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 September 30, 2001

                                       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 registrant as specified in its charter)


       Delaware                                        96-11-3349733
     ----------                                        -------------
(State  or  other  jurisdiction  of                  (I.R.S. Employer
 incorporation  or organization)                     Identification No.)

           350  Wireless  Boulevard,  Hauppauge,  New  York  11788
                               ------------------------
(Address  of  principal  executive  offices)              (Zip Code)

                                631-232-2100
                                ------------
                (Registrant's telephone number, including area code)


    (Former name, former address and former fiscal year, if changed since last
                                     report)


Indicate by check mark 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
        -


As  of  November  8,  2001,  there  were  61,467,872  shares  of  Common  Stock
outstanding.



<PAGE>


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




                                                            Page  No.
                                                            ---------
PART  I.   FINANCIAL  INFORMATION
---------------------------------

Item  1.     Financial  Statements  (Unaudited)

   Consolidated  Balance  Sheets  --
   September  30,  2001  and  December  31,  2000                3

   Condensed  Consolidated  Statements  of  Operations  --
   Three  Months  Ended  September  30,  2001  and  2000
   and  Nine  Months  Ended  September  30,  2001  and  2000     4

   Condensed  Consolidated  Statement  of  Shareholders'  Equity
   Nine  Months  Ended  September  30,  2001                     5

   Condensed  Consolidated  Statements  of  Cash  Flows  --
   Nine  Months  Ended  September  30,  2001  and  2000          6

   Notes  to  Condensed  Consolidated  Financial
   Statements  --  September  30,  2001                       7  -  10


Item  2.     Management's  Discussion  and  Analysis  of
     Financial  Condition  and  Results  of  Operations      10  -  13



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

Item  6.     Exhibits  and  Reports  on  Form  8-K              14


Signatures                                                      14


                                      - 2 -
<PAGE>

<TABLE>
<CAPTION>

SENTRY  TECHNOLOGY  CORPORATION
CONSOLIDATED  BALANCE  SHEETS
(In  thousands)



                                                                 September 30,    December 31,
                                                                     2001             2000
                                                                ---------------  --------------
<S>                                                             <C>              <C>
ASSETS
--------------------------------------------------------------
CURRENT ASSETS
  Cash and cash equivalents. . . . . . . . . . . . . . . . . .  $          331   $         927
  Accounts receivable, less allowance for doubtful
     accounts of $771 and $890, respectively . . . . . . . . .           3,447           3,178
  Net investment in sales-type leases -
     current portion . . . . . . . . . . . . . . . . . . . . .              69              84
  Inventories. . . . . . . . . . . . . . . . . . . . . . . . .           4,372           5,274
  Prepaid expenses and other current assets. . . . . . . . . .             404             202
                                                                ---------------  --------------
    Total current assets . . . . . . . . . . . . . . . . . . .           8,623           9,665

NET INVESTMENT IN SALES-TYPE LEASES -
  non-current portion. . . . . . . . . . . . . . . . . . . . .              49             100
SECURITY DEVICES ON LEASE, net . . . . . . . . . . . . . . . .              20              36
PROPERTY, PLANT AND EQUIPMENT, net . . . . . . . . . . . . . .           3,026           3,324
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . .             262             720
                                                                ---------------  --------------

                                                                $       11,980   $      13,845
                                                                ===============  ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------------------------
CURRENT LIABILITIES
  Revolving line of credit . . . . . . . . . . . . . . . . . .  $        2,486   $       2,920
  Accounts payable . . . . . . . . . . . . . . . . . . . . . .           1,291           1,463
  Accrued liabilities. . . . . . . . . . . . . . . . . . . . .           1,628           2,633
  Obligations under capital leases -
     current portion . . . . . . . . . . . . . . . . . . . . .             134             124
  Deferred income. . . . . . . . . . . . . . . . . . . . . . .             308             352
                                                                ---------------  --------------
    Total current liabilities. . . . . . . . . . . . . . . . .           5,847           7,492

OBLIGATIONS UNDER CAPITAL LEASES -
  non-current portion. . . . . . . . . . . . . . . . . . . . .           2,649           2,768
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                               ---             199
                                                                ---------------  --------------
    Total liabilities. . . . . . . . . . . . . . . . . . . . .           8,496          10,459

REDEEMABLE CUMULATIVE PREFERRED STOCK                                      ---          29,180

COMMON SHAREHOLDERS' EQUITY (DEFICIT)
  Common stock . . . . . . . . . . . . . . . . . . . . . . . .              61              10
  Additional paid-in capital . . . . . . . . . . . . . . . . .          44,358          12,859
  Accumulated deficit. . . . . . . . . . . . . . . . . . . . .         (40,935)        (38,663)
                                                                ---------------  --------------
    Total common shareholders' equity. . . . . . . . . . . . .           3,484         (25,794)
                                                                ---------------  --------------
                                                                $       11,980   $      13,845
                                                                ===============  ==============


See notes to the condensed consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

SENTRY  TECHNOLOGY  CORPORATION
CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
 (In  thousands,  except  per  share  data)


