FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                      For the quarter ended March 31, 2008

                                       OR

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

            For the transition period from __________ to __________

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

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

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


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


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

                                 not applicable
   ---------------------------------------------------------------------------
               (Former name, former address and former fiscal year,
                         if changed since last report)

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

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

   Large accelerated filer               Accelerated  filer
                            ----                                     ----
   Non-accelerated filer         (Do not check if a small reporting company)
                            ----
                                         Small reporting  company    X
                                                                   -----
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 14, 2008, there were 120,743,804 shares of Common Stock outstanding.
<PAGE>


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

                                                                   Page No.
                                                                   --------

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

Item 1.  Financial Statements

     Consolidated Balance Sheets --
     March 31, 2008 (Unaudited) and December 31, 2007                   3

     Consolidated Statements of Operations and Comprehensive Loss --
     Three Months Ended March 31, 2008 and 2007 (Unaudited)             4

     Consolidated Statements of Cash Flows --
     Three Months Ended March 31, 2008 and 2007 (Unaudited)             5

     Notes to Condensed Consolidated Financial
     Statements - March 31, 2008                                      6 - 12


Item 2.  Management's Discussion and Analysis of Plan of Operation   13 - 18


Item 3.  Quantitative and Qualitative Disclosures about Market Risk     18


Item 4T. Controls and Procedures                                        18



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

Item 6.     Exhibits                                                    18


Signature                                                               19


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

Item 1.     Financial Statements (Unaudited)
<TABLE><CAPTION>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value Amounts)
<S>                                                               <C>                   <C>
                                                                     MARCH 31,           December 31,
                                                                       2008                 2007
                                                                  --------------       ---------------
                                                                   (UNAUDITED)            (Audited)
                        ASSETS
                        ------
Current Assets:
   Cash and cash equivalents                                       $   1,221             $    256
   Short-term investments                                                101                  202
   Accounts receivable, less allowance for doubtful
     accounts of $214 and $209, respectively                           1,358                3,014
   Inventory                                                           3,328                3,299
   Prepaid expenses and other assets                                     595                  858
                                                                   ----------            ---------
Total current assets                                                   6,603                7,629

PROPERTY AND EQUIPMENT, net                                              582                  634
OTHER ASSETS                                                             268                  269
                                                                   ----------            ---------
      TOTAL ASSETS                                                 $   7,453             $  8,532
                                                                   ==========            =========

             LIABILITIES AND STOCKHOLDERS' EQUITY
             ------------------------------------
Current Liabilities:
   Bank indebtedness, demand loan and revolving line of credit     $   4,504             $  4,551
   Accounts payable                                                    1,220                1,223
   Accrued liabilities                                                 1,479                1,539
   Obligations under capital leases - current portion                      2                    2
   Deferred income                                                       140                  145
                                                                   ----------            ---------
Total current liabilities                                              7,345                7,460

OBLIGATIONS UNDER CAPITAL LEASES - less current portion                    6                    7
DEFFERED TAX LIABILITY                                                   113                  117
CONVERTIBLE DEBENTURE                                                  1,997                1,986
                                                                   ----------            ---------
Total liabilities                                                      9,461                9,570

MINORITY INTEREST                                                      1,197                1,200

STOCKHOLDERS' (DEFICIT) EQUITY
  Preferred stock, $0.001 par value; authorized 10,000
    (2007 - 10,000) shares; none issued and outstanding
  Common stock, $0.001 par value; authorized 190,000
    (2007 - 190,000) shares; issued and outstanding 120,744
    and 120,744 shares, respectively                                     121                  121
  Additional paid-in capital                                          49,424               49,420
  Accumulated deficit                                                (53,277)             (52,390)
  Accumulated other comprehensive income                                 527                  611
                                                                   ----------            ---------
Total stockholders' (deficit) equity                                  (3,205)              (2,238)
                                                                   ----------            ---------
     TOTAL LIABILITIES AND STOCKHOLDERS'
     (DEFICIT) EQUITY                                              $   7,453             $  8,532
                                                                   ==========            =========

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
</TABLE>
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                             March 31,
                                                                         ------------------
                                                                   2008                     2007
                                                                   ----                     ----
                                                                             (Unaudited)

<S>                                                             <C>                 <C>
REVENUES:
   Sales                                                        $  1,712                 $  2,329
   Service, installation and other revenues                          330                      339
                                                                ---------                ---------
                                                                   2,042                    2,668
COST OF SALES AND EXPENSES:
   Cost of sales                                                   1,019                    1,270
   Customer service expenses                                         550                      455
   Selling, general and administrative expenses                      979                    1,197
   Research and development                                          147                      206
                                                                ---------                ---------
                                                                   2,695                    3,128
                                                                ---------                ---------
OPERATING LOSS                                                      (653)                    (460)
INTEREST AND FINANCING EXPENSE, net                                  237                      213
                                                                ---------                ---------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST                      (890)                    (673)
INCOME TAX EXPENSE                                                   ---                       27
                                                                ---------                ---------
LOSS BEFORE MINORITY INTEREST                                       (890)                    (700)
MINORITY INTEREST                                                     (3)                      24
                                                                ---------                ---------
NET LOSS                                                        $   (887)                $   (724)
                                                                =========                =========

