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 March 31, 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  May  15,  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 (Unaudited)

         Consolidated Balance Sheets --
         March 31, 2007 and December 31, 2006                            3

         Consolidated Statements of Operations --
         Three Months Ended March 31, 2007 and 2006                      4

         Consolidated Statements of Cash Flows --
         Three Months Ended March 31, 2007 and 2006                      5

         Notes to Condensed Consolidated Financial
         Statements - March 31, 2007                                   6 - 11


Item 2.  Management's Discussion and Analysis of Plan of Operation    11 - 14


Item 3.  Controls and Procedures                                        14


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

Item 6.  Exhibits                                                       15

Signature                                                               15
</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)

                                                                 MARCH 31,    December 31,
                                                                   2007           2006
                                                               ------------  --------------

                                                               (UNAUDITED)     (Audited)
<S>                                                            <C>           <C>
                             ASSETS
                             ------
Current Assets:
  Cash and cash equivalents                                    $       276   $         360
  Short-term investments                                               262             259
  Accounts receivable, less allowance for doubtful
    accounts of $171 and $160, respectively                          1,714           2,251
  Inventory                                                          3,322           3,005
  Prepaid expenses and other assets                                    339             306
                                                               ------------  --------------
Total current assets                                                 5,913           6,181

PROPERTY AND EQUIPMENT, net                                            598             609
GOODWILL                                                             1,564           1,564
OTHER ASSETS                                                           374             480
                                                               ------------  --------------
  TOTAL ASSETS                                                 $     8,449   $       8,834
                                                               ============  ==============

             LIABILITIES AND STOCKHOLDERS' EQUITY
             ------------------------------------
Current Liabilities:
  Bank indebtedness, demand loan and revolving line of credit  $     2,983   $       3,030
  Accounts payable                                                     864             609
  Accrued liabilities                                                1,148           1,078
  Obligations under capital leases - current portion                     2               3
  Deferred income                                                      182             185
                                                               ------------  --------------
Total current liabilities                                            5,179           4,905

OBLIGATIONS UNDER CAPITAL LEASES - less current portion                  8               8
DEFFERED TAX LIABILITY                                                  91              91
CONVERTIBLE DEBENTURE                                                1,955           1,945
                                                               ------------  --------------
Total liabilities                                                    7,233           6,949

MINORITY INTEREST                                                    1,274           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 160,000
    (2006 - 160,000) shares; issued and outstanding 120,744
    and 120,744 shares, respectively                                   121             121
  Additional paid-in capital                                        49,043          49,037
  Accumulated deficit                                              (49,436)        (48,712)
  Accumulated other comprehensive income                               214             202
                                                               ------------  --------------
Total stockholders'(deficit) equity                                    (58)            648
                                                               ------------  --------------
    TOTAL LIABILITIES AND STOCKHOLDERS'
    (DEFICIT) EQUITY                                           $     8,449   $       8,834
                                                               ============  ==============
</TABLE>

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


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

                                                     Three Months Ended
                                                          March 31,
                                                ------------------------------
                                                     2007            2006
                                                --------------  --------------
                                                         (Unaudited)
<S>                                             <C>             <C>

REVENUES:
  Sales                                         $       2,329   $       2,285
  Service, installation and other revenues                339             423
                                                --------------  --------------
                                                        2,668           2,708
COST OF SALES AND EXPENSES:
  Cost of sales                                         1,270           1,256
  Customer service expenses                               455             523
  Selling, general and administrative expenses          1,197           1,353
  Research and development                                206             200
                                                --------------  --------------
                                                        3,128           3,332
                                                --------------  --------------
OPERATING LOSS                                           (460)           (624)
INTEREST AND FINANCING EXPENSE, net                       213              82
                                                --------------  --------------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST           (673)           (706)
INCOME TAX EXPENSE                                         27              10
                                                --------------  --------------
LOSS BEFORE MINORITY INTEREST                            (700)           (716)
MINORITY INTEREST                                          24              14
                                                --------------  --------------
NET LOSS                                        $        (724)  $        (730)
                                                ==============  ==============

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

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING
  Basic and diluted                                   120,744         120,648
                                                ==============  ==============
</TABLE>

