FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)
[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                      For the quarter ended June 30, 2008

                                       OR

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

            For the transition period from __________ to __________

                Commission File Number                1-12727
                                                     ----------


                         SENTRY TECHNOLOGY CORPORATION
                         -----------------------------
       (Exact name of small business issuer as specified in its charter)

        Delaware                                        96-11-3231714
       ----------                                       -------------
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation  or organization)                      Identification No.)


     1881  Lakeland  Avenue,  Ronkonkoma,  NY                   11779
----------------------------------------------------            -----
    (Address of principal executive offices)                 (Zip Code)


                                  631-739-2000
                                  ------------
            (Registrant's telephone number, including area code)

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

Check  whether  the registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12  months  (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90  days.

     Yes    X         No
           ----           ----

Indicate  by  check  mark whether the registrant is a large accelerated filer, a
non-accelerated  filer,  or  a  small  reporting company. See the definitions of
"large  accelerated  filer"  and  "small reporting company" in Rule 12b-2 of the
Exchange  Act.


   Large  accelerated  filer                 Accelerated  filer
                             =====                                =====

   Non-accelerated filer                     Small reporting company    X
                             =====                                    =====
(Do not check if a small reporting company)


Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).
                                        Yes             No    X
                                            -----           -----

As  of  August  11,  2008,  there  were  120,743,804  shares  of  Common  Stock
outstanding.

<PAGE>

                 SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
                 ----------------------------------------------
                                     INDEX
                                     -----


                                                                    Page No.
                                                                    --------

PART I.   FINANCIAL INFORMATION
-------------------------------

Item 1.  Condensed Consolidated Financial Statements (Unaudited)

         Consolidated Balance Sheets --
         June 30, 2008, and December 31, 2007                           3

         Consolidated Statements of Operations and Comprehensive
         Income (Loss) --
         Three Months Ended June 30, 2008, and 2007
         And Six Months Ended June 30, 2008, and 2007                   4

         Consolidated Statements of Cash Flows --
         Six Months Ended June 30, 2008, and 2007                       5

         Notes to Condensed Consolidated Financial
         Statements - June 30, 2008, and 2007                         6 - 14


Item 2.  Management's Discussion and Analysis of Plan of Operation   14 - 19


Item 3.  Quantitative and Qualitative Disclosures about Market Risk    19

Item 4T. Controls and Procedures                                     19 - 20


PART II.   OTHER INFORMATION
----------------------------

Item 6.  Exhibits                                                      20


Signature                                                              20




<PAGE>
------
PART I.   FINANCIAL INFORMATION
-------------------------------

Item 1.     Financial Statements
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value Amounts)
(Unaudited)

<TABLE>
<CAPTION>
                                                                     JUNE 30,           December 31,
                                                                      2008                 2007
                                                                    ---------          --------------
<S>                                                                <C>                   <C>
                       ASSETS
-------------------------------------------------------
Current Assets:
   Cash and cash equivalents                                        $  1,389             $    256
   Short-term investments                                                199                  202
   Accounts receivable, less allowance for doubtful
      accounts of $149 in 2008 and $209 in 2007, respectively            845                3,014
   Inventory, net                                                      3,124                3,299
   Prepaid expenses and other assets                                     899                  858
                                                                    ---------            ---------
Total current assets                                                   6,456                7,629

PROPERTY AND EQUIPMENT, net                                              556                  634
OTHER ASSETS                                                             266                  269
                                                                    ---------            ---------
   TOTAL ASSETS                                                     $  7,278             $  8,532
                                                                    =========            =========

         LIABILITIES AND STOCKHOLDERS' DEFICIT
------------------------------------------------------
Current Liabilities:
   Bank indebtedness, demand loan and revolving line of credit      $  4,120             $  4,551
   Accounts payable                                                      612                1,223
   Accrued liabilities                                                 1,667                1,539
   Obligations under capital leases - current portion                      2                    2
   Deferred income                                                       265                  145
   Convertible debenture                                               2,000                1,986
                                                                    ---------            ---------
Total current liabilities                                              8,666                9,446

OBLIGATIONS UNDER CAPITAL LEASES - less current portion                    6                    7
DEFFERED TAX LIABILITY                                                   114                  117
                                                                    ---------            ---------
Total liabilities                                                      8,786                9,570

MINORITY INTEREST                                                      1,205                1,200

STOCKHOLDERS' DEFICIT
  Preferred stock, $0.001 par value; authorized 10,000
  (2007 - 10,000) shares; none issued and outstanding
  Common stock, $0.001 par value; authorized 190,000
  (2007 - 190,000) shares; issued and outstanding 120,744
   and 120,744 shares, respectively                                      121                  121
  Additional paid-in capital                                          49,885               49,420
  Accumulated deficit                                                (53,269)             (52,390)
  Accumulated other comprehensive income                                 550                  611
                                                                    ---------            ---------
Total stockholders' deficit                                           (2,713)              (2,238)
                                                                    ---------            ---------
  TOTAL LIABILITIES AND STOCKHOLDERS'
        DEFICIT                                                     $  7,278             $  8,532
                                                                    =========            =========

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

</TABLE>

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In Thousands, Except Per Share Amounts)

<TABLE>
<CAPTION>




<S>                                                          <C>                <C>            <C>              <C>
                                                                  Three Months Ended               Six Months Ended
                                                                       June 30,                        June 30,
                                                                -----------------------         ----------------------
                                                                2008               2007         2008              2007
                                                                      (Unaudited)                     (Unaudited)
REVENUES:
    Sales                                                    $  3,402          $  1,991        $  5,114         $  4,320
    Service, installation and other revenues                      627               437             957              776
                                                             ---------         ---------       ---------        ---------
                                                                4,029             2,428           6,071            5,096

COST OF SALES AND EXPENSES:
    Cost of sales                                               1,884             1,106           2,903            2,376
    Customer service expenses                                     555               485           1,105              940
    Selling, general and administrative expenses                1,095             1,395           2,074            2,592
    Research and development                                      146               185             293              391
                                                             ---------         ---------       ---------        ---------
                                                                3,680             3,171           6,375            6,299
                                                             ---------         ---------       ---------        ---------
INCOME (LOSS) FROM OPERATIONS                                     349              (743)           (304)          (1,203)
INTEREST AND FINANCING EXPENSE, net                               327               193             564              406
                                                             ---------         ---------       ---------        ---------
INCOME (LOSS) BEFORE INCOME TAXES
    AND MINORITY INTEREST                                          22              (936)           (868)          (1,609)
INCOME TAX EXPENSE (RECOVERY)                                       6               (20)              6                7
                                                             ---------         ---------       ---------        ---------
INCOME (LOSS) BEFORE MINORITY INTEREST                             16              (916)           (874)          (1,616)
MINORITY INTEREST EXPENSE (INCOME)                                  8               (18)              5                6
                                                             ---------         ---------       ---------        ---------
NET INCOME (LOSS)                                                   8              (898)           (879)          (1,622)
                                                             ---------         ---------       ---------        ---------



OTHER COMPREHENSIVE INCOME (LOSS):
   Foreign Currency Translation Adjustments                        23               198             (61)             210
                                                             ---------         ---------       ----------       ---------
COMPREHENSIVE INCOME (LOSS)                                  $     31          $   (700)       $   (940)        $ (1,412)
                                                             =========         =========       ==========       =========