OTHER COMPREHENSIVE LOSS:
   Foreign Currency Translation Adjustments                           84                      (12)
                                                                ---------                ---------
COMPREHENSIVE LOSS                                              $   (971)                $   (712)
                                                                =========                =========

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

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

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
</TABLE>
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
<S>                                                                     <C>                  <C>
                                                                              Three Months Ended
                                                                                    March 31,
                                                                              ------------------
                                                                           2008                2007
                                                                          ------              ------
                                                                                  (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                             $  (887)            $  (724)
   Adjustments to reconcile net loss
     to net cash provided by (used in) operating activities:
     Depreciation                                                            30                  32
     Amortization of intangibles and other assets                            16                  31
     Non-cash consideration
         Stock based compensation                                             4                   6
         Warrant amortization included in interest                          118                  79
         Amortization of convertible debenture included in interest          10                  10
     Minority interest in net income of consolidated subsidiary              (3)                 37
   Changes in operating assets and liabilities:
     Accounts receivable                                                  1,584                 549
     Inventory                                                              (47)               (317)
     Prepaid expenses and other assets                                      139                 (33)
     Accounts payable                                                         5                 255
     Accrued liabilities                                                    (54)                 70
     Deferred income                                                         (4)                 (3)
                                                                       ---------            --------
   Net cash provided by (used in) operating activities                      911                  (8)
                                                                       ---------            --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Changes in short-term investments                                         96                  (3)
   Purchase of property and equipment                                         2                 (21)
   Other assets                                                             (15)                 (4)
                                                                       ---------            --------
   Net cash provided by (used in) investing activities                       83                 (28)
                                                                       ---------            --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net borrowing on the demand loan and revolving line of credit             71                 (47)
   Repayment of obligations under capital leases                             (1)                 (1)
                                                                       ---------            --------
   Net cash provided by (used in) financing activities                       70                 (48)
                                                                       ---------            --------

EFFECT OF EXCHANGE RATE CHANGES ON
   CASH AND CASH EQUIVALENTS                                                (99)                ---
                                                                       ---------            --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            965                 (84)
CASH AND CASH EQUIVALENTS, beginning of period                              256                 360
                                                                       ---------            --------
CASH AND CASH EQUIVALENTS, end of period                               $  1,221             $   276
                                                                       =========            ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for:
  Interest                                                             $    163             $   125
                                                                       =========            ========
  Income taxes                                                         $    ---             $    74
                                                                       =========            ========

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
</TABLE>
<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2008 and 2007


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

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

In  the  opinion  of management, all adjustments (which include normal recurring
adjustments)  necessary  to present a fair statement of financial position as of
March  31,  2008,  and results of operations, and cash flows for the three month
periods  ended  March 31, 2008 and 2007, have been made.  The interim results of
operations  are not necessarily indicative of the operating results for the full
fiscal  year  or  any  future  periods.

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


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

The  Company has incurred operating losses and decreased financial position as a
result  of  not  meeting  its  business  plan.  The  Company  had  losses  of
approximately $0.9 million for the period ended March 31, 2008 (March 31, 2007 -
$0.7  million)  and as of March 31, 2008, the Company had an accumulated deficit
of  approximately  $53.3  million  (December  31,  2007  - $52.4 million).   The
Company's  continuation  as  a  going  concern  is uncertain.  The Company is in
discussion with its primary lenders who have agreed to waive certain breaches in
the  lending  agreement  at  April  11,  2008  on  the  basis that a forbearance
agreement be finalized.  The Company's convertible debenture holders have agreed
to extend maturity to December 31, 2008.  Management's plan is to pursue raising
additional  funds  through  future  equity  or  debt  financing  to  satisfy its
commitments  to  its primary lenders and meet its obligations to the convertible
debenture holders until it achieves profitable operations.  Although the Company
plans to pursue additional financing, there can be no assurance that the Company
will  be  able  to  secure  financing  when  needed  or  obtain  such  on  terms
satisfactory  to  the Company, if at all.  The Company's continuation as a going
concern  depends  upon  its  ability  to  raise  funds  and  achieve and sustain
profitable  operations.

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

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2008 and 2007


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

In  April  2008, Financial Accounting Standards Board ("FASB") issued FASB Staff
Position ("FSP") SFAS No. 142-3, "Determination of the Useful Life of Intangible
Assets"  ("FSP  SFAS  No.  142-3").  FSP  SFAS No. 142-3 amends the factors that
should  be  considered  in  developing  renewal or extension assumptions used to
determine the useful life of a recognizable intangible asset under SFAS No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142").  The intent of FSP SFAS
No.  142-3  is  to  improve  the  consistency  between  the  useful  life  of  a
recognizable intangible asset under SFAS No. 142 and the period of expected cash
flows  used  to  measure  the  fair  value  of  the asset under SFAS No. 141(R),
"Business Combinations" and other U.S. generally accepted accounting principles.
FSP SFAS No. 142-3 is effective for financial statements issued for fiscal years
beginning  after  December  15,  2008,  and  interim periods within those fiscal
years.  Early  adoption is prohibited.  The Company does not anticipate that the
adoption  of FSP SFAS No. 142-3 will have an impact on its financial position or
results  of  operations.


