 31, 2002 and
December 31, 2003 were as follows:

  Calendar Quarter  High Bid Price   Low Bid Price

        2002
        ----
        First            $.09         $ .06
        Second            .28           .05
        Third             .08           .03
        Fourth            .06           .02

	2003
        ----
        First            $.11         $ .03
        Second            .11	        .05
        Third             .09           .05
        Fourth            .13           .05



The above listed quotes reflect inter-dealer prices without retail mark-up,
markdown, or commissions and are not necessarily representations of actual
transactions or the true value of the Common Stock.

As of December 31, 2003, there were approximately 262 holders of record of
the Common Stock of the Company.

The Company has paid no cash dividends since its inception. The Company
presently intends to retain any future earnings for use in its business and
does not presently intend to pay cash dividends in the foreseeable future.
Holders of the Common stock are entitled to share ratably in dividends when
and as declared by the Board of Directors out of funds legally available
therefore.

The market price of the Company's common stock, like that of other
technology companies, is highly volatile and is subject to fluctuations in
response to variations in operating results, announcements of technological
innovations or new products by the Company, or other events or factors. The
Company's stock price may also be affected by broader market trends
unrelated to the Company's performance.

Recent Sales of Unregistered Securities
---------------------------------------

Convertible Notes and Warrants

In connection with the acquisition of MMM, Laurus Master Fund, Ltd. agreed to
make advances and investments available to the Company in the aggregate
amount of up to $1,000,000.  The Company issued a convertible note on March
31, 2003, for the advancement of $247,750 in connection with the acquisition
of MMM. In addition, Laurus made available a revolving credit line based on
MMM accounts receivable. $203,500 was borrowed at the time of the
acquisition.  In connection with these agreements, 250,000 common stock
warrants were issued.

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

Option Grants

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<PAGE>

During 2003 the Company  issued 660,000 options to purchase shares of the
Company's common stock pursuant to the 2002 employee stock option plan, of
which 280,000 options expired in 2003.

On March 1, 2003, in connection with his employment agreement as Chief
Operating Officer, the Company granted Paul Burgess an option to purchase
2,000,000 shares of the Company's common stock at $.03 per share.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

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-KSB 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.


GENERAL BUSINESS OVERVIEW
-------------------------

Throughout the majority of fiscal 2003 the traditional global
telecommunications market did not show any signs of significant growth;
however, it did show signs of stabilization.  A number of factors continue
to stagnate growth in the sector including a decline in the global economy,
a result of the excess capacity that was built up during the telecom boom of
the late 1990s, and regulatory uncertainty.  Even though the traditional
Telecommunications market was not very robust, we have seen a growing demand
for VoIP technology.

While the Company continued to generate revenue from the Inmate Telephony
industry the Company has continued to build on its well-founded expertise in
Internet Protocol telephony.  Now with the added benefit of Modern Mass
Media, the Company has concentrated 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 in its Intelligent
Peripheral products built on its highly successful and adaptable
"BubbleLINK(T)" technology. 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.  This experience is
now being put to good use providing security, management and billing to
converged IP communications.

Over the past year, the Company has created several new software releases
for the Commander I and II models that have repositioned the product to
capitalize on the demand for a centralized VoIP solution. This has opened
the door to allow the Commander product to fill the needs of the independent
service providers. This is a segment of the industry that had previously
been overlooked as development centered on the needs of the large Local
Exchange Carrier (LEC) customers.  In addition, the product is better
positioned to penetrate markets outside of the inmate telephony business.
Consistent with this strategy SciDyn has engaged several upcoming
independent inmate call control service providers that in the past year have
been successful in displacing the local LEC competition in contract awards
that were not possible without the strength and reputation of a system such
as the Commander.

-11-
<PAGE>

During the past year, SciDyn has successfully leveraged our partnerships and
intellectual property to grow and diversify the Company's customer base.
The Company has rebuilt the business by partnering with many other
organizations and providing them with custom solutions accented toward their
individual requirements.  This strategy has diversified the Company's
customer base mitigating the risks associated with having the majority of
the Company's revenue obtained from a single customer.

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

Science Dynamics regards itself as a market leader in this business and is
one of a few companies in this area with applicable patented technology.  To
maximize revenue potential, the Company made the decision to license its
technology and take on custom development projects for other organizations.
Science Dynamics is now entering a phase where the Company will be actively
developing new relationships for the deployment of its IP based technology
across many other business sectors.  The Company has undertaken to meet its
goals in the deployment of its IP technology not only through the sale of
equipment but also through partnering with others in the development of new
and innovative systems for specific vertical markets such as the current
development contract with Evercom Systems Inc.

In addition, SciDyn acquired certain assets and assumed certain liabilities
of Modern Mass Media.  The acquisition of Modern Mass Media has positioned
the Company to supply high quality Audio Visual, Video conferencing, and
Multi Media solutions to many Fortune 500 companies. This provides SciDyn
further customer and product diversification, mitigating the risks
associated with the uncertainties surrounding the telecommunications market.
 In the coming months the revised and reconstructed Company intends to
develop these new relationships to extend the product and service offering
both within vertical markets and geographically.

Our success depends upon effective cash management.  The Company believes it
has made significant progress in lowering the Selling General &
Administration and Research & Development expenses.  We continue to drive
down costs, take decisive steps to restructure the Company's business and
reduce our cost structure. At December 31, 2003 we had a total of thirty-
four employees. We intend to continue to increase the scope of our
operations while also facing the challenge of maximizing resources
effectively.

With the advent of the industry's renewed demand for VoIP technology and the
Company's underlying strength in this area, the Company believes it is well
positioned to take advantage of this market opportunity.  In order to
effectively capitalize on this opportunity the Company is continually
evaluating different alternatives for raising the additional capital
required to execute these strategies.

-12-
<PAGE>

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

The following table sets forth income and certain expense items as a
percentage of total revenue and the change in dollar amounts of such items
compared to the previous fiscal year:


                            For the Years Ending December 31,

                                      2003           2002
                                      ----           ----

            Sales               $4,108,510       $975,473

            Net Loss             $(282,167)   $(2,771,090)

            Net Loss Per Share       (0.01)         (0.08)



                              OPERATING EXPENSES        PERCENT OF SALES
                              ------------------        ----------------

                               2003        2002           2003      2002
                               ----        ----           ----      ----

Cost of Goods Sold       $1,940,959    $429,933          47.2%     44.1%

Research & Development      382,764     748,501           9.3%     76.7%

Selling, General & Admin  2,952,218   2,274,019          71.9%    233.1%

Total Operating Costs
and Expenses             $5,275,941  $3,452,453         128.4%    353.9%



Sales for the fiscal year ended December 31, 2003 were $4,108,510 compared
to $975,473 in the 2002 fiscal year. For the fiscal year ended December 31,
2003, sales from our audiovisual division amounted to $2,617,676 and sales
from our software technology division amounted to $1,490,834. Revenues in
2003 and 2002 for software technology sales were predominantly derived from
the Commander Product Lines, as well as revenue generated from the
maintenance and support of those products

Cost of Goods Sold for the fiscal year ended December 31, 2003 increased to
$1,940,959 from $429,933 in the year ended December 31, 2002.  Costs of
$1,516,974 were derived from the audiovisual division and costs of $423,985
were derived from the software technology division.  The cost of sales in
the audiovisual division  are substantially higher than those for the
software technology. The audiovisual division is more dependent on its
supplier for pricing and credit than the software technology.

