SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C.  20549
                                  ____________

                                    FORM 10-K

     ANNUAL  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT  OF  1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)  OF THE SECURITIES
EXCHANGE  ACT  OF  1934

     FOR  THE  TRANSITION  PERIOD  FROM  -__________  TO  ___________----

                         COMMISSION  FILE  NUMBER:  1-12727
                                _________________

                          SENTRY TECHNOLOGY CORPORATION

     (EXACT  NAME  OF  THE  REGISTRANT  AS  SPECIFIED  IN  ITS  CHARTER)

            DELAWARE                                 96-11-3349733
     ----------------------                         ---------------
 (STATE  OR  OTHER  JURISDICTION OF                 (I.R.S. EMPLOYER
   INCORPORATION  OR ORGANIZATION)                  IDENTIFICATION NO.)


            350  WIRELESS  BOULEVARD,  HAUPPAUGE,  NEW  YORK  11788
            -------------------------------------------------------
           (ADDRESS  OF  PRINCIPAL  EXECUTIVE  OFFICES)  (ZIP  CODE)

     REGISTRANT'S  TELEPHONE  NUMBER,  INCLUDING  AREA  CODE:  (631)  232-2100
                                                               ---------------

       Securities registered pursuant to Section 12(b) of the Act:  None.


           Securities registered pursuant to Section 12(g) of the Act:

                              Title of each class:
                              --------------------

                          Common Stock, $.001 par value


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

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regula-tion  S-K  is not contained herein, and will not be contained, to the
best  of  the  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III  of this Form 10-K or any
amendment  to  this  Form  10-K.

At  March  28,  2003,  the  aggregate  market  value of the voting stock held by
non-affiliates  of  the  Registrant  was  approximately  $751,000 based upon the
closing  price  of  such  securities on the OTC Bulletin Board on that date.  At
March  28,  2003,  the  Registrant  had  outstanding 82,560,347 shares of Common
Stock.

Documents  Incorporated  by  Reference
--------------------------------------

None.

<PAGE>
                                     ------
                                      PART I
                                      ------
ITEM  1.   BUSINESS
-------------------

GENERAL

Sentry  Technology  Corporation  ("Sentry")  was  formed  in connection with the
February  1997  merger  of Knogo North America Inc., a Delaware corporation, and
Video Sentry Corporation, a Minnesota corporation. As a result of the merger, we
became  the  parent  corporation  of  two  wholly-owned  Delaware  subsidiaries:
Knogo  North America Inc. ("Knogo") and Video Sentry Corporation ("Video"). This
series  of  transactions  is  referred  to  herein collectively as the "Merger."

Knogo is engaged in the design, manufacture, sale, installation and servicing of
a  complete  line  of  electronic  article  surveillance  equipment.  Knogo  was
incorporated in Delaware in October 1996. Its corporate predecessors had been in
business  for  more  than  30  years.

Video  designs,  manufactures,  markets,  installs  and  services a programmable
traveling  closed  circuit  television  surveillance system that delivers a high
quality  video  picture  which  is used in a wide variety of applications. Video
also acts as a system integrator for conventional CCTV products that it markets,
installs  and  services.  Video's  predecessor  was founded in 1990 and made its
first  sales  in  1992.  Video  was  merged  into Knogo as of December 31, 2000.


RECENT  DEVELOPMENTS

Our  strategy  following the Merger in 1997 was to use Knogo's engineering staff
and  excess  manufacturing  capacity resulting from a 1994 restructuring for the
reengineering  and  production  of  its  proprietary  and  patented SentryVision
programmable  traveling closed circuit television surveillance ("CCTV") systems.
With the reengineering completed, management believed that sales of SentryVision
,  which  had  fallen  in  the final year that Video was a separate corporation,
would  rebound.

While  the  engineering  staff  was able to resolve substantially the design and
manufacturing  problems  associated  with SentryVision , the sales of the system
did  not  achieve  the  levels  anticipated  by  the  Company.

Furthermore,  while  still  profitable,  sales  of  Knogo's  Electronic  Article
Surveillance  ("EAS")  systems  have  continued to erode due to the attention we
gave  to the reengineering and marketing of SentryVision  as well as competition
from  lower-priced  "off-the-shelf"  systems  and  competition  from  larger,
better-financed  competitors  such  as  Sensormatic  Electronics Corporation and
Checkpoint Systems Inc. In addition, due to a non-compete provision entered into
by  Knogo  in  1994, we were not permitted to market our EAS products outside of
the  United  States  and Canada. The non-compete provision expired at the end of
1999.

We recognized that, because of our continuing operating losses and the depletion
of  our  tangible  assets to fund ongoing operations, our ability to continue to
market  our  existing SentryVision  and EAS products and to develop new products
and  product  extensions  to  allow  us  to  remain  competitive  would  require
additional  investment.

On  January  8,  2001, Dialoc ID Holdings, B.V. ("Dialoc ID"), formerly known as
Dutch  A&A  Holding,  B.V.,  acquired  23,050,452 shares of the Company's common
stock  for $3.0 million, $1.0 million of which was paid in January 2001, and the
remaining  balance was paid in equal $1.0 million installments on April 30, 2001
and  August  31,  2001.  Dialoc  ID  is a Netherlands company which, through its
subsidiaries,  is  in  the  business  of  development,  manufacture,  sale  and
distribution  of various kinds of RFID, access control and anti-theft electronic
article  surveillance  products  and  accessories.  Concurrent  with  the  share
purchase  agreement,  the  Company  entered  into  a distribution agreement with
Dialoc  ID allowing the Company access to new products of Dialoc ID and allowing
Dialoc  ID  access  to  the Company's products for an initial period of not less
than  two  years.