EARNINGS (LOSS) PER SHARE
   Basic and diluted                                         $   0.00          $  (0.01)       $  (0.01)        $  (0.01)
                                                             =========         =========       =========        =========

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING
   Basic and diluted                                          120,744           120,744         120,744          120,744
                                                             =========         =========       =========        =========


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

</TABLE>


<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                         June 30,
                                                                                    ------------------
                                                                                 2008                2007
                                                                                 ----                ----
                                                                                       (Unaudited)
<S>                                                                             <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                   $ (879)           $(1,622)
    Adjustments to reconcile net loss
      to net cash provided by (used in) operating activities:
      Depreciation                                                                 59                 63
      Amortization of other assets                                                 40                 64
      Non-cash consideration
           Stock-based compensation                                                 8                 14
           Warrant amortization included in interest                              273                152
           Amortization of convertible debenture included in interest              14                 21
      Minority interest in net income of consolidated subsidiary                    5                  6
    Changes in operating assets and liabilities:
      Accounts receivable                                                       2,116              1,115
      Inventory                                                                   163               (330)
      Prepaid expenses and other assets                                           138               (164)
      Accounts payable                                                           (608)               408
      Accrued liabilities                                                         135                (99)
      Deferred income                                                             121                 58
                                                                               -------            -------
    Net cash provided by (used in) operating activities                         1,585               (314)
                                                                               -------            -------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Changes in short-term investments                                              (2)               190
    Purchase of property and equipment                                            ---                (25)
    Other assets                                                                  (38)               103
                                                                               -------            -------
    Net cash (used in) provided by investing activities                           (40)               268
                                                                               -------            -------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowing on the demand loan and revolving line of credit                (350)              (212)
    Repayment of obligations under capital leases                                  (1)                (2)
                                                                               -------            -------
    Net cash (used in) provided by financing activities                          (351)              (214)
                                                                               -------            -------

EFFECT OF EXCHANGE RATE CHANGES ON
   CASH AND CASH EQUIVALENTS                                                      (61)               166
                                                                               -------            -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                1,133                (94)
CASH AND CASH EQUIVALENTS, beginning of period                                    256                360
                                                                               -------            -------
CASH AND CASH EQUIVALENTS, end of period                                       $1,389             $  266
                                                                               =======            =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the year for:
    Interest                                                                   $  335             $  254
                                                                               =======            =======
    Income taxes                                                               $  ---             $   10
                                                                               =======            =======

Non-cash financing activities:
Issuance of warrants relating to bank guarantees                               $  457             $  ---
                                                                               =======            =======

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

</TABLE>

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008, and 2007


NOTE  1  --  Basis  of  Presentation
------------------------------------
The  accompanying  unaudited condensed consolidated financial statements include
the  accounts of Sentry Technology Corporation ("Sentry") and its majority-owned
subsidiaries  (the  "Company").  All intercompany accounts and transactions have
been  eliminated  on  consolidation.

The  interim  financial  information as of June 30, 2008, and for the three- and
six-month  periods  ended  June  30,  2008,  and 2007 have been prepared without
audit,  pursuant  to  the  rules  and regulations of the Securities and Exchange
Commission  (the  "SEC").  Certain information and footnote disclosures normally
included  in financial statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations,  although  we  believe  that  the  disclosures made are adequate to
provide for fair presentation.  The interim financial information should be read
in conjunction with the consolidated financial statements and the notes thereto,
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December  31,  2007,  previously  filed  with  the  SEC.

In  the  opinion  of management, all adjustments (which include normal recurring
adjustments)  necessary  to present a fair statement of financial position as of
June  30,  2008,  and  results  of  operations and cash flows for the three- and
six-month  periods  ended  June 30, 2008, and 2007, have been made.  The interim
results  of  operations  are not necessarily indicative of the operating results
for  the  full  fiscal  year  or  any  future  periods.

Certain prior period amounts have been reclassified to conform to current period
presentation.


NOTE  2  --  Going  Concern
---------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United  States  of  America with the assumption that the Company will be able to
realize  its  assets  and  discharge  its  liabilities  in  the normal course of
business.

The  Company has incurred operating losses and decreased financial position as a
result  of  not  meeting  its  business  plan.  The  Company  had  losses  of
approximately  $0.9  million for the six- month period ended June 30, 2008 (June
30,  2007  -  $1.6  million),  and  as  of  June  30,  2008,  the Company had an
accumulated  deficit  of  approximately $53.3 million (December 31, 2007 - $52.4
million).   The  Company's  continuation  as  a going concern is uncertain.  The
Company  entered  into a forbearance agreement on May 29, 2008, with its primary
lenders  who  have  agreed  to  forbear  from  the  exercise of their rights and
remedies  under  the  security  in respect of the indebtedness until October 31,
2008  or  earlier  in the event of the occurrence of a default in the agreement.
The  Company's  convertible  debenture  holders  and Tradition Capital Bank have
agreed  to extend maturity to December 31, 2008.  Management's plan is to pursue
raising  additional funds through future equity or debt financing to satisfy its
commitments  to  its primary lenders and meet its obligations to the convertible
debenture holders until it achieves profitable operations.  Although the Company
plans to pursue additional financing, there can be no assurance that the Company
will  be  able  to  secure  financing  when  needed  or  obtain  such  on  terms
satisfactory  to  the Company, if at all.  The Company's continuation as a going
concern  depends  upon  its  ability  to  raise  funds  and  achieve and sustain
profitable  operations.

The  accompanying  unaudited  condensed consolidated financial statements do not
include  any  adjustments  to  reflect  the  possible  future  effects  on  the
recoverability  and  classification  of  assets  or  the
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008, and 2007


amounts  and classification of liabilities that may result from the inability of
the  Company  to  continue  as  a  going  concern.

NOTE  3  --  Recent  Accounting  Pronouncements
-----------------------------------------------

In  April  2008,  the  Financial Accounting Standards Board ("FASB") issued FASB
Staff  Position ("FSP") Statement of Financial Accounting Standards ("SFAS") No.
142-3,  "Determination  of  the  Useful  Life  of  Intangible Assets" ("FSP SFAS
142-3").  FSP  SFAS  142-3  amends  the  factors  that  should  be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, "Goodwill and Other Intangible
Assets"  ("SFAS  142").  The  intent  of  this FSP is to improve the consistency
between  the useful life of a recognized intangible asset under SFAS 142 and the
period  of expected cash flows used to measure the fair value of the asset under
FASB  Statement  No. 141 (revised 2007), "Business Combinations," and other U.S.
generally  accepted  accounting principles ("GAAP"). FSP SFAS 142-3 is effective
for  financial  statements  issued for fiscal years beginning after December 15,
2008,  and  interim  periods  within  those  fiscal  years.  The requirement for
determining  useful  lives  must  be  applied prospectively to intangible assets
acquired  after  the  effective  date  and  the  disclosure requirements must be
applied  prospectively to all intangible assets recognized as of, and subsequent
to,  the  effective date. Early adoption is prohibited. The Company is currently
reviewing  the  effect,  if  any;  the  proposed  guidance  will  have  on  its
consolidated  financial  statements.

