FORM 10-QSB

                       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, 2007

                                       OR

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

            For the transition period from __________ to __________

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


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

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

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

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

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

Check  whether  the registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12  months  (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90  days.
                              Yes [X]     No [ ]

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

As  of  August  14,  2007,  there  were  120,743,804  shares  of  Common  Stock
outstanding.

Transitional  Small  Business  Disclosure  Format  (check  one)

                              Yes [ ]     No [X]


<PAGE>
<TABLE>
<CAPTION>
                 SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
                 ----------------------------------------------
                                      INDEX
                                      -----


                                                                          Page No.
                                                                          --------
<S>                                                                       <C>

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

Item 1.    Financial Statements

           Consolidated Balance Sheets --
           June 30, 2007 (Unaudited) and December 31, 2006                    3

           Consolidated Statements of Operations --
           Three Months Ended June 30, 2007 and 2006
           And Six Months Ended June 30, 2007 and 2006 (Unaudited)            4

           Consolidated Statements of Cash Flows --
           Six Months Ended June 30, 2007 and 2006 (Unaudited)                5

           Notes to Condensed Consolidated Financial
           Statements - June 30, 2007                                       6 - 12


Item 2.    Management's Discussion and Analysis of Plan of Operation       13 - 15


Item 3.    Controls and Procedures                                            16


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

Item 6.    Exhibits                                                           16

Signature                                                                     17
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION
-------------------------------

Item 1.     Financial Statements (Unaudited)


SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value Amounts)


                                                                  JUNE 30,     December 31,
                                                                    2007           2006
                                                                ------------  --------------

                                                                (UNAUDITED)     (Audited)
<S>                                                             <C>           <C>
                              ASSETS
                              ------
Current Assets:
   Cash and cash equivalents                                    $       266   $         360
   Short-term investments                                                94             259
   Accounts receivable, less allowance for doubtful
     accounts of $183 and $160, respectively                          1,310           2,251
   Inventory                                                          3,384           3,005
   Prepaid expenses and other assets                                    334             306
                                                                ------------  --------------
Total current assets                                                  5,388           6,181

PROPERTY AND EQUIPMENT, net                                             625             609
GOODWILL                                                              1,564           1,564
OTHER ASSETS                                                            314             480
                                                                ------------  --------------
   TOTAL ASSETS                                                 $     7,891   $       8,834
                                                                ============  ==============

          LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
          -----------------------------------------------
Current Liabilities:
   Bank indebtedness, demand loan and revolving line of credit  $     3,035   $       3,030
   Accounts payable                                                   1,038             609
   Accrued liabilities                                                1,005           1,078
   Obligations under capital leases - current portion                     2               3
   Deferred income                                                      246             185
                                                                ------------  --------------
Total current liabilities                                             5,326           4,905

OBLIGATIONS UNDER CAPITAL LEASES - less current portion                   8               8
DEFFERED TAX LIABILITY                                                   99              91
CONVERTIBLE DEBENTURE                                                 1,966           1,945
                                                                ------------  --------------
Total liabilities                                                     7,399           6,949

MINORITY INTEREST                                                     1,243           1,237

STOCKHOLDERS' (DEFICIT) EQUITY
   Preferred stock, $0.001 par value; authorized 10,000
     (2006 - 10,000) shares; none issued and outstanding
   Common stock, $0.001 par value; authorized 190,000
     (2006 - 160,000) shares; issued and outstanding 120,744
     and 120,744 shares, respectively                                   121             121
   Additional paid-in capital                                        49,050          49,037
   Accumulated deficit                                              (50,334)        (48,712)
   Accumulated other comprehensive income                               412             202
                                                                ------------  --------------
Total stockholders' (deficit) equity                                   (751)            648
                                                                ------------  --------------
   TOTAL LIABILITIES AND STOCKHOLDERS'
   (DEFICIT) EQUITY                                             $     7,891   $       8,834
                                                                ============  ==============
</TABLE>

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


                                        3
<PAGE>
<TABLE>
<CAPTION>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)


                                                        Three Months Ended                     Six Months Ended
                                                              June 30,                              June 30,
                                                 ------------------------------------  ------------------------------------
                                                       2007               2006               2007               2006
                                                            (Unaudited)                            (Unaudited)
<S>                                              <C>                <C>                <C>                <C>
REVENUES
   Sales                                         $          1,991   $          2,526   $          4,320   $          4,811
   Service, installation and other revenues                   437                406                776                829
                                                 -----------------  -----------------  -----------------  -----------------
                                                            2,428              2,932              5,096              5,640