As  of  January  8, 2001, Dialoc ID owned 37.5 percent of the outstanding common
stock  of  the Company. Under the share purchase agreement, at any time prior to
January  8,  2002,  Dialoc  ID  had  the  right to increase its ownership of the
Company's  common  stock  to  a  total of 51% of the shares of common stock then
outstanding. If the average market value of the Company's common stock, measured
over  any  10-day trading period during the one year period following January 8,
2001,  was  at least $15.0 million, the purchase price for the additional shares
was  to be determined by multiplying the actual number of shares to be purchased
by  $.001.  In  November 2001, this market capitalization threshold was met.  At
that  time,  our  Board of Directors agreed to extend Dialoc ID's purchase right
until January 8, 2003 in exchange for an extension of the distribution agreement
for  one  year.  On  May  14,  2002, Dialoc ID exercised their right to purchase
14,500,000  additional  common  stock  shares  at  a  price  of $.001 per share,
increasing  its  percentage  of  our  outstanding  common  stock to 48.1% of the
Company's  common  stock.  On  January  7,  2003,  Dialoc exercised its right to
purchase 4,516,475 additional shares of our common stock at a price of $.001 per
share,  increasing  its percentage of our outstanding common stock to 51% and it
total  common  stock  ownership  to  42,066,927  shares.  As  a condition to the
investment  by  Dialoc  ID, the Company's stockholders elected three nominees of
Dialoc  ID  to  the  Board  of Directors at a Special Meeting of Stockholders on
December  8,  2000.

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

The  Company  has  incurred reduced revenue levels, decreased financial position
and recurring operating losses over the past several years.  During 2002, delays
in  orders  received and the loss of other purchase orders caused the Company to
operate  in  a cash flow deficit, borrow the maximum amounts available under our
credit  facility,  and  pursue  potential  sources  of debt or equity financing.
While  the  Company was successful in completing many of its business plan goals
for  2002,  we  were  unable to meet our projected revenue growth targets.  As a
result, On January 7, 2003, we initiated our restructuring plan.  We believe the
successful implementation of this restructuring will result in substantial gross
margin  improvements  and  reductions  in operating expenses beginning after the
first  quarter of 2003.  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 that additional debt or equity financing
will  be  available  on  terms that are satisfactory to Sentry, or that any such
debt  or  equity  financing  will  be  sufficient  to provide the full amount of
funding  necessary.  Our  future  cash  requirements  are  expected to depend on
numerous  factors,  including,  but  not limited to: (i) the ability to generate
positive  cash flow from operations, and the extent thereof, (ii) the ability to
raise  additional  capital  or  obtain  additional financing, and (iii) economic
conditions.  Sentry  will  require  liquidity  and  working  capital  to finance
increases in receivables and inventory associated with sales growth, payments to
past  due  vendors  and,  to  a  lesser  extent,  for  capital  expenditures.


THE  SENTRYVISION  SYSTEM

SentryVision  refers  to our family of traveling CCTV surveillance systems. Over
the  years,  Video  has  developed  various  generations  of  traveling  CCTV
surveillance  systems  including  the  H-System,  OH-System,  the  original
SentryVision  and  currently  the  new  and  improved  SmartTrack  system.

All  versions  of  the  product  consist of a camera carriage unit, a continuous
track  enclosed  with  tinted or mirrored glass enclosure and electronic control
equipment.  The  carriage unit moves within the enclosure and carries one or two
PTZ  CCTV  cameras,  electronic  transmission  components  and motor drives. The
carriage  track  and  enclosure are designed to custom lengths for more complete
viewing.  The  carriage  unit  transmits  video  and  control  signals  from the
camera(s)  through  two  copper  conductors  running  inside  the enclosure to a
receiver  unit  located  at one end of the carriage track. The copper conductors
also  carry  power  to  the  camera  carriage, eliminating the need for power or
communication cables. From the receiver unit, the video signals are relayed to a
central monitoring location by wire or fiber optics, where a system operator can
position  or  move  the  camera  carriage to obtain the best vantage point while
viewing  and  recording  the  continuous, live video pictures. The system design
supports  conventional  peripheral  devices,  such  as  analog  and  digital
videocassette  recorders,  alarm  inputs,  fixed  cameras,  PTZ  dome  cameras,
switches/multiplexers,  voice intercom systems, panic buttons and remote viewing
capability  using  dedicated  phone  lines  or  internet  technology.

Unlike  our  previous  products, our recently developed SentryVision  SmartTrack
system  features  one  or  two state-of-the-art pan, tilt and zoom ("PTZ") domes
providing  for  360  unobstructed  views  to  eliminate  most  blind  spots.
Additionally, SmartTrack utilizes sophisticated software that provides six tours
and  up  to  60  presets  per  camera carriage to allow programmable viewing and
recording  with  or  without  an operator. The improvements made to the carriage
make  the  new  SmartTrack  system  the fastest and most reliable traveling CCTV
surveillance  system  in  the  history  of  SentryVision  product  offerings.
SmartTrack  is  our  premier  product,  replacing  all  previous  generations of
SentryVision   products.

