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, 2002

[ ] 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 )

                      2059 Springdale Road, Suite 100
                    Cherry Hill, New Jersey 08003-1609
                 (Address of principal executive offices)

Issuer's telephone number: 856-424-0068

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, 2002 were
$975,473.

As of April 11, 2003, 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 $ 2,723,474 million

As of April 14, 2003, the issuer had 41,128,655 outstanding shares of
Common Stock.

Transitional small business format  Yes ___    No  X

<PAGE>

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

ITEM 1. DESCRIPTION OF BUSINESS


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

We were incorporated in the State of Delaware May 1973 and commenced
operations in July 1977.   The Company has been developing and delivering
technologically advanced telecommunication solutions for over twenty-five
years.

2002 has been a very difficult year for the company, with the slowdown in
deployment of infrastructure in our traditional customer base and many
organizational changes in the Inmate Telephony arena.

The Inmate Telephony business continues to provide revenue for the company,
although diminished by the decision of our main customer to exit this
business.  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.

The last three (3) months has seen our company take steps to improve our
survivability in this very difficult market place. New initiatives are being
formulated which should allow us to grow by focusing on niche applications
and markets.

As a subsequent event, 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.
(MMM), a privately held company based in Florham Park, NJ.  Modern Mass
Media, Inc. 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:

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.

-3-
<PAGE>

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

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

-4-
<PAGE>

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.

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

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

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

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

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

MinuteMan

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

-5-
<PAGE>

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.

A second-generation MinuteMan platform is currently in the integration test
stage.  This next generation platform is built on the industry standard
Compact PCI architecture.  This solution provides an even higher level of
system reliability and maintainability.  This version of the MinuteMan will
provide higher density within a single chassis as well as the ability to
dynamically add new resources to the switch and provision new services with
out taking the system offline.

New applications for the MinuteMan will be 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.  Support
will be provided for 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 it's 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

Sales against the distribution contract with Korean-based Mercury
Corporation have not yet come to fruition due to the deteriorated
economy within Korea.

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.


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.

-6-
<PAGE>

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.


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.

-7-
<PAGE>

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 as developed. We made application for a
patent on the 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.

Last year we started the patent 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.

INDUSTRY
--------

The inmate call control market generates $1 billion annually in network
usage. Its 200,000 telephones represent $200 million in equipment sales,
which include call control platforms and such ancillary equipment as
telephones, call recording devices and administrative terminals. The Federal
Bureau of Prisons operated 84 correctional facilities that are currently at
31% over capacity. There are 1,558 public and private facilities housing
State inmates. Many of these are operating above their capacity.
Additionally, there are some 3,365 jails with over 600,000 inmates operated
by municipal and county governments.

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
ourself 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.


-8-
<PAGE>

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, three of
which are formidable. 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.

CUSTOMERS
---------

During 2002, three customers, Bealls Communications Group, Bell South Public
Communications and Combined Public Communications accounted for an aggregate
of 55% of total sales.   During 2001, two customers, Bealls Communications
Group and Bell South, each accounted for an aggregate of 37% of total sales.

EMPLOYEES
---------

As of April 14, 2003, SciDyn employed fourteen 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 nor 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

Pursuant to a ten-year lease commencing May 1, 1995, we lease a 50,000 square
foot freestanding masonry building in an industrial park in Cherry Hill, New
Jersey, utilized for office space and testing of our products and other
corporate activities.  In the latter part of 1998, we subleased 25,645 square
feet of the building to a printed circuit board manufacturer.  The tenant
abandoned the premises at the end of February 2003.

-9-
<PAGE>

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


PART II

ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


The Registrant's Common Stock is being 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, 2001 and December 31, 2002 were as follows:




 Calendar Quarter          High Bid Price            Low Bid Price
 ----------------          --------------            -------------

    2001
    ----
    First                      $ 2.00                    $ .85
    Second                       1.45                      .50
    Third                         .65                      .12
    Fourth                        .12                      .06

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



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, 2002, there were approximately 253 holders of record of
the Common Stock of the Company. However, registrant has reason to believe
that there are more than 850 shareholders because of stock held in street
name by various broker-dealers.

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.

-10-
<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

The securities described below represent our securities sold by us for the
period ending December 31, 2002 that were not registered under the
Securities Act of 1933, as amended, (the "Securities Act") all of which were
issued by us pursuant to exemptions under the Securities Act. Underwriters
were involved in none of these transactions.

Private Placements of Common Stock and Warrants for Cash

None.

Sales of Debt and Warrants for Cash

From January 1, 2002 to December 31, 2002, we entered into securities
purchase agreements with one accredited investor, Laurus Master Fund, Ltd.
for the issuance of 8% convertible debentures in the aggregate amount of
$1,240,520.



               Date                 Conv Notes
            -------------------------------------
             2/6/2002              $    50,000
             2/8/2002              $    94,000
            2/13/2002              $    30,000
            2/20/2002              $   131,500
            3/25/2002              $   147,380
            3/27/2002              $    98,800
            3/28/2002              $    75,250
             4/1/2002              $    35,950
            6/20/2002              $   106,000
             7/5/2002              $   105,000
            7/12/2002              $    40,000
            7/23/2002              $    45,000
            7/29/2002              $   100,000
             8/5/2002              $    56,000
             8/8/2002              $    49,973
           10/16/2002              $    66,667
           12/20/2002              $     9,000

             Total 2002:           $ 1,240,520
            -------------------------------------

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

-11-
<PAGE>

On October 16, 2002, we entered into a Security Agreement with Laurus Master
Fund, Ltd, in order to secure all of our obligations to it.  Pursuant to
this Security Agreement, we granted a security interest in all of our
assets, including the following: all accounts, inventory, equipment, goods,
documents, instruments, contract rights, general intangibles, chattel paper,
supporting obligations, investment property, letter-of-credit right, and
trademarks and trade styles.