Research and development expenses decreased from $748,501 in the year ended
December 31, 2002 to $382,764 in the year ended December 31, 2003, a
decrease of $365,737.  The decrease in research and development expenses
during the year ended December 31, 2003 was due to the limited resources
available for product development.  We believe that continual enhancement of
our products will be required to enable SciDyn to maintain its competitive
position. SciDyn will have to focus its principal future product development
and resources on developing new, innovative, technical products and updating
existing products in the communications arena which will enable the Company
to explore other established markets that are considered "safe" from the
telecom disruption currently facing the industry.

Selling, general and administration expenses increased to $2,952,218 in the
year ended December 31, 2003 compared to $2,274,019 in the year ended
December 31, 2002.  For the year ended December 31, 2003, $1,411,354 of such
expenses was derived from the Software technology division and $1,540,864 of
such expenses was derived from the audiovisual division. During the year
ended December 31, 2003, we made significant cost cuts in this area due to
the consolidation of Science Dynamics' and Modern Mass Media's back offices.

-13-
<PAGE>

Interest Expense for the year ended December 31, 2003 includes interest
accrued on our convertible notes, interest paid on the Company's bank note
and a short term note from a stockholder. Interest expense for the year
ended December 31, 2003 was $199,713 compared to $158,131 for the year ended
December 31, 2002.   The increase in interest expenses was due to additional
financing that was used for the acquisition of Modern Mass Media.  In
December 2003 we paid down $600,000 of convertible debt.

Finance Expense in the twelve months ended December 31, 2003 was $125,942,
compared to $362,731 for the twelve months ended December 31, 2002 The
finance expense includes the recognition of a debt discount resulting from a
beneficial conversion feature embedded in the convertible notes issued to
Laurus Master Fund, Ltd. and the amortization of the financing cost.

Per Emerging Issues Task Force (EITF) Number 98-5, "Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios," this beneficial conversion feature was
assigned an intrinsic value of $43,721 and  $218,407 for December 31, 2003
and 2002, respectively, as calculated under the provisions of the EITF. This
amount was immediately expensed as the Notes were convertible into common
shares of the Company at the time of the signing of the Agreement.


LIQUIDITY & CAPITAL RESOURCES
-----------------------------

Net cash provided (used) by operating activities for the years ended
December 31, 2003 and 2002 was $404,578 and ($839,987), respectively.  Net
cash provided from operating activities for the year ended December 31, 2003
included adjustments to the net loss of $282,167, which amounted to $686,745
and was comprised of depreciation, non-cash items, increases in accounts
payable and accrued expenses offset by an increase in accounts receivable.

Net cash used in investing activities for the years ended December 31, 2003
and 2002 was $34,590 and $133,455, respectively.  The decrease in investing
activities in 2003 was attributable to the limited resources available for
capital investment.

Net cash provided (used) by financing activities for the years ended
December 31, 2003 and 2002 was ($338,879) and $999,508, respectively.  In
December 2003 we repaid Laurus Master Fund, Ltd. $600,000 against
convertible notes and $55,000 of bank notes.  In connection with the
acquisition of Modern Mass Media we issued a convertible note in the amount
of $247,000 and borrowed against a revolving AR credit facility. We also
repaid $100,000 against a loan in connection with the acquisition of Modern
Mass Media.

At December 31, 2003, the Company had $74,250 in cash and cash equivalents
and a $3,459,054 deficit in working capital, compared with  $43,141 in cash
and cash equivalents and $3,756,391 deficit in working capital at December
31, 2002. Current liabilities at December 31, 2003 were $4,164,295, compared
to $4,079,786 at December 31, 2002. The deficit in working capital for the
year ended December 31, 2003 is attributable to the low sales results. The
increase in the current liabilities for the year ended December 31, 2003
resulted from the minimal cash flows from operation.

We have renegotiated our capital lease obligation where by the balance of
the lease will be repaid at a rate of         $2,654.85 monthly for 60
months.

The cash requirements for funding our operations have greatly exceeded cash
flows from operations. We have satisfied our capital needs primarily through
debt and equity financing. Our liabilities consist of over extended accounts
payable and accrued executive compensation. We have successfully negotiated
a payment arrangement with our prior landlord and our capital lease
obligation.  In addition, we have successfully negotiated payment
arrangements with some of our vendors and are attempting to negotiate
payment arrangements with others. We are in discussion with other creditors
to renegotiate extended terms.   We cannot guarantee that any of these
discussions will be successful.  If we are unable to successfully
renegotiate any of the above payment arrangements, our business may be
materially and adversely affected.


-14-
<PAGE>

SciDyn's currently anticipated levels of revenue and cash flow are subject
to many uncertainties and cannot be assured. In order to have sufficient
cash to meet our anticipated cash requirements for the next twelve months we
must increase sales to provide cash flow from operations. However, SciDyn
does not have sufficient cash on hand to continue its operations without
successfully raising additional funds. The inability to generate sufficient
cash from operations or to obtain the required additional funds could
require SciDyn to reduce or curtail operations.

Our auditors have expressed a substantial doubt about the Company's ability
to continue as a going concern and the Company acknowledges that concern.


ITEM 7.  FINANCIAL STATEMENTS

The Company's Financial Statements set forth at the end of this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

There have been no disputes or disagreements of any nature between the
Company or its management and its public auditors with respect to any aspect
of accounting or financial disclosure during the Company's two most recent
fiscal years.

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures
------------------------------------------------

Within the 90 days prior to the filing date of this report, we carried out an
evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures pursuant to Securities Exchange Act Rule 13a-14.
This evaluation was done under the supervision and with the participation of
our Chief Executive Officer.  Based upon that evaluation, our Chief Executive
Officer concluded that our disclosure controls and procedures are effective
in gathering, analyzing and disclosing information needed to satisfy our
disclosure obligations under the Securities Exchange Act.

Changes in internal controls
----------------------------

There were no significant changes in our internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.


PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The Company's executive officers and directors and their ages and positions
are as follows:

 Name               Age   Position with the Company
 ----               ---   -------------------------

 Alan C. Bashforth  53    Chairman of the Board, President,
                          Chief Executive Officer, acting Chief
                          Financial Officer and Secretary

 Paul Burgess       39    Chief Operating Officer


There were no board meetings during the fiscal year ended December 31, 2003.