Sentry's  proprietary  CCTV system, called SentryVision , is designed to provide
enhanced  loss prevention surveillance in retail stores and distribution centers
as well as to provide monitoring and deterrence of illegal and unsafe activities
in  a  variety  of  other  locations  such  as  parking  garages,  correctional
facilities,  warehouses,  transportation  centers  and public transit terminals.
SentryVision   may  also be employed in a broad range of operational and process
monitoring  applications in commercial manufacturing and industrial settings. As
of  December  31,  2002,  1,272  SentryVision   systems  had  been  installed in
customer  locations  in  North  America.  Current  customers include Lowe's Home
Centers,  Target  Stores,  Mills Fleet Farm, Winn Dixie, Federal Express, Symbol
Technologies,  Menards,  UPS,  J.C.  Penney,  Canadian  Tire,  Reno Depot, Estee
Lauder,  Kohl's  Department Stores, Disney Direct Marketing and Duke University.
In  addition, during 2002, the Company's international distributors installed 60
SentryVision   systems  in  customer  locations  throughout  Western and Eastern
Europe,  Latin  America and Asia. Our international customers include Carrefour,
Auchon, Cora, Castorama, B & Q, and Coop. We believe that, by providing expanded
surveillance  coverage and enhanced flexibility to select the locations watched,
SentryVision   has  enabled  customers  to  significantly  reduce  inventory
shrinkage,  increase  theft  apprehension rates and improve safety and security.
Based  on  the  price  of its system and the experience of Sentry's customers to
date,  we  believe SentryVision   is a cost-effective solution which can improve
the  operations  of  our  customers.

Sentry  sold  its  first  systems  in  1992  for  installation in parking garage
security  surveillance applications, but quickly moved its market focus into the
retail  sector.  In  this sector, we have identified a number of specific market
segments  for  which  SentryVision   is  well  suited  for  loss  prevention
surveillance,  including  home  centers,  mass merchandise chains, supermarkets,
hypermarkets  and  drug stores, as well as related distribution centers. The key
application  is  inventory  loss  prevention  in  the  stores,  stock  rooms and
distribution  centers.

SentryVision   is  typically  installed  in  large  retail  stores  which  use a
checkout  area  at the front of the store and product display configurations and
high  merchandise  shelving  which  form  rows  and aisles. Video specializes in
designing  system applications which are customized to fit a customer's specific
needs  and  which  integrate the customer's existing surveillance equipment (PTZ
dome  and  fixed-mount  cameras)  with  SentryVision  .   The flexibility of the
system  allows  the customer to specify target-coverage areas ranging from stock
rooms  to  total  store  coverage  and  focus  on shoplifting, employee theft or
performance  evaluation  of client personnel. Typically, SentryVision   has been
installed  near  the  ceiling between the rows of cash registers and the ends of
the merchandise aisles. This allows the retailer to easily observe both the cash
handling  activities  of  cashiers  in the checkout area and customer activities
between  the  merchandise  rows, despite the presence of hanging signs and other
obstructions. The entire sales floor can be monitored efficiently by focusing up
and down the aisles and by moving the carriage horizontally from aisle to aisle,
or from cash register to cash register. In addition, with the use of camera pan,
tilt and zoom lens features, activities in each area can be monitored in greater
detail.  Results  from  Video's  current  installations  indicate  significant
improvements  in  detecting  shoplifting  and  employee  theft.

More  recently,  retailers  have  integrated  SentryVision   with  "front  end"
packages of conventional CCTV cameras, dedicated to monitoring the registers and
allowing  users  to locate the traveling camera track where the maximum coverage
of  in-store  traffic  can  be  monitored.  The  SentryVision   system  is today
generally  sold  in  conjunction  with conventional CCTV applications. Customers
using  the  SentryVision   system  have  reported  significant  reductions  in
theft-related  inventory  shrinkage.

RETAIL  MARKET  APPLICATIONS
----------------------------
- Home Centers. Video has installed 839 systems in more than 340 store locations
for  8 customers in the home center segment of the retail market. Typical of our
customers  in  this market are Lowe's Home Centers, with more than 850 stores in
45  states, and Mills Fleet Farm, a  24 store regional hardware, home supply and
discount retail chain. Both companies required systems for total floor coverage.
We  applied different solutions to this common problem in each case. Lowe's Home
Centers  chose to integrate track cameras with PTZ dome and fixed-mount cameras,
while  Mills  Fleet  Farm  chose  to  use  only  the  track  camera  system.

- Mass Merchandise Chains. Video has installed 101 systems for customers in this
segment, including Sears, Navy Exchange and Target Stores. The targeted coverage
varies  extensively  in these installations from only stock rooms to total store
coverage.  The  equipment  package  provided  in  each  case  varies  with  the
application  and  location  of  the  need.

-  Supermarkets.  Video  has  installed  34  systems in 32 store locations for 7
supermarket  customers. The targeted coverage in most of these installations has
been  the  entire  retail space. Supermarket chains using SentryVision   include
Kroger,  Marsh,  Cub  Foods,  Winn-Dixie  and  Fiesta  Mart.