COST OF SALES AND EXPENSES:
   Cost of sales                                            1,106              1,302              2,376              2,558
   Customer service expenses                                  485                558                940              1,081
   Selling, general and administrative expenses             1,395              1,324              2,592              2,677
   Research and development                                   185                204                391                404
                                                 -----------------  -----------------  -----------------  -----------------
                                                            3,171              3,388              6,299              6,720
                                                 -----------------  -----------------  -----------------  -----------------
OPERATING LOSS                                               (743)              (456)            (1,203)            (1,080)
INTEREST AND FINANCING EXPENSE, net                           193                 86                406                168
                                                 -----------------  -----------------  -----------------  -----------------
LOSS BEFORE INCOME TAXES
   AND MINORITY INTEREST                                     (936)              (542)            (1,609)            (1,248)
INCOME TAX (RECOVERY) EXPENSE                                 (20)                30                  7                 40
                                                 -----------------  -----------------  -----------------  -----------------
LOSS BEFORE MINORITY INTEREST                                (916)              (572)            (1,616)            (1,288)
MINORITY INTEREST                                              18                (26)                (6)               (40)
                                                 -----------------  -----------------  -----------------  -----------------
NET LOSS                                         $           (898)  $           (598)  $         (1,622)  $         (1,328)
                                                 =================  =================  =================  =================

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

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING
   Basic and diluted                                      120,744            120,729            120,744            120,689
                                                 =================  =================  =================  =================
</TABLE>

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


                                        4
<PAGE>
<TABLE>
<CAPTION>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

                                                                        Six Months Ended
                                                                            June 30,
                                                                 ------------------------------
                                                                      2007            2006
                                                                 --------------  --------------
                                                                  (Unaudited)
<S>                                                              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                      $      (1,622)  $      (1,328)
   Adjustments to reconcile net loss
     to net cash provided by (used in) operating activities:
     Depreciation                                                           63              78
     Amortization of intangibles and other assets                           63              61
     Deferred income taxes                                                   7               2
     Non-cash consideration                                                187              89
     Minority interest in net income of consolidated subsidiary              6              88
   Changes in operating assets and liabilities:
     Accounts receivable                                                 1,151             998
     Inventory                                                            (379)           (344)
     Prepaid expenses and other assets                                     (28)           (225)
     Accounts payable                                                      429             104
     Accrued liabilities                                                   (73)            412
     Deferred income                                                        61              (1)
                                                                 --------------  --------------
   Net cash used in operating activities                                  (135)            (66)
                                                                 --------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Changes in short-term investments                                       165             (15)
   Purchase of property and equipment                                      (79)            (87)
   Intangibles                                                             (49)            (19)
                                                                 --------------  --------------
   Net cash provided by (used in) investing activities                      37            (121)
                                                                 --------------  --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net payments on the demand loan and revolving line of credit              5             (19)
   Repayment of obligations under capital leases                            (1)             (1)
   Proceeds from exercise of stock options                                 ---              22
                                                                 --------------  --------------
   Net cash provided by financing activities                                 4               2
                                                                 --------------  --------------

DECREASE IN CASH AND CASH EQUIVALENTS                                      (94)           (185)
CASH AND CASH EQUIVALENTS, at beginning of period                          360             445
                                                                 --------------  --------------
CASH AND CASH EQUIVALENTS, at end of period                      $         266   $         260
                                                                 ==============  ==============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:
Interest                                                         $         254   $         145
                                                                 ==============  ==============
Income taxes                                                     $          10   $           8
                                                                 ==============  ==============
</TABLE>

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


                                        5
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2007 and 2006


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

The  accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of  America for interim financial information and the requirement of item 310(b)
of  Regulation  S-B. Accordingly, they do not include all of the information and
footnotes  required  by  accounting  principles generally accepted in the United
States  of  America  for  complete  financial  statements.  In  the  opinion  of
management, all adjustments (consisting of normal recurring accruals) considered
necessary  for  a  fair presentation have been included. Interim results are not
necessarily  indicative  of  the  results  that may be expected for a full year.
These  unaudited consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in
the  Company's  Annual  Report on Form 10-KSB for the fiscal year ended December
31,  2006,  as  filed  with  the  Securities  and  Exchange  Commission ("SEC").