-15-
<PAGE>


BIOGRAPHIES
-----------

Alan C. Bashforth, is currently our Chairman, President, CEO, acting CFO and
Secretary and has been since April 4, 2002. Prior to his present positions,
Mr. Bashforth served as a director with active duties in seeking finance for
the Company. Prior to serving as director, Mr. Bashforth was President and
Chief Executive Officer of SciDyn until January 2000 and served as Chairman
of the Board until November 30, 2000. He was President of Cascadent
Communications, a major customer of SciDyn until December 15, 2000.
Previously he was President of Innovative Communications Technology, LTD.
(ICT), a data communications company, located in Jersey, Channel Islands,
until the acquisition of the intellectual property of ICT by SciDyn in
November 1996. Prior experience included ownership of the CSL Group of
companies from its inception in 1975. CSL is a Communications and Computer
engineering group and employed over 100 people in 1992 when Mr. Bashforth
sold the company. From 1970 to 1975, Mr. Bashforth was employed by Automaten
CI, LTD., an office equipment and telecommunications company, in various
engineering and sales positions leading to the position of General Manager.
Mr. Bashforth was educated in electronic engineering at Mid Herts
Polytechnic College in England and holds a Higher National Diploma in
Electronic Engineering.

Paul Burgess, most recently, Mr. Burgess was with Plan B Communications
where he held positions as President and Chief Financial Officer.  Mr.
Burgess was responsible for successfully restructuring the business and
bringing the company to profitability.  Mr. Burgess was also responsible for
increasing the company's annual sales from $1.7 million to over $15 million.
 Prior to Plan B Communications Mr. Burgess spent three years with MetroNet
Communications, where he had major responsibilities for the development of
MetroNet's coast to coast intra and inter city networks.  MetroNet
Communications was recently acquired by AT&T for $5 billion.  In addition,
Mr. Burgess was influential in developing the operations of MetroNet during
the early growth stage of the company.  Prior to joining MetroNet, Mr.
Burgess was with ISM, a company recently acquired by IBM Global Services,
where he was responsible for developing and deploying the company's
distributed computing strategy.  In addition, Mr. Burgess successfully
negotiated and secured $130 million in new business for ISM.


Audit Committee
---------------

The Company does not have a separately designated standing audit committee,
or a committee performing similar functions.  Accordingly, the Company also
does not have an audit committee financial expert since it does not have an
audit committee.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

Based upon a review of filings with the Securities and Exchange Commission
and written representations that no other reports were required, the Company
believes that all of the Company's directors and executive officers complied
during fiscal 2003 with the reporting requirements of Section 16(a) of the
Securities Exchange Acts of 1934.

Code of Ethics
--------------

The Company has adopted its Code of Ethics and Business Conduct for
Officers, Directors and Employees that applies to all of the officers,
directors and employees of the Company.  The Code of Ethics is filed
herewith as Exhibit 14.1.


ITEM 10. EXECUTIVE COMPENSATION

Executive Compensation Summary Table

The following table sets forth all information concerning total compensation
earned or paid to the Company's Chief Executive Officer and the four other
most highly compensated executive officers of the Company who served in such
capacities as of December 31, 2003 for services rendered to the Company
during each of the last three fiscal years.

-16-
<PAGE>

                      SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                      SUMMARY COMPENSATION TABLE

                           Annual Compensation           Long term compensation
                          -----------------------      --------------------------
Name and            Year  Salary     Bonus  Other            Awards                  All
Principal                   ($)       ($)   Annual     Restrict-   Options/   LTIP    Other
Position                                    Compen-    ed Stock    SARs(#)    Pay-    Compensa-
                                            sation ($) Award(s)($)            outs($) tion ($)
----------          ----  ------     -----  ---------- ---------  ----------  ------  --------
<S>                <C>    <C>        <C>    <C>        <C>        <C>         <C>     <C>

Alan C              2003                   126,000        -0-                         75,000(6)
Bashforth           2002                   165,000     130,909(3)
President/CEO(1)

Paul Burgess        2003   80,208                         -0-     2,000,000
COO(5)

Joy C.Hartman,      2003   96,346     -0-      -0-        -0-       160,000     -0-      -0-
CFO(2)              2002   92,308     -0-      -0-      30,000(4)  -0-          -0-      -0-
                    2001  159,519     -0-    6,731        -0-      -0-          -0-      -0-

</TABLE>


(1) Consultancy fee paid to Calabash Consulting LTD, the remaining $114,000
has been accrued for the year ended December 31,2003.  The contractual
fee for the year 2003 is $240,000.

(2) On November 3, 2003, Ms. Hartman resigned as CFO and is no longer
employed with the Company.  Ms. Hartman is now a consultant to company
on as needed basis.

(3) Pursuant to his consulting agreement, Mr. Bashforth is entitled to
a bonus equal to 4,363,636 shares of the Company's common stock for the
year ended December 31, 2002.  These shares are valued at $.03 per
share, and although the shares have not been issued to date, they have
been expensed by the Company.

(4) For the year ended December 31, 2002, Ms. Hartman was granted
1,000,000 shares of the Company's common stock. These shares are valued
at $.03 per share, and although the shares have not been issued to date,
they have been expensed by the Company.

(5) Mr. Burgess was hired as COO on March 1, 2003 at a contractual fee
of $175,000 per year.  Of Mr. Burgess' $145,833 compensation for 2003,
the remaining $65,625 has been accrued for the year ended
December 31,2003.

(6) Consultancy fee paid to Calabash Consulting LTD, was the remaining
balance of his 2002 contract.



Options Grants for Fiscal 2003
------------------------------

Aggregate Options Exercised During the most recently completed financial
year and financial year-end option values.

No options were exercised by our executive officers and directors during the
most recent financial year.

Options Granted During Most Recent Financial Year.

A total of 660,000 options were granted on February 28, 2003 to 13
employees, of which Joy Hartman the former CFO was granted 160,000.


-17-
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Securities Authorized for Issuance Under Equity Compensation Plans

The following table shows information with respect to each equity compensation
plan under which the Company's Common Stock is authorized for issuance as the
fiscal year ended December 31, 2003.


<TABLE>
<CAPTION>


                          EQUITY COMPENSATION PLAN INFORMATION
                          ------------------------------------
                                                                     NUMBER OF
                                                                     SECURITIES
                                                                     REMAINING
                          NUMBER OF                             AVAILABLE FOR FUTURE
                       SECURITIES TO BE                            ISSUANCE UNDER
                         ISSUED UPON        WEIGHTED-AVERAGE           EQUITY
                         EXERCISE OF       EXERCISE PRICE OF        COMPENSATION
                         OUTSTANDING          OUTSTANDING         PLANS (EXCLUDING
                      OPTIONS, WARRANTS    OPTIONS, WARRANTS    SECURITIES REFLECTED
                          AND RIGHTS           AND RIGHTS          IN COLUMN (a))
  PLAN CATEGORY              (a)                  (b)                   (c)
====================================================================================
<S>                          <C>                 <C>                <C>
Equity
compensation plans
approved by
security holders              380,000               $.03             19,620,000
====================================================================================
Equity
compensation plans
not approved by
security holders             -0-                  -0-                   -0-
====================================================================================
TOTAL                         380,000               $.03             19,620,000
====================================================================================

</TABLE>



Security Ownership of Certain Beneficial Owners
-----------------------------------------------

The following table sets forth certain information as of March 22, 2004 with
respect to the beneficial ownership of the common stock by each beneficial
owner of more than 5% of the outstanding shares thereof, by each director,
each nominee to become a director and each executive officer named in the
Summary Compensation Table and by all executive officers, directors and
nominees to become directors of the Company as a group. Under the rules of
the Commission, a person is deemed to be the beneficial owner of a security
if such person has or shares the power to vote or direct the voting of such
security or the power to dispose or direct the disposition of such security.
A person is also deemed to be a beneficial owner of any securities if that
person has the right to acquire beneficial ownership within 60 days.
Accordingly, more than one person may be deemed to be a beneficial owner of
the same securities. Unless otherwise indicated by footnote, the named
entities or individuals have sole voting and investment power with respect
to the shares of common stock beneficially owned. There are no arrangements
known to the Company including pledges of securities, which might, at a
subsequent date, result in any change of control of the Company.

