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, 2002

                                       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 Identification
incorporation or organization)                              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 August 14, 2002, there were 78,043,872 shares of Common Stock outstanding.

<PAGE>

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

                                                               Page  No.
                                                               ---------

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

Item  1.     Financial  Statements  (Unaudited)

     Consolidated  Balance  Sheets  --
     June  30,  2002  and  December  31,  2001                       3

     Condensed  Consolidated  Statements  of  Operations  --
     Three  Months  Ended  June  30,  2002  and  2001
     and  Six  Months  Ended  June  30,  2002  and  2001             4

     Condensed  Consolidated  Statements  of  Cash  Flows  --
     Six  Months  Ended  June  30,  2002  and  2001                  5

     Notes  to  Condensed  Consolidated  Financial
     Statements  -  June  30,  2002                                6 - 9


Item  2.     Management's  Discussion  and  Analysis  of
     Financial  Condition  and  Results  of  Operations            9 - 12



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

Item  6.     Exhibits  and  Reports  on  Form  8-K                   12


Signatures                                                           12


<TABLE>
<CAPTION>

SENTRY  TECHNOLOGY  CORPORATION
CONSOLIDATED  BALANCE  SHEETS
(In  thousands)

<S>                                                            <C>         <C>
                                                                 June 30,    December 31,
                                                                  2002          2001
                                                               ----------   -------------

ASSETS
-------------------------------------------------------------
CURRENT ASSETS
  Cash and cash equivalents . . . . . . . . . . . . . . . . .  $     250   $         423
  Accounts receivable, less allowance for doubtful
     accounts of $743 and $763, respectively. . . . . . . . .      2,097           2,713
  Inventories . . . . . . . . . . . . . . . . . . . . . . . .      4,501           4,740
  Prepaid expenses and other current assets . . . . . . . . .        417             399
                                                               ----------  --------------
    Total current assets. . . . . . . . . . . . . . . . . . .      7,265           8,275

PROPERTY, PLANT AND EQUIPMENT, net. . . . . . . . . . . . . .      2,782           2,962
OTHER ASSETS. . . . . . . . . . . . . . . . . . . . . . . . .        381             324
                                                               ----------  --------------

                                                               $  10,428   $      11,561
                                                               ==========  ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------------------------
CURRENT LIABILITIES
  Revolving line of credit and term loan. . . . . . . . . . .  $   2,272   $       2,599
  Accounts payable. . . . . . . . . . . . . . . . . . . . . .      2,182           1,153
  Accrued liabilities . . . . . . . . . . . . . . . . . . . .      1,570           1,864
  Obligations under capital leases -
     current portion. . . . . . . . . . . . . . . . . . . . .        128             121
  Deferred income . . . . . . . . . . . . . . . . . . . . . .        227             303
                                                               ----------  --------------
    Total current liabilities . . . . . . . . . . . . . . . .      6,379           6,040

OBLIGATIONS UNDER CAPITAL LEASES -
  non-current portion . . . . . . . . . . . . . . . . . . . .      2,579           2,630
                                                               ----------  --------------
    Total liabilities . . . . . . . . . . . . . . . . . . . .      8,958           8,670

SHAREHOLDERS' EQUITY
  Common stock. . . . . . . . . . . . . . . . . . . . . . . .         78              62
  Additional paid-in capital. . . . . . . . . . . . . . . . .     44,521          44,403
  Accumulated deficit . . . . . . . . . . . . . . . . . . . .    (43,009)        (41,574)
  Note receivable from shareholder                                  (120)            ---
                                                               ----------  --------------
    Total shareholders' equity. . . . . . . . . . . . . . . .      1,470           2,891
                                                               ----------  --------------
                                                               $  10,428   $      11,561
                                                               ==========  ==============

See notes to the condensed consolidated financial statements.