                                                                Three Months Ended                     Nine Months Ended
                                                                  September 30,                          September  30,
                                                               --------------------                   -------------------
<S>                                                            <C>             <C>                    <C>           <C>
                                                               2001            2000                   2001          2000
                                                               --------------------                   -------------------

REVENUES. . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 4,329      $ 5,547                   $ 13,004   $ 15,588

COSTS AND EXPENSES:
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . .    2,219        2,836                      6,713      8,110
Customer service expenses . . . . . . . . . . . . . . . . . .    1,174        1,113                      3,327      3,410
Selling, general and
   administrative expenses. . . . . . . . . . . . . . . . . .    1,417        1,774                      4,334      5,586
Research and development. . . . . . . . . . . . . . . . . . .      107          198                        490        649
                                                               --------------------                   -------------------

                                                                 4,917        5,921                     14,864     17,755
                                                               --------------------                   -------------------

OPERATING LOSS. . . . . . . . . . . . . . . . . . . . . . . .     (588)        (374)                    (1,860)    (2,167)

INTEREST EXPENSE. . . . . . . . . . . . . . . . . . . . . . .      129          187                        412        511
                                                               --------------------                   -------------------

LOSS BEFORE INCOME TAXES AND CUMULATIVE
     EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE . . . . . . . .     (717)        (561)                    (2,272)    (2,678)

INCOME TAXES                                                       ---          ---                        ---        ---
                                                               --------------------                   -------------------

NET LOSS BEFORE CUMULATIVE EFFECT OF
     CHANGE IN ACCOUNTING PRINCIPLE . . . . . . . . . . . . .     (717)        (561)                    (2,272)    (2,678)

CUMULATIVE EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE                                          ---          ---                        ---        301
                                                               --------------------                   -------------------

NET LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . .     (717)        (561)                    (2,272)    (2,979)

PREFERRED STOCK DIVIDENDS                                          ---          336                         25      1,001

RETURN TO COMMON SHAREHOLDERS FROM
     REDEMPTION OF PREFERRED STOCK                                 ---          ---                     27,198        ---
                                                               --------------------                   -------------------

NET INCOME (LOSS) ATTRIBUTED TO
     COMMON SHAREHOLDERS. . . . . . . . . . . . . . . . . . .  $  (717)  $     (897)                  $ 24,901   $ (3,980)
                                                               ====================                   ===================

NET INCOME (LOSS) PER COMMON SHARE BEFORE
     CUMULATIVE EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE:
  Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ (0.01)  $    (0.09)                  $  0.41    $  (0.38)
                                                               ====================                   ===================
  Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .  $ (0.01)  $    (0.09)                  $  0.41    $  (0.38)
                                                               ====================                   ===================

NET INCOME (LOSS) PER COMMON SHARE
  Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ (0.01)  $    (0.09)                  $  0.41    $  (0.41)
                                                               ====================                   ===================
  Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .  $ (0.01)  $    (0.09)                  $  0.41    $  (0.41)
                                                               ====================                   ===================

WEIGHTED AVERAGE COMMON SHARES
  Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .   61,468        9,751                    60,127       9,751
                                                               ====================                   ===================
  Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .   61,468        9,751                    61,298       9,751
                                                               ====================                   ===================

See notes to the condensed consolidated financial statements.

</TABLE>


<PAGE>
<TABLE>

<CAPTION>

SENTRY  TECHNOLOGY  CORPORATION
CONDENSED  CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
 (IN  THOUSANDS)


                                                                                            TOTAL
                                                                          RETAINED         COMMON        REDEEMABLE
                                           COMMON         ADDITIONAL      EARNINGS      SHAREHOLDERS'    CUMULATIVE
                                            STOCK          PAID-IN      (ACCUMULATED       EQUITY        PREFERRED
                                       SHARES  AMOUNT      CAPITAL        DEFICIT)        (DEFICIT)        STOCK
                                      ---------------    ------------  --------------  ---------------  ------------

<S>                                      <C>      <C>        <C>           <C>              <C>              <C>
BALANCE, DECEMBER 31, 2000            9,751    $ 10       $ 12,859      $(38,663)        $(25,794)        $29,180

NET LOSS AND COMPREHENSIVE LOSS         ---      ---          ---         (2,272)          (2,272)

PREFERRED STOCK DIVIDENDS               ---      ---           (25)          ---              (25)             25

COMMON SHARES ISSUED IN CONNECTION
    WITH REDEMPTION OF CLASS A
    PREFERRED STOCK                  28,667      28         29,177           ---           29,205         (29,205)

COMMON STOCK ISSUED TO
    DUTCH A&A NET OF
    EXPENSES                         23,050      23          2,347           ---            2,370             ---
                                     ------  -------    ----------    ----------      -----------      ----------


BALANCE, SEPTEMBER 30, 2001          61,468    $ 61       $ 44,358      $(40,935)        $  3,484         $   ---
                                     ======  =======    ==========    ==========      ===========      ==========
</TABLE>

SEE  NOTES  TO  THE  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS.