In  May,  2008,  FASB  issued  FSP  Accounting  Principles  Board  ("APB") 14-1,
"Accounting  for  Convertible  Debt Instruments That May Be Settled in Cash upon
Conversion  (Including  Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1
clarifies  that  convertible  debt  instruments that may be settled in cash upon
conversion (including partial cash settlement) are not addressed by paragraph 12
of  APB  Opinion  No.  14, "Accounting for Convertible Debt and Debt Issued with
Stock  Purchase  Warrants." Additionally, FSP APB 14-1 specifies that issuers of
such  instruments  should  separately  account  for  the  liability  and  equity
components  in  a  manner  that  will  reflect  the entity's nonconvertible debt
borrowing  rate  when interest cost is recognized in subsequent periods. FSP APB
14-1  is  effective  for  financial statements issued for fiscal years beginning
after  December  15,  2008, and interim periods within those fiscal years. Early
adoption  is  not  permitted.  The Company is currently reviewing the effect, if
any;  the  proposed guidance will have on its consolidated financial statements.

In  May  2008,  FASB  issued  SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting  Principles"  ("SFAS  162").  SFAS  162  identifies  the  sources  of
accounting principles and the framework for selecting the principles used in the
preparation  of  financial  statements  of  nongovernmental  entities  that  are
presented  in  conformity with generally accepted accounting principles ("GAAP")
in  the  United  States  (the  GAAP  hierarchy).  SFAS  162 is effective 60 days
following  the  SEC's  approval of the Public Company Accounting Oversight Board
amendments  to AU Section 411, "The Meaning of Present Fairly in Conformity With
Generally  Accepted  Accounting  Principles." The Company is currently reviewing
the  effect,  if  any;  the  proposed  guidance  will  have  on its consolidated
financial  statements.

In  June  2008,  FASB  issued  FSP  EITF  Issue  03-6-1,  "Determining  Whether
Instruments  Granted  in  Share-Based  Payment  Transactions  Are  Participating
Securities"  ("FSP EITF 03-6-1").  FSP EITF 03-6-1 addresses whether instruments
granted  in  share-based payment transactions are participating securities prior
to  vesting  and,  therefore,  need to be included in the earnings allocation in
computing  earnings per share under the two-class method described in paragraphs
60  and  61  of SFAS No. 128, "Earnings per Share." FSP EITF 03-6-1 is effective
for  financial  statements  issued  for  fiscal  years  beginning  after

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008, and 2007


December  15,  2008,  and  interim  periods  within those years.  The Company is
currently  reviewing  the effect, if any; the proposed guidance will have on its
consolidated  financial  statements.


NOTE 4 -- Inventory
-------------------

 Inventory consisted of the following:          JUNE 30,          December 31,
                                                --------          ------------
                                                  2008                 2007
                                                --------          ------------
                                              (UNAUDITED)          (audited)
                                                      (In thousands)

             Raw  materials                    $  1,170          $  1,288
             Work-in-process                        213               193
             Finished  goods                      1,741             1,818
                                              -----------       -----------
             Total,  net                       $  3,124          $  3,299
                                              -----------       -----------

Reserves  for excess and obsolete inventory totaled $1,346,000 and $1,350,000 as
of June 30, 2008, and December 31, 2007, respectively, and have been included as
a  component  of  the  above  amounts.


NOTE 5 - Bank Indebtedness, Demand Loan and Revolving Line of Credit
--------------------------------------------------------------------

                                                    JUNE 30,        December 31,
                                                    --------        ------------
                                                      2008              2007
                                                    --------        ------------
                                                   (UNAUDITED)        (audited)
                                                         (In thousands)

Royal Bank of Canada ("RBC") - Bank indebtedness      $    6          $    13
RBC - Demand loan                                      3,064            3,488
Tradition Capital Bank - Revolving line of credit      1,050            1,050
                                                   ----------        ----------
                                                     $ 4,120          $ 4,551
                                                   ==========        ==========

a)     Royal  Bank  of  Canada
       -----------------------

The  maximum  borrowing under the demand loan facility was Canadian $3.6 million
(U.S.  $3.5  million).  RBC  increased the borrowing base formula by Canadian $1
million  (U.S.  $982,000) in exchange for additional security provided by two of
the  Company's  directors.  Borrowings under the facility are subject to certain
limitations  based on a percentage of eligible accounts receivable and inventory
as  defined in the agreement.  Interest is payable at a rate of RBC's prime rate
(4.75%  at June 30, 2008), plus 2.75% per annum.  Borrowings under this facility
are  secured by substantially all of the Company's assets.  As of June 30, 2008,
the  Company  exceeded its facilities under the lending formula by approximately
$0.6  million  (subject  to  the  above limitations) under the demand loan.  RBC
agreed  to  forbear  from  the  exercise  of  its  rights and remedies under the
security in respect of the indebtedness until October 31, 2008 or earlier in the
event  of the occurrence of default in accordance with the forbearance agreement
which  was  finalized  on  May  29,  2008.  In  accordance  with the forbearance
agreement  the  maximum  borrowings  were  reduced  to Canadian $3,175,000 (U.S.
$3,117,000) and the interest rate was increased from RBC's prime rate plus 2.75%
per  annum  to  RBC's  prime  rate  plus  3.25%  per  annum.

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008, and 2007


In  consideration  for  the  guarantees provided by Mr. Murdoch and Mr. Furst to
RBC,  the  Company  paid  a  fee of $43,000, shared between them, paid in twelve
equal  monthly  installments.  As  additional consideration, they received fully
vested,  two  year  warrants to purchase approximately 2.9 million shares of the
Company's common stock, at an exercise price of $0.10 per share.  The fair value
of  these  warrants  of $120,000 was determined in accordance with SFAS No. 123R
and  beginning  in  June  2006  was  taken  into  income  over the period of the
guarantee,  which  was one year.  These guarantees expired in June 2007 and were
subsequently  renewed  in  July  2007 until April 30, 2008.  In consideration of
these  guarantee  renewals, Mr. Murdoch and Mr. Furst received a fee of $40,000,
shared  between  them,  paid  in  ten equal monthly installments.  As additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  7.4  million common shares of the Company at an exercise price of
$0.065  per  share.  The fair value of these warrants of $164,000 was determined
in  accordance  with  SFAS  No.  123R  and beginning in July 2007 was taken into
income over the period of the guarantee, which was ten months.  These guarantees
expired  in  April 2008 and were subsequently renewed in May 2008 until December
31,  2008.  In  consideration  of  these guarantee renewals, Mr. Murdoch and Mr.
Furst  received  a  fee  of  $33,000,  shared  between them, paid in eight equal
monthly  installments.  As additional consideration, they received fully vested,
two  year  warrants  to  purchase  approximately  5 million common shares of the
Company  at  an  exercise  price  of  $0.10  per share.  The fair value of these
warrants  of  $150,000  was  determined  in  accordance  with  SFAS No. 123R and
beginning  in  May  2008  is  being  taken  into  income  over the period of the
guarantee,  which  is eight months.  Interest and financing expense recorded was
$54,000  for  the three- month period ended June 30, 2008, $103,000 for the six-
months  ended June 30, 2008.  During the three- and six-month periods ended June
30,  2007,  $20,000 and $50,000, respectively, has been recorded in interest and
financing  expense.