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

The Company renegotiated the convertible debentures and on February 27, 2003
signed an agreement with Laurus Master Fund, Ltd., to extend the Maturity
Date of each of the Notes to December 31, 2004.  In exchange for the
Maturity Dates, the Company has agreed to repay the aggregate principal
amount of the Notes and interest commencing April 1st 2003 and ending
December 31, 2004.  The schedule includes a principal conversion feature as
previously described.  The payment schedule will be accelerating, meaning
that the size of the monthly payments will start low and increase over time.

Option Grants

None.

Issuances of Stock for Services or in Satisfaction of Obligations

None.


Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None


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


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

Throughout fiscal 2002 the global telecommunications market continued an
unprecedented down cycle.  The depth of the decline in spending and its
duration was unexpected in the industry.  The earlier predictions of
improvement in the technology and telecom sectors did not come to fruition.

This decline was due to a number of factors 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.

This business climate has led us to evaluate the company's position and make
substantial changes in order to sustain the company and open new areas for
growth. While we still have much work to accomplish, every action undertaken
over this past year was designed to get us through the downturn and to
position us to grow as the market returns.

-12-
<PAGE>

During 2002, Alan Bashforth assumed the position of President/CEO working
under a consulting agreement entered between the company and Calabash
Consulting Ltd.  The company believes that the consultancy agreement
provides an equitable agreement for the Company as well as for Calabash
Consulting Ltd.  As consideration for three-year consultancy, the
agreement contains the following arrangements.  Consultancy Fee is an
annual fee of $240,000.00 to be paid in monthly payments of $20,000.00.
Calabash shall be entitled to a bonus of one years fee's to be paid in
SciDyn common stock at a value of $0.055 per share (4,363,636 shares)
at the end of the term or on 31st December 2002 should the company
continue in business after that date.  The stock bonus has been
expensed but has not been issued to date.  The stock should be issued in
the near future.  Calabash Consulting Ltd. shall be reimbursed for all
approved expenses incurred by him in the performance of his duties.
SciDyn will pay the sum of $750.00 per month towards the provision of
a suitable vehicle for the consultant's exclusive use during the term
of this agreement

During the past year, SciDyn streamlined our product lines focusing efforts
in both the product development and marketing teams to strengthen our
position in the area of inmate call control.  The Inmate Telephony business
continues to provide revenue for the company, although diminished by the
decision of our main customer to exit this business.  The company has been
rebuilding the business by partnering with many other organizations and
providing them with custom solutions accented toward their individual
requirements.

Over the past year, several new software releases have been produced for the
Commander I and II models that have repositioned the product for a greater
segment of the inmate call control market. This has opened the door to allow
the Commander product to fill the needs of the independent service
providers. This is a segment of the industry that had previously been
overlooked as development centered on the needs of the large Local Exchange
Carrier (LEC) customers.

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

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 add
to our customers. Typically, these back-office services are charged on a
monthly or transaction basis and apply to calls made through Commander
platforms installed in the field. This introduces a new revenue producing
operation that can extend the value of a typical system beyond the initial
equipment sale to a potential three to five year revenue source.

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 technology across
many other business sectors.

With the launch during the year of our MinuteMan Pre-paid telephony systems,
the company entered a new market, which has great potential in both domestic
and international markets. This product, like many of our products will be
made available as a software suite for integration by other organizations or
as a stand-alone product. The company is now starting to see sales of this
product and is entering into an enhanced marketing campaign to develop this
business.

-13-
<PAGE>


Subsequent to the year ending, on March 31, 2003, SciDyn acquired certain
assets and assumed certain liabilities of Modern Mass Media, Inc.  This very
recent acquisition of Modern Mass Media has placed the company in the
position of being a supplier of high quality Audio Visual, Video
conferencing, and Multi Media solutions to many Fortune 500 companies. 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 April 14, 2003 we had a total of fourteen
employees. We intend to continue to increase the scope of our operations
while also facing the challenge of maximizing resources effectively.
The Company expects operating losses and negative cash flow for the
foreseeable future as we must obtain orders, introduce additional services
and create optional procurement methods. We believe that increasing our
revenues will depend in large part on our ability to offer products that are
attractive to our customers, increase customer awareness of our product
offerings by developing effective marketing and promotional activities and
develop strategic relationships.


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,
                                     2002               2001
                                     ----               ----

Sales                          $  975,473         $  891,149

Net Loss                      $(2,771,090)       $(4,375,476)

Net Loss Per Share                 $(0.08)            $(0.24)


                                OPERATING EXPENSES        PERCENT OF SALES
                                ------------------        ----------------
                                2002          2001        2002        2001
                                ----          ----        ----        ----

Cost of Goods Sold          $  429,933  $  555,064        44.1%       62.3%

Research & Development         748,501   1,533,890        76.7%      172.1%

Selling, General & Admin     2,274,019   2,966,347       233.1%      332.9%

Total Operating Costs
and Expenses                $3,452,453  $5,055,301       353.9%      567.3%


Sales for the fiscal year ended December 31, 2002 were $975,473 compared to
sales of $891,149 in the 2001 fiscal year. Revenues in 2002 and 2001 were
predominantly derived from the Commander Product Lines, as well as revenue
generated from the maintenance and support of those products.   The sales
results were affected by the significant reduction in capital spending by
service providers and the overall economic conditions.