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


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

The  Company  has  incurred  operating  losses,  reduced  levels of revenues and
decreased  financial position as a result of not meeting its business plan.  The
Company  had losses of $1.6 million for the six month period ended June 30, 2007
and  as  at  June  30,  2007,  the  Company  had an accumulated deficit of $50.3
million.   The  Company's  continuation  as  a  going  concern  is  uncertain.
Management's  plan is to continue raising additional funds through future equity
or debt financing until it achieves profitable operations.  Although the Company
plans to pursue additional financing, there can be no assurance that the Company
will  be  able  to  secure  financing  when  needed  or  obtain  such  on  terms
satisfactory  to  the Company, if at all.  The Company's continuation as a going
concern  depends  upon  its  ability  to  raise  funds  and  achieve and sustain
profitable  operations.

The  accompanying unaudited consolidated financial statements do not include any
adjustments  to  reflect  the  possible future effects on the recoverability and
classification  of  assets or the amounts and classification of liabilities that
may  result  from  the  inability of the Company to continue as a going concern.

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

On  May 2, 2007 the FASB issued FASB Interpretation FIN No. 48-1, "Definition of
Settlement  in  FASB  Interpretation  48"  ("FIN 48-1"). FIN 48-1 amends FIN 48,
"Accounting  for Uncertainty in Income Taxes-an interpretation of FASB Statement
No.  109",  to  provide guidance on how an enterprise should determine whether a
tax  position  is  effectively settled for the purpose of recognizing previously
unrecognized  tax  benefits.  The guidance in FIN 48-1 shall be applied upon the
initial  adoption  of  FIN  48. The Company is currently assessing the potential
impacts  of  implementing  this  standard.


                                        6
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2007 and 2006


In  May 2007, the FASB issued a FASB Staff Position on FIN 46(R)-7, "Application
of  FASB Interpretation No. 46(R) to Investment Companies" ("FSP FIN 46 (R)-7").
FSP FIN 46(R)-7 addresses the application of FASB Interpretation No. 46 (revised
December 2003), "Consolidation of Variable Interest Entities", by an entity that
accounts  for  its  investments  in  accordance  with the specialized accounting
guidance  in  the  AICPA Audit and Accounting Guide, "Investment Companies". The
Company  has  assessed  the  effect of adopting this guidance and has determined
that there will be no impact on the Company's consolidated financial statements.

In  June  2007, the American Institute of Certified Public Accountants ("AICPA")
issued  Statement  of Position ("SOP") No. 07-1, ''Clarification of the Scope of
the  Audit  and  Accounting  Guide Investment Companies and Accounting by Parent
Companies and Equity Method Investors for Investments in Investment Companies.''
SOP  No. 07-1 clarifies when an entity may apply the provisions of the Audit and
Accounting  Guide  from  Investment  Companies (the Guide). Investment companies
that  are  within  the  scope  of  the  Guide  report investments at fair value;
consolidation  or  use  of  the  equity  method for investments is generally not
appropriate. SOP No. 07-1 also addresses the retention of specialized investment
company  accounting  by a parent company in consolidation or by an equity method
investor.  SOP  No.  07-1  is  effective  for fiscal years beginning on or after
December  15, 2007 with early adoption encouraged.  The Company has assessed the
effect of adopting this guidance and has determined that there will be no impact
on  the  Company's  consolidated  financial  statements.

In  February  2007,  the  Financial  Accounting  Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 159, "The Fair Value of
Option  for  Financial  Assets  and Liabilities" ("SFAS No. 159"), which permits
entities  to  measure many financial instruments and certain other items at fair
value  that  are  not currently required to be measured at fair value. An entity
would  report  unrealized  gains  and  losses  on items for which the fair value
option  has  been  elected  in  earnings  at each subsequent reporting date. The
objective  is  to  improve  financial  reporting  by providing entities with the
opportunity  to  mitigate  volatility  in  reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. The decision about whether to elect the fair value option
is  applied  instrument  by  instrument,  with a few exceptions; the decision is
irrevocable; and it is applied only to entire instruments and not to portions of
instruments.  The statement requires disclosures that facilitate comparisons (a)
between entities that choose different measurement attributes for similar assets
and  liabilities  and  (b)  between  assets  and  liabilities  in  the financial
statements  of  an  entity  that  selects  different  measurement attributes for
similar  assets  and  liabilities.  SFAS  No.  159  is  effective  for financial
statements  issued  for  fiscal  years  beginning after November 15, 2007. Early
adoption  is  permitted  as  of the beginning of a fiscal year that begins on or
before  November  15,  2007,  provided  the  entity  also  elects  to  apply the
provisions  of  SFAS  No. 157, "Fair Value Measurement". Upon implementation, an
entity  shall  report  the  effect of the first remeasurement to fair value as a
cumulative-effect  adjustment to the opening balance of retained earnings. Since
the  provisions  of SFAS No. 159 are applied prospectively, any potential impact
will  depend  on the instruments selected for fair value measurement at the time
of  implementation.  The Company is currently assessing the potential impacts of
implementing  this  standard.