b)     Tradition  Capital  Bank
       ------------------------

In  December 2006, the Company entered into a secured revolving credit agreement
with  Tradition  Capital Bank. From December 15, 2006, through the expiration of
the  facility  on  June  15,  2007, the Company drew up to a maximum of $550,000
under the facility. Borrowings under this facility were secured by substantially
all  of  the Company's assets in a second position to RBC. In addition, the loan
was  fully  secured  by  personal  guarantees  of  Mr. Murdoch and Mr. Furst. In
consideration  of  these guarantees, Mr. Murdoch and Mr. Furst received a fee of
$14,000,  shared  between them, paid in six equal monthly installments beginning
in  December  2006. As additional consideration, they received fully vested, two
year  warrants  to  purchase  approximately  5.2 million shares of the Company's
common  stock, at an exercise price of $0.053 per share. The fair value of these
warrants  of  $91,000  was  determined  in  accordance  with  SFAS  No. 123R and
beginning  in  December  2006  was  taken  into  income  over  the period of the
guarantee,  which  was  six  months.  The credit facility and related guarantees
expired  in June 2007 and were subsequently renewed in July 2007 until April 30,
2008.  In  consideration  of  the  guarantee renewals, Mr. Murdoch and Mr. Furst
received  a  fee  of  $23,000,  shared  between  them, paid in ten equal monthly
installments.  As additional consideration, they received fully vested, two year
warrants  to  purchase approximately 4.2 million common shares of the Company at
an  exercise  price  of  $0.065  per  share. The fair value of these warrants of
$94,000  was  determined  in accordance with SFAS No. 123R and beginning in July
2007  was  taken  into  income  over  the period of the guarantee, which was ten
months.

On  September  25,  2007,  Mr. Murdoch and Mr. Furst agreed to provide Tradition
Capital  Bank  additional personal guarantees totaling $500,000, which increased
the  maximum the Company can draw to $1,050,000, until April 30, 2008, under the
same  terms and conditions as listed above.  In consideration of the guarantees,
Mr.  Murdoch  and Mr. Furst received a fee of $15,000, shared between them, paid
in

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008, and 2007


seven  equal  monthly  installments.  As additional consideration, they received
fully  vested,  two  year  warrants to purchase approximately 2.5 million common
shares  of  the Company at an exercise price of $0.10 per share.  The fair value
of these warrants of $89,000 was determined in accordance with SFAS No. 123R and
beginning  in  October  2007  was  taken  into  income  over  the  period of the
guarantee,  which  was  seven months.  On April 30, 2008 the above loan facility
expired  and  was  renewed  until December 31, 2008.  Interest is payable at the
reference  rate  (Wall Street Journal prime, with an interest rate floor of 5.5%
currently  5.0%), plus 1.0% per annum.  At June 30, 2008, borrowings were at the
maximum  amount  available.  In  consideration  of these guarantee renewals, Mr.
Murdoch  and  Mr. Furst will receive a fee of $35,000, shared between them, paid
in eight equal monthly installments.  As additional consideration, they received
fully  vested,  two  year  warrants to purchase approximately 5.3 million common
shares  of  the Company at an exercise price of $0.10 per share.  The fair value
of  these  warrants  of $157,000 was determined in accordance with SFAS No. 123R
and  beginning  in  May  2008  is being taken into income over the period of the
guarantee,  which  is eight months.  Interest and financing expense recorded was
$61,000  for  the  three-month period ended June 30, 2008, $128,000 for the six-
months  ended June 30, 2008.  During the three- and six-month periods ended June
30,  2007,  $37,000 and $87,000, respectively, has been recorded in interest and
financing  expense.


NOTE 6 -- Accrued Liabilities
-----------------------------
                                                      JUNE 30,     December 31,
                                                      --------     ------------
                                                        2008           2007
                                                      --------     ------------
                                                     (UNAUDITED)    (audited)
                                                     -----------    ----------
                                                           (In thousands)

Accrued salaries, employee benefits and payroll taxes   $   227      $   280
Customer deposit payables                                   744          305
Other accrued liabilities                                   696          954
                                                        --------     --------
                                                        $ 1,667      $ 1,539
                                                        ========     ========

NOTE 7 - Convertible Debenture
------------------------------

On  April  30,  2004,  Sentry  entered  into  a  $2,000,000  secured convertible
debenture  with  Brookfield  Technology  Fund  ("Brookfield"),  an  alternative
investment  fund  established  by Brookfield Asset Management (formerly known as
Brascan  Technology  Fund and Brascan Asset Management, respectively), to invest
in  early  stage,  technology-based  companies  with  high  growth  potential.

Key  terms  of  the  transaction  are  as  follows:

-     Four-year  term.
-     Interest rate of 8% per annum.
-     Redeemable at Sentry's option after 18 months.
-     Conversion price equal to the market price, at time of conversion, less a
      discount of 30% with a maximum conversion price of $0.12 per share.
-     Conversion is at the option of Brookfield when market share price is equal
      to or greater than $0.17 per share or with the approval of Sentry's Board
      of Directors when the market share price is less than $0.17 per share.

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008, and 2007


-    Sentry will provide most favored pricing to all Brookfield affiliates and
     expects to be a supplier of security and identification products to the
     Brookfield affiliates.

-    Brookfield was issued warrants for 5,000,000 common shares of Sentry,
     priced at $0.15 per share, exercisable anytime up to April 30, 2008.

-    Brookfield is entitled to one seat on Sentry's Board of Directors or will
     participate as an observer.

The convertible debenture is secured by a general security interest over all the
assets  and  properties  of  Sentry.  The  amount is subordinate to the existing
credit  facilities.

On April 11, 2008, Brookfield extended its maturity of the debenture to December
31,  2008.  The  5  million  warrants  that  were originally issued expired.  In
consideration  of  this  renewal,  Brookfield  received  fully  vested, two year
warrants to purchase 5 million common shares of the Company at an exercise price
of $0.10 per share.  The fair value of these warrants of $150,000 was determined
in  accordance  with SFAS No. 123R and beginning in May 2008 is being taken into
income  over  the  period  of  the  guarantee,  which  is  eight  months.


NOTE  8  --  Related  Party  Transactions
-----------------------------------------

Transactions  between related parties are in the normal course of operations and
are  measured  at  the  exchange  amount,  which  is the amount of consideration
established  and  agreed  to  by  the  related  parties.

Certain  of  Sentry's  key shareholders and directors personally guaranteed bank
debt  to  the  Company.  Please  refer  to  Note  5  for  details.

In  August 2007, Mr. Murdoch agreed to provide a personal guarantee for a Letter
of  Credit  of  $49,350  for  a period of one year in favor of Palm Beach Public
Library  that the Company was unable to obtain on its own in order to complete a
sale  of  the  Company's self service library systems.  In consideration of this
guarantee  Mr. Murdoch will receive a fee of $2,000 paid in twelve equal monthly
installments.  As  additional  consideration, he received fully vested, two year
warrants  to  purchase approximately 0.2 million common shares of the Company at
an  exercise  price  of  $0.10  per  share.  The fair value of these warrants of
$10,000  was  determined in accordance with SFAS No. 123R "Share-Based Payment,"
and  beginning  in August 2007 is being taken into income over the period of the
guarantee,  which is twelve months.  Interest and financing expense recorded was
$3,000 for the three-month period and $5,000 for the six-month period ended June
30,  2008.

In  December  2007,  Mr.  Murdoch,  Sentry's  CEO and director, and Mr. Furst, a
Sentry  director,  agreed  to  lend  the  Company $141,000 ($81,000 and $60,000,
respectively)  to  secure a bid that the Company was unable to obtain on its own
to  sell  products  to  an airport facility.  In consideration of the loans, Mr.
Murdoch  and  Mr. Furst received interest for the period of the loan at the Bank
of  America's prime rate (7.25%) plus 1% per annum.  During the six-month period
ended  June  30,  2008, $1,000 has been recorded in interest and finance expense
related  to  the  loans.  The  loans  were  repaid  in  January  2008.