<PAGE>
<TABLE>
<CAPTION>

SENTRY  TECHNOLOGY  CORPORATION
CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
(In  thousands)



                                                                          Nine Months Ended
                                                                            September 30,
                                                                         -------------------
                                                                          2001         2000
                                                                         ------      -------

<S>                                                                      <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
--------------------------------------------------------------
  Net loss . . . . . . . . . . . . . . . . . . . . . . . . . .  $       (2,272)     $(2,979)
  Adjustments to reconcile net loss
     to net cash used in operating activities:
     Depreciation and amortization of security
        devices and property, plant and equipment. . . . . . .             381          472
     Amortization of intangibles and other assets. . . . . . .              20          747
     Provision for bad debts . . . . . . . . . . . . . . . . .              41          158
  Changes in operating assets and liabilities:
     Accounts receivable . . . . . . . . . . . . . . . . . . .            (310)       2,399
     Net investment in sales-type leases . . . . . . . . . . .              66          332
     Inventories . . . . . . . . . . . . . . . . . . . . . . .             902         (393)
     Accounts payable and accrued liabilities. . . . . . . . .          (1,177)         (68)
     Other, net. . . . . . . . . . . . . . . . . . . . . . . .              14         (435)
                                                                      --------     --------

    Net cash used in operating activities. . . . . . . . . . .          (2,335)         233
                                                                      --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, plant and equipment, net . . . . . . .             (67)           2
  Security devices on lease                                                ---          (13)
  Intangibles. . . . . . . . . . . . . . . . . . . . . . . . .             (21)          (7)
                                                                      --------     --------

    Net cash used in investing activities. . . . . . . . . . .             (88)         (18)
                                                                      --------     --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (payments) under the revolving line of credit            (434)         633
  Repayment of obligations under capital leases. . . . . . . .            (109)        (140)
  Proceeds from sale of stock, net                                       2,370          ---
                                                                      --------     --------

    Net cash provided by financing activities. . . . . . . . .           1,827          493
                                                                      --------     --------

INCREASE (DECREASE) IN CASH. . . . . . . . . . . . . . . . . .            (596)         708

CASH, at beginning of period . . . . . . . . . . . . . . . . .             927          951
                                                                      --------     --------
CASH, at end of period . . . . . . . . . . . . . . . . . . . .  $          331      $ 1,659
                                                                      ========     ========






See notes to the condensed consolidated financial statements.


                                                 - 6 -
</TABLE>

SENTRY  TECHNOLOGY  CORPORATION
NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
SEPTEMBER  30,  2001


NOTE  A  --  Basis  of  Presentation - Knogo North America Inc. and Video Sentry
--------------------------------------------------------------------------------
Corporation  Merger
-------------------
Sentry  Technology  Corporation  ("Sentry"),  a  Delaware  Corporation,  was
established  to effect the merger of Knogo North America Inc. ("Knogo N.A.") and
Video  Sentry Corporation ("Video Sentry") which was consummated on February 12,
1997 (the "Effective Date").  The merger resulted in Knogo N.A. and Video Sentry
becoming  wholly  owned  subsidiaries  of  Sentry.  The  consolidated  financial
statements  include  the accounts of Sentry and its majority-owned subsidiaries.
All  intercompany  accounts  and  transactions  have  been  eliminated  in
consolidation.

The  consolidated  financial  statements  are  unaudited.  In  the  opinion  of
management,  all  adjustments,  consisting  of  normal  recurring  adjustments
necessary  for  a fair presentation of the financial information for the periods
indicated,  have  been included.  Interim results are not necessarily indicative
of  results  for  a  full  year.  These  financial  statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included  in  Sentry's Annual Report to Stockholders on Form 10-K for the fiscal
year  ended  December  31,  2000,  as  filed  with  the  Securities and Exchange
Commission.


NOTE  B  --  Investment  by  Dutch  A&A
---------------------------------------
On  January  8,  2001,  Dutch A&A Holding, B.V. ("Dutch A&A) acquired 23,050,452
shares  of  our  common  stock  for  $3 million, of which $1 million was paid in
January 2001, $1 million was paid on April 30, 2001 and the remaining balance of
$1  million  was  paid  on  August 31, 2001.  Dutch A&A is a Netherlands company
which, through its subsidiaries, is in the business of development, manufacture,
sale  and  distribution  of  various kinds of identification, access control and
anti-theft  electronic  article  surveillance  systems  and  accessories.

As of January 8, 2001, Dutch A&A owns 37.5% of our outstanding common stock.  At
any  time  prior to January 8, 2002, Dutch A&A may increase its ownership of our
common  stock  to a total of 51% of the shares of common stock then outstanding.
If  the  average  market  value  of  our  common stock, measured over any 10-day
trading period during the one year period following January 8, 2001, is at least
$15.0  million, the purchase price for the additional shares shall be determined
by  multiplying the actual number of shares to be purchased by $.001; otherwise,
the  purchase price will be $1.5 million.  At any time prior to January 8, 2003,
Dutch  A&A  may  increase its ownership of our common stock to a total of 60% of
the  shares  of  common  stock  then  outstanding.  The  purchase  price for the
additional shares shall be determined as follows: If the average market value of
the  common  stock, measured over a 10-day period during the two years preceding
January 8, 2003, is at least $25 million, the purchase price shall be determined
by  multiplying  the actual number of shares to be purchased by $.001.  If Dutch
A&A  previously  exercised its right to acquire shares increasing its investment
to 51% of our common stock, but the average market value test was not met at the
time  of  the  second  purchase,  then the purchase price shall be $3.5 million;
otherwise  the  purchase  price  shall  be  $5.0 million.  As a condition to the
investment by Dutch A&A, our stockholders elected three nominees of Dutch A&A to
the Board of Directors at a Special Meeting of Stockholders on December 8, 2000.
If Dutch A&A has not acquired 51% of our common stock by January 8, 2003, one of
the three nominees of Dutch A&A will resign and be replaced, with the consent of
Dutch  A&A,  by  a  nominee of our directors who are not nominated by Dutch A&A.