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

<TABLE>
<CAPTION>
  Inventory consists of the following:                          JUNE 30,       December 31,
                                                                  2007             2006
                                                             ---------------  --------------
                                                                      (In thousands)
                                                             ---------------  --------------
<S>                                                          <C>              <C>
  Raw materials                                              $         1,230  $           938
  Work-in-process                                                        201              233
  Finished goods                                                       1,953            1,834
                                                             ---------------  ---------------
                                                             $         3,384  $         3,005
                                                             ===============  ===============
</TABLE>


Reserves  for excess and obsolete inventory totaled $1,227,000 and $1,285,000 as
of June 30, 2007 and December 31, 2006, respectively and have been included as a
component  of  the  above  amounts.


                                        7
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2007 and 2006


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

<TABLE>
<CAPTION>
                                                                JUNE 30,       December 31,
                                                                  2007             2006
                                                             ---------------  ---------------
                                                                      (In thousands)
                                                             ---------------  ---------------
<S>                                                          <C>              <C>
Royal Bank of Canada - Bank indebtedness                     $            85  $            36
Royal Bank of Canada - Demand loan                                     2,400            2,519
Tradition Capital Bank - Revolving line of credit                        550              475
                                                             ---------------  ---------------
                                                             $         3,035  $         3,030
                                                             ===============  ===============
</TABLE>


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

In  November  2006,  the  Company  and  certain  of its subsidiaries amended its
secured  credit  facility  with  Royal  Bank of Canada ("RBC") by converting the
facility  to  a  demand  loan,  increasing  the  interest  rate  and eliminating
financial  covenants. In addition, during 2006, the maximum borrowings under the
demand  loan were reduced to Canadian $3.6 million (U.S. $3.4 million). However,
RBC  increased  the  borrowing  base  formula  by  Canadian  $1.0  million (U.S.
$939,000)  in  exchange for additional security provided by two of the Company's
directors  in  the  second quarter of 2006. Borrowings under the demand loan are
subject  to  certain  limitations  based  on  a  percentage of eligible accounts
receivable  and  inventory as defined in the agreement. Interest is payable at a
rate  of  RBC's  prime  rate  (6.0%  at  June  30,  2007), plus 2.75% per annum.
Borrowings  under  this  demand  loan  are  secured  by substantially all of the
Company's  assets.  As  of  June  30,  2007,  the Company had borrowings of $2.4
million,  which  exceeded  the  maximum available (subject to above limitations)
under  the  demand  loan,  and  accordingly, the Company was in violation of the
terms  of the agreement. RBC has been made aware of the violation and has agreed
to  waive  the  violation  at  June  30,  2007.  The  Company  is  presently  in
negotiations  with  RBC  to  further  amend  the  agreement.

At  the end of the second quarter of 2006, Mr. Murdoch, Sentry's Chief Executive
Officer  and  Director,  and  Mr.  Furst, a Sentry Director, agreed to provide a
personal  guarantee to RBC, the Company's lender, in the amount of Canadian $1.0
million  (U.S.  $939,000)  in  exchange for RBC providing increased availability
under its credit facility to the Company by the same amount. In consideration of
these  guarantees,  Mr.  Murdoch and Mr. Furst received a fee of $43,000, shared
between  them,  paid  in  12  equal  monthly  installments.  As  additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  2.9  million common shares of the Company at an exercise price of
$0.10  per share. The fair value of these warrants of $120,000 was determined in
accordance  with  SFAS No. 123R "Share-Based Payment" and beginning in June 2006
was  taken  into  income  over  the period of the guarantee, which was one year.
During the three and six month periods ended June 30, 2007, $20,000 and $50,000,
respectively,  has  been  recorded  in  interest  and  financing  expense. These
guarantees  expired  in June 2007 and were subsequently renewed in July 2007. In
consideration  of  these  guarantee  renewals,  Mr.  Murdoch  and Mr. Furst will
receive  fully  vested,  two year warrants to purchase approximately 7.4 million
shares  of  the  Company's  common  stock, at an exercise price of $0.065, to be
shared  between them. As additional compensation, Mr. Murdoch and Mr. Furst will
receive  an  annual  cash  fee,  to  be  shared between them, equal to 5% of the
guarantee value (Canadian $1.0 million) payable until the loan guarantees expire
(June  2008  and  December  2007  for  Mr. Murdoch and Mr. Furst, respectively).