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

 Inventory consisted of the following:          MARCH 31,          December 31,
                                                ---------          ------------
                                                  2008                 2007
                                                  ----                 ----
                                                        (In thousands)
                                                        --------------
Raw  materials                                 $  1,257             $  1,288
Work-in-process                                     215                  193
Finished  goods                                   1,856                1,818
                                               ---------            ---------
                                               $  3,328             $  3,299
                                               ---------            ---------

Reserves  for excess and obsolete inventory totaled $1,334,000 and $1,350,000 as
of March 31, 2008 and December 31, 2007, respectively, and have been included as
a  component  of  the  above  amounts.

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

                                                      MARCH 31,     December 31,
                                                      ---------     ------------
                                                        2008            2007
                                                        ----            ----
                                                         (In thousands)
                                                         --------------

Royal Bank of Canada ("RBC") - Bank indebtedness      $     4        $    13
RBC - Demand loan                                       3,450          3,488
Tradition Capital Bank - Revolving line of credit       1,050          1,050
                                                      --------       --------
                                                      $ 4,504        $ 4,551
                                                      --------       --------

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

In November 2006, the Company and certain of its subsidiaries amended its
secured credit facility with RBC by converting the facility to a demand loan,
increasing the interest rate and eliminating financial covenants.  In addition,
during 2006, the maximum borrowing under the facility was reduced to Canadian
$3.6 million (U.S. $3.5 million).  However, RBC increased the borrowing base
formula by Canadian $1.0

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2008 and 2007

million  (U.S.  $973,000) in exchange for additional security provided by two of
the  Company's  directors  in  the  second quarter of 2006. Borrowings under the
facility  are  subject  to certain limitations based on a percentage of eligible
accounts  receivable  and  inventory  as  defined  in the agreement. Interest is
payable  at a rate of RBC's prime rate (5.25% at March 31, 2008), plus 2.75% per
annum.  Borrowings  under  this facility are secured by substantially all of the
Company's  assets.  As  of  March  31,  2008, the Company had borrowings of $3.5
million, which exceeded the maximum available (subject to the above limitations)
under  the  demand  loan. RBC agreed to temporarily increase the availability to
the  Company  by  Canadian  $300,000  (U.S.  $292,000)  until  March 31, 2008 in
consideration  of  a  further  guarantee  by  certain  directors.

In  consideration  for these guarantees, as described above, Mr. Murdoch and Mr.
Furst  received  a  fee  of  $43,000,  shared between them, paid in twelve equal
monthly  installments.  As additional consideration, they received fully vested,
two  year warrants to purchase approximately 2.9 million shares of the Company's
common  stock,  at an exercise price of $0.10 per share. The fair value of these
warrants  of  $120,000  was  determined  in  accordance  with  SFAS No. 123R and
beginning  in  June 2006 was taken into income over the period of the guarantee,
which  was one year. These guarantees expired in June 2007 and were subsequently
renewed  in  July 2007 until April 30, 2008. In consideration of these guarantee
renewals, Mr. Murdoch and Mr. Furst will receive a fee of $40,000 shared between
them  paid  in ten equal monthly installments. As additional consideration, they
received  fully  vested, two year warrants to purchase approximately 7.4 million
common  shares of the Company at an exercise price of $0.065 per share. The fair
value  of  these warrants of $164,000 was determined in accordance with SFAS No.
123R  and  beginning  in July 2007 is being taken into income over the period of
the  guarantee,  which  is ten months. During the three month period ended March
31,  2008,  $49,000 (March 31, 2007 - $30,000) has been recorded in interest and
financing  expense related to these warrants and $17,000 will be expensed in the
second  quarter  of  2008.

As  of  March  31,  2008,  the  Company exceeded the maximum borrowing available
(subject  to  above  limitations) by approximately $1.0 million under the demand
loan.  RBC  agreed  to  temporarily waive the violation; but reserves all of its
rights  and  remedies  under  the loan agreement on the basis that a forbearance
agreement  be  finalized.

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

In  December 2006, the Company entered into a secured revolving credit agreement
with  Tradition  Capital Bank.  From December 15, 2006 through the expiration of
the  facility  on  June  15,  2007, the Company drew up to a maximum of $550,000
under the facility.  Interest was payable at Tradition Capital Bank's prime rate
(7.0% at March 31, 2008), plus 1% per annum. Borrowings under this facility were
secured  by  substantially  all  of the Company's assets in a second position to
RBC.  In  addition,  the  loan  was  fully secured by personal guarantees of Mr.
Murdoch and Mr. Furst. In consideration of these guarantees, Mr. Murdoch and Mr.
Furst  received a fee of $14,000, shared between them, paid in six equal monthly
installments  beginning  in  December  2006.  As  additional consideration, they
received  fully  vested, two year warrants to purchase approximately 5.2 million
shares  of the Company's common stock, at an exercise price of $0.053 per share.
The  fair  value  of these warrants of $91,000 was determined in accordance with
SFAS  No.  123R  and  beginning  in December 2006 was taken into income over the

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2008 and 2007

period  of the guarantee, which was six months.  The credit facility and related
guarantees expired in June 2007 and were subsequently renewed in July 2007 until
April 30, 2008.  In consideration of the guarantee renewals, Mr. Murdoch and Mr.
Furst  will  receive  a  fee  of  $23,000  shared  between  them  paid  in  ten
equal  monthly  installments.  As  additional consideration, they received fully
vested, two year warrants to purchase approximately 4.2 million common shares of
the  Company  at an exercise price of $0.065 per share.  The fair value of these
warrants  of  $94,000  was  determined  in  accordance  with  SFAS  No. 123R and
beginning  in  July  2007  is  being  taken  into  income over the period of the
guarantee,  which  is  ten  months.