In  addition  to  the  election  of  three nominees of Dutch A&A to the Board of
Directors,  other  matters  which  were approved at the December 8, 2000 Special
Meeting  of Stockholders and became effective on January 8, 2001 were amendments
to  the  Company's  certificate of incorporation to: (i) permit the payment of a
dividend  of  additional  shares of Class A Preferred Stock at the rate of 0.075
shares  of  Class  A  Preferred  Stock for each share of Class A Preferred Stock
held;  (ii) to reclassify Class A Preferred Stock into shares of common stock on
a ratio of five shares of common stock for each share of Class A Preferred Stock
outstanding; and (iii) to increase the number of the Company's authorized shares
of  common  stock  to  140,000,000.  As  a  result  of  the  dividend  and
reclassification,  28,666,660  common  shares  were  issued  to  former  Class A
Preferred  shareholders.

Also,  on  December  28,  2000,  the  Board of Directors increased the number of
directors  from  five  to  seven  effective  upon  the  closing of the Dutch A&A
investment.



                                      - 7 -

SENTRY  TECHNOLOGY  CORPORATION
NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
SEPTEMBER  30,  2001


The reclassification of the Class A Preferred Shares resulted in a return to the
common shareholders of $27.2 million, which was recorded in the first quarter of
2001.  This  amount  represents  the difference between the fair market value of
the common stock issued and the carrying amount of the preferred stock redeemed.


NOTE  C  --  Financial  Condition  and  Liquidity
-------------------------------------------------
We  have  incurred  reduced  revenue  levels,  decreased  financial position and
recurring  operating  losses  over  the  past  several years.  To strengthen our
financial  position,  a  number  of  activities  have  been initiated including:

-     Investment  of  $3  million in newly issued shares of the Company's common
      stock  by  Dutch A&A.  The transaction with Dutch A&A will allow us to
      introduce new  products,  share  resources  and  simplify  our  capital
      structure.
-     Improvements  in  existing  products  and  service  capabilities.
-     Additions  to  direct  sales  staff  and emphasis on growing international
      dealer  base.
-     Various  cost  cutting  and  cost  saving  initiatives.

As  a result of these activities, we anticipate that current cash reserves, cash
obtained  pursuant  to  the  Dutch A&A transaction, existing lines of credit and
cash  generated  by  operations should be sufficient to meet our working capital
requirements,  as well as future capital expenditure requirements, over the next
twelve  months.


NOTE  D  --  Net  Investment  in  Sales-Type  Leases
----------------------------------------------------
We are the lessor of security devices under agreements expiring in various years
through  2003.  The  net  investment  in  sales-type  leases  consists  of:

<TABLE>
<CAPTION>


                                                     September 30, 2001    December 31, 2000
                                                    --------------------  -------------------
<S>                                                 <C>                   <C>
                                                                  (in thousands)

Minimum lease payments receivable. . . . . . . . .  $               134   $              215
Allowance for uncollectible minimum lease payments                   (7)                 (10)
Unearned income. . . . . . . . . . . . . . . . . .                   (9)                 (21)
                                                    --------------------  -------------------
Net investment . . . . . . . . . . . . . . . . . .                  118                  184
Less current portion . . . . . . . . . . . . . . .                   69                   84
                                                    --------------------  -------------------
Non-current portion. . . . . . . . . . . . . . . .  $                49   $              100
                                                    ====================  ===================

</TABLE>


NOTE  E  --  Inventories
------------------------
Inventories  consist  of  the  following:

<TABLE>
<CAPTION>


                                                     September 30, 2001   December 31, 2000
                                                    --------------------  ------------------
<S>                                                 <C>                   <C>
                                                                 (in thousands)
Raw materials .                                     $              1,230  $            1,479
Work-in-process                                                    2,115               2,259
Finished goods.                                                    1,027               1,536
                                                    --------------------  ------------------
                                                    $              4,372  $            5,274
                                                    ====================  ==================
</TABLE>


Reserves  for excess and obsolete inventory totaled $3,171,000 and $3,354,000 as
of September 30, 2001 and December 31, 2000, respectively and have been included
as  a  component  of  the  above  amounts.