                                        8
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2007 and 2006


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

In  December 2006, the Company entered into a secured revolving credit agreement
with  Tradition  Capital  ("TC")  Bank.  From  December  15,  2006  through  the
expiration  of  the  facility  on  June  15,  2007, the Company may draw up to a
maximum  of  $550,000 under the facility. Interest is payable at TC Bank's prime
rate  (8.25%  at  June  30,  2007),  plus  1%  per  annum.  As of June 30, 2007,
borrowings  were at the maximum amount available. Borrowings under this facility
are secured by substantially all of the Company's assets in a second position to
RBC.  In  addition,  the facility is fully secured by the personal guarantees of
Mr. Murdoch and Mr. Furst. In consideration of these guarantees, Mr. Murdoch and
Mr.  Furst  received  a  fee  of  $14,000,  shared between them, paid in 6 equal
monthly  installments  beginning  in December 2006. As additional consideration,
they  received  fully  vested,  two  year warrants to purchase approximately 5.2
million shares of the Company's common stock, at an exercise price of $0.053 per
share.  The fair value of these warrants of $91,000 was determined in accordance
with  SFAS  No.  123R  "Share-Based  Payment" and beginning in December 2006 was
taken  into income over the period of the guarantee, which is six months. During
the  three  and  six  month  periods  ended  June 30, 2007, $37,000 and $83,000,
respectively,  has  been  recorded in interest and financing expense. The credit
facility  and  related  guarantees  expired  in  June 2007 and were subsequently
renewed  in July 2007 until December 31, 2007. In consideration of the guarantee
renewals, Mr. Murdoch and Mr. Furst will receive fully vested, two year warrants
to  purchase  approximately 4.2 million shares of the Company's common stock, at
an  exercise  price  of  $0.065,  to  be  shared  between  them.  As  additional
compensation, Mr.  Murdoch  and Mr. Furst will receive an annual cash fee, to be
shared  between them, equal to 5% of the guarantee value($550,000) payable until
the  loan  guarantees  expire  on  December  31,  2007.


NOTE 6 - Accrued Liabilities
----------------------------

<TABLE>
<CAPTION>
Accrued liabilities consist of the following:             JUNE 30,       December 31,
                                                       ---------------  ---------------
                                                            2007             2006
                                                       ---------------  ---------------
                                                               (In thousands)
<S>                                                    <C>              <C>
Accrued salaries, employee benefits and payroll taxes  $           259  $           297
Other accrued liabilities                                          746              781
                                                       ---------------  ---------------
                                                       $         1,005  $         1,078
                                                       ===============  ===============
</TABLE>

<TABLE>
<CAPTION>

NOTE 7 - Comprehensive Loss
---------------------------

Comprehensive loss is as follows:                Three Months Ended                Six Months Ended
                                                      June 30,                          June 30,
                                                2007             2006             2007             2006
                                          ---------------  ---------------  ---------------  ---------------
                                                                   (in thousands)
<S>                                       <C>              <C>              <C>              <C>
Net loss:                                 $         (898)  $         (598)  $       (1,622)  $       (1,328)
Other comprehensive income (loss):
Foreign currency translation adjustments             198               51              210               49
                                          ---------------  ---------------  ---------------  ---------------
Comprehensive loss                        $         (700)  $         (547)  $       (1,412)  $       (1,279)
                                          ---------------  ===============  ---------------  ===============
</TABLE>


                                        9
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2007 and 2006


NOTE 8 - Related Party Transactions
-----------------------------------
Related parties include directors and officers and companies controlled by the
directors and officers of the Company.

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

See Note 5 for Related Party Transactions in regard to Directors guarantees.