On  September  25,  2007,  Mr. Murdoch and Mr. Furst agreed to provide Tradition
Capital  Bank  additional personal guarantees totaling $500,000, which increased
the  maximum  the Company can draw to $1,050,000, until April 30, 2008 under the
same terms and conditions as listed above.  As of March 31, 2008 borrowings were
at  the  maximum  amount  available.  In  consideration  of  the guarantees, Mr.
Murdoch  and Mr. Furst will receive a fee of $15,000 shared between them paid in
seven  equal  monthly  installments.  As additional consideration, they received
fully  vested,  two  year  warrants to purchase approximately 2.5 million common
shares  of  the Company at an exercise price of $0.10 per share.  The fair value
of these warrants of $89,000 was determined in accordance with SFAS No. 123R and
beginning  in  October  2007  will  be  taken into income over the period of the
guarantee, which is seven months.  During the three month period ended March 31,
2008,  $66,000  (March  31,  2007  -  $46,000) has been recorded in interest and
financing  expense related to these warrants and $22,000 will be expensed in the
second  quarter  of  2008.

c)   Palm  Beach  Public  Library  -  Letter  of  Credit
     ---------------------------------------------------

In  August 2007, Mr. Murdoch agreed to provide a personal guarantee for a Letter
of  Credit  of  $49,350  for  a period of one year in favor of Palm Beach Public
Library  that the Company was unable to obtain on its own in order to complete a
sale  of  the  Company's self service library systems.  In consideration of this
guarantee  Mr. Murdoch will receive a fee of $2,000 paid in twelve equal monthly
installments.  As  additional  consideration, he received fully vested, two year
warrants  to  purchase approximately 0.2 million common shares of the Company at
an  exercise  price  of  $0.10  per  share.  The fair value of these warrants of
$10,000  was  determined  in accordance with SFAS No. 123R "Share-Based Payment"
and  beginning  in August 2007 is being taken into income over the period of the
guarantee,  which is twelve months.  Interest and financing expense recorded was
$3,000  for  the  three  month  period  ended  March 31, 2008 and $3,000 will be
expensed  in  the  second  quarter  of  2008.

d)   Airport  -  Bid  Bond
     ---------------------

In  December 2007, Mr. Murdoch and Mr. Furst agreed to lend the Company $141,000
($81,000  and $60,000, respectively) to secure a bid that the Company was unable
to  obtain on its own to sell products to an airport facility.  In consideration
of  the loans, Mr. Murdoch and Mr. Furst received interest for the period of the
loan  at the Bank of America's prime rate (7.25%) plus 1% per annum.  During the
three  month  period  ended March 31, 2008, $1,000 has been recorded in interest
and finance expense related to the loans. The loans were repaid in January 2008.

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2008 and 2007

NOTE 6 -- Accrued Liabilities
-----------------------------
<TABLE>
<CAPTION>

<S>                                                      <C>                 <C>
Accrued liabilities consist of the following:               MARCH 31,        December 31,
                                                            ---------        ------------
                                                              2008               2007
                                                              ----               ----
                                                                  (In thousands)
                                                                  --------------

Accrued salaries, employee benefits and payroll taxes    $     276           $     280
Customer deposit payables                                      531                 305
Other accrued liabilities                                      672                 954
                                                         ----------          ----------
                                                         $   1,479           $   1,539
                                                         ==========          ==========
</TABLE>

NOTE  7  --  Related  Party  Transactions
-----------------------------------------

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

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

In  December  2007,  Mr.  Murdoch,  Sentry's  CEO and director, and Mr. Furst, a
Sentry  director,  agreed  to  lend  the  Company $141,000 ($81,000 and $60,000,
respectively)  to  secure a bid that the Company was unable to obtain on its own
to  sell  products  to  an airport facility.  In consideration of the loans, Mr.
Murdoch  and  Mr. Furst received interest for the period of the loan at the Bank
of  America's  prime  rate  (7.25%)  plus  1% per annum.  During the three month
period  ended  March  31, 2008, $1,000 has been recorded in interest and finance
expense  related  to the loans. The loans were repaid in January 2008.  Included
in  accrued  liabilities  at December 31, 2007 for this transaction is $142,000.