Cost of Goods Sold for the fiscal year ended December 31, 2002 decreased to
$429,933 from $555,064 in the year ended December 31, 2001.  This decrease
was primarily attributable to the sale of certain higher margin solutions
and services during the year ended December 31, 2002.


-14-
<PAGE>

Research and development expenses decreased from $1,533,890 in 2001 to
$748,501 in 2002, a decrease of $785,389.  The decrease in research and
development expenses during the year ended December 31, 2002 was due to the
reduction in the development staff for the IP Telephony Integrator product
line.  The sales revenue potential of the IP product line was long term and
we had to reduce our expenses to survive in this very difficult market
place.  We believe that continual enhancements of our products will be
required to enable SciDyn to maintain its competitive position. SciDyn
intends to focus its principal future product development efforts on
developing new, innovative, technical products and updating existing
products in the communications arena which will enable the Company to
explore other established markets that are considered "safe" from the
telecom disruption currently facing the industry.

Selling, general and administration expenses decreased to $2,274,019 in the
year ended December 31, 2002 compared to $2,966,347 in the year ended
December 31, 2001.  The decreases in the SG&A are related to the reduction
in force and other cost cutting initiatives implemented by the company
during the current year.

Interest Expense for the year ended December 31, 2002 is interest accrued on
our convertible notes, interest paid on the bank note and on the loan from
two stockholders.

Finance Expense in the twelve months ended December 31, 2002 was $326,731.
The finance expense includes $218,407 relating to the recognition of a
debt discount resulting from a beneficial conversion feature embedded in the
convertible notes issued between February 6, 2002 and December 20, 2002.
The finance expense also includes 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  $218,407, 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 used for operating activities for the years ended December 31, 2002
and 2001 was  $839,987 and $3,131,307 respectively.  Net cash used
for operating activities was the net loss of $2,771,090, offset by a
decrease in inventories, other assets and receivables an increase in
accounts payable and accrued expenses.

Net cash used in investing activities was $133,455 in 2002 and $22,605 in
2001. The increase in cash used for investing activities in 2002 was
primarily attributable to software necessary for engineering development.

Net cash provided by financing activities was $999,508 for the year ended
December 31, 2002 and $1,819,346 for the year ended December 31, 2001.  Net
cash provided by financing activities for the year ended December 31, 2002
resulted primarily from the cash received from the issuance of convertible
debt partially offset by the repayment of the bank note and the reduction of
the short term loan payable.

At December 31, 2002, the Company had $43,141 in cash and cash equivalents
and $2,102,576 deficit in working capital, compared with  $17,075 in cash
and cash equivalents and $1,078,796 deficit in working capital at December
31, 2001. Current liabilities at December 31, 2002 were $2,425,971, compared
to $1,606,129 at December 31, 2001. The deficit in working capital for the
year ended December 31, 2002 are attributable to the low sales results.
The increase in the current liabilities for the year ended December 31, 2002
resulted from the minimal cash flows from operation.

-15-
<PAGE>

The capital lease obligation for Engineering development and test equipment
is under renegotiation.  We are attempting to negotiate terms over 60 months
but there has been no resolution to date.

The short-term loan payable is a loan from a stockholder.

The customer deposits includes equipment that was shipped during the first
quarter, a maintenance agreement for the entire year of 2003 that is
expensed per month and two systems that have not yet been shipped, as the
customer has two delivered systems they have not yet deployed.

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

The accounts payable increase consists of over extended accounts payable,
arrearages to the landlord and newly established extended terms with some of
our vendors.   The accrued expenses consist primarily of accrued interest
due on the convertible notes and the accrued Calabash Consulting LTD
consultancy fee.

After obtaining majority stockholder approval and ratification by means of
an action by the written consent of the majority of stockholders, the
Company, on November 6, 2002, adopted an amendment to the Corporation's
Certificate of Incorporation, as amended, to increase the number of
authorized shares of common stock, par value $.01 per share, of the Company
from 45,000,000 shared to 200,000,000 shares and the creation of 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 and features upon issuance.   The Corporation also adopted the 2002
Employee Stock Option Plan which reserves up to 20,000,000 shares of Common
Stock for issuance thereunder.  The Corporation also adopted the 2002
Employee Stock Purchase Plan, which reserves up to 20,000,000 shares of
Common Stock for issuance thereunder.  The previous 1992 Incentive Stock
Option Plan had expired.


Subsequently, On November 12, 2002 we filed a Proxy Statement which:

1. Amended the Company's Certificate of Incorporation as follows:

  (a) increase the number of authorized shares of common stock, par
   value $.01 per share (the "Common Stock") of the Company from
   45,000,000 shares to 200,000,000 shares; and

  (b) authorize the creation of 10,000,000 shares of blank check
   preferred stock.

2. To approve the Company's 2002 Employee Stock Option Plan and
reserve up to 20,000,000 shares of Common Stock for issuance
thereunder.

3. To approve the Company's 2002 Employee Stock Purchase Plan and to
reserve up to 20,000,000 shares of Common Stock for issuance
thereunder

On December 4, 2002 we filed a Form S-8 with the SEC authorizing the
potential issuance of 20,000,000 in employee stock option plan and
20,000,000 in employee stock purchase plan.  ($.001 par value)


-16-
<PAGE>

On December 26, 2002 we filed a Form SB2 with the SEC to Register
116,148,774 shares of common shares, consisting of 115,017,865 shares of
Common stock, $.01 par value and 1,130,909 warrants

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, accrued executive compensation, arrearages to the landlord and we
are in default on the capital lease obligation.   We have successfully
negotiated payment arrangements with some of our vendors and are attempting
to negotiate payment arrangements with other vendors, the landlord and an
alternate arrangement with the leasing company.  We cannot guarantee that
any of these discussions will be successful.   If we are unable to obtain
successful negotiations, our business may well be severely affected.