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

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

The  Company's  1997  Stock Incentive Plan of Sentry (the "1997 Plan"), which is
shareholder approved, permits the granting of common share options and shares to
its  employees  for  up  to  6,369,365  shares  of  common  stock as stock-based
compensation.  This  plan expired as of January 14, 2007 and as such, there were
no  remaining  shares available for grant under this plan at June 30, 2007.  The
plan  was  renewed  on  May  18,  2007  (the  "2007 Plan"), which is shareholder
approved,  permits  the  granting  of  common  share  options  and shares to its
employees  for  up  to  5,000,000  shares  of  common  stock  as  stock-based
compensation.  The stock option committee may grant awards to eligible employees
in  the  form of stock options, restricted stock awards, phantom stock awards or
stock  appreciation  rights.  Stock  options  may  be granted as incentive stock
options  or  non-qualified  stock  options.  Such  options  normally  become
exercisable  at  a  rate  of 20% per year over a five-year period and expire ten
years from the date of grant.  The purchase of stock by Saburah Investments Inc.
constituted  a change in control under the 1997 Plan, resulting in the immediate
vesting  of  all  shares  issued  prior  to  May 1, 2004.  All outstanding stock
options  are  issued at not less than the fair value of the related common stock
at  the  date of grant.  At June 30, 2007, under the 1997 plan, 1,550,500 common
shares  were  reserved  for  issuance  in  connection with the exercise of stock
options.  Under  the 2007 plan, 511,500 common shares were reserved for issuance
in  connection  with the exercise of stock options during the quarter ended June
30,  2007.

Effective  January  1,  2006,  the Company's Plan is accounted for in accordance
with the recognition and measurement provisions of SFAS No. 123R, which replaces
SFAS  No.  123,  "Accounting  for  Stock-Based  Compensation,"  and  supersedes
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued
to  Employees,"  and  related  interpretations.  SFAS 123R requires compensation
costs  related  to  share-based  payment  transactions, including employee stock
options,  to be recognized in the financial statements. In addition, the Company
adheres  to  the guidance set forth within SEC Staff Accounting Bulletin No. 107
("SAB  107"), which provides the staff's views regarding the interaction between
SFAS No. 123R and certain SEC rules and regulations and provides interpretations
with  respect  to  the  valuation  of share-based payments for public companies.

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


                                       10
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2007 and 2006

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

<TABLE>
<CAPTION>
                          Three Months Ended       Six Months Ended
                                June 30,               June 30,
                            2007        2006        2007         2006
                         ----------  ----------  ----------  ------------
<S>                      <C>         <C>         <C>         <C>
Risk-free interest rate       4.82%       4.75%       4.82%         4.46%
Expected dividend yield          0%          0%          0%            0%
Expected lives           2-5 YEARS     2 years   2-5 YEARS   2 - 3 years
Expected volatility             80%         87%         80%          100%
</TABLE>

The following table represents the Company's stock options granted, forfeited or
expired  and  exercised  during  the  six  months  ended  June  30,  2007:

<TABLE>
<CAPTION>
                                                         Weighted
                                 Number of   Weighted     Average    Aggregate
                                  Shares      Average    Remaining   Intrinsic
                                Subject to   Exercise   Contractual    Value
                                 Issuance      Price       Term        ($000)
                                -----------  ---------  -----------  ----------
<S>                             <C>          <C>        <C>          <C>
Outstanding at January 1, 2007   2,145,500   $    0.16
Granted                            511,500        0.06
Exercised                              ---         ---
Forfeited or expired              (595,000)       0.29
                                -----------  ---------
OUTSTANDING AT JUNE 30, 2007     2,062,000   $    0.10    7.9 YEARS          0
                                ===========  =========  ===========  ==========

EXERCISABLE AT JUNE 30, 2007     1,032,000   $    0.11    7.3 YEARS          0
                                ===========  =========  ===========  ==========
</TABLE>

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

The  compensation  cost  recognized  in  income for stock-based compensation was
$7,000  and  $14,000 for the three and six month periods ended June 30, 2007 and
was  $6,000 and $18,000 for the three and six month periods ended June 30, 2006,
respectively.

As  of June 30, 2007, there was $64,000 of total unrecognized compensation cost,
net  of  estimated  forfeitures, related to all unvested stock options, which is
expected  to  be  recognized over a weighted average period of approximately 3.3
years.

There  were  511,500  options  issued during the six month period ended June 30,
2007  with a weighted average estimated fair value of $0.06.  There were 650,000
options  issued  during the six month period ended June 30, 2006 with a weighted
average  estimated  fair  value  of  $0.10.

At  June  30,  2007,  the  1997 option plan expired; there were no common shares
available  for  future  grant under this plan.  Under the 2007 option plan there
were  4,488,500  options  available  for  grant  as  of  June  30,  2007.


                                       11
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June  30,  2007  and  2006


     b)   Warrants
          --------

As  of  June  30, 2007, Sentry has outstanding warrants for 13,363,680 (June 30,
2006  -  8,600,000)  common  shares  issued in connection with various financing
arrangements.  The  warrants  have  exercise  prices ranging from $0.05 to $0.20
(June  30, 2006 - $0.10 to $0.20) and expire from April 28, 2008 through January
22,  2009.