INDUSTRIAL  MARKET  APPLICATIONS
--------------------------------
-  Distribution  Centers.  Video  also provides loss prevention surveillance for
distribution  centers  and  warehouses,  and  has  installed  101  systems  in
distribution  centers  for  41  different  retailers including Kohl's Department
Stores,  Target  Stores, Borders Group, Disney Direct Marketing, Barnes & Noble,
Robinsons-May,  Ross,  Saks,  Guess, Tower Records, Big Dog, Food Lion, the Gap,
Bealls  and J.C. Penney. Traveling through a facility from an overhead position,
the  SentryVision   system  can monitor activities occurring between the stacked
rows  of  cartons  or  lines  of  hanging  garments.  The system can also move a
surveillance  camera  into  position to monitor shipping and receiving docks and
parked delivery trucks. To achieve surveillance capabilities equivalent to those
of the SentryVision   system, a conventional PTZ dome system or fixed-mount CCTV
camera  would  have  to  be  installed at every desired vantage point, requiring
numerous cameras, additional equipment and wiring and increased installation and
operating  costs.

- Manufacturing  and Transportation  Facilities.  So  far  SentryVision  use  in
factories  has  been  limited,  but  the  benefits  of  continuous  tracking  of
industrial  operations and processes indicate future growth potential. Continued
expansion  of  the SentryVision dealer program is expected to generate increased
installations in factories manufacturing electronics, pharmaceuticals, computers
and  other  high  value  products  and  in  various  wholesale  distribution and
transportation  facilities.  Express  package  and  other  high  throughput
distribution  facilities  are also good prospects for a continuous tracking CCTV
system  for  theft  prevention.  Installations include Symbol Technologies, AT&T
Wireless,  Federal  Express,  UPS, Wyeth-Ayerst Labs, USF Logistics and Thompson
Electronics.

-  Internet  Data Centers. Video markets SentryVision   systems to internet data
centers  (IDC's).  Most  IDC's are full service business internet providers with
state-of-the-art  systems  that  host,  monitor  and  maintain  mission-critical
web-sites,  e-commerce  platforms  and business applications for small to medium
sized  businesses.  SentryVision   systems are used to heighten security through
remote  video monitoring. Installations include FirstWorld Communications, Inc.,
Savvis  and  The  Discovery  Channel.

INSTITUTIONAL  MARKET  APPLICATIONS
-----------------------------------
-  Parking,  Corrections,  and  Government  Institutions.  We have installed 108
systems  in three parking garages at Duke University's Medical Center with major
benefits  identified  as  savings  in  guard costs, vandalism, safety and theft.
SentryVision   has been installed in correctional facilities in Texas, Michigan,
New Mexico and Illinois, with reported safety benefits of continuous coverage in
dormitory,  recreation  and  visitation areas. SentryVision   installations have
also been completed in various government agencies including the Federal Reserve
Bank,  U.S.  Postal  Service  and  U.S.  Immigration  Service.


CONVENTIONAL  CCTV  SYSTEMS

Conventional  CCTV is cost effective in many applications and is the most widely
used  loss  prevention  system  in North America. Conventional CCTV uses all the
basic  components  of  the  video surveillance industry including fixed and dome
cameras,  VCR's,  monitors,  switchers,  multiplexers and controllers. As all of
this  equipment is manufactured for Video by outside vendors, we can provide our
customers with state-of-the-art equipment for specific applications at favorable
costs.  We  believe  that,  while  less  profitable  than  SentryVision   and
traditional  EAS  products,  the CCTV products complement our other surveillance
systems and provide retailers with further protection against internal theft and
external  shoplifting  activities.  CCTV  systems  can  also  be  electronically
connected  to  EAS  systems, causing a video record to be generated when a theft
alarm  is  triggered.

While  we  believe  that  conventional CCTV and SentryVision   are complementary
security  solutions,  many companies have traditionally viewed them as competing
solutions  and  have selected between conventional CCTV systems and SentryVision
systems  for  their  security  solutions.

Remote video transmission and digital recording are other potential growth areas
for  Video. These systems allow customers to monitor remote sites using existing
communication  lines  and  a PC-based system. Video camera images are stored and
manipulated  digitally,  substituting  the  PC  for the VCR and multiplexer, and
eliminating  the  videotape.  Video markets digital video recording and a remote
video  transmission  unit developed by third-party vendors including Kalatel and
Integral.

We  continue  to  expand  conventional  CCTV  installations  in  industrial  and
institutional  facilities.  Significant installations have been made for express
package  companies,  including Federal Express, United Parcel Service, Emery Air
Freight  and  Airborne  Express.  The use of CCTV surveillance also continues to
grow  in  both  new and existing correctional facilities and Sentry now has CCTV
installations  in  both  state  and  county  facilities.

In  2002,  we  continued  marketing  CCTV  to  the  school  market.  Successful
installations  were  completed  with  reported  benefits  including  decreased
vandalism  and  improved  safety.  In schools, conventional CCTV is an extremely
cost  effective  security  option  with  Digital  Recording  and  Remote  Video
Transmission  becoming  attractive  options  for  large  school  districts.

Our  largest  single  school  CCTV  installation was at the Norristown (PA) High
School  with 111 cameras, using digital recording and fiber optic cabling. It is
an  advanced  cost  effective  system  with  video  from  all  cameras instantly
accessible  on  their  network.