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


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

                                                                     Three Months Ended
                                                                           March 31,
                                                                ------------------------------
                                                                     2007            2006
                                                                --------------  --------------
                                                                         (Unaudited)
<S>                                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                      $        (724)  $        (730)
  Adjustments to reconcile net loss
    to net cash provided by (used in) operating activities:
    Depreciation                                                           32              38
    Amortization of intangibles and other assets                           31              31
    Non-cash consideration                                                 95              19
    Minority interest in net income of consolidated subsidiary             37               8
  Changes in operating assets and liabilities:
    Accounts receivable                                                   549             608
    Inventory                                                            (317)           (200)
    Prepaid expenses and other assets                                     (33)           (134)
    Accounts payable                                                      255              48
    Accrued liabilities                                                    70             652
    Deferred income                                                        (3)             (6)
                                                                --------------  --------------
  Net cash (used in) provided by operating activities                      (8)            334
                                                                --------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Changes in short-term investments                                        (3)              2
  Purchase of property and equipment                                      (21)            (11)
  Intangibles                                                              (4)            ---
                                                                --------------  --------------
  Net cash used in investing activities                                   (28)             (9)
                                                                --------------  --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net payments on the demand loan and revolving line of credit            (47)           (532)
  Repayment of obligations under capital leases                            (1)             (1)
  Proceeds from exercise of stock options                                 ---               6
                                                                --------------  --------------
  Net cash used in financing activities                                   (48)           (527)
                                                                --------------  --------------

DECREASE IN CASH AND CASH EQUIVALENTS                                     (84)           (202)
CASH AND CASH EQUIVALENTS, at beginning of period                         360             445
                                                                --------------  --------------
CASH AND CASH EQUIVALENTS, at end of period                     $         276   $         243
                                                                ==============  ==============
</TABLE>

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


                                        5
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 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  $.7 million for the three month period ended March 31,
2007  and  as at March 31, 2007, the Company had an accumulated deficit of $49.4
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
-----------------------------------------------
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


                                        6
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2007 and 2006


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:     MARCH 31,      December 31,
                                      --------------------------------
                                           2007             2006
                                      ---------------  ---------------
                                               (In thousands)
<S>                                   <C>              <C>
Raw materials                         $         1,107  $           938
Work-in-process                                   205              233
Finished goods                                  2,010            1,834
                                      ---------------  ---------------
                                      $         3,322  $         3,005
                                      ===============  ===============
</TABLE>

Reserves  for excess and obsolete inventory totaled $1,301,000 and $1,285,000 as
of  March 31, 2007 and December 31, 2006, respectively and have been included as
a  component  of  the  above  amounts.


NOTE 5 - Bank Indebtedness, Demand Loan, Revolving Line of Credit
-----------------------------------------------------------------
<TABLE>
<CAPTION>
                                                      MARCH 31,      December 31,
                                                   --------------------------------
                                                        2007             2006
                                                   ---------------  ---------------
                                                            (In thousands)
<S>                                                <C>              <C>
Royal Bank of Canada - Bank indebtedness           $            19  $            36
Royal Bank of Canada - Demand loan                           2,414            2,519
Tradition Capital Bank - Revolving line of credit              550              475
                                                   ---------------  ---------------
                                                   $         2,983  $         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


                                        7
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2007 and 2006

demand  loan were reduced to Canadian $3.6 million (U.S. $3.1 million). However,
RBC  increased  the  borrowing  base  formula  by  Canadian  $1.0  million (U.S.
$866,000)  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  March  31, 2007), plus 2.75% per annum.
Borrowings  under  this  demand  loan  are  secured  by substantially all of the
Company's  assets.  As  of  March  31,  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 until
April  30, 2007, at which time the Company repaid the excess. As a result of the
Company  exceeding  its  availability,  its interest rate was increased to RBC's
prime  rate  plus  5%  per  annum  for the entire balance of the loan during the
violation  period.

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
million  (U.S.  $866,000)  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 will receive a fee of $43,000, to
be  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
is  being taken into income over the period of the guarantee, which is one year.
During  the  three  months  ended  March  31, 2007, $30,000 has been recorded in
interest and financing expense and the remaining $20,000 will be expensed in the
second  quarter.

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  March  31,  2007),  plus  1%  per annum. As of March 31, 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 will receive a fee of $14,000, to be 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  is being taken into income over the period of the guarantee,
which  is  six  months.  During  the  three  month  period ended March 31, 2007,
$46,000  has  been  recorded in interest and financing expense and the remaining
$37,000  will  be  expensed  in  the  second  quarter.