-18-
<PAGE>



<Table>
<CAPTION>
                                                            Shares of
                                                             Common
                                                              Stock
  Name and Address                                        Beneficially        Percent of
  Beneficial Owner               Title                       Owned       Outstanding Shares(1)
  ----------------               -----                    ---------     ------------------
 <S>                            <C>                        <C>             <C>

NEObliviscaris Partnership       5% Owner                   3,852,451          9.3%
200 Bar harbor Drive
Suite 300
West Conshohocken, PA  19428


Cumberland Investments LLC       5% Owner                   3,630,951          8.8%
Golf Corporate Centre
415 W. Golf Road, Suite 17
Arlington Heights, IL  60005


Alan C. Bashforth                CEO/President            1,520,000(2)         3.7%
Le Virage                        Chairman of the
La Route de Sainte Marie,        Board, Secretary
St. Mary, Jersey, UK
JE3 3DB



All Directors, 5% owners
and Officers As a group                                    9,003,402          21.7%

</TABLE>



If Laurus Master Fund, Ltd fully converted its debt, the potential
conversion would be 12,929,052 shares.   Contractually, it is not permitted
to hold more than 4.99% of the Company's outstanding common stock at any
time.  Laurus Master Fund, Ltd is only permitted to convert the debt into
the Company stock if we are in default, at the present time we are not in
default.

(1) Based upon a total number of 41,418,655 shares outstanding as of
March 26, 2004.
(2) Shares in the name of Innovative Communications Technology, LTD.,
a corporation, controlled by Mr. Bashforth.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



On April 1, 2003 in connection with the acquisition of Modern Mass Media the
Company entered into an employment agreement with Chip Del Coro the sole
shareholder of MMM. The agreement is for a term of three years with salary
of $65,000 the first year, $65,000 plus $25,000 and $30,000 draw against
commission in the in the second and third year respectively.

As of November 2003, Joy Hartman, the Company's former CFO, is now a
consultant to Company on an as needed basis.


-19-
<PAGE>


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:

  1. FINANCIAL STATEMENTS

     Report of Independent Accountants dated March 26,2004...........Page 24
     Consolidated Balance Sheets as of December 31, 2003 and 2002....Page 25
     Consolidated Statements of Operations, two years
     ended December 31,2003..........................................Page 26
     Consolidated Statements of Cash Flows, two years
     ended December 31,2003..........................................Page 27
     Consolidated Statements of Changes in Shareholders' Equity,
     two years ended December 31,2003................................Page 28
     Notes to Consolidated Financial Statements......................Page 29-36

2. INDEX OF EXHIBITS

   Exhibit No.    Description of Exhibit
   -----------    ----------------------
   3.1            Articles of Incorporation (1)
   3.2            By-Laws (1)
   4.1            Purchase Agreement between M3 Acquisition Corp,
                  a subsidiary of Science Dynamics Corporation and
                  Modern Mass Media, Inc. (2)
  10.1            Employment Agreement with Chip Del Coro (2)
  14.1            Code of Ethics
  21.1            List of Subsidiaries
  31.1            Certification by Alan C. Bashforth, Chief Executive
                  Officer and acting Chief Financial Officer, pursuant
                  to Section 302 ofthe 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.
  99.1            Press Release reporting the acquisition of Modern
                  Mass Media, Inc. (2)

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

(2) Incorporated by reference to the Company's current report on Form 8-K
filed on April 15, 2003.


(b) Reports on Form 8-K:

    On April 15, 2003, the Company filed a current report on Form 8-K
disclosing the acquisition, through its newly formed majority owned
subsidiary M3 Acquisition Corp., of certain business assets and assumed
certain liabilities of Modern Mass Media, Inc., a privately held company
based in Florham Park, NJ.

  On July 16, 2003, the Company filed a current report on Form 8-K/A with the
following financial statements of Modern Mass Media, Inc.: (1) audited
balance sheet for the year ended December 31, 2002; (2) audited statement of
operations for the year ended December 31, 2002; (3) audited statement of
cash flows for the year ended December 31, 2002; (4) unaudited balance sheet
for the period ended March 31, 2003; and (5) unaudited statement of
operations for the period ended March 31, 2003.  Also filed were the
following pro forma financial statements of Science Dynamics Corporation and
its subsidiaries: (1) unaudited combined pro forma balance sheet as of March
31, 2003; and (2) unaudited combined pro forma statement of operations for
the year ended December 31, 2002.


-20-
<PAGE>



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees. The aggregate fees billed by our auditors to date, for
professional services rendered for the audit of the Company's annual
financial statements for the years ended December 31, 2003 and December 31,
2002, and for review of the financial statements included in the Company's
quarterly reports on Form 10-QSB during those fiscal years, were $ 3,800,
and $ 28,000, for the respective years ended December 31, 2003 and 2002.

Audit-Related Fees.  The aggregate fees billed for assurance and related
services by our auditors that are reasonably related to the performance of
the audit or review of our financial statements were $ 0 and $ 47,000 for
the years ended December 31, 2003 and 2002, respectively.  Of which $15,000
was from our subsidiary.

All Other Fees. For the fiscal year ended December 31, 2003, the Company
incurred fees to auditors of $ 7,400
 for services rendered to the Company, other than the services covered in
"Audit Fees," "Audit-Related Fees" or "Tax Fees."  The nature of such
services were preparation of 8-K filing.


-21-
<PAGE>



                              SIGNATURES

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


SCIENCE DYNAMICS CORPORATION

BY:    /s/ Alan C. Bashforth
       ---------------------
       CEO/President/Acting CFO

DATED: April 8, 2004



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 dates indicated.


   Signature                 Title                      Date
   ---------                 -----                      ----

BY: /s/ Alan C. Bashforth     CEO/President/Acting CFO  April 8, 2004
    Alan C. Bashforth         Chairman of the Board
                              Secretary


-22-
<PAGE>





                     SCIENCE DYNAMICS CORPORATION



             Index to Consolidated Financial Statements


Report of Independent Accountants dated March 26,2004..............Page 24

Consolidated Balance Sheets as of December 31, 2003
and 2002.......................................................... Page 25

Consolidated Statements of Operations, two years ended
December 31, 2003 .................................................Page 26

Consolidated Statements of Cash Flows, two years ended
December 31, 2003 .................................................Page 27

Consolidated Statements of Changes in Shareholders' Equity,
two years ended December 31,2003 ..................................Page 28

Notes to Consolidated Financial Statements........................ Pages 29-36


-23-
<PAGE>



                       INDEPENDENT AUDITORS' REPORT


   To The Board of Directors
   Science Dynamics Corp.