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008, and 2007


NOTE 9 -- Stock-Based Compensation
----------------------------------

a)     Stock  Options
       --------------

The  Company's  1997  Stock Incentive Plan of Sentry (the "1997 Plan"), which is
shareholder approved, permits the granting of common share options and shares to
its  employees  for  up  to  6,369,365  shares  of  common  stock as stock-based
compensation.  This plan expired as of January 14, 2007, and as such, there were
no  remaining  shares available for grant under this plan at June 30, 2008.  The
plan  was renewed on May 18, 2007 (the "2007 Plan"), is shareholder approved and
permits  the granting of common share options and shares to its employees for up
to  5,000,000  shares  of  common  stock as stock-based compensation.  The stock
option  committee  may  grant  awards to eligible employees in the form of stock
options,  restricted  stock  awards, phantom stock awards, or stock appreciation
rights.  Stock  options  may  be  granted  as  incentive  stock  options  or
non-qualified stock options.  Such options normally become exercisable at a rate
of  20%  per  year over a five-year period and expire ten years from the date of
grant.

There  was  no  cash  received  from  exercise  of options during the three- and
six-month periods ended June 30, 2008 and the three- and six-month periods ended
June  30,  2007.

The assumptions used for the specified reporting periods and resulting estimates
of weighted average fair value per share of options granted during those periods
were  as  follows:

                                       Three Months Ended     Six Months Ended
                                             June 30,             June 30,
                                        2008        2007       2008      2007
                                        ----        ----       ----      ----

Risk-free interest rate                  ---        4.82%       ---     4.82%
Expected dividend yield                  ---         0%         ---      0%
Expected lives                           ---     2-5 years      ---    2-5 years
Expected volatility                      ---        80%         ---     80%


The  following  table represents the Company's stock options granted, forfeited,
or  expired  and  exercised  during  the  six-months  ended  June  30,  2008:
<TABLE>
<CAPTION>
<S>                                    <C>            <C>         <C>           <C>

                                                                   Weighted
                                       Number of      Weighted     Average      Aggregate
                                        Shares        Average      Remaining    Intrinsic
                                       Subject to     Exercise    Contractual     Value
                                       Issuance       Price          Term         ($000)
                                       --------       -----          ----         ------

Outstanding as of January 1, 2008      2,057,000      $ 0.10
Granted                                    ---          ---
Exercised                                  ---          ---
Forfeited                               (129,000)       0.16
Expired                                   (3,000)       2.37
                                      -----------     -------
OUTSTANDING AS OF JUNE 30, 2008        1,925,000      $ 0.09       7.0 YEARS       $ 4
                                      ===========     ======       =========       ===

EXERCISABLE AS OF JUNE 30, 2008        1,201,000      $ 0.09       6.7 YEARS       ---
                                      ===========     ======       =========       ===
</TABLE>

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008, and 2007


The  aggregate  intrinsic  value  of  options  exercisable  has been shown as $0
because  the exercise price of the exercisable option shares exceeded the period
end  market  price  of  the  Company's  common  stock.

The  compensation  cost  recognized  in  income for stock-based compensation was
$4,000  and $8,000 for the three- and six-month periods ended June 30, 2008, and
$7,000  and  $14,000  for the three- and six- month periods ended June 30, 2007,
respectively.

As  of June 30, 2008, there was $39,000 of total unrecognized compensation cost,
net  of  estimated  forfeitures, related to all unvested stock options, which is
expected  to  be  recognized over a weighted average period of approximately 2.5
years.

There  were  no  stock options issued during the six-month period ended June 30,
2008.  There  were 511,500 options issued during the six-month period ended June
30,  2007,  with  a  weighted  average  estimated  fair  value  of  $0.06.

At  June 30, 2008, options for 4,508,500 common shares were available for future
grants  under  the  2007  Stock Option Plan.  On January 14, 2007, the 1997 Plan
expired.  There  were  no  common  shares  available for future grant under this
Plan.

   b)     Warrants
          --------

As  of  June  30, 2008, Sentry has outstanding warrants for 35,093,123 (June 30,
2007  -  13,363,680)  common  shares issued in connection with various financing
arrangements.  The  warrants  have  exercise  prices ranging from $0.05 to $0.17
(June  30, 2007 - $0.05 to $0.17) and expire from December 15, 2008, through May
1,  2010.


NOTE  10  -  Fair  Value  Measurements
--------------------------------------

Effective January 1, 2008, the Company adopted SFAS 157, except as it applies to
the  nonfinancial assets and nonfinancial liabilities subject to FSP SFAS 157-2.
SFAS  157  clarifies  that  fair value is an exit price, representing the amount
that  would  be  received to sell an asset or paid to transfer a liability in an
orderly  transaction  between  market  participants.  As  such,  fair value is a
market-based  measurement  that  should  be determined based on assumptions that
market  participants  would  use  in  pricing  an  asset  or
a  liability.  As a basis for considering such assumptions, SFAS 157 establishes
a three-tier value hierarchy, which prioritizes the inputs used in the valuation
methodologies  in  measuring  fair  value:

     Level 1 -     Observable inputs that reflect quoted prices (unadjusted) for
                   identical  assets  or  liabilities  in  active  markets.

     Level  2  -   Include  other  inputs  that  are  directly  or  indirectly
                   observable  in  the  marketplace.

     Level  3  -   Unobservable  inputs  which  are  supported by little or no
                   market  activity.

The  fair  value  hierarchy  also  requires  an  entity  to  maximize the use of
observable  inputs  and  minimize  the use of unobservable inputs when measuring
fair  value.

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2008, and 2007


Cash  and  cash  equivalents,  short-term  investments  (Level  1),  accounts
receivable,  bank  indebtedness, accounts payable and accrued liabilities (Level
2)  are  reflected  in  the consolidated balance sheets at carrying value, which
approximates  fair  value  due  to  the  short-term nature of these instruments.


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

Certain Factors That May Affect Future Results
----------------------------------------------

Information  contained  or  incorporated by reference in this periodic report on
Form  10-Q  and  in  other  SEC  filings  by  Sentry  contains  "forward-looking
statements"  within  the meaning of the Private Securities Litigation Reform Act
of  1995  which can be identified by the use of forward-looking terminology such
as  "believes,"  "expects,"  "may,"  "will,"  "should"  or  "anticipates" or the
negative  thereof,  other  variations  thereon  or comparable terminology, or by
discussions  of  strategy.  These  forward-looking  statements  involve  certain
significant  risks  and  uncertainties, and actual results may differ materially
from the forward-looking statements. For further details and discussion of these
risks  and  uncertainties  see  Sentry  Technology  Corporation's  SEC  filings
including,  but  not  limited to, its annual report on Form 10-KSB. No assurance
can  be given that future results covered by the forward-looking statements will
be  achieved,  and  other  factors  could  also  cause  actual  results  to vary
materially  from  the future results covered in such forward-looking statements.
We  do  not  undertake  to  publicly update or revise any of our forward-looking
statements  even if experience or future changes show that the indicated results
or  events  will  not  be  realized.