                                        8
<PAGE>
<TABLE>
<CAPTION>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2007 and 2006


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

Accrued liabilities consist of the following:              MARCH 31,     December 31,
                                                       --------------------------------
                                                            2007             2006
                                                       ---------------  ---------------
                                                                (In thousands)
<S>                                                    <C>              <C>
Accrued salaries, employee benefits and payroll taxes  $           325  $           297
Other accrued liabilities                                          823              781
                                                       ---------------  ---------------
                                                       $         1,148  $         1,078
                                                       ---------------  ---------------
</TABLE>


NOTE 7 - Comprehensive Loss
---------------------------
<TABLE>
<CAPTION>
Comprehensive loss is as follows:               Three Months Ended
                                                     March 31,
                                          --------------------------------
                                               2007             2006
                                          ---------------  ---------------
                                                   (In thousands)
<S>                                       <C>              <C>
Net loss:                                 $         (724)  $         (730)
Other comprehensive loss:
Foreign currency translation adjustments             (12)              (2)
                                          ---------------  ---------------
Comprehensive loss                        $         (736)  $         (732)
                                          ===============  ===============
</TABLE>


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.


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 the Company is in the
process  of putting a new plan in place. As such, there were no remaining shares
available  for  grant  under  this  plan  at  March  31,  2007. 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 Saburah
investment  constituted  a  change  in  control  under  the


                                        9
<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2007 and 2006

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 March 31, 2007,
1,617,000  common  shares  were  reserved  for  issuance  in connection with the
exercise  of  stock  options.

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.

Cash received from exercise of options during the periods were none in the three
month period ended March 31, 2007 and $6,000 in the three months ended March 31,
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
                                  March 31,
                         ----------------------------
                             2007           2006
                         -------------  -------------
<S>                      <C>            <C>
Risk-free interest rate      4.46%         4.375%
Expected dividend yield        0%            0%
Expected lives            2 - 3 YEARS     3 years
Expected volatility           100%          104%
</TABLE>

The following table represents the Company's stock options granted, forfeited or
expired  and  exercised  during  the  three  months  ended  March  31,  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                                ---         ---
Exercised                              ---         ---
Forfeited or expired              (528,500)       0.24
                                -----------  ---------
Outstanding at March 31, 2007    1,617,000   $    0.13    7.4 years          0
                                ===========  =========  ===========  ==========

EXERCISABLE AT MARCH 31, 2007      817,000   $    0.17    6.5 YEARS          0
                                ===========  =========  ===========  ==========
</TABLE>


                                       10
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March  31,  2007 and 2006

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  $6,000  for  the  three month period ended March 31, 2007 and 2006,
respectively.

As of March 31, 2007, there was $54,000 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 3.4
years.

There were no stock options issued during the three month period ended March 31,
2007.  A  total  of  300,000  options were granted in the same period last year.
The  weighted average estimated fair value of stock options granted in the three
month  period  ended  March  31,  2006  was  $0.07.

At March 31, 2007, since the option plan has expired, there are no common shares
available  for  future  grants  until  the  new  plan  is  put  into  place.

     b)     Warrants
            --------

As  of  March  31,  2007, Sentry has outstanding warrants for 13,788,680 (2006 -
5,725,000)  common  shares  issued  in  connection  with  various  financing
arrangements.  The  warrants  have  exercise  prices ranging from $0.05 to $0.20
(2006 - $0.15 to $0.20) and expire from April 29, 2007 through January 21, 2009.


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.


                                       11
<PAGE>
SENTRY TECHNOLOGY CORPORATION  AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
March 31, 2007 and 2006

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

Consolidated  revenues  were  1%  lower  in  the quarter ended March 31, 2007 as
compared  to  the  quarter ended March 31, 2006. Our backlog of orders, which we
expect  to  deliver within the next twelve months, was $1.7 million at March 31,
2007.  While  this  is  a  19% decrease as compared to $2.1 million at March 31,
2006,  this  is a 21% 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-1          Q-1% Change
                                             2007             2006         Incr (Decr)
                                        ---------------  ---------------  --------------
                                                 (in thousands)
<S>                                     <C>              <C>              <C>
Electronic Article Surveillance (EAS)   $         1,653  $         1,511              9%
Closed Circuit Television (CCTV)                     96              207           (54%)
SentryVision(R)                                     580              567              2%
                                        ---------------  ---------------  --------------
Total sales                                       2,329            2,285              2%
Service, maintenance and installation               339              423           (20%)
                                        ---------------  ---------------  --------------
Total revenues                          $         2,668  $         2,708            (1%)
                                        ===============  ===============  ==============
</TABLE>