The sales revenue shortfall has greatly impacted cash on hand. SciDyn's
currently anticipated levels of revenue and cash flow are subject to many
uncertainties and cannot be assured. In order to have sufficient cash to
meet our anticipated cash requirements for the next twelve months we must
increase sales to provide cash flow from operations. 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.

The auditors have expressed a going concern opinion and the company
acknowledges that concern.  The recent acquisition to expand the product and
service offerings should boost SciDyn's consolidated 2003 revenue.

Subsequent Events
-----------------

The Company renegotiated the convertible debentures and on February 27, 2003
signed an agreement with Laurus Master Fund, Ltd., to extend the Maturity
Date of each of the Notes to December 31, 2004.  In exchange for the
Maturity Dates, the Company has agreed to repay the aggregate principal
amount of the Notes and interest commencing April 1st 2003 and ending
December 31, 2004.  The schedule includes a principal conversion feature as
previously described.  The payment schedule will be accelerating, meaning
that the size of the monthly payments will start low and increase over time.

On March 31, 2003, the Company acquired certain business assets and
liabilities of Modern Mass Media, Inc. (MMM), a privately held company based
in Florham Park, NJ.  The acquisition should expand the product offerings
and capabilities of the Company.


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

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

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


-17-
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS

The Financial Statements are listed at "Index to Consolidated Financial
Statements".


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

There were 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.

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

The directors and executive officers of the registrant were:

Name                   Age           Position with the Company
----                   ---           -------------------------
Alan C. Bashforth       53           Chairman of the Board, President,
                                      Chief Executive Officer and Secretary

Joy C. Hartman          54           Chief Financial Officer


There were no board meetings during 2002.

In the beginning of 2002 the following directors resigned due to personal
reasons:  John Innes, Joy C. Hartman, Sheldon Hofferman, Louis Padulo,
Kenneth Ray, and Michael Hone.  In addition, we accepted the resignation of
Joy C. Hartman as CEO and President and the appointment of Alan C. Bashforth
as CEO, President, Chairman and Secretary on April 4, 2002.


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

Alan C. Bashforth, is currently our Chairman, President, CEO 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.

Joy C. Hartman is currently our Chief Financial Officer and has been since
April 4, 2002. Prior to this position, Ms. Hartrman served as President and
Chief Executive Officer from January 2000 until April 4, 2002. Ms. Hartman
joined SciDyn in January 1982. In addition to holding these positions, other
positions she has held at SciDyn include CFO, Treasurer, Corporate
Secretary, and Executive Vice President. Her prior experiences included
TeleSciences, Inc., and Peat Marwick Mitchell. Ms. Hartman is a graduate of
The Wharton School of Business of the University of Pennsylvania. She is a
member of the Financial Executives Institute, the National Association of
Corporate Directors, and the American Society of Corporate Secretaries.


-18-
<PAGE>

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 2002 with the reporting requirements of Section 16(a) of the
Securities Exchange Acts of 1934.
ITEM 10. MANAGEMENT REMUNERATION AND TRANSACTIONS


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, 2002 for services rendered to the Company
during each of the last three fiscal years.

<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              2002                   165,000     130,909(3)
Bashforth
President/CEO(1)

Joy C.Hartman,      2002   92,308     -0-      -0-      30,000(3)  -0-         -0-      -0-
CFO(2)              2001  159,519     -0-    6,731        -0-      -0-         -0-      -0-
                    2000  161,185     -0-    1,666        -0-    100,000       -0-      -0-

</TABLE>





(1) Consultancy fee paid to Calabash Consulting LTD, the remaining $75,000
has been accrued for the year ended December 31,2002.  The contractual fee
for the year 2003 is $240,000.

(2) On April 4, 2002, Ms. Hartman resigned as President and CEO and was
appointed Chief Financial Officer of SciDyn. The company anticipates the
compensation for Ms. Hartman for 2003 to be $135,000.

(3) The stock was expensed but not issued to date.



Options Grants for Fiscal 2002

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.


-19-
<PAGE>


Options Granted During Most Recent Financial Year.

No options were granted to our executive officers and directors during the
most recent financial year.



ITEM  11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The following table sets forth certain information as of April 14, 2003 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.



<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

Joy C. Hartman                   CFO                        210,185(3)         0.5%
27 Hogan Way
Moorestown, NJ   08057


All Directors, 5% owners
and Officers As a group                                    9,213,587          22.3%

</TABLE>

-20-
<PAGE>

If Laurus Master Fund, Ltd fully converted the debt, the potential
conversion would be 115,017,865 shares.   Contractually they are not allowed
to hold more than 4.99% at any time.