EAS  SYSTEMS

EAS  systems  consist  of detection devices which are triggered when articles or
persons  tagged  with reusable tags or disposable labels, (referred to as tags),
pass through the detection device. The EAS systems which Sentry manufactures are
based upon three distinct technologies. One, the Radio Frequency ("Knoscape RF")
System,  uses  medium radio frequency transmissions in the two to nine megahertz
range.  Second,  the "Ranger " system uses ultra-high frequency radio signals in
the  902 megahertz and 928 megahertz bands. Third, the Magnetic ("Knoscape MM ")
system uses very low frequency electromagnetic signals in the range of 218 hertz
to  nine kilohertz. Since 1996, Sentry has been an authorized distributor of the
library  security  systems  and  related  products  of  Minnesota  Mining  and
Manufacturing  Company  ("3M").  We cancelled our distribution agreement with 3M
effective  December  31,  2002.

The  principal  application  of  Sentry's  products  is  to  detect  and  deter
shoplifting  and  employee theft in supermarket, department, discount, specialty
and  various  other  types of retail stores including bookstores, video, liquor,
drug,  shoe,  sporting goods and other stores. The use of these products reduces
inventory  shrinkage  by  deterring  shoplifting,  increases  sales potential by
permitting  the  more open display of greater quantities of merchandise, reduces
surveillance  responsibilities  of  sales  and  other  store personnel and, as a
result,  increases  profitability  for  the  retailer. In addition, Sentry's EAS
systems  are  used  in  non-retail  establishments to detect and deter theft, in
office  buildings  to  control the loss of office equipment and other assets, in
nursing  homes  and  hospitals  for  both asset and patient protection, and in a
variety  of  other  applications.

The U.S. market for retail EAS systems and tags is estimated by industry sources
at  $570  million  and  is  growing  at an estimated rate of 8 percent per year.

At  December  31,  2002, the approximate number of EAS Systems sold or leased by
Sentry  and  its  predecessors  exceeded  25,500.

RADIO  FREQUENCY  AND  RANGER  DETECTION  SYSTEMS

Sentry  manufactures  and  distributes  the  Knoscape  RF  system, the principal
application  of  which  is to detect and deter shoplifting and employee theft of
clothing  and  hard goods in retail establishments. Sentry also manufactures and
distributes  the  Ranger  system,  which  the Company believes is a particularly
useful  and  cost  efficient EAS system for high fashion retail stores with wide
mall-type exit areas which ordinarily would require multiple Knoscape RF systems
for  adequate  protection.  The  Knoscape RF and Ranger systems consist of radio
signal  transmission  and  monitoring  equipment installed at exits of protected
areas, such as doorways, elevator entrances and escalator ramps. The devices are
generally  located  in  panels or pedestals anchored to the floor for a vertical
arrangement  or  mounted  in  or  suspended  from the ceiling (Silver Cloud) and
mounted  in or on the floor in a horizontal arrangement. The panels or pedestals
are  designed to harmonize with the decor of the store. The monitoring equipment
is  activated  by tags, containing electronic circuitry, attached to merchandise
transported through the monitored zone. The circuitry in the tag interferes with
the  radio signals transmitted through the monitoring system, thereby triggering
alarms,  flashing lights or indicators at a central control point, or triggering
the  transmission  of an alarm directly to the security authorities. By means of
multiple  installations of horizontal Knoscape RF systems or installation of one
or  more  Ranger systems, the Company's products have the ability to protect any
size  entrance  or  exit.

Non-deactivatable reusable tags are manufactured in a variety of sizes and types
and  are attached directly to the articles to be protected by means of specially
designed  fastener  assemblies.  A  reusable  tag  is removed from the protected
article,  usually by a clerk at the checkout desk, by use of a decoupling device
specially  designed  to facilitate the removal of the fastener assemblies with a
minimum  of effort. Removal of the tag without a decoupler is very difficult and
unauthorized  removal  will  usually  damage  the  protected article and thereby
reduce  its  value  to  a  shoplifter.  Optional reminder stations automatically
remind  the  store  clerk, by means of audiovisual indicators, to remove the tag
when  the  article  is  placed  on  the  cashier's  desk.

Disposable  labels can be applied to products either by placing them directly on
the  outside  packaging  of  the  item  or  hidden  within  the  product  by the
manufacturer. These labels can be deactivated, at the checkout desk, through the
use  of  a  deactivation  device.

Knoscape  RF  and  Ranger  systems generally have an economic useful life of six
years (although many of Knogo's systems have been operating for longer periods),
have  a  negligible  false  alarm rate and are adaptable to meet the diversified
article  surveillance  needs  of  individual  retailers.

MAGNETIC  DETECTION  SYSTEMS

The  primary  application of Knoscape MM systems is to detect and deter theft in
"hard  goods"  applications  such  as  supermarkets,  bookstores  and  in  other
specialty  stores  such as video, drug, liquor, shoe, record and sporting goods.

Knoscape  MM  systems  use  detection  monitors  which  are  activated  by
electromagnetically  sensitized strips. The MM targets are typically attached to
the  articles  to  be  protected  and  are easily camouflaged on a wide array of
products.  The  detection monitors used by the Knoscape MM systems are installed
at  three  to  five foot intervals at the exits of protected areas. The magnetic
targets  can  be supplied in many forms and are attractively priced, making them
suitable  for  a variety of retail applications. In addition, the MM targets can
be manufactured to be activated and deactivated repeatedly while attached to the
articles  to be protected. Accurate deactivation is also very important when the
item  to  be protected is a personal accessory that will be carried by its owner
from  place  to  place, such as pocket books, pens, lipstick, shoes, camera film
and  cameras.