NOTE 8 -- 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 March 31, 2008.  The
plan  was renewed on May 18, 2007 (the "2007 Plan"), is shareholder approved and
permits  the granting of common share options and shares to its employees for up
to  5,000,000  shares  of  common  stock as stock-based compensation.  The stock
option  committee  may  grant  awards to eligible employees in the form of stock
options,  restricted  stock  awards,  phantom stock awards or stock appreciation
rights.  Stock  options  may  be  granted  as  incentive  stock  options  or
non-qualified stock options.  Such options normally become exercisable at a rate
of  20%  per  year over a five-year period and expire ten years from the date of
grant.

There  was  no  cash  received  from  exercise of options during the three month
period  ended  March  31,  2008 and the three month period ended March 31, 2007.

The following table represents the Company's stock options granted, forfeited or
expired  and  exercised  during  the  three-months  ended  March  31,  2008:

<PAGE>
SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2008 and 2007
<TABLE>
<CAPTION>
<S>                             <C>          <C>        <C>          <C>
                                                         Weighted
                                 Number of   Weighted     Average    Aggregate
                                  Shares      Average    Remaining   Intrinsic
                                Subject to   Exercise   Contractual    Value
                                 Issuance      Price       Term       ($000)
                                -----------  ---------  -----------  ---------

Outstanding at January 1, 2007   2,057,000   $    0.10
Granted                                ---         ---
Exercised                              ---         ---
Forfeited                         (122,000)       0.16
Expired                             (3,000)       2.37
                                -----------  ---------
OUTSTANDING AT MARCH 31, 2008    1,932,000   $    0.09    7.2 YEARS        ---
                                ===========  =========    =========    ========

EXERCISABLE AT MARCH 31, 2008    1,162,000   $    0.09    6.8 YEARS        ---
                                ===========  =========    =========    ========
</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
$4,000  and  $6,000  for  the three-month periods ended March 31, 2008 and 2007,
respectively.

As of March 31, 2008, there was $44,000 of total unrecognized compensation cost,
net  of  estimated  forfeitures, related to all unvested stock options, which is
expected  to  be  recognized over a weighted average period of approximately 2.8
years.

There  were  no  stock options issued during the three-month periods ended March
31,  2008  and  March  31,  2007.

At March 31, 2008, options for 4,508,500 common shares were available for future
grants  under  the  2007  Stock  Option Plan.  On January 14, 2007 the 1997 Plan
expired.  There  were  no  common  shares  available for future grant under this
Plan.

    b)   Warrants
         --------

As  of March 31, 2008, Sentry has outstanding warrants for 27,718,123 (March 31,
2007  -  13,788,680)  common  shares issued in connection with various financing
arrangements.  The  warrants  have  exercise  prices ranging from $0.05 to $0.17
(March  31,  2007  -  $0.05  to  $0.20)  and  expire from April 28, 2008 through
September  25,  2009.


NOTE  9  -  Fair  Value  Measurements
-------------------------------------

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

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

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

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

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

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


NOTE 10 - Subsequent Events
--------------------------

As  of April 11, 2008, Mr. Robert Furst extended his personal guarantee relating
to  the  RBC  loan  agreement  to  December  31, 2008.  In consideration of this
guarantee  renewal,  Mr. Furst will receive a fee of $13,333 paid in eight equal
monthly  installments.  As additional consideration he will receive fully vested
warrants  for  the  purchase  of  approximately  2  million common shares of the
Company,  exercisable  until  April  30, 2010, at an exercise price of $0.10 per
share.

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
March 31, 2008 and 2007

As  of  April  11,  2008,  Brookfield  extended its maturity of the debenture to
December  31,  2008 subject to fully vested warrants for the purchase of up to 5
million  common  shares  of the Company, exercisable until April 30, 2010, at an
exercise  price  of  $0.10  per  share,  registered  in  the name of Brookfield.

As of April 30, 2008, Mr. Peter Murdoch extended his personal guarantee relating
to  the  RBC  loan  agreement  to  December  31, 2008.  In consideration of this
guarantee renewal, Mr. Murdoch will receive a fee of $20,000 paid in eight equal
monthly  installments.  As additional consideration he will receive fully vested
warrants  for  the  purchase  of  approximately  3  million common shares of the
Company,  exercisable  until  April  30, 2010, at an exercise price of $0.10 per
share.

As  of  April  30, 2008, Mr. Peter Murdoch and Mr. Robert Furst agreed to extend
their  personal guarantees relating to the Tradition Capital Bank loan agreement
to December 31, 2008.  In consideration of these guarantee renewals, Mr. Murdoch
and  Mr.  Furst will receive a fee of $35,000 shared between them in eight equal
monthly  installments.  As  additional  consideration  they  will  receive fully
vested  warrants  for the purchase of approximately 5.3 million common shares of
the  Company,  to  be  shared  equally,  exercisable until April 30, 2010, at an
exercise  price  of  $0.10  per  share.