(1) Based upon a total number of  41,254,454 shares outstanding as of
    April 14, 2003.
(2) Shares in the name of Innovative Communications Technology, LTD., a
    corporation, controlled by Mr. Bashforth.
(3) The 210,185 shares in Ms. Hartman's name include incentive options,
    exercisable within sixty days to acquire 160,000 shares, and 300 shares
    owned by Ms. Hartman's children.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 2002, Alan Bashforth assumed the position of President/CEO working
under a consulting agreement entered between the company and Calabash
Consulting Ltd.  The company believes that the consultancy agreement
provides an equitable agreement for the Company as well as for Calabash
Consulting Ltd.  As consideration for three-year consultancy, the agreement
contains the following arrangements.  Consultancy Fee is an annual fee of
$240,000.00 to be paid in monthly payments of $20,000.00.  Calabash shall
be entitled to a bonus of one years fee's to be paid in SciDyn common
stock at a value of $0.055 per share (4,363,636 shares) at the end of the
term or on 31st December 2002 should the company continue in business after
that date.  The stock bonus has been expensed but has not been issued to
date.  The stock should be issued in the near future.
Calabash Consulting Ltd. shall be reimbursed for all approved expenses
incurred by him in the performance of his duties.  SciDyn will pay the
sum of $750.00 per month towards the provision of a suitable vehicle for
the consultant's exclusive use during the term of this agreement


ITEM 13. CONTROLS AND PROCEDURES

As of December 31, 2002, an evaluation was performed under the supervision
and with the participation of the Company's management, including the
Principal Executive Officer and the Principal Accounting Officer, of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures.  Based on that evaluation, the Company's
management, including the Principal Executive Officer and the Principal
Accounting Officer, concluded that the Company's disclosure controls and
procedures were effective as of December 31, 2002.  There have been no
significant changes in the Company's internal controls or in other factors
that could significantly affect internal controls subsequent to December 31,
2002.



ITEM 14. 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 April 14,2003.......... Page 25
     Consolidated Balance Sheets as of December 31, 2002
     and 2001........................................................Page 26
     Consolidated Statements of Operations, two years ended
     December 31, 2002...............................................Page 27
     Consolidated Statements of Cash Flows, two years ended
     December 31, 2002...............................................Page 28
     Consolidated Statements of Changes in Shareholders'
     Equity, two years ended December 31, 2002.......................Page 29
     Notes to Consolidated Financial Statements......................Page 30-36


-21-
<PAGE>

2. INDEX OF EXHIBITS

 Exhibit No. Description of Exhibit
   3.1(1) The Articles of Incorporation
   3.2(1) By-Laws
  99.1    Certification of the Chief Executive Officer of Science
          Dynamics Corporation Pursuant to 18 U.S.C. Section 1350,
          As Adopted Pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002.

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

  99.3(2) Form SB-2 filed with the SEC on December 26, 2002 to Register
          116,148,774 shares of common shares, consisting of
          115,017,865 shares of Common stock, $.01 par value
          and 1,130,909 warrants

  99.4(3) Form S-8 with the SEC authorizing the potential issuance
          of 20,000,000 in employee stock option plan and 20,000,000
          in employee stock purchase plan.  ($.001 par value).

  99.5(4) Form 14C with the SEC to increase the number of authorized
          shares of common stock, par value $.01 per share
          (the "Common Stock") of the Company from 45,000,000 shares
          to 200,000,000 shares; and authorize the creation of 10,000,000
          shares of blank check preferred stock.  To approve the
          Company's 2002 Employee Stock Option Plan and reserve up to
          20,000,000 shares of Common Stock for issuance thereunder. To
          approve the Company's 2002 Employee Stock Purchase Plan and
          to reserve up to 20,000,000 shares of Common Stock for issuance
          thereunder.



(1)       Filed as like-numbered exhibits to Registration Statement,
          Form S-18, File Number 33-20687, effective April 21, 1981,
          incorporated by reference.
(2)       Incorporated by reference from the Registrant's Form SB-2
          filed December 26, 2002 and the amendments thereto.
(3)       Incorporated by reference from the Registrant's Form S-8
          filed December 4, 2002.
(4)       Incorporated by reference from the Registrant's Form 14C
          filed November 12, 2002.


(b) Reports on Form 8-K:

    None in the Fiscal Year 2002

-22-
<PAGE>


                                SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

SCIENCE DYNAMICS CORPORATION


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

DATED: April 14, 2003
       --------------


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

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

BY:     /s/ Alan C. Bashforth   CEO/President              April 14, 2003
        ---------------------   Chairman of the Board
        Alan C. Bashforth       Secretary


BY:     /s/ Joy C. Hartman      CFO                        April 14, 2003
        ---------------------
        Joy C. Hartman



-23-
<PAGE>




                      SCIENCE DYNAMICS CORPORATION


               Index to Consolidated Financial Statements


     Report of Independent Accountants dated April 14,2003.......... Page 25

     Consolidated Balance Sheets as of December 31, 2002
     and 2001........................................................Page 26

     Consolidated Statements of Operations, two years ended
     December 31, 2002...............................................Page 27

     Consolidated Statements of Cash Flows, two years ended
     December 31, 2002...............................................Page 28

     Consolidated Statements of Changes in Shareholders'
     Equity, two years ended December 31, 2002.......................Page 29

     Notes to Consolidated Financial Statements......................Page 30-36


-24-
<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, 2002 and 2001 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 generally accepted auditing
standards.  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, 2002 and 2001,
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(m) 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(m).  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

April 3, 2003


-25-
<PAGE>




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

<CAPTION>
                        ASSETS

                                                             2002                   2001
                                                             ----                   ----

<S>                                                   <C>                     <C>
Current assets:
   Cash and cash equivalents                           $   43,141              $   17,075
   Accounts receivable - trade                             46,428                  13,234
   Accounts receivable - other                                  -                  60,721
   Inventories                                            205,551                 310,857
   Other current assets                                    28,275                 125,446
                                                       ----------               ---------
      Total current assets                                323,395                 527,333
                                                       ----------               ---------

Property and equipment, net                               514,417                 805,727
Deferred Assets                                           149,068                 154,268
Other assets                                               17,370                  25,363
                                                       ----------               ---------
      Total assets                                     $1,004,250             $ 1,512,691
                                                       ==========               =========