The  Knoscape  MM  system  offers  retailers  several  features not available in
Knoscape  RF  and  Ranger  systems.  Since  the target is very small, relatively
inexpensive  and  may  be  inserted at the point of manufacture or packaging, it
provides  retailers  with  a  great  deal  of  flexibility  and is practical for
permanent  attachment  to  a  wide  variety  of  hard  goods,  especially  low
profit-margin  products.  The  target  can  be  automatically  deactivated  at
check-out, eliminating the risk of triggering alarms when merchandise leaves the
store  and  saving  sales  personnel  valuable  time.  Since  the targets can be
incorporated  directly  into  a  price  tag  or  the  article  itself,  they are
convenient  to  use.


BOOKINGS

Of  Sentry's  bookings  for  the  year ended December 31, 2002, approximately 32
percent  were  attributable  to SentryVision , 45 percent to CCTV, 20 percent to
EAS  and  3 percent to 3M library security systems. Of Sentry's bookings for the
year  ended  December  31,  2001,  approximately 23 percent were attributable to
SentryVision , 40 percent to CCTV, 31 percent to EAS and 6 percent to 3M library
security systems. For the year ended December 31, 2000, approximately 17 percent
were attributable to SentryVision , 39 percent to CCTV, 39 percent to EAS, and 5
percent  to  3M  library  security  systems.


MAJOR  CUSTOMERS

Although the composition of our largest customers has changed from year to year,
a  significant portion of our revenues has been attributable to a limited number
of  major  customers.  In 2002, 2001 and 2000, Lowe's Home Centers accounted for
40%,  22%  and  14%, respectively, of total revenues. In  2001 and 2000, Goody's
Family  Clothing  accounted  for  11%  and 15%, respectively, of total revenues.
While  we  believe  that  one  or  more  major  customers  could  account  for a
significant  portion of our sales for at least the next two years, we anticipate
that our customer base will continue to expand and that in the future we will be
less  dependent  on  major  customers.


PRODUCTION

SENTRYVISION  AND  CCTV  PRODUCTS
---------------------------------

Sentry's  manufacturing  operations  consist  primarily  of  the assembly of its
camera  carriages  and control units using materials and manufactured components
purchased  from  third  parties.  Sentry  is  not  dependent upon any particular
supplier  for  these  materials  or  components.  Some  parts  are  stock,
"off-the-shelf"  components,  and  other  materials  and  system  components are
designed  by  Sentry and manufactured to Sentry's specifications. Final assembly
operations  are  conducted  at  the Company's facilities in Hauppauge, New York.
System components and parts include cameras, circuit boards, electric motors and
a  variety  of  machined  parts.  Each  system  component  and finished assembly
undergoes  a  quality  assurance  check  by  Sentry  prior to its shipment to an
installation site. All SmartTrack electronic circuit board enclosures are tested
and  burned in for 72 hours. Upon completion, the finished product is tested and
run  for  an additional 24 hours resulting in approximately 3,000 travel and PTZ
cycles  prior  to quality assurance sign off. Sentry is not subject to any state
or  federal  environmental  laws,  regulations  or obligations to obtain related
licenses  or  permits  in  connection  with  its  manufacturing  and  assembly
operations.

EAS  PRODUCTS
-------------

Sentry  produces  at our facilities in Hauppauge, New York, or purchases through
suppliers, its Knoscape RF, Ranger, Knoscape MM and KnoGlo, or their components.
Production  consists  of  final  assembly  operations  of  printed  circuitry,
electronic  and  mechanical  components  that  Sentry  purchases  from  various
suppliers.  Independent  contractors  using  existing  molds and tooling produce
plastic cases and antenna coils for the tags to Sentry's specifications. Through
product  redesign  efforts,  final  assembly  machines  were  modified to reduce
production  complexities.  As  a  result, increased production run rates of this
product  have  been  realized,  simultaneously increasing production quality and
reducing  manpower.  Sentry  is  not  dependent  on any one supplier or group of
suppliers of components for its systems. Our policy is to maintain our inventory
at  a  level that is sufficient to meet projected demand for its products. We do
not  anticipate any difficulties in continuing to obtain suitable components for
EAS  products at competitive prices in sufficient quantities as and when needed.


MARKETING

In 2002, we marketed our products through the direct efforts of approximately 13
salespersons  located  in select metropolitan areas across the United States and
Canada, as well as through dealers/system integrators. Marketing efforts include
participation  in  trade  shows,  targeted direct mailings and telemarketing. In
addition,  the  effort  is augmented through our Website which provides enhanced
product and market oriented information. Internationally, we market SentryVision
through  large  system  integrators  and  distributors  including Ultrak, Chubb,
Cegelec,  Intrepid  and  BSC.  As  part  of  the 2003 restructuring plan we have
reduced  the  number  of  direct  salespersons  to  four,  whose efforts are now
supplemented  through  six  in-house  sales  support staff and independent sales
representatives.



SENTRYVISION  AND  CCTV  PRODUCTS
---------------------------------

To  date,  most SentryVision   and conventional CCTV Systems have been sold on a
direct  sale  basis.  Typical  billing  arrangements  for SentryVision   systems
involve  invoicing 50% of total sale upon shipment of the product and 50% on the
completion  of  the  installation.

While  most  of the current SentryVision   and conventional CCTV sales have been
made to home centers, retail chains and distribution centers, our marketing plan
for  Video  also  emphasized  a dealer program for institutional, industrial and
international  prospects.