     We have audited the accompanying consolidated balance sheets of
Science Dynamics Corp. and Subsidiaries as of December 31, 2003 and 2002
and the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for the years then ended.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based
on our audit.

     We conducted our audit in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Science
Dynamics Corp. and subsidiaries as of December 31, 2003 and 2002, and
results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.

     The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.  As discussed
in Note1(l) to the financial statements, the Company has generated
significant losses and requires additional capital to continue operations.
These conditions raise substantial doubt about its ability to continue as
a going concern.  Management's plans in regard to these matters are also
described in Note 1(l).  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



Peter C. Cosmas Co., CPAs

370 Lexington Ave.
New York, NY 10017

March 15, 2004



-24-
<PAGE>


<TABLE>
                           SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                                  CONSOLIDATED BALANCE SHEETS
                                       AS OF DECEMBER 31

<CAPTION>
                        ASSETS

                                                             2003                   2002
                                                             ----                   ----

<S>                                                   <C>                     <C>
Current assets:


   Cash and cash equivalents                             $ 74,250             $   43,141
   Accounts receivable trade                              447,061                 46,428
   Inventories                                            181,119                205,551
   Other current assets                                     2,812                 28,275
                                                         --------               --------
      Total current assets                                705,241                323,395
                                                         --------               --------


Property and equipment, net                               209,654                514,417
Deferred Asset                                             66,847                149,068
Other assets                                                2,812                 17,370
Goodwill                                                  250,498                      -
                                                         --------               --------
      Total assets                                     $1,235,052             $1,004,250
                                                         ========               ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

   Short term payable                                     111,860                128,413
   Bank Note                                                    -                 33,550
   Customer deposits                                      137,004                286,990
   Deferred Income                                         35,404                      -
   SBA Loan                                                50,000                      -
   Revolving Credit Line                                  336,309                      -
   Loan payable stockholders                              163,192                163,192
   Accounts payable                                     1,488,690              1,214,792
   Accrued expenses                                       443,474                413,534
   Convertible Debenture                                1,198,362              1,839,315
   Subscribed Stock Payable                               200,000                      -
                                                         --------               --------
      Total current liabilities                         4,164,294              4,079,786

Long Term liabilities:
Long Term Debt                                            428,828                      -
Non current portion of bank Note                                -                 50,326
                                                         --------               --------

Total liabilities                                       4,593,123              4,130,112
                                                         --------               --------


Shareholders' equity -
 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,
      41,554,454 and 41,254,454 issued
      41,428,654 and 41,128,654 outstanding
      in 2003 and 2002 respectively.                      415,545                412,545

   Additional paid-in capital                          15,593,569             15,546,611
   Reserve for stock compensation                         160,909                160,909
  (Deficit)                                           (19,130,261)           (18,848,094)
                                                         --------               --------
                                                       (2,960,238)            (2,728,029)
   Common stock held in treasury, at cost                (397,833)              (397,833)
                                                         --------               --------
   Total shareholders' equity                          (3,358,071)            (3,125,862)
   Total liabilities and shareholders'
   Equity                                             $ 1,235,052            $ 1,004,250
                                                         ========               ========

                See accompanying notes to the consolidated financial statements.

-25-
<PAGE>

</TABLE>



<PAGE>


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


<CAPTION>
                                                     Twelve Months Ended December 31,

                                                   2003                             2002
                                                   ----                             ----
<S>                                         <C>                              <C>

NET SALES                                    $ 4,108,510                      $  975,473
                                               ---------                       ---------


Operating costs and expenses:

      Cost of sales                            1,940,959                         429,933
      Research and development                   382,764                         748,501
      Selling, general
          And administrative                   2,952,218                       2,173,466
                                               ---------                       ---------
                                               5,275,941                       3,351,903
                                               ---------                       ---------

Operating (Loss) before other income
 (expenses) and Cumulative effect of
 accounting change                            (1,167,431)                     (2,376,430)


Other income (expenses):

  Sale of NJ NOL                                217,021                          190,752
  Sale of Intangible Asset                    1,350,000                                -
  Write Down of Assets                         (105,603)                        (100,550)

  Interest Expense                             (199,713)                        (158,131)

  Finance Expense                              (125,942)                        (326,731)
                                               ---------                       ---------

Net Loss before cumulative effect
of accounting Change                            (31,668)                      (2,771,090)

Cumulative effect of accounting
change                                         (250,499)                               -
                                               ---------                       ---------
Net Loss                                       (282,167)                      (2,771,090)
                                               =========                       =========

Net (loss) per common share
 basic and diluted                           $    (0.01)                     $     (0.08)
                                               =========                       =========


Weighted average shares outstanding
  basic and diluted                           41,418,655                      34,485,986
                                               =========                       =========

                 See accompanying notes to the consolidated financial statements.

</TABLE>


-26-
<PAGE>


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


<CAPTION>
                                                               Year Ended December 31,

                                                             2003                   2002
                                                             ----                   ----
<S>                                                    <C>                  <C>
Cash flows from operating activities:
 Net (loss)                                             $(282,167)           $ (2,771,090)

Adjustments to reconcile net
(loss) to net cash provided by
(used for) operating activities:
   Depreciation                                           277,772                  324,215
   Interest expense non cash                                  665                  107,365
   Write-off long lived assets                            105,603                  100,550
   Other non cash items                                    73,187                  160,909
   Financing expense non cash                             125,942                  326,731
   Impairment of Goodwill                                 250,499                        -
Changes in operating assets
and liabilities:
   (Increase) decrease in:
    Accounts receivable                                  (400,633)                 (33,194)
    Other receivable                                            -                   60,721
    Inventories                                            24,432                  105,306
    Other current assets                                   25,463                   97,171
    Other assets                                           14,558                    7,993
     Increase (decrease) in:
     Accounts Payable and
     accrued expenses                                     303,839                  675,714
     Deferred Income                                       35,404                        -
     Customer Deposits                                   (149,986)                  (2,378)
                                                         --------                  -------

Total adjustments                                         686,745                1,931,103
                                                         --------                  -------

Net cash provided by (used for)
  operating activities                                    404,578                 (839,987)
                                                         --------                  -------

Cash flows from investing activities:
 Purchase of property and equipment - net                 (34,590)                (133,455)
                                                         --------                  -------

 Net cash (used) in investing activities                  (34,590)                (133,455)
                                                         --------                  -------

Cash flows from financing activities:
 Increase (decrease) in
  Repayment of Loan Payable                              (100,000)                       -
  Bank Note                                               (83,876)                 (15,659)
  Subscribed Stock                                        200,000                        -
  Issuance of Convertible Debt                                  -                1,046,975
  Repayment of convertible debt                          (661,312)                 (31,808)
  Net borrowing on Revolving AR
  credit facility                                         306,309                        -
                                                         --------                  -------

  Net cash (used in) provided by financing activities    (338,879)                 999,508
                                                         --------                  -------

  Net increase (decrease) in cash and cash equivalents     31,109                   26,066

Cash and cash equivalents -
 beginning of period                                       43,141                   17,075
                                                         --------                  -------
Cash and cash equivalents -
 end of period                                         $   74,250               $   43,141
                                                         ========                  =======

                     See accompanying notes to the consolidated financial statements.