</TABLE>

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

                                                Three Months Ended   Six Months Ended
                                                     June  30,          June  30,
                                                ------------------  ------------------
                                                  2002      2001      2002      2001
                                                --------  --------  --------  --------
<S>                                             <C>       <C>       <C>       <C>
REVENUES                                        $ 3,181   $ 4,005   $ 7,923   $ 8,675

COSTS AND EXPENSES:
  Cost of sales                                   1,559     2,103     3,707     4,494
  Customer service expenses                       1,054     1,024     2,333     2,153
  Selling, general and administrative expenses    1,368     1,395     2,750     2,917
  Research and development                          145       208       296       383
                                                --------  --------  --------  --------

                                                  4,126     4,730     9,086     9,947
                                                --------  --------  --------  --------

OPERATING LOSS                                     (945)     (725)   (1,163)   (1,272)

INTEREST EXPENSE                                    140       136       272       283
                                                --------  --------  --------  --------

LOSS BEFORE INCOME TAXES                         (1,085)     (861)   (1,435)   (1,555)

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

NET LOSS                                         (1,085)     (861)   (1,435)   (1,555)

PREFERRED STOCK DIVIDENDS                           ---       ---       ---        25

RETURN TO COMMON SHAREHOLDERS FROM
     REDEMPTION OF PREFERRED STOCK                  ---       ---       ---    27,198
                                                --------  --------  --------  --------
NET INCOME (LOSS) ATTRIBUTED TO
     COMMON SHAREHOLDERS                        $(1,085)  $  (861)  $(1,435)  $25,618
                                                ========  ========  ========  ========
NET INCOME (LOSS) PER COMMON SHARE
  Basic                                         $ (0.02)  $ (0.01)  $ (0.02)  $  0.43
                                                ========  ========  ========  ========
  Diluted                                       $ (0.02)  $ (0.01)  $ (0.02)  $  0.42
                                                ========  ========  ========  ========

WEIGHTED AVERAGE COMMON SHARES
  Basic                                          71,032    61,468    66,343    59,457
                                                ========  ========  ========  ========
  Diluted                                        71,032    61,468    66,343    60,291
                                                ========  ========  ========  ========
</TABLE>

See notes to the condensed consolidated financial statements.

<TABLE>
<CAPTION>


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

                                                                         Six Months Ended
                                                                              June 30,
                                                                        ------------------
<S>                                                                <C>             <C>
                                                                        2002           2001
                                                                   ------------    -----------


CASH FLOWS FROM OPERATING ACTIVITIES:
-----------------------------------------------------------------
  Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  (1,435)      $   (1,555)
  Adjustments to reconcile net loss
     to net cash provided by (used in) operating activities:
     Depreciation and amortization. . . . . . . . . . . . . . . .        266              268
     Provision for bad debts. . . . . . . . . . . . . . . . . . .         23               27
  Changes in operating assets and liabilities:
     Accounts receivable. . . . . . . . . . . . . . . . . . . . .        593             (325)
     Inventories. . . . . . . . . . . . . . . . . . . . . . . . .        239              901
     Accounts payable and accrued liabilities . . . . . . . . . .        735           (1,037)
     Other, net . . . . . . . . . . . . . . . . . . . . . . . . .       (164)             234
                                                                   ----------      -----------

    Net cash provided by (used in) operating activities . . . . .        257           (1,487)
                                                                   ----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, plant and equipment, net. . . . . . . . .        (62)             (41)
  Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . .        (11)             (20)
                                                                   ----------      -----------

    Net cash used in investing activities . . . . . . . . . . . .        (73)             (61)
                                                                   ----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings under the revolving line of credit and term loan       (327)             (10)
  Repayment of obligations under capital leases . . . . . . . . .        (44)             (77)
  Proceeds from sale of stock, net. . . . . . . . . . . . . . . .         14            2,370
  Receivable from stock sale                                             ---           (1,000)
                                                                   ----------         --------

    Net cash provided by (used in) financing activities . . . . .       (357)           1,283
                                                                   ----------         --------

DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . .       (173)            (265)

CASH AND CASH EQUIVALENTS, at beginning of period . . . . . . . .        423              927
                                                                   ----------         --------
CASH AND CASH EQUIVALENTS, at end of period . . . . . . . . . . .  $     250          $   662
                                                                   ==========         ========

See notes to the condensed consolidated financial statements.