Beginning  in  mid-1998,  we  began  a  program to market SentryVision   through
qualified  security  dealers  and  integrators.  Much  of  the  industrial  and
institutional  SentryVision   /CCTV  prospects  are  serviced  by local security
companies  who  design  and  install  integrated  CCTV, access control and alarm
systems.  By  working  with  these  companies, we are able to reach a far larger
number  of  SentryVision   prospects  and penetrate the market more rapidly. The
program  has generated interest through trade advertising, direct mail and trade
show  participation.  Domestic dealers did not generate significant SentryVision
installations  in  industrial  and institutional facilities in 2002. Prior sales
were  made  through  ADT,  STG,  Siemans,  Mosler  and  Security  Link.

In  addition,  we  market  SentryVision   internationally  using  independent
distributors.  The  agreements  require  the  distributor  to purchase a minimum
dollar  amount  of  the  Company's  product  during the term of the agreement to
retain  distributor  status. We sell our products to independent distributors at
prices  below  those  charged  to  end-users because distributors typically make
volume  purchases  and  assume  marketing,  customer  training,  installation,
servicing  and  financing  responsibilities.  As  of  December 31, 2002, we have
distributors  in Canada, UK, France, Mexico, Belgium, Holland, Italy, Singapore,
Brazil,  Argentina,  Hungary  and  Romania.

During  2002,  Video placed in service 186 SentryVision   systems and 4,449 CCTV
cameras, as compared to 97 SentryVision   systems and 4,257 CCTV cameras in 2001
and  84  SentryVision   systems  and  3,424  CCTV  cameras  in  2000.

EAS  PRODUCTS
-------------

Sentry  EAS  systems  are  marketed on both a direct sales and lease basis, with
direct  sales  representing  the  majority  of  the  business.  The terms of the
standard leases are generally from one to five years. The sales prices and lease
rates  vary  based upon the type of system purchased or leased, number and types
of  targets included, the sophistication of the system employed and, in the case
of  a lease, its term. In the case of the Knoscape MM systems, detection targets
which  are  permanently  attached  to  the  item to be protected are sold to the
customer even when the system is leased. Therefore, in the case of either a sale
or  lease  of  a  Knoscape MM system, as the customer replenishes its inventory,
additional  targets  will  be  required for those items to be protected. We also
market  a  more  expensive,  removable,  reusable detection tag for use with the
Knoscape  MM  systems on certain products such as clothing and other soft goods.

During each of the years ended December 31, 2002, 2001 and 2000 Sentry placed in
service  590,  675  and  347, respectively, Knoscape RF, Ranger, and Knoscape MM
systems.

RF and Ranger systems continue to be used by apparel and department stores which
have  wide  exit  areas and a desire for deterrence based on reusable hard tags.
Both  the  Silver  Cloud  and Knoscape RF systems are universal in that they can
detect both 2 MHz hard tags and 8 MHz labels.  Knogo also markets an 8MHz P-2000
RF  system  designed for both hard and soft good customers. The P-2000 system is
economical  and  self-installable  by  the  customer.

Supermarkets,  bookstores,  video  stores  and  specialty  stores  remain  good
prospects  for  MM  systems due to the small size and low cost of Micro-Magnetic
strips.  Since  2000,  Knoscape  MM Systems feature updated digital electronics.
Knoscape  MM Systems detect virtually all manufacturers' magnetic strips and can
universally  replace  older  magnetic  strip systems manufactured by various EAS
vendors.

The library market continues to be a substantial market for magnetic technology.
In  March  1996,  3M  and  Sentry  entered  into a strategic alliance to provide
universal  asset  protection  to  libraries across North America.  The agreement
permitted  Sentry  to  act  as  a  distributor  of all of 3M's library products,
including  the  3M  Tattle-Tape Security Strips, detection systems, 3M SelfCheck
System  hardware  and  software  and  other 3M library materials flow management
products  and  accessories  to public, academic and government libraries.  Under
the  agreement,  3M  provided  service and installation for all new and existing
Sentry  library  customers  throughout  North  America.  In  exchange  for these
agreements,  we  agreed  not  to compete against 3M for sales and service of EAS
Systems  in  the  library  market  until  March  2004.

Sales  of 3M library products declined in 2002 and 2001 due to 3M's direct sales
practices  in  competition  with  Sentry  making  it  uneconomical to sell these
products.  As  a result, we have discontinued our distribution agreement with 3M
effective  December  31,  2002.


DIALOC  ID  SECURITY  PRODUCTS

In  February  2001,  we  introduced  a new EAS system manufactured by Dialoc ID,
which is housed in slender, self-contained Plexiglas panels. The new 9000 PL 8.2
MHz  system  provides retailers with clear lines of sight at the front end along
with  the  durability  of solid Plexiglas. The panels can be custom printed with
the  retailer's  logo  for enhanced image and trade name awareness. The system's
electronics,  which  are  built-in to the base of the Plexiglas antenna, provide
detection  of  8.2  MHz  labels and hard tags in aisles up to six feet wide. The
9000  PL  system  is offered in both single and dual aisle configurations and is
compatible  with  all  existing  8.2  MHz  tags  and  checkout  accessories. The
Plexiglas  RF  system  is the first in a series of new products being brought to
market  by  the  Company as a result of a distribution agreement with Dialoc ID.
In  addition, through Sentry, Dialoc ID will introduce LaserFuse, a new RF label
technology,  which is compatible with, and an alternative to, the labels offered
by  Checkpoint Systems, Inc. In the future, we will also sell Dialoc ID products
in  the  proximity  access  control  and  RFID  markets.