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Convertible Notes current                           $  185,500             $         -
   Current portion of capital lease obligation            128,413                  69,615
   Bank Note                                               33,550                  99,535
   Customer Deposits                                      286,990                 289,368
   Short term loan payable                                163,192                 195,000
   Accounts payable                                     1,214,792                 800,460
   Accrued expenses                                       413,534                 152,151
                                                       ----------               ---------
      Total current liabilities                         2,425,971               1,606,129



Long Term liabilities:
Non current portion Bank Note                              50,326                       -
Non current portion of capital lease obligation                 -                  58,798
Convertible Debenture                                   1,653,815               1,431,949
                                                       ----------               ---------


      Total liabilities                                 4,130,112               3,096,876
                                                       ----------               ---------


Shareholders' equity (deficit)
   Preferred stock - .01 par value
      10,000,000 shares authorized
      no shares issued
   Common stock - .01 par value,
     200,000,000 and 45,000,000 shares authorized
      41,254,455 and 20,879,500 issued
      41,128,655 and 20,753,700 outstanding
      in 2002 and 2001 respectively.                      412,545                 208,795

   Additional paid-in capital                          15,546,611              14,681,858
   Reserve for stock compensation                         160,909                       -
   (Deficit)                                          (18,848,094)            (16,077,005)
                                                       ----------               ---------
                                                       (2,728,029)             (1,186,352)

   Common stock held in treasury,
    at cost                                              (397,833)               (397,833)
                                                       ----------               ---------
   Total shareholders' equity (deficit)                (3,125,862)             (1,584,185)
                                                       ----------               ---------
   Total liabilities and shareholders'
    Equity                                             $1,004,250              $1,512,691
                                                       ==========               =========


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

</TABLE>

-26-
<PAGE>


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


<CAPTION>
                                                     Twelve Months Ended December 31,

                                                   2002                             2001
                                                   ----                             ----
<S>                                         <C>                              <C>

 NET SALES                                   $  975,473                       $  891,149
                                             ----------                       ----------


Operating costs and expenses:

      Cost of sales                             429,933                          555,064
      Research and development                  748,501                        1,533,890
      Selling, general
          and administrative                  2,274,019                        2,966,347
                                             ----------                       ----------

                                              3,452,453                        5,055,301
                                             ----------                       ----------

Operating (loss)                             (2,476,980)                      (4,164,152)

Other income (expenses):
   Interest income                                    -                            9,589
   Sale of NJ NOL                               163,252                          218,135
   Interest expense                            (130,631)                        (295,569)
   Finance expense                             (326,731)                        (143,477)
                                             ----------                       ----------


Net (Loss)                                  $(2,771,090)                     $(4,375,476)
                                             ==========                       ==========



Net (loss) per common share
  basic and diluted                         $     (0.08)                     $     (0.24)
                                             ==========                       ==========

Weighted average shares
outstanding basic and diluted                34,485,986                       18,019,738
                                             ==========                       ==========



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

</TABLE>

-27-
<PAGE>




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


<CAPTION>
                                                               Year Ended December 31,

                                                             2002                   2001
                                                             ----                   ----
<S>                                                    <C>                  <C>
Cash flows from operating activities:
   Net (loss)                                           $(2,771,090)         $(4,375,476)
                                                        -----------          -----------

Adjustments to reconcile net (loss) to
 net cash provided by (used for)
 operating activities:
   Depreciation                                             324,215              222,241
   Interest expense non cash                                107,365              295,569
   Write-off Leasehold improvements                         100,550                    -
   Other non cash items                                     160,909                    -
   Financing expense non cash                               326,731              143,477
   Amortization of Intangible assets                              -              300,000
Changes in operating assets and liabilities:
   (Increase) decrease in:
    Accounts receivable                                     (33,194)              88,960
    Other receivable                                         60,721               (9,320)
    Inventories                                             105,306             (223,234)
    Other current assets                                     97,171              (40,880)
    Other assets                                              7,993             (154,267)
   Increase (decrease) in:
     Accounts Payable and
       accrued expenses                                     675,714              475,732
       Customer deposits                                     (2,378)             289,368
                                                        -----------          -----------

Total adjustments                                         1,931,103            1,244,169
                                                        -----------          -----------

Net cash provided by (used for)
  operating activities                                     (839,987)          (3,131,307)
                                                        -----------          -----------

Cash flows from investing activities:

 Purchase of property and equipment - net                  (133,455)             (22,605)
                                                        -----------          -----------

 Net cash (used) in investing activities                   (133,455)             (22,605)
                                                        -----------          -----------

Cash flows from financing activities:
 Increase (decrease)in
  Bank Note                                                 (15,659)              99,535
  Issuance of Convertible Debt                            1,046,975            1,288,472
  Short term loan payable                                   (31,808)             195,000
  Payment on capitalized lease                                    -              (57,598)
 Issuance of common stock and warrants                            -              150,460
                                                        -----------          -----------

   Net cash (used in) provided
    by financing activities                                 999,508            1,819,346
                                                        -----------          -----------

Net increase (decrease) in
 cash and cash equivalents                                   26,066           (1,334,566)

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

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



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

</TABLE>

-28-
<PAGE>



<TABLE>

                                       SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
                               CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                    FOR THE TWO YEARS ENDED DECEMBER 31, 2002 AND 2001
<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, 2000        17,783,700   $177,837    $14,266,787    $(11,701,529)    $       -    125,800    $397,833   $ 2,345,262
                          ----------   --------   ------------    -------------    ---------    -------     -------   -----------


Issuance of common stock
 net of related expenses   3,095,800     30,958        415,071                             -                              446,029


Net Loss                                                            (4,375,475)            -                           (4,375,475)