</TABLE>

SENTRY  TECHNOLOGY  CORPORATION
NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
JUNE  30,  2002


NOTE  A  --  Basis  of  Presentation
------------------------------------
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,  2001,  as  filed  with  the  Securities and Exchange
Commission.

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


NOTE  B  --  Investment  by  Dialoc  ID  Holdings  B.V.
-------------------------------------------------------
On  January  8,  2001,  Dialoc ID Holdings B.V. ("Dialoc ID"), formerly known as
Dutch  A&A  Holding, B.V., 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 $1 million was paid on August 31, 2001.  Dialoc
ID  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.  Concurrent  with  the  share purchase agreement, the
Company  entered  into  a  distribution  agreement  with  Dialoc ID allowing the
Company access to new products of Dialoc ID and allowing Dialoc ID access to the
Company's  products  for  an  initial  period  of  not  less  than  two  years.

As of January 8, 2001, Dialoc ID owned 37.5% of the Company's outstanding common
stock.  Under  the  share  purchase  agreement,  at any time prior to January 8,
2002,  Dialoc ID had the right to 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, was at
least  $15.0  million,  the  purchase  price  for the additional shares would be
determined  by multiplying the actual number of shares to be purchased by $.001.
In  November  2001, this market capitalization threshold was met.  At that time,
our Board of Directors agreed to extend Dialoc ID's purchase right until January
8, 2003 in exchange for an extension of the distribution agreement for one year.
On  May  14,  2002,  Dialoc  ID  exercised  their  right  to purchase 14,500,000
additional  common  shares  at a price of $.001 per share.  Currently, Dialoc ID
owns  48.1% of the Company's common stock. Further, the share purchase agreement
provides  that  at any time prior to January 8, 2003, Dialoc ID 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 the average market value
test  was  not  met  at the time of the second purchase, then the purchase price
shall  be  $3.5  million.  As  a  condition  to the investment by Dialoc ID, the
Company's  stockholders  elected  three  nominees  of  Dialoc ID to the Board of
Directors  at  a Special Meeting of Stockholders on December 8, 2000.  If Dialoc
ID has not acquired 51% of the Company's common stock by January 8, 2003, one of
the three nominees of Dialoc ID will resign and be replaced, with the consent of
Dialoc  ID,  by  a  nominee  of the Company's directors who are not nominated by
Dialoc  ID.

In  addition  to  the  election  of  three nominees of Dialoc ID 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


                                      - 6 -

SENTRY  TECHNOLOGY  CORPORATION
NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
JUNE  30,  2002


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.

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:

-     Entering  into  a  new  three-year  financing  agreement.
-     Signing  of  a  distribution  agreement  with  Dialoc ID providing us with
      access  to  new  products  and  shared  technologies.
-     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.

We  will  require positive cash flow from operations to meet our working capital
needs  over  the  next  twelve  months.  We  anticipated  receiving  significant
additional  purchase  orders from specific customers during the first six months
of  2002.  While  we  continue  to  believe  that  these purchase orders will be
received  later this year, the delays we have experienced have caused us to: (i)
operate  in  a  cash  flow  deficit for the first seven months of the year; (ii)
borrow the maximum amounts available under our credit facility; and (iii) pursue
potential  sources  of  debt  or  equity  financing.

We  anticipate  revenue  growth in new and existing markets.  We are striving to
improve  our  gross  margin 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 financing.  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, and
the  extent  thereof;  (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.


NOTE  D  --  Revolving  Line  of  Credit  and  Term  Loan
---------------------------------------------------------
On March 22, 2002, we entered into a new three year revolving line of credit and
term  loan  with  the  CIT  Group/Business  Credit,  Inc.  ("CIT")  for  maximum
borrowings  of  $8  million, which are subject to certain limitations based on a
percentage  of  eligible  accounts  receivable and inventories as defined in the
agreement.  Interest  on  the revolving line of credit is payable monthly at the
JPMorgan  Chase Bank prime rate (4.75% at June 30, 2002), plus 2% per annum.  We
are  required  to pay a commitment fee of 0.375% per annum on any unused portion
of  the credit facility.  Borrowings under the line are secured by substantially
all  of  our  assets.  The  terms  of the agreement, among other matters, places
restrictions on capital expenditures and prohibits the payment of dividends.  In
addition, we entered into a $100,000 term loan with CIT.  The principal shall be
repaid  to  CIT in twelve equal monthly installments of $8,333 beginning May 31,
2002.  Interest on the term note is at the JPMorgan Chase Bank prime plus 2.25%.