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

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

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

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

Consolidated  revenues  were  23%  lower  in the quarter ended March 31, 2008 as
compared  to  the quarter ended March 31, 2007.  Our backlog of orders, which we
expect  to  deliver within the next twelve months, was $5.6 million at March 31,
2008,  an increase of 229% as compared to $1.7 million at March 31, 2007.  Total
revenues  for  the  periods  presented  are  broken  out  as  follows:

                                            Q-1         Q-1          % Change
                                           2008         2007        Incr (Decr)
                                          ------       ------       -----------
                                            (in thousands)

Electronic Article Surveillance (EAS)    $  979       $ 1,653          (41%)
Closed Circuit Television (CCTV)             86            96          (10%)
SentryVision                                647           580           12%
                                         -------      --------         -----
Total sales                               1,712         2,329          (26%)
Service, maintenance and installation       330           339           (3%)
                                         -------      --------         -----
Total revenues                           $2,042       $ 2,668          (23%)
                                         ======       ========         =====
<PAGE>

Sales  in the first quarter of 2008 were 26% lower than the same period in 2007.
Both domestic and international sales were lower for EAS mainly due to low sales
volume  at  our  51%  owned  labeling plant as well as lower domestic QuickCheck
sales. There was an increase in domestic SentryVision sales, which was partially
offset  by  lower international sales. Service income was lower due to a reduced
number  of  service  calls  offset slightly by higher installation revenue while
maintenance  revenue  remained  constant.  In  general,  the  shortfall in sales
revenue was a result of several large orders received too late in the quarter to
be  installed. This resulted in an increase in the order backlog of $2.8 million
over  the  $2.8  million backlog as of December 31, 2007, equaling a total order
backlog  of  $5.6  million  as  of  March  31,  2008.

Cost  of sales were 60% of total sales in the three-month period ended March 31,
2008  as  compared  to  55% in the three-month period ended March 31, 2007.  The
increase in the cost of sales percentage is mainly due to extremely low sales at
our  51%  owned  labeling  plant.

The  21%  increase  in  customer  service  expenses in the first quarter of 2008
compared  to  the  first  quarter  of  2007  is  primarily due to an increase in
subcontractor  labor  and  salary  expenses.  The  Company  is continuing to use
outside  service  contractors to supplement our field service employees in order
to  better  manage  total customer service costs during fluctuations in activity
levels  between  periods.

Selling,  general  and administrative expenses were 18% lower in the three-month
period  ended  March  31,  2008 when compared to the same period of the previous
year.  This  decrease  is  principally  the  result of foreign exchange gains of
$141,000  and  a  decrease in salary and warranty expenses, which were partially
offset  by higher sales promotion costs and professional fees.  Foreign exchange
gains  resulted  from  the  strengthening  of  the  U.S. dollar valuation of the
Company's  Canadian  dollar bank loan as well as receivables denominated in U.S.
dollars  from  our  Canadian  subsidiary.

The  decrease  in  research and development costs of 29% in the first quarter of
2008 when compared to the first quarter of 2007 is primarily a result of reduced
consulting  fees.  The  Company  continues to develop both hardware and software
products  for  its  core  library  and  traveling  camera  system  markets.

Total  interest  and  financing  costs increased in the three-month period ended
March  31, 2008 primarily as a result of financing costs (including the non-cash
amortization  of  warrants  issued  of  $118,000  and $76,000 in the three-month
period  ended  March  31,  2008  and  2007,  respectively)  related  to the loan
guarantees  provided  by  the  Company's directors as well as increased interest
expenses on a higher average outstanding debt offset slightly by interest income
earned  on  past  due  receivable  balances.

There  was  no  income tax provision needed at March 31, 2008 as a result of our
51%  owned labeling plant having a loss for the quarter.  The income tax expense
in  the  2007  period  was  principally  a  result of the taxable income of this
Canadian  subsidiary,  which  cannot  be  offset  by Sentry's net operating loss
carryforwards.

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
March 31, 2008 and 2007


As a result of the foregoing, Sentry had losses of $887,000 in the quarter ended
March  31, 2008 as compared to losses of $724,000 in the quarter ended March 31,
2007.


Liquidity  and  Capital  Resources  as  of  March  31,  2008

At March 31, 2008, we had cash and short-term investments of $1,322,000, working
capital  of  ($742,000)  and total assets of $7,453,000.  While we had a loss of
$0.9  million  in  the  first  three  months of 2008, we generated net cash from
operating activities of $0.9 million.  This was primarily a result of collecting
a  large  receivable  balance  the  last  week  of  the  quarter.

Cash  provided by investing activities was $83,000 during the first three months
of  2008  due  to  use of short term investments, partially offset by changes in
other  assets.

Cash  provided  by  financing activities was $70,000 during the first quarter of
2008  primarily  due  to  increased  borrowings under our RBC credit facilities.
Borrowing  availability  under  the  credit  facilities  has been based upon the
combined  levels  of receivables and inventory, which was slightly higher in the
first  three  months  of 2008.  The extra availability under the credit facility
above the maximum allowable limit resulted from the $1.0 million loan guarantees
provided  by  our  directors  as  well as RBC allowing the Company to exceed the
maximum  allowable  borrowing  by  an  additional  $1.0 million.  The Company is
currently  in  negotiations  with  RBC  to finalize a forbearance with the bank.