                                       12
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2007 and 2006


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

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

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


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

Consolidated  revenues  were  17%  lower  in  the quarter ended June 30, 2007 as
compared  to  the  quarter  ended June 30, 2006.  For the six month period ended
June  30,  2007  consolidated revenues were 10% lower than in the same period of
last  year.  Our  backlog  of orders, which we expect to deliver within the next
twelve months, was $3.3 million at June 30, 2007, an increase of 65% as compared
to  $2.0  million  at  June  30,  2006,  and a 136% increase as compared to $1.4
million  at  December  31,  2006.  Total  revenues for the periods presented are
broken  out  as  follows:

<TABLE>
<CAPTION>
                                   Q-2       Q-2       %       6 Mos.    6 Mos.      %
                                   2007      2006    Change     2007      2006    Change
                                 --------  --------  -------  --------  --------  -------
                                   (in thousands)               (in thousands)
<S>                              <C>       <C>       <C>      <C>       <C>       <C>
EAS                              $  1,247  $  1,865     (33)  $  2,900  $  3,376     (14)
CCTV                                   53       168     (68)       149       375     (60)
SentryVision                          691       493      40      1,271     1,060      20
                                 --------  --------  -------  --------  --------  -------
Total sales                         1,991     2,526     (21)     4,320     4,811     (10)
Service, installation and other       437       406       8        776       829      (6)
                                 --------  --------  -------  --------  --------  -------
Total revenues                   $  2,428  $  2,932     (17)  $  5,096  $  5,640     (10)
                                 ========  ========  =======  ========  ========  =======
</TABLE>

Sales  in the second quarter of 2007 continued to be soft. EAS and CCTV revenues
decreased  due  to  a  weak  sector  performance.  There  was  an  increase  in
international  sales of our SentryVision SmartTrack systems, which was partially
offset  by  lower  domestic  sales.  Installation revenues were lower in the six
month period of 2007 as compared to 2006 due to related lower sales revenue. The
increase  in  the  three  month period compared to the same period last year was
principally  the  result of higher SentryVision (R) sales. However, the increase
in the order backlog is illustrative of a positive trend in new business that is
expected  to  continue  throughout  2007.


                                       13
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2007 and 2006


Cost of sales were 56% and 55% of total sales in the three and six month periods
ended  June  30, 2007 compared to 52% and 53% in the three and six month periods
ended  June,  30,  2006.  We  continue  to have slightly lower margins due to an
increase  in  the  percentage  of  total  sales  to  foreign  dealers.

The  13%  decrease  in customer service expenses in the second quarter and first
six  months  of  2007  as compared to the second quarter and first six months of
2006  is  primarily attributable to a decrease in the number of customer service
employees  and  increase  use  of outside service contractors in order to better
manage  total  customer  service  costs  during  fluctuations in activity levels
between  periods.

Selling,  general and administrative expenses were 5% higher and 3% lower in the
three  and  six  month  periods  ended  June  30, 2007 when compared to the same
periods of the previous year.  An increase in the three month period compared to
the  same period last year was principally the result of foreign exchange losses
of  $292,000  which  were  partially  offset  by  lower  headcount,  travel  and
promotional  costs.  A  decrease  in  the  six month period compared to the same
period  last  year  was  attributable to lower headcount, travel and promotional
costs  which  was  partially  offset  by  foreign  exchange  losses of $337,000.

The  decrease  in research and development costs in the second quarter and first
six  months  of 2007 when compared to the second quarter and first six months of
2006  is  primarily  a  result  of  a  reduced  headcount.

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

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

As a result of the foregoing, Sentry had losses of $898,000 and 1,622,000 in the
quarter and six months ended June 30, 2007 as compared to losses of $598,000 and
$1,328,000  in  the  quarter  and  six  months  ended  June  30,  2006.


Liquidity and Capital Resources as of June 30, 2007

At  June  30,  2007, we had cash and short-term investments of $360,000, working
capital  of  $62,000  and  total  assets  of $7,891,000.  Cash used in operating
activities  was $135,000 for the six month period ended June 30, 2007.  Cash was
principally  used  to  finance  increases  in  inventory  levels  purchased  in
anticipation  of  higher  sales  levels.  Cash  was generated from reductions in
accounts  receivable  as  well  as  an  increase  in  accounts  payable.