                                      - 7 -

<TABLE>
<CAPTION>

SENTRY  TECHNOLOGY  CORPORATION
NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
JUNE  30,  2002



NOTE E  --  Inventories
-----------------------------------------------------
Inventories consist of the following:
<S>                                                    <C>                      <C>
                                                       June 30, 2002            December 31, 2001
                                                      --------------            -----------------
                                                                   (in thousands)
Raw materials . . . . . . . . . . . . . . . . . . . .  $    1,397                 $    1,139
Work-in-process . . . . . . . . . . . . . . . . . . .         928                      1,238
Finished goods. . . . . . . . . . . . . . . . . . . . .     2,176                      2,363
                                                       ----------                 ----------
                                                       $    4,501                 $    4,740
                                                       ==========                 ==========

Reserves for excess and obsolete inventory totaled $3,418,000 and $3,497,000
as of June 30, 2002 and December 31, 2001, respectively and have been included
as a component of the above amounts.

</TABLE>


NOTE  F  --  Related  Party  Transactions
-----------------------------------------
As  a  result  of  the  Dialoc ID investment, Sentry entered into a distribution
agreement  with Dialoc ID which contemplates a two-way distribution relationship
between  the  companies.  Under  the  agreement,  Sentry  has the rights to sell
Dialoc  ID's  EAS,  access  control and RFID products and accessories and Sentry
gives  Dialoc  ID  the rights to sell its EAS and CCTV products and accessories.
Pricing  for  products  under the agreements are at the lowest prices charged to
affiliates.  In  addition,  in  2001 Dialoc ID received an annual management fee
for  product  marketing  and  product  engineering management from Sentry in the
amount  of  $100,000.  Also, Peter Murdoch, a shareholder of Dialoc ID, receives
an  annual salary of $150,000 in the capacity of President of Sentry.  Purchases
from  Dialoc  ID were $7,000 and $26,000 in the quarters ended June 30, 2002 and
2001  and  $10,000 and $86,000 in the six month periods ending June 30, 2002 and
2001,  respectively.  Services and sales to Dialoc ID were $8,000 and $15,000 in
the  quarters  ended  June  30, 2002 and 2001 and $13,000 and $36,000 in the six
month  periods  ended  June  30,  2002  and  2001, respectively.  The net amount
payable  to  Dialoc  ID  as  of  June  30,  2002  is  $86,000.

In  addition, on March 27, 2002, Peter Murdoch, our President and CEO, exercised
a  stock  option  for  two  million shares of Sentry common stock at an exercise
price  of  $0.06  per  share  which  was  paid  for  through  the  issuance of a
promissory note in the amount of $120,000.  The principal of the note is secured
by  the  option  shares  and  is  repayable  no later than January 8, 2006.  Mr.
Murdoch  will  not  have any personal liability for the principal of the note if
the  value  of  the option shares is not sufficient to repay the note.  The note
bears  interest  at  prime  (currently  4.75%)  less  .75%.  The  note  has been
reflected  as  a  reduction  of  shareholders'  equity  on  the  consolidated
balance  sheet.


NOTE  G  --  Recent  Accounting  Pronouncements
-----------------------------------------------
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
did  not  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.  We are required to adopt the provisions of
SFAS  No.  143  effective  January 1, 2003.  The adoption of SFAS No. 143 is not
expected  to  have  a  material  impact  on  our  financial  statements.