</TABLE>


-27-
<PAGE>



<TABLE>

                                       SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                               CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                    FOR THE TWO YEARS ENDED DECEMBER 31, 2003 AND 2002
<CAPTION>


                          Common Stock              Additional                      Reserve     Treasury
                          ------------                Paid-In        Retained        Stock      --------
                             Shares      Amount       Capital        (Deficit)   Compensation    Shares       Amount        Total
                             ------      ------       -------       ---------   ------------    ------       ------    -----------
<S>                      <C>          <C>        <C>             <C>             <C>               <C>         <C>      <C>



Balance
December 31, 2001        20,879,500     208,795    14,681,858     (16,077,004)             -     125,800     397,833    (1,584,184)

Issuance of common stock
net of related expenses  20,374,954     203,750       864,753                              -                             1,068,503


Net Loss                                                           (2,771,090)             -                            (2,771,090)


Other                                                                                160,909                               160,909


Balance                  ----------     -------    ----------      ----------        -------    -------      -------     ---------
December 31, 2002        41,254,454    $412,545  $ 15,546,611   $ (18,848,094)    $  160,909    125,800    $ 397,833  $ (3,125,862)

Issuance of common stock
net of related expenses     300,000       3,000        46,958                              -                                49,958

Net Loss                                                             (282,167)             -                              (282,167)


Balance                  ----------     -------    ----------      ----------        -------    -------      -------     ---------
December 31, 2003        41,454,454   $ 415,545  $ 15,593,569   $ (19,130,261)    $  160,909    125,800   $  397,833  $ (3,358,807)


                           See accompanying notes to the consolidated financial statements.


</TABLE>

-28-
<PAGE>



          SCIENCE DYNAMICS CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1) Summary of Significant Accounting Policies:

     a) Principles of Consolidation:

The consolidated financial statements included the accounts of the Company
and all of its subsidiaries in which a controlling interest is maintained.
All significant intercompany accounts and transactions have been eliminated
in consolidation.  For those consolidated subsidiaries where Company
ownership is less than 100%, the outside stockholders' interests are shown
as minority interests.  Investments in affiliates over which the Company has
significant influence but not a controlling interest are carried on the
equity basis.

     b) Organization and Description of Business:

Science Dynamics Corporation (the "Company", "SciDyn" or "Science Dynamics")
was incorporated in the State of Delaware May 1973 and commenced operations
in July 1977.  The Company began as a provider of specialized solutions to
the telecom industry.  Throughout its history, SciDyn has adapted to the
changes in this industry by reinventing itself to be more responsive and
open to the dynamic pace of change experienced in the broader converged
communications industry of today.  Currently SciDyn still provides advanced
solutions for several vertical markets.  The greatest change in operations
is in the shift from being a component Manufacturer to a solution provider
focused on developing applications through software on our core platform
technology.

Science Dynamics Corporation formed a subsidiary M3 Acquisition Corp. (M3)
and has acquired certain business assets and liabilities of Modern Mass
Media, Inc. (MMM), a privately held company based in Florham Park, NJ.
Modern Mass Media is a company with a 30-year history of selling media
solutions to some of the most widespread corporations in the Northeast.
Since the company's inception in the early 1970s, it has been a leader in
providing audio/video technology to corporate clients that span the spectrum
from finance and advertising to healthcare and pharmaceuticals. MMM has also
provided and continues to provide solutions to public institutions from
local governments to educational institutions such as regional school boards
and colleges.

     c) Use of Estimates:

 Our 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 us to make estimates and
judgments that affect the reported amounts in the financial statements and
accompanying notes. These estimates form the basis for judgments we make
about the carrying values of assets and liabilities that are not readily
apparent from other sources. We base our estimates and judgments on
historical experience and on various other assumptions that we believe are
reasonable under the circumstances. However, future events are subject to
change and the best estimates and judgments routinely require adjustment. US
GAAP requires us 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
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.

     d) Inventories:

Inventories are stated at the lower of cost or market, with cost determined
on a first-in, first-out basis.

-29-
<PAGE>


     e) Depreciation, Amortization and Long-Lived Assets

        Long-lived assets include:

       Property, plant and equipment - These assets are recorded at
       original cost and increased by the cost of any significant
       improvements after purchase.  We depreciate the cost evenly over
       the assets' estimated useful lives.  For tax purposes,
       accelerated depreciation methods are used as allowed by tax laws.

       Goodwill- Goodwill represents the difference between the purchase
       price of acquired business and the fair value of the their net
       assets. Good will is not amortized.

       Identifiable intangible assets - These assets are recorded at
       original cost. Intangible assets with finite live are amortized
       evenly over their estimated useful lives.  Intangible assets with
       indefinite lives are not amortized.

       At least annually,  we review all long-lived assets for
       impairment.  When necessary, we record charges for impairments of
       long-lived assets for the amount by which the present value of
       future cash flows, or some other fair value measure, is less than
       the carrying value of these assets.

     f) Cash and Cash Equivalents:

The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

     g) Income Taxes:

The Company elected to adopt the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes", (SFAS No.
109) in 1992.  Under SFAS No. 109, deferred income taxes are recognized for
the tax consequences in future years of differences between the tax basis of
assets and liabilities and their financial reporting amounts at each year-
end based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expenses (credit)
is the tax payable (receivable) for the period and the change during the
period in deferred tax assets and liabilities.

     h) Revenue Recognition:

Revenue is recognized when all significant contractual obligations have been
satisfied and collection of the resulting receivable is reasonably assured.
 Revenue from product sales is recognized when the goods are shipped and
title passes to the customer. Sales of services are recognized at time of
performance.

     i) Impairment of Long-Lived Assets:

Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of long-lived Assets and for long-lived Assets to be Disposed
of." SFAS No. 121 requires the Company to review the recoverability of the
carrying amounts of its long-lived assets whenever events or changes in
circumstances indicate that the carrying amount of the asset might not be
recoverable.

In the event that facts and circumstances indicate that the carrying amount
of long-lived assets may be impaired, an evaluation of recoverability would
be performed.  If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset would be compared to the
assets' carrying amount to determine if a write-down to fair value is
required.  Fair value may be determined by reference to discounted future
cash flows over the remaining useful life of the related asset.