NOTE  F  --  Related  Party  Transactions
-----------------------------------------
As  a  result  of  the  Dutch A&A investment, Sentry entered into a distribution
agreement  with Dutch A&A which contemplates a two-way distribution relationship
between the companies.  Under the agreement, Sentry has the rights to sell Dutch
A&A's  EAS,  access  control  and RFID products and accessories and Sentry gives
Dutch  A&A  the  rights  to  sell  its  EAS  and  CCTV products and accessories.
Pricing  for  products  under  the  agreements  are at the lowest prices charged

                                      - 8 -

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION
NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
SEPTEMBER  30,  2001


to  affiliates.  In  addition,  Dutch  A&A  receives  annual management fees for
product  marketing  and product engineering management from Sentry in the amount
of  $100,000.  Also,  Peter  Murdoch,  a  shareholder  of Dutch A&A, receives an
annual  salary  of  $150,000  in the capacity of President of Sentry.  Purchases
from  Dutch  A&A were $50,000 and $136,000 in the quarter and nine month periods
ended September 30, 2001.  Fees, services and sales to Dutch A&A were $3,000 and
$39,000 in the quarter and nine months ended September 30, 2001.  The net amount
receivable  from  Dutch  A&A  as  of  September  30,  2001  is  $27,000.


NOTE  G  --  Recent  Accounting  Pronouncements
-----------------------------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments  and  Hedging Activities".  SFAS No. 133 is effective for all fiscal
years  beginning after June 15, 2000.  SFAS No. 133, as amended and interpreted,
establishes  accounting  and  reporting  standards  for  derivative instruments,
including  certain  derivative  instruments embedded in other contracts, and for
hedging  activities.  All  derivatives,  whether  designated  in  hedging
relationships  or  not,  will be required to be recorded on the balance sheet at
fair  value.  If the derivative is designated in a fair value hedge, the changes
in  the  fair  value of the derivative and the hedged item will be recognized in
earnings.  If  the derivative is designated in a cash-flow hedge, changes in the
fair  value of the derivative will be recorded in other comprehensive income and
will  be  recognized  in  the  income  statement  when  the  hedged item affects
earnings.  SFAS  No.  133  defines  new  requirements  for  designation  and
documentation  of  hedging  relationships  as  well  as  ongoing  effectiveness
assessments  in  order  to use hedge accounting.  For a derivative that does not
qualify  as  a  hedge, changes in fair value will be recognized in earnings.  We
adopted  SFAS  No. 133 on January 31, 2001 and the implementation did not have a
material  impact  on  our  consolidated  financial  statements.

In  June  2001,  the  Financial  Accounting  Standards  Board  issued  Financial
Accounting  Standards  No.  141 ("SFAS No. 141"), "Business Combinations."  SFAS
No.  141 applies prospectively to all business combinations initiated after June
30,  2001  and  to all business combinations accounted using the purchase method
for  which  the  date  of acquisition is July 1, 2001, or later.  This statement
requires  all  business  combinations  to be accounted for using one method, the
purchase  method.  Under  previously  existing  accounting  rules,  business
combinations  were  accounted  for  using  one  of  two  methods,  the
pooling-of-interests  method  or  the purchase method.  The adoption of SFAS No.
141  is  not  expected  to  have  a material impact on our financial statements.

In  June  2001,  the  Financial  Accounting  Standards  Board  issued  Financial
Accounting  Standards  No.  142 ("SFAS No. 142"), "Goodwill and Other Intangible
Assets."  SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill  and  other  intangible  assets.  Under SFAS No. 142, goodwill and some
intangible  assets  will  no  longer  be  amortized,  but  rather  reviewed  for
impairment on a periodic basis. The provisions of this Statement are required to
be  applied  starting with fiscal years beginning after December 15, 2001.  This
Statement  is  required  to  be applied at the beginning of the Company's fiscal
year and to be applied to all goodwill and other intangible assets recognized in
its  financial  statements  at  that  date.  Impairment  losses for goodwill and
certain  intangible  assets  that  arise  due to the initial application of this
Statement are to be reported as resulting from a change in accounting principle.
Goodwill  and  intangible  assets  acquired after June 30, 2001, will be subject
immediately  to  the provisions of this Statement.  The adoption of SFAS No. 142
is  not  expected  to  have  a  material  impact  on  our  financial statements.

In  August  2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations."  SFAS  No.  143  addresses  financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs.  The adoption of SFAS No. 143 is not expected
to  have  a  material  impact  on  our  financial  statements.

In  August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal  of Long-Lived Assets." SFAS No. 144 addresses financial accounting and
reporting  for the impairment or disposal of long-lived assets.  The adoption of
SFAS  No.  144  is  not  expected  to  have  a  material impact on our financial
statements.


                                       -9-


SENTRY  TECHNOLOGY  CORPORATION
NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
SEPTEMBER  30,  2001

NOTE  H  --  Change  in  Accounting  Principle
----------------------------------------------
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin  No.  101  (SAB 101), Revenue Recognition in Financial Statements.  The
SAB  summarizes  certain  of  the  staff's  views in applying generally accepted
accounting  principles  to  revenue  recognition  in  the  financial statements.

In  accordance  with  SAB  101,  we  have  changed  our  accounting  method  for
recognizing  revenue  on  the  sale of equipment where post-shipment obligations
exist.  Previously,  we recognized revenue for equipment when title transferred,
generally  upon  shipment.  Beginning  with  the  first quarter of year 2000, we
began  recognizing  revenue when installation is complete or other post-shipment
obligations  have  been  satisfied.  The  cumulative  effect  of  the  change in
accounting  method is a non-cash reduction in net earnings of $301,000, or $0.03
per  share.