                                    -  8  -


SENTRY  TECHNOLOGY  CORPORATION
NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
JUNE  30,  2002

In  April  2002,  SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64,
Amendment  of FASB Statement No. 13, and Technical Corrections" was issued. This
statement  provides  guidance on the classification of gains and losses from the
extinguishment  of  debt  and  on  the  accounting  for  certain specified lease
transactions. Certain provisions of this statement related to the classification
of  gains  and  losses from extinguishment of debt are required to be adopted by
the  Company  beginning  with  the  year  ended  December  31,  2003.  All other
provisions  are  required to be adopted after May 15, 2002 and early application
is  encouraged.  It  is not anticipated that the adoption of this statement will
have  a  material  impact  on  the consolidated financial position, consolidated
results  of  operations  or  liquidity  of  the  Company.

In  June  2002,  SFAS  No.  146,  "Accounting  for Costs Associated with Exit or
Disposal  Activities"  was  issued.  This  statement  provides  guidance  on the
recognition  and  measurement of liabilities associated with disposal activities
and  is effective for the Company on January 1, 2003. It is not anticipated that
the  adoption  of this statement will have a material impact on the consolidated
financial  position,  consolidated  results  of  operations  or liquidity of the
Company.


NOTE  H  --  Earnings  Per  Share
---------------------------------
The  earnings  per  share calculations (basic and diluted) for the periods ended
June  30,  2002  and  2001  are based upon the weighted average number of common
shares  outstanding  during  each  period. There are no reconciling items in the
numerator  of  the  earnings  per  share  calculations  in either of the periods
presented.  Options  and warrants have been excluded from the net loss per share
calculation  for the second quarter and six month period ended June 30, 2002 and
for  the  second  quarter  ended  June  30,  2001  because their effect would be
antidilutive.  For the six month period ended June 30, 2001, 834,000 options and
warrants  were  included  in  the  diluted  earnings  per  share  calculation.



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  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 21% and 9% lower in the quarter and six months ended
June  30,  2002  than  in  the  quarter and six months ended June 30, 2001.  Our
overall domestic revenues continued to be impacted by the post September 11 soft
economic  environment,  resulting  in  a  slowdown  or delay in new retail store
openings  of  some of our customers.  The backlog of orders at June 30, 2002 was
approximately  $5.2  million  from  approximately $5.1 million at June 30, 2001.
Total  revenues  for  the  periods  presented  are  broken  out  as  follows:

                                      - 9 -

<TABLE>
<CAPTION>
SENTRY  TECHNOLOGY  CORPORATION
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS  OF  OPERATIONS


<S>                            <C>         <C>      <C>        <C>       <C>      <C>
                                  Q-2      Q-2       %         6 Mos.    6 Mos.     %
                                 2002      2001    Change       2002      2001    Change
                               --------  --------  -------    -------   -------  -------
                                   (in thousands)              (in thousands)

EAS . . . . . . . . . . . . .  $   625   $ 1,632    (62)      $ 1,316   $ 2,967     (56)
CCTV. . . . . . . . . . . . .      863       771     12         2,630     2,463       7
SentryVision. . . . . . . . .      497       433     15         1,136       760      49
3M library products . . . . .       77       167    (54)          191       293     (35)
                               -------   -------   ------     -------   -------  -------
Total sales . . . . . . . . .    2,062     3,003    (31)        5,273     6,483     (19)
Service revenues and other. .    1,119     1,002     12         2,650     2,192      21
                               -------   -------   ------     -------    ------  -------
Total revenues. . . . . . . .  $ 3,181   $ 4,005    (21)      $ 7,923   $ 8,675      (9)
                               =======   =======   ======     =======   =======  =======
</TABLE>


Direct sales of EAS products were lower in both the second quarter and first six
months  of 2002 as compared to the same periods in the prior year primarily as a
result  of lower sales to two of our largest EAS customers, which have indicated
they  will  open  fewer  new  stores  in 2002.  The increase in CCTV revenues is
primarily  a  result of higher sales to existing customers and the completion of
the  installations  that  were  delayed  at  the  end  of 2001.  The increase in
SentryVision  sales  revenues  in  2002  is  a  result  of the continuing market
acceptance of the new SmartTrack system.  We continue to see a growing trend for
product  acceptance  and  increased  market  opportunities  for traveling camera
systems  both  domestically  and  internationally.  Sales of 3M library products
declined  due to delays in customer's installations.  Service revenues increased
as  a  result  of  the  higher  base  of  systems  no  longer  under  warranty.