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

Consolidated  revenues  were  66%  higher  in the quarter ended June 30, 2008 as
compared  to  the  quarter ended June 30, 2007.  For the six- month period ended
June  30,  2008 consolidated revenues were 19% higher than in the same period of
last  year.  Our  backlog  of orders, which we expect to deliver within the next
twelve  months, was $3.6 million at June 30, 2008, an increase of 9% as compared
to $3.3 million at June 30, 2007, and a 29% increase as compared to $2.8 million
at  December  31, 2007.  Total revenues for the periods presented are broken out
as  follows:

<TABLE>
<CAPTION>
<S>                                     <C>       <C>       <C>           <C>       <C>        <C>
                                          Q-2       Q-2       %            6 Mos.    6 Mos.      %
                                         2008      2007     Change          2008      2007     Change
                                         ----      ----     ------         ------    ------    ------
                                         (in thousands)                     (in thousands)

Electronic Article Surveillance (EAS)   $ 1,184   $ 1,247     (5)         $ 2,163   $ 2,900     (25)
Closed Circuit Television (CCTV)             52        53     (2)             138       149      (7)
SentryVision                              2,166       691    213            2,813     1,271     121
                                        -------   -------   ----          -------   -------    -----
Total sales                               3,402     1,991     71            5,114     4,320      18
Service, maintenance and installation       627       437     43              957       776      23
                                        -------   -------   ----          -------   -------    -----
Total revenues                          $ 4,029   $ 2,428     66          $ 6,071   $ 5,096      19
                                        =======   =======   ====          =======   =======    =====

</TABLE>

Sales  in  the  second  quarter  of 2008 were 71% higher than the same period in
2007.  For  the  three- and six- month periods ended June 30, 2008 both domestic
and international sales were lower for EAS sales mainly due to weak sales volume
at our 51% owned labeling plant.  In the three- month period ended June 30, 2008
we  had  higher  domestic  QuickCheck self-service library sales offset by lower
QuickCheck  sales  in  the

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2008, and 2007


six-  month period ended June 30, 2008 compared to 2007.  CCTV produced slightly
lower  sales  in both the three- month and six- month periods while SentryVision
international  sales were up in both the three- month and six- month periods due
to  a  $900,000  sale  to  a  dealer  serving  the  Mexico City Metro.  Domestic
SentryVision  sales  are  up  in  both  the three- and six- month periods due to
higher  sales  to two major customers.  Installation revenues were higher in the
three-  and six- month periods of 2008 as compared to 2007 due to higher related
sales  revenue.  Maintenance revenue was higher offset slightly by lower service
revenue  in  both  the  three-  and  six-  month  periods.

Cost  of  sales  were  55%  and  57% of total sales in the three- and six- month
periods  ended  June  30, 2008 as compared to 56% and 55% in the three- and six-
month  periods  ended  June  30, 2007.  The three- month decrease in the cost of
sales  percentage  is  mainly  due  to a higher volume of sales.  The six- month
increase in the cost of sales percentage is mainly due to lower sales at our 51%
owned  labeling  plant.

The  14% increase in customer service expenses in the second quarter and the 18%
increase  in  the  first  six- months of 2008 compared to the second quarter and
first  six-  months  of  2007  is  primarily due to an increase in subcontractor
labor,  salary expenses and lift rentals due to higher revenues.  The Company is
continuing  to  use  outside service contractors to supplement our field service
employees  in  order  to  better  manage  total  customer  service  costs during
fluctuations  in  activity  levels  between  periods.

Selling,  general  and  administrative  expenses  were  22% and 20% lower in the
three-  and  six- month periods ended June 30, 2008, respectively, when compared
to  the  same  periods  of  the  previous year. This decrease is principally the
result of foreign exchange loss of $65,000 in the three- month period and a gain
of  $76,000  in  the six- month period ended June 30, 2008 compared to a loss of
$292,000  in  the  three-  month period and a loss of $337,000 in the six- month
period  ended  June  30,  2007  as  well  as lower sales salaries and travel and
warranty expenses, offset slightly by higher professional fees. Foreign exchange
gains  resulted  from  the  strengthening  of  the  U.S. dollar valuation of the
Company's  Canadian  dollar bank loan as well as receivables denominated in U.S.
dollars  from  our  Canadian  subsidiary.

The  decrease  in research and development costs of 21% in the second quarter of
2008  when compared to the second quarter of 2007 is primarily a result of lower
salary  and  travel expenses and the 25% decrease in the six- month period ended
June  30,  2008  as  compared  to  the same period of 2007 is primarily due to a
decrease  in  salary and consulting fees.  The Company continues to develop both
hardware  and software products for its core library and traveling camera system
markets.

Total  interest  and  financing  costs  increased  in  the three- and six- month
periods  ended June 30, 2008 primarily as a result of financing costs related to
the  non-cash  amortization  of  warrants issued of $155,000 and $273,000 in the
three-  and six- month periods ended June 30, 2008 as compared to $58,000 in the
three-  month  and  $134,000 in the six- month periods ended June 30, 2007, as a
result  of  the  loan  guarantees provided by the Company's directors as well as
increased  interest  expenses  on  a  higher  average  outstanding  debt.

The  income  tax  expense  (income) in all periods presented principally results
from  the  taxable  income  of one of our Canadian subsidiaries, which cannot be
offset  by  Sentry's  net  operating  loss  carryforwards.

As a result of the foregoing, Sentry had a gain of $8,000 and a loss of $879,000
in  the  quarter  and  six-  months ended June 30, 2008 as compared to losses of
$898,000  and  $1,622,000  in  the  quarter and six- months ended June 30, 2007.

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2008, and 2007


Liquidity  and  Capital  Resources  as  of  June  30,  2008

At  June 30, 2008, we had cash and short-term investments of $1,588,000, working
capital  of ($2,210,000) and total assets of $7,278,000.  While we had a loss of
$0.9  million  in  the  first  six  months  of  2008, we generated net cash from
operating activities of $1.6 million.  This was primarily a result of collecting
accounts  receivable  balances  as  well  as  collecting  cash upfront from most
foreign  customers  and  some  domestic  customers.

Cash  used  by  investing  activities was $40,000 during the first six months of
2008  mainly  due  to  changes  in  other  assets.

Cash  used  by  financing activities was $351,000 during the first six months of
2008  primarily  due  to  reduced  borrowings  under  our RBC credit facilities.
Borrowing  availability  under  the  credit  facilities  has been based upon the
combined  levels  of receivables and inventory, which was lower in the first six
months  of  2008.  The  extra  availability  under the credit facility above the
maximum  allowable limit resulted from the $1.0 million loan guarantees provided
by  our  directors  as  well  as  RBC allowing the Company to exceed the maximum
allowable  borrowing  by  an  additional  $0.6 million as of June 30, 2008.  The
Company entered into a forbearance agreement with RBC in May 2008, extending the
RBC  bank  credit  to  October  31,  2008.

The  maximum  borrowing under the demand loan facility was Canadian $3.6 million
(U.S.  $3.5  million).  RBC  increased the borrowing base formula by Canadian $1
million  (U.S.  $982,000) in exchange for additional security provided by two of
the  Company's  directors.  Borrowings under the facility are subject to certain
limitations  based on a percentage of eligible accounts receivable and inventory
as  defined in the agreement.  Interest is payable at a rate of RBC's prime rate
(4.75%  at June 30, 2008), plus 2.75% per annum.  Borrowings under this facility
are  secured by substantially all of the Company's assets.  As of June 30, 2008,
the  Company  exceeded its facilities under the lending formula by approximately
$0.6  million  (subject  to  the  above limitations) under the demand loan.  RBC
agreed  to  forbear  from  the  exercise  of  its  rights and remedies under the
security in respect of the indebtedness until October 31, 2008 or earlier in the
event  of the occurrence of default in accordance with the forbearance agreement
which  was  finalized  on  May  29,  2008.  In  accordance  with the forbearance
agreement  the  maximum  borrowings  were  reduced  to Canadian $3,175,000 (U.S.
$3,117,000) and the interest rate was increased from RBC's prime rate plus 2.75%
per  annum  to  RBC's  prime  rate  plus  3.25%  per  annum.