NOTE  I  --  Earnings  Per  Share
---------------------------------
Basic  earnings  per share is determined by using the weighted average number of
common  shares  outstanding  during  each  period.  Diluted  earnings  per share
further  assumes the issuance of common shares for all dilutive potential common
shares  outstanding.  The  calculations  for  earnings per share are as follows:

<TABLE>
<CAPTION>



                                                              Three Months Ended                  Nine Months Ended
                                                                 September 30,                      September 30,
                                                             ----------------------              -------------------
<S>                                                          <C>         <C>                     <C>          <C>
                                                             2001          2000                  2001         2000
                                                             ----------------------              -------------------
                                                                             (in thousands, except
                                                                              per share amounts)
Net Income (Loss):
  Income (loss) before cumulative effect
  of accounting change . . . . . . . . . . .                 $  (717)    $   (561)               $24,926      $(2,678)
  Effect of preferred stock dividends                            ---         (336)                   (25)      (1,001)
                                                             ----------------------              ---------------------
                                                                (717)        (897)                24,901       (3,679)
  Cumulative effect of accounting change                         ---          ---                    ---         (301)
                                                             ----------------------              ---------------------
  Net income (loss) attributed to common shareholders  .  .  $  (717)    $   (897)               $24,901      $(3,980)
                                                             ======================              =====================

Weighted Average Common Shares:
  Weighted average common shares for basic earnings
    per share . . . . . . . . .                               61,468        9,751                 60,127        9,751
  Stock option plans                                             ---          ---                  1,171          ---
                                                             ----------------------              ---------------------
  Weighted average common shares for diluted earnings
    per share . . . . . . . . . . . . . . . . . . . . . . . . 61,468        9,751                 61,298        9,751
                                                             ======================              =====================

Basic and Diluted Earnings per Common Share:
  Before cumulative effect of accounting change . . . . . . .$ (0.01)    $  (0.09)               $  0.41      $ (0.38)
  Cumulative effect of accounting change                         ---          ---                    ---        (0.03)
                                                             ----------------------              ---------------------

  Basic earnings per common share . . . . . . . . . . . . .  $ (0.01)    $  (0.09)               $  0.41      $ (0.41)
                                                             ======================              =====================
  Diluted earnings per common share . . . . . . . . . . . . .$ (0.01)    $  (0.09)               $  0.41      $ (0.41)
                                                             ======================              =====================

</TABLE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS  OF  OPERATIONS

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

                                      -10-


SENTRY  TECHNOLOGY  CORPORATION
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS  OF  OPERATIONS


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-K. 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  22%  and  17% lower in the quarter and nine months
ended  September  30,  2001  than  in  the  quarter and nine month periods ended
September  30,  2000.  Our overall domestic revenues continued to be impacted by
the  soft  economic  environment, resulting in a slowdown or delay in new retail
store  openings  of some of our customers.    Our backlog of orders at September
30,  2001  was  approximately  $5.3  million  as  compared to approximately $7.7
million  at  September  30, 2000.   Total revenues for the periods presented are
broken  out  as  follows:

<TABLE>
<CAPTION>



                                  Q-3      Q-3     %                9 Mos.    9 Mos.   %
<S>                               <C>      <C>     <C>              <C>       <C>     <C>
                                  2001     2000    Change           2001      2000    Change
                                  -----    -----   ------           -----     -----   -------
                                   (in thousands)                    (in thousands)

EAS. . . . . . . . . . . . . . .  $1,360   $2,261     (40)          $4,327  $ 6,321     (32)
CCTV . . . . . . . . . . . . . .   1,120    1,295     (14)           3,584    3,965     (10)
SentryVision . . . . . . . . . .     523      648     (19)           1,283    1,268       1
3M library products. . . . . . .     212      313     (32)             505      968     (48)
                                  ------  -------  -------         -------  -------  -------
Total sales. . . . . . . . . . .   3,215    4,517     (29)           9,699   12,522     (23)
Service, installation and other.   1,114    1,030       8            3,305    3,066       8
                                  ------  -------  -------         -------  -------  -------
Total revenues . . . . . . . . .  $4,329  $ 5,547     (22)         $13,004  $15,588     (17)
                                  ======  =======  =======         =======  =======  =======
</TABLE>


     *  Certain  amounts from prior periods have been reclassified to conform to
        the  current  presentation.