In  November  2006,  the  Company  and  certain  of its subsidiaries amended its
secured  credit  facility  with RBC by converting the facility to a demand loan,
increasing  the interest rate and eliminating financial covenants.  In addition,
during  2006,  the  maximum borrowing under the facility was reduced to Canadian
$3.6  million  (U.S.  $3.5  million).  However, RBC increased the borrowing base
formula  by  Canadian  $1.0  million  (U.S. $973,000) in exchange for additional
security  provided  by  two  of the Company's directors in the second quarter of
2006.  Borrowings under the facility are subject to certain limitations based on
a  percentage  of  eligible  accounts receivable and inventory as defined in the
agreement.  Interest  is  payable  at a rate of RBC's prime rate (5.25% at March
31,  2008), plus 2.75% per annum.  Borrowings under this facility are secured by
substantially  all  of  the Company's assets.  As of March 31, 2008, the Company
had borrowings of $3.5 million, which exceeded the maximum available (subject to
the  above  limitations)  under  the  demand  loan.  RBC  agreed  to temporarily
increase  the  availability  to the Company by Canadian $300,000 (U.S. $292,000)
until  March  31,  2008  in  consideration  of  a  further  guarantee by certain
directors.

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

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
March 31, 2008 and 2007

of  these  guarantee  renewals,  Mr. Murdoch and Mr. Furst will receive a fee of
$40,000  shared  between  them  paid  in  ten  equal  monthly  installments.  As
additional  consideration,  they  received  fully  vested,  two year warrants to
purchase  approximately  7.4 million common shares of the Company at an exercise
price  of  $0.065  per  share.  The fair value of these warrants of $164,000 was
determined  in accordance with SFAS No. 123R and beginning in July 2007 is being
taken  into income over the period of the guarantee, which is ten months. During
the  three month period ended March 31, 2008, $49,000 (March 31, 2007 - $30,000)
has  been  recorded  in interest and financing expense related to these warrants
and  $17,000  will  be  expensed  in  the  second  quarter  of  2008.

As  of April 11, 2008, Mr. Robert Furst extended his personal guarantee relating
to  the  RBC  loan  agreement  to  December  31, 2008.  In consideration of this
guarantee  renewal,  Mr. Furst will receive a fee of $13,333 paid in eight equal
monthly  installments.  As additional consideration he will receive fully vested
warrants  for  the  purchase  approximately  to  2  million common shares of the
Company,  exercisable  until  April  30, 2010, at an exercise price of $0.10 per
share.

As of April 30, 2008, Mr. Peter Murdoch extended his personal guarantee relating
to  the  RBC  loan  agreement  to  December  31, 2008.  In consideration of this
guarantee renewal, Mr. Murdoch will receive a fee of $20,000 paid in eight equal
monthly  installments.  As additional consideration he will receive fully vested
warrants  for  the  purchase  of  approximately  3  million common shares of the
Company,  exercisable  until  April  30, 2010, at an exercise price of $0.10 per
share.

As  of  March  31,  2008,  the  Company exceeded the maximum borrowing available
(subject  to  above  limitations) by approximately $1.0 million under the demand
loan.  RBC  agreed  to  temporarily waive the violation; but reserves all of its
rights  and  remedies  under  the loan agreement on the basis that a forbearance
agreement  be  finalized.

In  December 2006, the Company entered into a secured revolving credit agreement
with  Tradition  Capital Bank.  From December 15, 2006 through the expiration of
the  facility  on  June  15,  2007, the Company drew up to a maximum of $550,000
under the facility.  Interest was payable at Tradition Capital Bank's prime rate
(7.0% at March 31, 2008), plus 1% per annum. Borrowings under this facility were
secured  by  substantially  all  of the Company's assets in a second position to
RBC.  In  addition,  the  loan  was  fully secured by personal guarantees of Mr.
Murdoch and Mr. Furst. In consideration of these guarantees, Mr. Murdoch and Mr.
Furst  received a fee of $14,000, shared between them, paid in six equal monthly
installments  beginning  in  December  2006.  As  additional consideration, they
received  fully  vested, two year warrants to purchase approximately 5.2 million
shares  of the Company's common stock, at an exercise price of $0.053 per share.
The  fair  value  of these warrants of $91,000 was determined in accordance with
SFAS  No.  123R  and  beginning  in December 2006 was taken into income over the
period  of the guarantee, which was six months.  The credit facility and related
guarantees expired in June 2007 and were subsequently renewed in July 2007 until
April 30, 2008.  In consideration of the guarantee renewals, Mr. Murdoch and Mr.
Furst  will  receive  a  fee  of  $23,000  shared between them paid in ten equal
monthly  installments.  As additional consideration, they received fully vested,
two  year  warrants  to  purchase approximately 4.2 million common shares of the
Company  at  an  exercise  price  of  $0.065 per share.  The fair value of these
warrants  of  $94,000  was  determined  in  accordance  with  SFAS  No. 123R and
beginning  in  July  2007  is  being  taken  into  income over the period of the
guarantee,  which  is  ten  months.