In  consideration  for  the  guarantees provided by Mr. Murdoch and Mr. Furst to
RBC,  the  Company  paid  a  fee of $43,000, shared between them, paid in twelve
equal  monthly  installments.  As  additional consideration, they received fully
vested,  two  year  warrants to purchase approximately 2.9 million shares of the
Company's common stock, at an exercise price of $0.10 per share.  The fair value
of  these  warrants  of $120,000 was determined in accordance with SFAS No. 123R
and  beginning  in  June  2006  was  taken  into  income  over the period of the
guarantee,  which  was one year.  These guarantees expired in June 2007 and were
subsequently  renewed  in  July  2007 until April 30, 2008.  In consideration of
these  guarantee  renewals, Mr. Murdoch and Mr. Furst received a fee of $40,000,
shared  between  them,  paid  in  ten equal monthly installments.  As additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  7.4  million common shares of the Company at an exercise price of
$0.065  per  share.  The fair value of these warrants of $164,000 was determined
in  accordance  with  SFAS  No.  123R  and beginning in July 2007 was taken into
income over the period of the guarantee, which was ten months.  These guarantees
expired  in  April 2008 and were subsequently renewed in May 2008 until December
31,  2008.  In  consideration  of  these guarantee renewals, Mr. Murdoch and Mr.
Furst  received

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2008, and 2007


a fee of $33,000, shared between them, paid in eight equal monthly installments.
As  additional  consideration,  they received fully vested, two year warrants to
purchase  approximately  5  million  common shares of the Company at an exercise
price  of  $0.10  per  share.  The  fair value of these warrants of $150,000 was
determined  in  accordance with SFAS No. 123R and beginning in May 2008 is being
taken  into  income  over  the  period  of the guarantee, which is eight months.
Interest  and financing expense recorded was $54,000 for the three- month period
ended  June  30, 2008, $103,000 for the six- months ended June 30, 2008.  During
the  three-  and  six-month  periods  ended  June 30, 2007, $20,000 and $50,000,
respectively,  has  been  recorded  in  interest  and  financing  expense.

In  December 2006, the Company entered into a secured revolving credit agreement
with  Tradition  Capital Bank. From December 15, 2006, through the expiration of
the  facility  on  June  15,  2007, the Company drew up to a maximum of $550,000
under the facility. Borrowings under this facility were secured by substantially
all  of  the Company's assets in a second position to RBC. In addition, the loan
was  fully  secured  by  personal  guarantees  of  Mr. Murdoch and Mr. Furst. In
consideration  of  these guarantees, Mr. Murdoch and Mr. Furst received a fee of
$14,000,  shared  between them, paid in six equal monthly installments beginning
in  December  2006. As additional consideration, they received fully vested, two
year  warrants  to  purchase  approximately  5.2 million shares of the Company's
common  stock, at an exercise price of $0.053 per share. The fair value of these
warrants  of  $91,000  was  determined  in  accordance  with  SFAS  No. 123R and
beginning  in  December  2006  was  taken  into  income  over  the period of the
guarantee,  which  was  six  months.  The credit facility and related guarantees
expired  in June 2007 and were subsequently renewed in July 2007 until April 30,
2008.  In  consideration  of  the  guarantee renewals, Mr. Murdoch and Mr. Furst
received  a  fee  of  $23,000,  shared  between  them, paid in ten equal monthly
installments.  As additional consideration, they received fully vested, two year
warrants  to  purchase approximately 4.2 million common shares of the Company at
an  exercise  price  of  $0.065  per  share. The fair value of these warrants of
$94,000  was  determined  in accordance with SFAS No. 123R and beginning in July
2007  was  taken  into  income  over  the period of the guarantee, which was ten
months.

On  September  25,  2007,  Mr. Murdoch and Mr. Furst agreed to provide Tradition
Capital  Bank  additional personal guarantees totaling $500,000, which increased
the  maximum the Company can draw to $1,050,000, until April 30, 2008, under the
same  terms and conditions as listed above.  In consideration of the guarantees,
Mr.  Murdoch  and Mr. Furst received a fee of $15,000, shared between them, paid
in seven equal monthly installments.  As additional consideration, they received
fully  vested,  two  year  warrants to purchase approximately 2.5 million common
shares  of  the Company at an exercise price of $0.10 per share.  The fair value
of these warrants of $89,000 was determined in accordance with SFAS No. 123R and
beginning  in  October  2007  was  taken  into  income  over  the  period of the
guarantee,  which  was  seven months.  On April 30, 2008 the above loan facility
expired  and  was  renewed  until December 31, 2008.  Interest is payable at the
reference  rate  (Wall Street Journal prime, with an interest rate floor of 5.5%
currently  5.0%), plus 1.0% per annum.  At June 30, 2008, borrowings were at the
maximum  amount  available.  In  consideration  of these guarantee renewals, Mr.
Murdoch  and  Mr. Furst will receive a fee of $35,000, shared between them, paid
in eight equal monthly installments.  As additional consideration, they received
fully  vested,  two  year  warrants to purchase approximately 5.3 million common
shares  of  the Company at an exercise price of $0.10 per share.  The fair value
of  these  warrants  of $157,000 was determined in accordance with SFAS No. 123R
and  beginning  in  May  2008  is being taken into income over the period of the
guarantee,  which  is eight months.  Interest and financing expense recorded was
$61,000  for  the  three-month  period  ended  June  30,  2008, $128,000 for the
six-months  ended  June 30, 2008.  During the three- and six-month periods ended
June  30, 2007, $37,000 and $87,000, respectively, has been recorded in interest
and  financing  expense.

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2008, and 2007


In  August 2007, Mr. Murdoch agreed to provide a personal guarantee for a Letter
of  Credit  of  $49,350  for  a period of one year in favor of Palm Beach Public
Library  that the Company was unable to obtain on its own in order to complete a
sale  of  the  Company's self service library systems.  In consideration of this
guarantee  Mr. Murdoch will receive a fee of $2,000 paid in twelve equal monthly
installments.  As  additional  consideration, he received fully vested, two year
warrants  to  purchase approximately 0.2 million common shares of the Company at
an  exercise  price  of  $0.10  per  share.  The fair value of these warrants of
$10,000  was  determined in accordance with SFAS No. 123R "Share-Based Payment,"
and  beginning  in August 2007 is being taken into income over the period of the
guarantee,  which is twelve months.  Interest and financing expense recorded was
$3,000 for the three-month period and $5,000 for the six-month period ended June
30,  2008.

In  December  2007,  Mr.  Murdoch,  Sentry's  CEO and director, and Mr. Furst, a
Sentry  director,  agreed  to  lend  the  Company $141,000 ($81,000 and $60,000,
respectively)  to  secure a bid that the Company was unable to obtain on its own
to  sell  products  to  an airport facility.  In consideration of the loans, Mr.
Murdoch  and  Mr. Furst received interest for the period of the loan at the Bank
of  America's prime rate (7.25%) plus 1% per annum.  During the six-month period
ended  June  30,  2008, $1,000 has been recorded in interest and finance expense
related  to  the  loans.  The  loans  were  repaid  in  January  2008.