-30-
<PAGE>


     j) Fair Value Disclosures:

The carrying amounts reported in the Consolidated Balance Sheets for cash
and cash equivalents, accounts receivable, accounts payable and accrued
expenses, approximate fair value because of the immediate or short-term
maturity of these financial instruments.

     k) Stock Options:

In December 2002, the Financial  Accounting Standard Board ("FASB") issued
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure", SFAS No. 148 amends Statement of Financial Accounting Standards
No. 123, " Accounting for Stock-Based Compensation," to provide alternate
methods of transition for companies electing to voluntarily change to the
fair value method of accounting for stock-based compensation and also amends
the disclosure provisions of SFAS No. 123.  The provisions of SFAS No. 148
are effective for fiscal years ending December 15, 2002. The Company has
adopted the disclosure provisions of SFAS No. 148.

The Company accounts for its stock options in accordance with the provisions
of Accounting principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations.  As such, compensation
expense would be recorded on the date of grant only if the current market
price of the underlying stock exceeded the exercise price.  On January 1,
1996, the Company adopted the disclosure requirements of SFAS No. 123,
Accounting for Stock Based Compensation. Had the company determined
compensation cost based on fair value at the grant date for stock options
under SFAS No. 123 the effect would have been immaterial.

     l) Basis of Financial Statement Presentation:

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.  The Company has generated
significant losses and is unable to predict profitability for the future.
These factors indicate that the Company's continuation, as a going concern
is dependent upon its ability to obtain adequate financing.

     2) Accounts Receivable:

The Company evaluates its accounts receivable on a customer-by-customer
basis and has determined that no allowance for doubtful accounts is
necessary at December 31, 2003 and 2002.

     3) Property and Equipment:

A summary of the major components of property and equipment is as follows:

                            2003                2002
Computers, fixtures
And equipment  	         $1,566,545          $1,487,894

Less accumulated
      Depreciation       (1,356,891)           (973,477)
                          ---------             -------
      Totals            $   209,654          $  514,417
                          =========             =======



-31-
<PAGE>



4) Segment Reporting

Management views its business in two divisions, the software engineering
division and the audiovisual division.



                                              Year               Year
                                             Ended              Ended
                                      December 31, 2003    December 31, 2002
                                      -----------------    -----------------
Revenue

 Audio Visual Division                     $ 2,617,676                   -
 Software Technology Division                1,490,834             975,473
                                      -----------------    -----------------
 Total Consolidated Revenue                $ 4,108,510         $   975,473
                                      -----------------    -----------------


Net Income (loss)

 Audio Visual Division                     $ ( 691,429)                  -
 Software Technology Division                  409,262           2,771,090
                                      -----------------    -----------------
 Total Consolidated Net Loss                 $(282,167)         $2,771,090
                                      -----------------    -----------------

Assets

 Audio Visual Division                       $ 496,883                   -
 Software Technology Division                  739,169           1,004,250
                                      -----------------    -----------------
 Total Consolidated Assets                  $ 1,235,052        $ 1,004,250
                                      -----------------    -----------------

5) Acquisitions of Assets

On March 31, 2003, Science Dynamics Corp. (the "Company") through its newly
formed majority owned subsidiary, M3 Acquisition Corp., acquired certain
Business assets and assumed certain liabilities of Modern Mass Media, Inc.
for $600,000.The acquisition was funded through an additional Purchase and
Security Agreement between Laurus Master Fund, Ltd. and the Company. Laurus
Master Funds, Ltd. agrees to make advances and investments available to the
Company in the aggregate amount of up to $1,000,000.The Company issued a
convertible note on March 31, 2003, for the advancement of $247,750 in
connection with the acquisition. In addition Laurus made available a
revolving credit line based on MMM accounts receivable. $203,500 was borrowed
at the time of the acquisition.  In connection with these agreements 250,000
common stock warrants were issued.

Upon execution of the Purchase Agreement between the Company and Modern Mass
Media, Inc. an initial payment of $100,000 was due at closing and a further
payment of $100,000 due sixty days after the first payment. Modern Mass Media
retained $100,000 to cover the initial payment and a holdback reserve of
$55,000 to cover any outstanding checks or open items. The balance on account
was remitted to M3 Acquisition .The remaining portion of the purchase price
will be paid out over the next sixty months in increments of $80,000 per
year, plus interest equivalent to the "Cost of Living" index, in cash or
stock or a combination of both at the Buyer's discretion.


6) Income Taxes:

In 1992, the Company adopted SFAS No. 109, Accounting for Income taxes.
Under the provision of SFAS No. 109, the Company elected not to restate
prior years due to immateriality.  In 1992, the effect of the change was to
decrease the net loss by $308,000 (.10 per share).  The deferred tax asset
recognized was recovered through the sale of New Jersey State net-operating
loss carryovers as permitted by the State in the amount of $308,000.  In
2003 and 2002 the Company recovered $ $217,021 and  $163,252 respectively
through the sale of New Jersey State net-operating loss carryovers as
permitted by the State.  This recovery was recognized as other income in the
years ended 2003 and 2002 Statement of Operations.

At this time, the Company does not believe it can reliably predict
profitability for the long-term.  Accordingly, the deferred tax asset
applicable to 2003 and 2002 operations has been reduced in its entirety by
the valuation allowance.

-32-
<PAGE>

As a result of the operating losses for the years ended December 31, 1990
and 1992-2003 the Company has available to offset future taxable income a
net operating loss of approximately  $20,000,000 expiring 2005-2023.
In addition, research credits expiring 2005-2017 are available to offset
future taxes.

The components of the provision (credit) for income taxes from continuing
operations is as follows:


                                      2003                      2002
                                      ----                      ----

Deferred

Federal               	         $       -                   $      -

Current
    Federal                              -                          -
    State                                -                          -
                                  --------                    -------

                                 $       -                   $      -
                                  --------                    -------

Differences between the tax provision computed using the statutory
federal income tax rate and the effective income tax rate on
operations is as follows:


                                      2003                      2002
                                      ----                      ----


Federal
   Statutory rate                 $(93,295)                $(934,653)

   Research tax
   Credits                        $      -                 $       -

   Tax benefit not
   Provided due
   To valuation
      Allowance                     93,295                   934,653
                                  --------                 ---------
                                  $      -                 $       -
                                  ========                 =========



Components of the Company's deferred tax assets and liabilities are as
follows:

                                                 December 31,

                                      2003                      2002
                                      ----                      ----


Deferred tax assets:
Tax benefits related
To net operating
Loss carry forwards
And research tax Credits        $6,814,245                $6,720,950
                                 ---------                 ---------

Total deferred tax Asset         6,814,245                 6,720,950
                                 ---------                 ---------

Valuation Allowance for
Deferred tax Assets              6,814,245                 6,720,950
                                 ---------                 ---------

Net deferred tax Assets         $      -0-                $      -0-

                                 =========                 =========


-33-
<PAGE>



7)	Commitments:

     a. Leases
     The Company leases their office, sales and manufacturing facilities
     and certain vehicles under non-cancelable operating leases with
     varying terms.  The leases generally provide that the Company pay
     the taxes, maintenance and insurance expenses related to the leased
     assets.  Future minimum lease payments required under operating
     leases that have initial or remaining non-cancelable lease terms in
     excess of one year, as of December 31, 2003 are as follows:

              2004                  $111,744
              2005                   111,744
              2006                    16,875
              2007                        -0-

    Total minimum lease payments    $240,363
                                     =======


8) Goodwill and other Intangible Assets:

In 2002, as a result of adoption SFAS No. 142, Goodwill and Other Intangible
Assets, we recorded a write-down of $250,499 for the impairment provisions
related to goodwill in our Audio Visual business. The fair value of the
Audio Visual business was using discounted cash flows.  This write-down, was
report as a cumulative effect of a change in accounting principle.