Direct sales of EAS products in the 2001 periods were lower in the third quarter
and  first nine months of 2001 as compared to the same periods in the prior year
in  part as a result of lower sales to one of our major customers.  In addition,
EAS revenues were negatively impacted by a reduction in OEM sales to Sensormatic
of  $0.2  and  $1.5  million in the third quarter and first nine months of 2001,
respectively.  Presently, we do not anticipate an increase the level of sales to
Sensormatic  through  the  rest  of  the year.  The decrease in CCTV revenues is
primarily related to a lesser marketing emphasis placed on non-retail CCTV sales
as  part  of  our  strategy  to attract dealers in the commercial and industrial
markets  for SentryVision .  The decrease in SentryVision  sales revenues in the
third  quarter  of  2001  is  a result of the introduction of the new SmartTrack
system.  Part  of  our  sales  strategy  was  to  offer system trials to new and
existing  customers  under  a  "Test-A-Track"  program.  Under  this program, we
install  a  system  on  a nominal cost trial basis.  At the end of the trial, if
satisfied,  the  customer  purchases the system.  To date, we have received 100%
positive  feedback  from  our  customers  on  the  features  and  reliability of
SmartTrack,  resulting in new sales opportunities.  In addition, we have offered
new  SmartTrack  carriage  upgrades  to  existing customers that result in lower
sales revenue than new system sales.  We have been successful selling SmartTrack
to  several  domestic  and international large-scale security dealer integrators
with  repeat order opportunities.  We see a growing trend for product acceptance
and  increased  market  opportunities  for  traveling  camera  systems  both
domestically and internationally.   Service revenues increased as a result of an
increase  in  the  installed  base  of  systems  no  longer  under  warranty.

Cost  of  sales  were  51%  and 52% of total revenues in both the three and nine
month periods ended September 30, 2001 and 2000.  Plant inefficiencies resulting
from  lower volume in the current year were offset by the proportional increases
in  service  revenues.
                                     - 11 -

SENTRY  TECHNOLOGY  CORPORATION
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS  OF  OPERATIONS


Customer  service  expenses  were 5% higher in the third quarter of 2001 than in
the third quarter of 2000 primarily as a result of increased service billings on
a  larger  installed base of systems.  For the nine month period ended September
30,  2001,  expenses were 2% lower than in the same period of the previous year.
The  expense  reduction  is  due  to  a combination of our ability to reduce the
number  of  customer service representatives due to our Service Partner program.
We are encouraged by the improvements made in our service delivery system, which
has  resulted  in fewer service calls and a quicker service response time to our
customers.  Our  remedial  warranty  costs  associated  with  prior  generation
SentryVision  installations  have  continued  to  decrease.

Selling, general and administrative expenses were 20% and 22% lower in the three
and  nine  month  periods  ended  September  30,  2001 when compared to the same
periods  of  the  previous  year  primarily as a result of lower amortization of
patents  and  goodwill and lower sales commissions.  We continued to augment our
sales  and  marketing efforts through the hiring of a new sales director and the
hiring  of  new  sales  account  executives.

Research  and  development  costs  were lower when compared to the previous year
periods  due  to  a  reduction  in  headcount and our continued concentration on
development  of  the  SmartTrack  system.  In  addition  to our direct costs, we
benefit  from  ongoing  research  and  product  development  by  Dutch  A&A.

Net  interest  expense  for  the  third  quarter  and  first nine months of 2001
decreased  due  to lower average borrowings under our revolving credit agreement
and  lower  interest  rates.

Due to net operating losses, we have not provided for income taxes in any of the
periods  presented.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin  No.  101  (SAB 101), Revenue Recognition in Financial Statements.  The
SAB  summarizes  certain  of  the  staff's  views in applying generally accepted
accounting  principles  to  revenue recognition in the financial statements.  In
accordance  with  SAB 101, we have changed our accounting method for recognizing
revenue  on  the  sale  of  equipment  where  post-shipment  obligations  exist.
Previously,  we  recognized  revenue  for  equipment  when  title  transferred,
generally  upon  shipment.  Beginning  with  the  first quarter of year 2000, we
began  recognizing  revenue when installation is complete or other post-shipment
obligations  have  been  satisfied.  The  cumulative  effect  of  the  change in
accounting  method  is  a non-cash reduction in net earnings of $0.3 million, or
$0.03  per  share.

As  a  result  of  the foregoing, Sentry had a net loss of $0.7 million and $2.3
million  in  the  quarter  and  nine  month  periods ended September 30, 2001 as
compared  to a net loss of $0.6 million and $3.0 million in the quarter and nine
month  periods  ended  September  30,  2000.

We  recorded  preferred stock dividends of $25,000 through January 8, 2001 prior
to  the preferred stock redemption, as compared to $0.3 million and $1.0 million
in  the  third  quarter  and  first  nine  months  of  2000.

Effective January 8, 2001, and just prior to the Dutch A&A investment, there was
a  payment  of a dividend of additional shares of Class A Preferred Stock at the
rate  of  0.075  shares  of  Class  A  Preferred Stock for each share of Class A
Preferred  Stock held and immediately thereafter a reclassification of the Class
A  Preferred  Stock  into common stock at a ratio of five shares of common stock
for  each share of Class A Preferred Stock outstanding.  The reclassification of
the  Class A Preferred Shares resulted in a return to the common shareholders of
$27.2  million,  which  was  recorded in the first quarter of 2001.  This amount
represents  the  difference  between  the  fair market value of the common stock
issued  and  the  carrying  amount  of  the  preferred  stock  redeemed.