Cost of sales were 76% and 70% of total sales in the three and six month periods
ended  June  30,  2002  compared to 66% and 63% in the same periods of the prior
year.  The  increase  costs  as  a  percentage  of sales in the 2002 periods was
primarily due to a higher mix of sales through third distributors, which provide
lower  margins  than  direct  sales,  as well as the under absorption of factory
overhead  resulting  from  lower production levels than in the previous year and
competitive  pricing  pressures  during  the  current  year.

Customer  service expenses were 3% and 8% higher in the second quarter and first
six  months  of  2002  than  in  the second quarter and first six months of 2001
primarily  as a result of the increase in service billings on a larger installed
base  of  systems  and  the  increased use of outside contractors needed to meet
various  customers'  installation  deadlines.

Selling,  general  and administrative expenses were 2% and 6% lower in the three
and  six  month  periods ended June 30, 2002 when compared to the same period of
the  previous  year primarily as a result of lower warranty costs and reductions
in  office  space.

Research  and  development  costs were lower in the second quarter and first six
months  of 2002 when compared to the second quarter and first six months of 2001
due to lower engineering prototype costs associated with Smart Track development
in  2001.

Net  interest  expense increased due to higher average borrowings for the second
quarter  of  2002 but was slightly lower during the first six months of 2002 due
to  lower  interest  rates  under  our  revolving  credit  agreement.

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

As  a result of the foregoing, Sentry had a net loss of $1.1 and $1.4 million in
the  quarter  and first six months ended June 30, 2002 as compared to a net loss
of  $0.9  and  $1.6  million in the quarter and six month periods ended June 30,
2001.

We  recorded  preferred  stock dividends of $25,000 in the first quarter of 2001
prior  to  the  redemption  of  the  preferred  stock  on  January  8,  2001.


                                     - 10 -
SENTRY  TECHNOLOGY  CORPORATION
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS  OF  OPERATIONS


Effective January 8, 2001, and just prior to the Dialoc ID 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  June  30,  2002
-----------------------------------------------------------

We  have  incurred  reduced  revenue  levels,  decreased  financial position and
recurring  operating losses over the past several years.  To further address the
continuing  losses,  our  business  plan  for  2002  includes  the  following:
-     Entering  into  a  new  three-year  financing  agreement.
-     Addition  of  new  products, including high-end EAS systems and disposable
      tags  and  labels,  proximity  access control and RFID, through our
      distribution agreement  with  Dialoc  ID.
-     Increased  promotion  of  SmartTrack,  our  new  entry in the SentryVision
      family  of  products.
-     Strengthening  our  international  dealer  network  with  new  and  more
      financially  stronger  business  partners.
-     Joint participation with Dialoc ID in trade show activity and a refocus on
      expanding  business  with  existing  customers.
-     Continuation  and  expansion  of  our  Service  Partner program to augment
      service  provided  by  our  employees.
-     Further  subletting  of  office  space  in  our  corporate  offices.
-     Additions  to  direct  sales  staff  and emphasis on growing international
      dealer  base.
-     Various  additional  cost  cutting  and  cost  saving  initiatives.

On March 22, 2002, we entered into a new three year revolving line of credit and
term  loan  with  the  CIT  Group/Business  Credit,  Inc.  ("CIT")  for  maximum
borrowings  of  $8  million, which are subject to certain limitations based on a
percentage  of  eligible  accounts  receivable and inventories as defined in the
agreement.  Interest  on  the revolving line of credit is payable monthly at the
JPMorgan  Chase Bank prime rate (4.75% at June 30, 2002), plus 2% per annum.  We
are  required  to pay a commitment fee of 0.375% per annum on any unused portion
of  the credit facility.  Borrowings under the line are secured by substantially
all  of  our  assets.  The  terms  of the agreement, among other matters, places
restrictions on capital expenditures and prohibits the payment of dividends.  In
addition, we entered into a $100,000 term loan with CIT.  The principal shall be
repaid  to  CIT in twelve equal monthly installments of $8,333 beginning May 31,
2002.  Interest  on  the  term  note  is  at  prime  plus  2.25%.