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)

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



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

</TABLE>

-29-
<PAGE>

             SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1)	Summary of Significant Accounting Policies:

      a) Principles of Consolidation:

        The consolidated financial statements include the Company's wholly
        owned subsidiary. All intercompany transactions have been
        eliminated in consolidation.

      b) Organization and Description of Business:

         The Company, which was incorporated in May, 1973 and commenced
         operations in July 1977, is engaged in the design, development,
         integration and marketing of advanced telecommunications products
         and applications.   All the Company's operations are considered to
         be in one industry.

      c) Use of Estimates:

         The preparation of financial statements in conformity with
         generally accepted accounting principles require management to make
         estimates and assumptions that affect the reported amounts of
         assets and liabilities and disclosure of contingent assets and
         liabilities at the date of the financial statements and the
         reported amounts of revenues and expenses during the reporting
         periods.  Actual results could differ from those estimated.

      d) Inventories:

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

      e) Property and Equipment:

         Property and equipment are stated at cost, depreciation of property
         and equipment is computed generally using the straight-line method
         based on estimated useful lives of five years for machinery and
         equipment and seven years for furniture and fixtures. Leasehold
         improvements are amortized over the life of the related lease or
         their estimated useful lives, whichever is shorter, using the
         straight-line method.  Costs of major additions and betterment's
         are capitalized; maintenance and repairs which do not improve or
         extend the life of respective assets are charged to expenses as
         incurred.  When an asset is sold or otherwise disposed of, the cost
         of the property and the related accumulated depreciation is removed
         from the respective accounts and any resulting gains or losses are
         reflected in income.

      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.

-30-
<PAGE>

      h) Revenue Recognition:

         Revenue is generally recognized when all significant contractual
         obligations have been satisfied and collection of the resulting
         receivable is reasonably assured.  Revenue from product sales is
         recognized at time of delivery and acceptance and after
         consideration of all the terms and conditions of the customers
         contract.  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.  In 2002, the Company
         wrote off the carrying value of its leasehold improvements in the
         amount of $100,550.

      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:

         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) New Accounting Pronouncements:

         In June 2001, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No.  143 (SFAS 143)
         "Accounting for Asset Retirement Obligations."  SFAS 143 addresses
         financial accounting and reporting for obligations associated with
         the retirement of intangible, long-lived assets and the associated
         asset retirement costs.  This Statement requires that the fair
         value of a liability for an asset retirement obligation be
         recognized in the period in which it is incurred by capitalizing it
         as part of the carrying amount of the long-lived assets.  As
         required by SFAS 143 we will adopt this new accounting standard on
         January 1, 2003. We believe that adoption of SFAS 143 will not have
         a material impact on our financial statements.

-31-
<PAGE>

         In June 2002, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 146 (SFAS 146) "
         Accounting for Costs Associated with Exit or Disposal Activities."
         SFAS 146 nullifies the guidance of the Emerging Issues task Force
         (EITF) Issue No. 94-3, Liability Recognition for certain Employee
         Termination Benefits and Other Costs to Exit an Activity (including
         Certain Costs Incurred in a Restructuring).  SFAS 146 requires that
         a liability for a cost associated with an exit or disposal activity
         be recognized when the liability is incurred.  SFAS 146 also
         establishes that fair value is the objective for the initial
         measurement of the liability. The provisions of SFAS 146 are
         required for exit or disposal activities that are initiated after
         December 31, 2002.  We will adopt this new accounting standard on
         January 1, 2003.

         In November 2002, the Financial Accounting Standards Board issued
         FASB Interpretation No. 45 (FIN 45), " Guarantor's Accounting and
         Disclosure Requirements for Guarantees, including Indirect
         Guarantees of indebtedness of Others." FIN 45 elaborates on the
         disclosures to be made by a guarantor about its obligations under
         certain guarantees.  It also clarifies that a guarantor is required
         to recognize, at the inception of a guarantee, a liability for the
         fair value of the obligation undertaken in issuing the guarantee.
         As required by FIN 45, we will adopt on January 1, 2003.

         In December 2002, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 148 (SFAS 148),
         "Accounting for Stock-Based Compensation Transition and
         Disclosure." This Statement amends FASB Statement No. 123,
         "Accounting for Stock-Based Compensation," to provide alternative
         methods of transition for a voluntary change to the fair value
         based method of accounting for stock-based employee compensation.
         In addition, this Statement amends the disclosure requirements of
         Statement 123 to require prominent disclosures in both annual and
         interim financial statements about the method of accounting for
         stock-based employee compensation and the effect of the method used
         on reported results.  We account for stock options using the
         intrinsic value method in accordance with Accounting Principles
         Board Opinion No. 23 " Accounting for Stock Issued to Employees."
         Therefore, no compensation expense is recognized in association
         with our options. We will adopt SFAS 148 January 1, 2003.


      m) 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, 2002 and 2001.

-32-
<PAGE>

      3) Property and Equipment:

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



                                                  2002	          2001
                                                  ----            ----

       Computers, fixtures
       And equipment                          $1,487,894      $1,557,163

       Less accumulated
               Depreciation                     (973,477)       (751,436)
                                               ----------      ----------

               Totals                          $  514,417     $  805,727
                                               ==========     ==========

      4) 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 2002 and 2001 the Company
         recovered $163,251 and  $218,135 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 year ended 2002
         and 2001 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 2002 and 2001 operations has been reduced in its
         entirety by the valuation allowance.

         As a result of the operating losses for the years ended December 31,
         1990 and 1992-2002 the Company has available to offset future taxable
         income a net operating loss of $19,846,818 expiring 2005-2022. In
         addition, research credits expiring 2005-2016 are available to offset
         future taxes.