On December 22, 2003, Evercom Systems, Inc. (Evercom) and Science Dynamic
Corp. (SDC) executed a series of agreements which provide, among other
things, that SDC will assist Evercom in accelerating its development of a
next generation IP based inmate telephony system. In concert with this
development effort, SDC has sold to Evercom certain Intellectual Property
that relates to technology known as "voice over Internet protocol". As a
condition of the purchase agreement, SDC will receive a perpetual, royalty-
free, non-exclusive license to use the technology primarily developed by SDC
during this contract term with the condition that SDC may only exploit such
technology outside of the law enforcement market place.

In connection with this sale the Company booked a sale of intangible asset
for $1,350,000.  Included in other income in the consolidated statement of
operations.

The company has concluded that due to the nature of this extraordinary sale,
the company will account for this transaction as a Sale of Intangible Asset
outside of normal recognized revenue.  The Company now considers this
activity to be part of it's core business and is undertaking further
initiatives to develop communication software and systems for licensing and
outright sale.


9) Notes payable

   a) Short Term Loans Payable
   The short-term loan payable consists of a loan from one stockholder at
   December 31, 2003.  Short-term borrowing amounted to $163,192 and
   $163,192 in 2003 and 2002 respectively.


-34-
<PAGE>

   b) Convertible Notes Payable
   In 2002  the Company entered into various securities purchase
   agreements with one accredited investor for the issuance of 8%
   convertible debentures in the aggregate amount of $1,240,520
   respectively.  The debentures are convertible into common stock at a
   conversion price of the lower of 85% of the average of the three
   lowest closing bid prices for the common stock thirty days prior to
   the closing date or 85% of the average of the three lowest closing bid
   prices for the common stock thirty days prior to conversion.  We paid
   a fund management fee of 8% amounting to $103,125 in 2002
   respectively. In addition we issued 840,000 commons stock purchase
   warrants in 2002 respectively ranging in price from $1.46 to $.355.
   The offering of convertible debentures was exempt from registration
   under Rule 506 of Regulation D and under Section 4(2) of the
   Securities Act.  No advertising or general solicitation was employed
   in offering the securities.  All persons were accredited investors,
   represented that they were capable of analyzing the merits and risks
   of their investment.  On October 16, 2002, the Company entered into a
   security agreement with Laurus Master Fund, Ltd.  In order to secure
   all its obligations pursuant to this security agreement the company
   granted a security interest in all its assets.

   c) Credit Line
   On March 31, 2003 the Company entered into a revolving credit line up
   to $1,000,000 with Laurus to factor the accounts receivable of M3
   Acquisition Corp.  Availability is based on accounts receivable which
   are less than 90 days old. Balance outstanding at December 31, 2003 is
   $336,309.

   d) Other Loan and Notes Payable
   In connection with the acquisition of Modern Mass Media we assumed a
   $50,000 SBA loan. It bears and interest rate of 4%. Principal and
   interest payments are deferred for 25 months.  The notes is due July ,
   2004. The note is secured by Chip Del Cordo personal residence.

   On March 31, 2003 the Company entered into a loan agreement for the
   purchase of MMM.  The loan amounted to $600,000.  $100,000 was paid at
   the time of closing, an additional $100,000 was paid during 2003  The
   balance will paid over the next five years in equal installments of
   $80,000  plus interest.  All or part of  the loan maybe converted into
   the companies stock at the buyers discretion buyer's discretion. The
   balance at December 31, 2003 is $400,000.


10) Employment agreements
In January 2002 the Company entered into a three year employment agreement
with Calabash Consulting LTD. for the services of Alan Bashforth to act as
Chief Executive officer and President of the Company for an annual fee of
$240,000 and a bonus of 4,363,636 shares of the Company's common stock at
the end of the term or on 31st December 2002. The Company has recorded
additional compensation expense of $130,909 and reserved against the capital
account for the issuance of such. To date the stock has not been issued. In
addition the company is responsible for payment of any state or federal tax
arising out of this agreement.

On March 1, 2003 the Company entered into a three year employment agreement
with Paul Burgess to become the Chief operating Officer for an annual salary
of $175,000.  In addition he has been granted an option to purchase
2,000,000 shares of stock at .03 a share.

On April 1, 2003 in connection with the acquisition of Modern Mass Media the
Company entered into an employment agreement with Chip Del Coro the sole
shareholder of MMM. The agreement is for a term of three years with salary
of $65,000 the first year, $65,000 plus $25,000 and $30,000 draw against
commission in the in the second and third year respectively.

11) Stock
On November 6, 2002 by written consent of the majority of stockholders, the
Company, adopted an amendment to the Corporations' Certificate of
Incorporation to increase the number of authorized shares of common stock,
from 45,000,000 to 200,000,000 shares and create 10,000,000 shares of
preferred stock,$.01 par value per share of which the Board of Directors of
the Corporation shall have the right to determine the terms, rights upon
issuance.


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12) Stock Options and Warrants:
    a. Stock option
    The Company issued 660,000 at an exercise price of .03 in 2003 in
    connection with the 2002 Employee Stock Option Plan. 280,000 shares
    expired in 2003.

    b. Warrants
    The Company issued 250,000 and 840,000 common stock purchase warrants
    in 2003 and 2002 respectively at a prices ranging from $1.4339 to
    $0.052 per share in connection with the issuance of various
    convertible notes.

13) Major Customers:

    Currently no one customer accounts for more than 10% of total sales
    compared to 2002.  This is a significant improvement over 2002 when
    three customers accounted for an aggregate of 55% of total sales.

14) Earnings (Loss) Per Share:

    In February 1997, the Financial Accounting Standards Board issued
    SFAS No. 128.  "Earnings Per Share" applicable for financial
    statements issued for periods ending after December 15, 1997.
    As required the Company adopted SFAS No. 128 for the year ended
    December 31, 1997 and restated all prior period earnings per share
    figures.  The Company has presented basic earnings per share.  Basic
    earnings per share excludes potential dilution and is calculated by
    dividing income available to common stockholders by the weighted average
    number of outstanding common shares.  Diluted earnings per share
    incorporates the potential dilutions from all potentially dilutive
    securities that would have reduced earnings per share.  Since the
    potential issuance of additional shares would reduce loss per share
    they are considered anti-dilutive and are excluded from the calculation.

    The weighted average number of shares used to compute basic loss per
    share was 41,418,655 in 2003 and 34,485,986 in 2002.

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