Sales  in the first quarter of 2007 were slightly higher than the same period in
2006.  We  had  growth  in  EAS  sales  in  the  North  American  library sector
principally  due  to  higher  sales  of  our  QuickCheck  patron  self  check
book-borrowing  systems.  CCTV  revenues  decreased  due  to  a  weak  sector
performance. There was an increase in international sales of our SentryVision(R)
SmartTrack  systems,  which  was  partially  offset  by  lower  domestic  sales.
Installation  revenues  were  lower in 2007 as compared to 2006 due to increased
sales  of our EAS library business, where installation revenue is lower than our
CCTV  and  SentryVision(R)  sales.

Cost  of  sales  remained  constant  at 55% in both the three month period ended
March  31,  2007  and  2006.

The  13%  decrease  in customer service expenses in the first quarter of 2007 as
compared to the first quarter of 2006 is primarily attributable to a decrease in
the  number  of  customer service employees and lower outside service contractor
costs  as  a  result  of  lower  installation  revenues.

Selling,  general  and administrative expenses were 12% lower in the three month
period  ended  March  31,  2007 when compared to the same period of the previous
year.  The  decreases  in  expenses  in  2007  are  principally  a  result  of
administrative  cost reductions including reduced headcount, accounting fees and
sales  promotion costs. These were partially offset by a higher foreign exchange
loss.

The  3%  increase in research and development costs in the first quarter of 2007
when  compared  to  the first quarter of 2006 is primarily a result of increased
use of engineering consulting firms and prototype costs for new products.  These
were  partially  offset  by  a  reduced  headcount.

Total  interest  and financing costs increased 160% in the first quarter of 2007
compared  to  the  first quarter of 2006.  The increase is primarily 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  debt  outstanding.


                                       12
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
March 31, 2007 and 2006

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. A 170% increase from the same period
last  year  is  primarily  the  result  of  higher  taxable income earned by the
Company's  subsidiary.

As a result of the foregoing, Sentry had losses of $724,000 in the quarter ended
March  31, 2007 as compared to a net loss of $730,000 in the quarter ended March
31,  2006.


Liquidity  and  Capital  Resources  as  of  March  31,  2007

At  March  31, 2007, we had cash and short-term investments of $538,000, working
capital  of  $734,000  and  total  assets of $8,449,000.  Cash used in operating
activities was $8,000 for the three month period ended March 31, 2007.  Cash was
principally  used  to  finance  increases  in  inventory  levels  purchased  in
anticipation  of higher sales activity levels. This was partially offset by cash
generated  from  reductions  in  accounts  receivable  resulting  from  improved
collection  efforts  as  well  as  an  increase  in accounts payable and accrued
liabilities.

Cash  used  in investing activities was $28,000 during the first three months of
2007  principally  for  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  used  in financing activities was $48,000 during the first quarter of 2007
primarily  due  to  payments  made  under  our  credit  facilities.  Borrowing
availability  under  the  credit  facilities has principally been based upon the
combined  levels of receivables and inventory, which declined in the first three
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. $3.1 million). However,
RBC  increased  the  borrowing  base  formula  by  Canadian  $1.0  million (U.S.
$866,000)  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  March  31, 2007), plus 2.75% per annum.
Borrowings  under  this  demand  loan  are  secured  by substantially all of the
Company's  assets.  As  of  March  31,  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 until
April  30, 2007, at which time the Company repaid the excess. As a result of the
Company  exceeding  its  availability,  its interest rate was increased to RBC's
prime  rate  plus  5%  per  annum  for the entire balance of the loan during the
violation  period.

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 three months of 2007.  This has
substantially  reduced  the  Company's  available  cash  reserves  and  limited


                                       13
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
March 31, 2007 and 2006

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.  While we
believe  that  we  have  developed  solid  sales  leads with some of the world's
largest  retailers,  we  continued  to  see delays in receipt of current orders,
which  caused  us  to  continue  to operate in a cash flow deficit for the first
three  months  of  the  year.

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.


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.


                                       14
<PAGE>
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.


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:     May 15, 2007          By: /s/ JOAN E. MILLER
          ------------              --------------------------------------------
                                    Joan E. Miller, Vice President - Finance
                                    and Treasurer
                                    (Principal Financial and Accounting Officer)


                                       15