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


                                     2002        2001
                                     ----        ----

          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:


                                     2002	 2001
                                     ----        ----
          Federal
          Statutory rate        $(934,653)  $(1,487,662)

          Research tax
          Credits                       -             -

          Tax benefit not
          Provided due
          To valuation
          Allowance               934,653     1,487,662
                                ---------     ---------
                                $       -    $        -
                                =========    ==========

-33-
<PAGE>


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


                                      December 31,
                                  2002            2001
                                  ----            ----

    Deferred tax assets:

    Tax benefits related
    To net operating

    Loss carry forwards
    And research tax
    Credits                     $6,720,950    $5,786,297
                                ----------    ----------


    Total deferred tax
    Asset                       $6,720,950    $5,786,297

    Valuation
    Allowance for
    Deferred tax
    Assets                      $6,720,950    $5,786,297
                                ----------    ----------

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

5) 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, 2002 are as follows:



                             2003         202,512
                             2004         202,512
                             2005          75,673
                             2006           3,445
                             2007             -0-
                      After  2007             -0-
                                         --------

           Total minimum lease payments  $484,142
                                         ========


6) Intangible Assets:

      On November 7, 1996, the Company acquired "Intellectual Property",
      issuing 1,500,000 shares of its common stock. Based on technical
      reviews of the property and the business potential of the technology,
      the Company valued the "Intellectual Property" at $1,500,000.  The
      Company began amortizing the property on January 1, 1997 over a period
      of five years.  The amortization for 2002 and 2001 was -0- and
      $300,000 respectively.

7) Notes payable
   a) Bank Note
      In June 2002 the company converted its bank line of credit $100,000
      for a fixed three year loan in the amount of $99,535, with an interest
      rate of 6.25%. The Company  shall make equal monthly payments of
      $3,046.79 each, including interest.

-34-
<PAGE>

   b) Short Term Loans Payable
      The short-term loan payable consists of a loan from one stockholder at
      December 31, 2002.  Short-term borrowing amounted to $163,192 and
      $195,000 in 2002 and 2001 respectively.

   c) Convertible Notes Payable
      In 2002 and 2001  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 and
      $1,600,000 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 and $142,040 in
      2002 and 2001 respectively. In addition we issued 840,000 and
      1,163,136 commons stock purchase warrants in 2002 and 2001
      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.

      In 2002 and 2001 $815,869 and $168,060 plus interest of $34,228 and
      $1,909 was converted into 20,459,645 and 3,095,800 shares of the
      Company's common stock respectively.

8) 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.

9)  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.

10. Stock Options and Warrants:

   a. Stock options
      On November 6, 2002, by written consent of the majority of
      stockholders, the Company adopted the 2002 Employee Stock Option Plan
      which reserves up to 20,000,000 shares of Common Stock for issuance
      thereunder. The Company also adopted the 2002 Employee Stock Purchase
      Plan, which reserves up to 20,000,000 share of Common Stock for
      issuance thereunder.

      The previous plan expired November ,2002  at that time 491,200 options
      expired. On February 28, 2003 the Company issued 660,000 options from
      the new plan at .03.

      In 2002 no shares were exercised, in 2001 335,013 shares were
      exercised.  The total amount of shares granted and not exercised at
      December 31, 2001 amount to 683,2000 at exercise prices ranging from
      0.26 to 7.625 per share.

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<PAGE>

     We account for stock options using the intrinsic value method in
     accordance with  "Accounting for Stock Issued to Employees" Accounting
     Principles Board Opinion No. 25.  Under APB No. 25, the Company does
     not recognize compensation expense on the issuance of its stock
     options because the options terms are fixed and the exercise price
     equals the market price of the underlying stock on the grant date.

     As required by FASB No. 123, the Company has determined the pro-forma
     information as if the Company had accounted for stock options granted
     since January 1, 1996, under the fair value method of FASB No. 123. An
     option pricing model similar to the Black-Sholes was used with the
     following weighted average assumptions used for grants in the year
     2002 and 2001, respectively: expected volatility of 80 percent; risk
     free interest rate of 7% and 6% respectively and expected lives of 5
     years.  The pro-forma effect of these options on net earnings was not
     material.  These pro-forma calculations only include the effect of
     2002 and 2001 grants.  As such, the impacts are not necessarily
     indicative of the effects on reported net income of future years.

 b) Warrants
    The Company issued 840,000 and 1,163,636 common stock purchase
    warrants in 2002 and 2001 respectively at a prices ranging from
    $1.4339 to $0.052 per share in connection with the issuance of various
    convertible notes.

11. Major Customers:

    During 2002 three customers accounted for 55% of total sales. During
    2001 two customers each accounted for 37% of total sales.

12. 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 34,485,986 in 2002 and 18,019,738 in 2001.

13. Subsequent Events

  a. In March 2003 the Company formed M3 Acquisition Corp. a majority
     owned subsidiary.  On March 31, 2003 M3 Acquisition acquired
     Modern Mass Media for $600,000 payable over the next five years.
  b. In February the Company entered into an agreement to extend the
     maturity dates of each of the notes to December 31, 2004.  In
     exchange for extending the Maturity dates the Company has agreed
     to repay the aggregate principal amount of the loan in increasing
     monthly payments, beginning April 2003 through December 2004

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<PAGE>


                                 CERTIFICATION

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

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

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

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

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

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

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

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

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

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

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

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

April 14, 2003

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


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<PAGE>


                            CERTIFICATION

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

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

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

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

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

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

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

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

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

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

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

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


April 14, 2003


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

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