Liquidity  and  Capital  Resources  as  of  September  30,  2001
----------------------------------------------------------------

We  have  incurred  reduced  revenue  levels,  decreased  financial position and
recurring  operating  losses  over  the  past  several years.  To strengthen our
financial  position,  a  number  of  activities  have  been initiated including:

                                      -12-



SENTRY  TECHNOLOGY  CORPORATION
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS  OF  OPERATIONS


-     Investment  of  $3  million in newly issued shares of the Company's common
      stock  by  Dutch  A&A.  The transaction with Dutch A&A will allow the
      Company to introduce  new  products,  share  resources  and  simplify the
      Company's capital structure.

-     Improvements  in  existing  products  and  service  capabilities.

-     Additions  to  direct  sales  staff  and emphasis on growing international
      dealer  base.

-     Various  cost  cutting  and  cost  saving  initiatives.

Our  existing  credit  agreement  with G.E. Capital Corporation is due to expire
December  31,  2001.  We  have completed our business plan for the year 2002 and
beyond, which has been presented to prospective lenders.  Based upon preliminary
discussions, it is our belief that we will be able to replace the existing line.
We  anticipate  that  current cash reserves, cash obtained pursuant to the Dutch
A&A  transaction,  lines  of  credit  and cash generated by operations should be
sufficient  to  meet our working capital requirements, as well as future capital
expenditure  requirements,  over  the  next  twelve  months.

On  January  8,  2001,  Dutch A&A Holding, B.V. ("Dutch A&A) acquired 23,050,452
shares  of  the  Company's  common stock for $3 million, of which $1 million was
paid  in  January  2001, $1 million was paid on April 30, 2001 and the remaining
balance  of  $1 million was paid on August 31, 2001.  Dutch A&A is a Netherlands
company  which,  through  its  subsidiaries,  is in the business of development,
manufacture,  sale  and  distribution of various kinds of identification, access
control  and anti-theft electronic article surveillance systems and accessories.

As  of  January 8, 2001, Dutch A&A owns 37.5% of the outstanding common stock of
the  Company.  At  any time prior to January 8, 2002, Dutch A&A may increase its
ownership  of  the  Company's  common  stock  to a total of 51% of the shares of
common  stock  then  outstanding.  If  the average market value of the Company's
common stock, measured over any 10-day trading period during the one year period
following January 8, 2001, is at least $15.0 million, the purchase price for the
additional shares shall be determined by multiplying the actual number of shares
to  be  purchased  by $.001; otherwise, the purchase price will be $1.5 million.
At  any  time  prior to January 8, 2003, Dutch A&A may increase its ownership of
the  Company's common stock to a total of 60% of the shares of common stock then
outstanding.  The  purchase  price for the additional shares shall be determined
as  follows:  If  the  average market value of the common stock, measured over a
10-day  period  during  the two years preceding January 8, 2003, is at least $25
million, the purchase price shall be determined by multiplying the actual number
of shares to be purchased by $.001.  If Dutch A&A previously exercised its right
to  acquire  shares  increasing  its  investment  to 51% of the Company's common
stock,  but  the average market value test was not met at the time of the second
purchase,  then the purchase price shall be $3.5 million; otherwise the purchase
price shall be $5.0 million.  As a condition to the investment by Dutch A&A, the
stockholders  of the Company elected three nominees of Dutch A&A to the Board of
Directors  at  a  Special Meeting of Stockholders on December 8, 2000.  If Dutch
A&A  has  not acquired 51% of the Company's common stock by January 8, 2003, one
of the three nominees of Dutch A&A will resign and be replaced, with the consent
of Dutch A&A, by a nominee of the directors of the Company who are not nominated
by  Dutch  A&A.

In  addition  to  the  election  of  three nominees of Dutch A&A to the Board of
Directors,  other  matters  which  were approved at the December 8, 2000 Special
Meeting  of Stockholders and became effective on January 8, 2001 were amendments
to  the  Company's  certificate of incorporation to: (i) permit the payment of a
dividend  of  additional  shares of Class A Preferred Stock at the rate of 0.075
shares  of  Class  A  Preferred  Stock for each share of Class A Preferred Stock
held;  (ii) to reclassify Class A Preferred Stock into shares of common stock on
a ratio of five shares of common stock for each share of Class A Preferred Stock
outstanding; and (iii) to increase the number of the Company's authorized shares
of  common  stock  to  140,000,000.

Also,  on  December  28,  2000,  the  Board of Directors increased the number of
directors  from  five  to  seven  effective  upon  the  closing of the Dutch A&A
investment.  Currently,  there  are  six  directors.


                                      -13-


SENTRY  TECHNOLOGY  CORPORATION
PART  II  -  OTHER  INFORMATION
-------------------------------

Item  6.     Exhibits  and  Reports  on  Form  8-K

     (a)     List  of  Exhibits:  None

     (b)     Reports  on  Form  8-K - There were no reports on Form 8-K filed
             for the three  months  ended September  30,  2001.


PART  II  -  SIGNATURES


SIGNATURES

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:     November  8,  2001             By:     /S/   PETER  J.  MUNDY
          ------------------             ------------------------------
                                         Peter  J.  Mundy,
                                         Vice  President  -  Finance
                                         and Chief  Financial  Officer
                                         (Principal  Financial  and
                                          Accounting  Officer)



                                      -14-