On April 11, 2008, Brookfield extended its maturity of the debenture to December
31,  2008.  The  5  million  warrants  that  were originally issued expired.  In
consideration  of  this  renewal,  Brookfield  received  fully  vested, two year
warrants to purchase 5 million common shares of the Company at an exercise price
of $0.10 per share.  The fair value of these warrants of $150,000 was determined
in  accordance  with SFAS No. 123R and beginning in May 2008 is being taken into
income  over  the  period  of  the  guarantee,  which  is  eight  months.

We  will require positive cash flows from operations to meet our working capital
needs  over  the  next  twelve months.  The Company continued to incur operating
losses  through  the  first  six months of 2008.  This has limited the Company's
ability  to  secure  additional  bank  financing.  The Company collected cash in
advance  of  delivery from both foreign and domestic customers, which caused our
cash  balance  to  increase to $1.4 million.  The Company has instituted certain
plans  to increase its revenue base as well as preserve its cash and continue to
reduce  operating  expenses.

We  anticipate  revenue  growth  in new and existing markets. We are striving to
continue  to  improve our gross margins and control our selling expenses and our
general  and  administrative  expenses. There can be no assurance, however, that
changes in our plans or other events affecting our operations will not result in
accelerated  or  unexpected  cash requirements, or that we will be successful in
achieving  positive  cash  flow  from operations or obtaining adequate financing
through our credit facility. Our future cash requirements are expected to depend
on  numerous factors, including, but not limited to: (i) the ability to generate
positive cash flow from operations; (ii) the ability to raise additional capital
or obtain additional financing; and (iii) economic conditions. In the event that
sufficient  positive  cash  flow  from operations is not generated, we will seek
additional  financing  to  satisfy  current  operating  cash  flow deficiencies.

There  can be no assurance, however, that additional financing will be available
on  terms  that are satisfactory to the Company, or that any such financing will
be  sufficient  to  provide  the  full  amount  of  funding  necessary.

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2008, and 2007


Related  Party  Transactions
----------------------------
Certain  of  Sentry's  key shareholders and directors personally guaranteed bank
debt  to  the  Company.  Please  refer  to  the  Liquidity and Capital Resources
section  for  details.

In  August 2007, Mr. Murdoch agreed to provide a personal guarantee for a Letter
of  Credit  of  $49,350  for  a period of one year in favor of Palm Beach Public
Library  that the Company was unable to obtain on its own in order to complete a
sale  of  the  Company's self service library systems.  In consideration of this
guarantee  Mr. Murdoch will receive a fee of $2,000 paid in twelve equal monthly
installments.  As  additional  consideration, he received fully vested, two year
warrants  to  purchase approximately 0.2 million common shares of the Company at
an  exercise  price  of  $0.10  per  share.  The fair value of these warrants of
$10,000  was  determined in accordance with SFAS No. 123R "Share-Based Payment,"
and  beginning  in August 2007 is being taken into income over the period of the
guarantee,  which is twelve months.  Interest and financing expense recorded was
$3,000 for the three-month period and $5,000 for the six-month period ended June
30,  2008.

In  December  2007,  Mr.  Murdoch,  Sentry's  CEO and director, and Mr. Furst, a
Sentry  director,  agreed  to  lend  the  Company $141,000 ($81,000 and $60,000,
respectively)  to  secure a bid that the Company was unable to obtain on its own
to  sell  products  to  an airport facility.  In consideration of the loans, Mr.
Murdoch  and  Mr. Furst received interest for the period of the loan at the Bank
of  America's prime rate (7.25%) plus 1% per annum.  During the six-month period
ended  June  30,  2008, $1,000 has been recorded in interest and finance expense
related  to  the  loans.  The  loans  were  repaid  in  January  2008.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of changes in the value of market risk sensitive
instruments caused by fluctuations in interest rates, foreign exchange rates and
commodity  prices.  Changes  in  these  factors  could cause fluctuations in the
results of our operations and cash flows. In the ordinary course of business, we
are primarily exposed to foreign currency and interest rate risks. We do not use
derivative  financial  instruments  in  connection  with  these commodity market
risks.


Item  4T.  Controls  and  Procedures

(a)  Evaluation  of  Disclosure  Controls  and  Procedures

Our  Chief Executive Officer and our Principal Financial Officer evaluated, with
the  participation  of  our  management,  the  effectiveness  of  our disclosure
controls  and  procedures  as of the end of the period covered by this Quarterly
Report  on  Form 10-Q.  As of June 30, 2008, our Chief Executive Officer and our
Principal  Financial  Officer  concluded  that  our  disclosure  controls  and
procedures,  as  defined  in  Securities  Exchange  Act  Rule  13a-15(e),  were
effective.

Our  disclosure  controls and procedures have been formulated to ensure (i) that
information  that  we are required to disclose in reports that we file or submit
under  the  Securities Exchange Act of 1934 were recorded, processed, summarized
and  reported  within  the  time  periods  specified  in Securities and Exchange
Commission  rules  and  forms  and  (ii)  that  the  information  required to be
disclosed by us is accumulated and communicated to our management, including our
Chief  Executive  Officer  and  Principal  Financial Officer, as appropriate, to
allow  timely  decisions  regarding  required  disclosures.

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
PART II  - OTHER INFORMATION
June 30, 2008, and 2007


(b)  Changes  in  Internal  Controls  over  Financial  Reporting

There  was  no  change  in  our  internal  controls over financial reporting (as
defined  in  Rules  13a-15(f)  and  15d-15(f) under the Exchange Act) during the
second quarter of 2008 covered by this Quarterly Report on Form 10-Q that have
materially affected, or are reasonably likely to materially affect, our internal
controls  over  financial  reporting.


PART II  - OTHER INFORMATION

Item 6 - Exhibits

(a)     Exhibits:

10.1 -  Forbearance Agreement, dated May 29, 2008, by and among Royal Bank of
        Canada, Sentry Technology Canada Inc., Sentry Technology Corporation and
        Custom Security  Industries  Inc.

31.1 -  Certification by the Chief Executive Officer Pursuant to Rule
        13a-14(a)/15d-14(a).

31.2 -  Certification by the Principal Financial Officer Pursuant to Rule
        13a-14(a)/15d-14(a).

32.1 -  Certification by the Chief Executive Officer Pursuant to 18 U.S.C.
        Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
        of 2002.***

32.2 -  Certification by the Principal Financial Officer Pursuant to 18 U.S.C.
        Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
        of 2002.***

***  In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit
     shall not be deemed "filed" for the purposes of Section 18 of the
     Securities and Exchange Act of 1934 or otherwise subject to the liability
     of that section, nor shall it be deemed incorporated by reference in any
     filing under the Securities Act of 1933 or the Securities Exchange Act of
     1934.


SIGNATURE

Pursuant  to  the  requirements  of the Securities and Exchange Act of 1934, the
registrant  had  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.

                            SENTRY TECHNOLOGY CORPORATION
                            -----------------------------


Date:   August 11, 2008     By:     /s/JOAN E. MILLER
        ---------------            -----------------------------------------
                                     Joan E. Miller, Vice President - Finance
                                     and Treasurer
                                    (Principal Financial and Accounting Officer)