On  September  25,  2007,  Mr. Murdoch and Mr. Furst agreed to provide Tradition
Capital  Bank  additional personal guarantees totaling $500,000, which increased
the  maximum  the Company can draw to $1,050,000, until April 30, 2008 under the
same  terms  and  conditions  as  listed  above.  As  of  March  31,

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
March 31, 2008 and 2007

2008  borrowings  were  at the maximum amount available. In consideration of the
guarantees,  Mr.  Murdoch  and  Mr.  Furst  will receive a fee of $15,000 shared
between  them  paid  in  seven  equal  monthly  installments.  As  additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  2.5  million common shares of the Company at an exercise price of
$0.10  per  share. The fair value of these warrants of $89,000 was determined in
accordance  with  SFAS No. 123R and beginning in October 2007 will be taken into
income over the period of the guarantee, which is seven months. During the three
month  period  ended March 31, 2008, $66,000 (March 31, 2007 - $46,000) has been
recorded in interest and financing expense related to these warrants and $22,000
will  be  expensed  in  the  second  quarter  of  2008.

As  of  April  30, 2008, Mr. Peter Murdoch and Mr. Robert Furst agreed to extend
their  personal guarantees relating to the Tradition Capital Bank loan agreement
to December 31, 2008.  In consideration of these guarantee renewals, Mr. Murdoch
and  Mr.  Furst will receive a fee of $35,000 shared between them in eight equal
monthly  installments.  As  additional  consideration  they  will  receive fully
vested  warrants  for the purchase of approximately 5.3 million common shares of
the  Company,  to  be  shared  equally,  exercisable until April 30, 2010, at an
exercise  price  of  $0.10  per  share.

In  August 2007, Mr. Murdoch agreed to provide a personal guarantee for a Letter
of  Credit  of  $49,350  for  a period of one year in favor of Palm Beach Public
Library  that the Company was unable to obtain on its own in order to complete a
sale  of  the  Company's self service library systems.  In consideration of this
guarantee  Mr. Murdoch will receive a fee of $2,000 paid in twelve equal monthly
installments.  As  additional  consideration, he received fully vested, two year
warrants  to  purchase approximately 0.2 million common shares of the Company at
an  exercise  price  of  $0.10  per  share.  The fair value of these warrants of
$10,000  was  determined  in accordance with SFAS No. 123R "Share-Based Payment"
and  beginning  in August 2007 is being taken into income over the period of the
guarantee,  which is twelve months.  Interest and financing expense recorded was
$3,000  for  the  three-month  period  ended  March  31, 2008 and $3,000 will be
expensed  in  the  second  quarter  of  2008.

In  December 2007, Mr. Murdoch and Mr. Furst agreed to lend the Company $141,000
($81,000  and $60,000, respectively) to secure a bid that the Company was unable
to  obtain on its own to sell products to an airport facility.  In consideration
of  the loans, Mr. Murdoch and Mr. Furst received interest for the period of the
loan  at the Bank of America's prime rate (7.25%) plus 1% per annum.  During the
three  month  period  ended March 31, 2008, $1,000 has been recorded in interest
and finance expense related to the loans. The loans were repaid in January 2008.

We  will require positive cash flows from operations to meet our working capital
needs  over  the  next  twelve months.  The Company continued to incur operating
losses  through  the first three months of 2008.  This has limited the Company's
ability  to  secure  additional  bank  financing.  The Company collected a large
receivable  balance  the  last  week  of the quarter ended March 31, 2008, which
caused our cash balance to increase to $1.2 million.  The Company has instituted
certain  plans  to  increase  its  revenue  base  as  well as preserve its cash.

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

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
March 31, 2008 and 2007

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

In  December  2007,  Mr.  Murdoch,  Sentry's  CEO and director, and Mr. Furst, a
Sentry  director,  agreed  to  lend  the  Company $141,000 ($81,000 and $60,000,
respectively)  to  secure a bid that the Company was unable to obtain on its own
to  sell  products  to  an airport facility.  In consideration of the loans, Mr.
Murdoch  and  Mr. Furst received interest for the period of the loan at the Bank
of  America's  prime  rate  (7.25%)  plus  1% per annum.  During the three month
period  ended  March  31, 2008, $1,000 has been recorded in interest and finance
expense  related  to the loans. The loans were repaid in January 2008.  Included
in  accrued  liabilities  for  2007  for  this  transaction  is  $142,000.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

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


Item  4T.  Controls  and  Procedures

We maintain disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) that are designed (i) to collect the information we are
required  to  disclose  in  the  reports  we  file with the SEC; (ii) to record,
process,  summarize  and  disclose  this  information  within  the  time periods
specified  in  the  rules  of  the  SEC; and (iii) to ensure that information is
accumulated  and  communicated  to our management, including our Chief Executive
Officer  and  Principal  Financial  Officer,  as  appropriate  to  allow  timely
decisions  regarding  required  disclosure.


Changes  in  Internal  Control  Over  Financial  Reporting

There  was  no change in the Company's internal control over financial reporting
that  occurred  during  our  most  recently  completed  fiscal  quarter that has
materially  affected, or is reasonably likely to materially affect, our internal
control  over  financial  reporting.

<PAGE>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
PART II  - OTHER INFORMATION
March 31, 2008 and 2007


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 14, 2008          By:     /s/JOAN E. MILLER
          ------------                -------------------------
                                      Joan E. Miller, Vice President
                                      Finance and Treasurer
                                      (Principal Financial and
                                                   Accounting Officer)