Cash provided by investing activities was $37,000 during the first six months of
2007  due  to use of short term investments, partially offset by the purchase of
manufacturing  equipment  at  our  51%  owned  labeling  plant.  There  are  no
significant  projected  capital expenditure requirements anticipated through the
remainder  of  the  year,  however, the level of spending will be dependent upon
various  factors,  including  growth  of  the  business  and  general  economic
conditions.

Cash  provided by financing activities was $4,000 during the first six months of
2007  primarily  due  to  increased  borrowings  under  our  credit  facilities.
Borrowing  availability  under  the credit facilities has principally been based
upon  the  combined levels of receivables and inventory, which was a net decline
in


                                       14
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
June 30, 2007 and 2006

the  first six months of 2007.  The extra availability under the credit facility
was principally related to the loan guarantees provided by our directors and the
overdraft  allowed  by  RBC.

In  November  2006,  the  Company  and  certain  of its subsidiaries amended its
secured  credit  facility  with  Royal  Bank of Canada ("RBC") by converting the
facility  to  a  demand  loan,  increasing  the  interest  rate  and eliminating
financial  covenants. In addition, during 2006, the maximum borrowings under the
demand  loan were reduced to Canadian $3.6 million (U.S. $3.4 million). However,
RBC  increased  the  borrowing  base  formula  by  Canadian  $1.0  million (U.S.
$939,000)  in  exchange for additional security provided by two of the Company's
directors  in  the  second quarter of 2006. Borrowings under the demand loan are
subject  to  certain  limitations  based  on  a  percentage of eligible accounts
receivable  and  inventory as defined in the agreement. Interest is payable at a
rate  of  RBC's  prime  rate  (6.0%  at  June  30,  2007), plus 2.75% per annum.
Borrowings  under  this  demand  loan  are  secured  by substantially all of the
Company's  assets.  As  of  June  30,  2007,  the Company had borrowings of $2.4
million,  which  exceeded  the  maximum  available  under  the  demand loan, and
accordingly, the Company was in violation of the terms of the agreement. RBC has
been  made  aware of the violation and has agreed to waive the violation at June
30, 2007. The Company is presently in negotiations with RBC to further amend the
agreement.

We  will require positive cash flows from operations to meet our working capital
needs  over the next twelve months.  Sentry's revenues declined and we continued
to  incur  operating  losses  through  the  first  six months of 2007.  This has
substantially  reduced  the  Company's  available  cash  reserves  and  limited
our  ability  to  secure additional bank financing.  A majority of the Company's
cash  is  held  at the 51% owned subsidiary.  The Company has instituted certain
plans  to  increase  its  revenue  base  as  well  as  preserve  its  cash.

Recently the Company completed a successful market trial of its OperationalVideo
system  that  uses our patented SmartTrack traveling system to manage safety and
security  as  well as retail business operations such as sign placement, product
merchandising  and  employee procedure compliance over the internet.  Management
believes  that OperationalVideo will contribute a significant new revenue stream
beginning  in  the  third  quarter  of  2007.

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

Related Party Transactions
--------------------------
Details of related party transactions are included in Note 8 of this Form
10-QSB.


                                       15
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
June 30, 2007 and 2006


Item 3. Controls and Procedures

As  of  the  end  of  the  period  covered  by  this  report,  Sentry Technology
Corporation  carried  out  an  evaluation,  under  the  supervision and with the
participation  of  the  Company's  management,  including  the  Company's  Chief
Executive  Officer  and Principal Financial Officer, of the effectiveness of the
design  and  operation  of  the  Company's  disclosure  controls  and procedures
pursuant  to  Rule 13a-15 of the Securities and Exchange Act of 1934. Based upon
that  evaluation,  the  Chief  Executive Officer and Principal Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
timely  alerting  them  to  material  information related to the Company that is
required to be included in Sentry Technology Corporation's periodic SEC filings.

There  has  been  no  change  in  the  Company's internal control over financial
reporting during the period covered by this report that has materially affected,
or  is  reasonable  likely  to materially affect, the Company's internal control
over  financial  reporting.


PART II - OTHER INFORMATION


Item 6 - Exhibits

     (a)  Exhibits:

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

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

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

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

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


                                       16
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
June 30, 2007 and 2006


SIGNATURE

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

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


Date: August 14, 2007            By: /s/ JOAN E. MILLER
      ---------------                -------------------------------------------
                                    Joan E. Miller, Vice President - Finance
                                    and Treasurer
                                    (Principal Financial and Accounting Officer)


                                       17