We  will  require positive cash flow from operations to meet our working capital
needs  over  the  next  twelve  months.  We  anticipated  receiving  significant
additional  purchase  orders from specific customers during the first six months
of  2002.  While  we  continue  to  believe  that  these purchase orders will be
received  later this year, the delays we have experienced have caused us to: (i)
operate  in  a  cash  flow  deficit for the first seven months of the year; (ii)
borrow the maximum amounts available under our credit facility; and (iii) pursue
potential  sources  of  debt  or  equity  financing.

We  anticipate  revenue  growth in new and existing markets.  We are striving to
improve  our  gross  margin 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 financing.  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, and
the  extent  thereof;  (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.

                                     - 11 -


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

Currently,  under  the  terms of the share purchase agreement, Dialoc ID has the
right  to acquire 51% of the common stock.  On May 13, 2002, Dialoc ID exercised
their  purchase right for an additional 14,500,000 shares of newly issued common
stock  at  an  exercise  price  of  $0.001  per  share.  As  a  result  of  this
transaction, Dialoc ID currently owns 48.1% of our common stock outstanding.  In
addition, under certain conditions more fully described in Note B, Dialoc ID has
the  right to acquire additional shares during the two year period following the
closing, up to an aggregate holding of 60% of the common stock then outstanding.

Related  Party  Transactions
----------------------------
Details of related party transactions are included in Notes B and F of this Form
10-Q.



PART  II  -  OTHER  INFORMATION

Item  6.     Exhibits  and  Reports  on  Form  8-K

(a)  List  of  Exhibits:
     99.1     Certification  by  Chief  Executive  Officer
     99.2     Certification  by  Chief  Financial  Officer

(b)  Reports on Form 8-K - On June 25, 2002, we filed a current report on Form
     8-K with respect to the resignation of William A. Perlmuth as a Director
     of the Company.

<PAGE>

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:  August  14,  2002

                             By:  /s/ Peter J. Mundy
                                  -------------------------------------------
                                  Peter  J.  Mundy,  Vice  President
                                  Finance  and Chief  Financial  Officer
                                  (Principal Financial and Accounting Officer)


                                     - 12 -

<PAGE>

Exhibit  99.1


  CERTIFICATION PURSUANT TO 18 U.S.C.SS.1350, AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002


     In  connection with the Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002 of Sentry Technology Corporation (the "Company") as filed with the
Securities  and  Exchange Commission on the date hereof (the "Report"), I, Peter
L.  Murdoch,  President  and  Chief  Executive  Officer, certify, pursuant to 18
U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002,
that,  to  the  best  of  my  knowledge:  (1) the Report fully complies with the
requirements  of  Section  13(a) of the Securities Exchange Act of 1934; and (2)
the  information  contained  in  the  Report  fairly  presents,  in all material
respects,  the  financial  condition  and  results of operations of the Company.



                           /s/  PETER  L.  MURDOCH
                          -------------------------------------------------
                          Peter  L.  Murdoch
                          President  and  Chief  Executive  Officer

                          August  14,  2002



<PAGE>

Exhibit  99.2


  CERTIFICATION PURSUANT TO 18 U.S.C.SS.1350, AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002


     In  connection with the Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002 of Sentry Technology Corporation (the "Company") as filed with the
Securities  and  Exchange Commission on the date hereof (the "Report"), I, Peter
J.  Mundy,  Vice  President and Chief Financial Officer, certify, pursuant to 18
U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002,
that,  to  the  best  of  my  knowledge:  (1) the Report fully complies with the
requirements  of  Section  13(a) of the Securities Exchange Act of 1934; and (2)
the  information  contained  in  the  Report  fairly  presents,  in all material
respects,  the  financial  condition  and  results of operations of the Company.



                         /s/  PETER  J.  MUNDY
                         -------------------------------------------------
                         Peter  J.  Mundy
                         Vice  President  and  Chief  Financial  Officer

                         August  14,  2002