BACKLOG

Our  backlog  of  orders was approximately $5.2 million at December 31, 2002, as
compared  to  approximately  $6.0 million at December 31, 2001 and approximately
$5.8  million at December 31, 2000.  We anticipate that substantially all of the
backlog  present  as  of  December  31, 2002 will be delivered within 12 months.


SEASONAL  ASPECTS  OF  THE  BUSINESS

Our current customers are primarily dependent on retail sales which are seasonal
and  subject  to  significant  fluctuations  which  are  difficult  to  predict.


SERVICE

Installation  services  are performed by our personnel and by carefully screened
and  supervised  subcontractors  as well as authorized dealers and distributors.
Repair  and  maintenance  services  are  performed  primarily  by  the Company's
personnel.  All  products  sold  or  leased  are  covered  by a warranty period,
generally,  one  year.  After  the  warranty  period, we offer our customers the
option  of  entering  into a maintenance contract with the Company or paying for
service  on  a  per  call  basis.

Installations  of  SentryVision   systems  typically  take  from  three  days to
several  weeks  and  involve  mounting the enclosures, installing the controller
unit,  installing the carriage assembly, and connecting control and transmission
cables  to  the  central  monitoring  location. Items such as high voltage power
termination  wiring  are  typically  the  responsibility  of  the  end  user.

Throughout  1999,  a  great  deal  of our efforts were directed at servicing the
existing  SentryVision   systems,  as  reliability  problems were not completely
resolved.  Our  engineering  efforts  were  directed  at  resolving  electronic
problems,  which  resulted  in  numerous  service  calls and in the re-design of
printed  circuit  boards  to  upgrade  them  and  increase their performance and
reliability. These issues were substantially resolved in the first half of 1999.
Mechanical  reliability  issues then became our focus in the latter half of 1999
as  system problems continued. These issues appear to have been largely resolved
with  the  development  and  introduction in 1999 of new drive and idler wheels,
brush  block  assemblies  and  wire  harnesses.

The  use of subcontractors supervised by Company employees proved cost effective
with  no  sacrifice  in  quality.  A  network  of  qualified  contractors  was
established.  In  the second half of 1999, we released 34 installation employees
and  retained only our most technically skilled employees. We intend to continue
to  focus  on EAS, SentryVision   and CCTV technical service and maintenance and
continue  to  expand  our  contractor  network  for  installation  work.

This  strategy  has resulted in significant cost savings. In addition, we retain
our reputation of technical expertise within the industry and management efforts
can be focused on increased electronics training for our employees, distributors
and  sub-contractors.

Since  2000,  we  have added Service Partners and installation contractors in 25
key  market areas. In total, we have more than 86 trained service technicians in
the  field  to  augment  service  provided  by  Company employees. Many of these
partners are factory trained and have contractual commitments to provide prompt,
quality  service  at  our  direction. The field service management structure was
also  modified  so  that  two  of  our  most  experienced  managers  will  focus
exclusively  on  quality  control  with  our  service  partners.

In  addition,  our  Call  Center was reorganized and a new supervisor appointed.
Technical  support functions were transferred to our Design Center personnel and
all service requests are now screened extensively via telephone. Initial results
have been highly successful in lowering the number of on-site visits required to
resolve  service  issues.

In  2001, we focused on improving the quality of our service delivery system and
we  were  successful.  Telephone surveys were conducted after installations were
completed  and we achieved a 96% approval rating. Our employees remained focused
on  technical  service  and  maintenance.

Technician  headcount  was  reduced  to 29 at the end of 2002 as we continued to
develop expertise among our service and installation partner companies.  Company
employees  now  perform  only technical service and our well-established partner
network performs all installations.  The model remains cost-effective and allows
us  to  scale  our efforts up or down as business requires without the risk of a
fixed  cost  structure.

Our  Design  Center  personnel continued to screen all service requests and were
able  to  close  almost  500  calls  over the telephone, avoiding costly service
calls.  In  addition,  careful screening allowed us to ship replacement parts in
advance  of the technician's arrival increasing our ability to complete calls in
a  single  visit.

Customer  service  is a priority and we are focused on continued improvements in
2003.  We  anticipate  that  increased  installation  and  service  work  can be
supported  by  the  existing  headcount  and  infrastructure.


COMPETITION

We  operate  in  a  highly competitive market with many companies engaged in the
business of furnishing security services designed to protect against shoplifting
and  theft.  In addition to EAS systems using the concept of tagged merchandise,
such  services  use,  among  other things, conventional PTZ dome and fixed mount
CCTV  systems,  traveling  CCTV systems, mirrors, guards, private detectives and
combinations of the foregoing. We compete principally on the basis of the nature
and  quality of its products and services and the adaptability of these products
to  meet  specific  customer  needs  and  price  requirements.

To  our  knowledge,  there  are several other companies that market, directly or
through  distributors,  conventional  closed  circuit  video  systems and/or EAS
equipment  to  retail  stores,  of  which  Sensormatic  (acquired  by Tyco/ADT),
Checkpoint  Systems,  Inc., Philips, Inc., Pelco Manufacturing, Inc., Panasonic,
Inc.,  and  Ultrak,  Inc.  (recently  purchased  by Honeywell) are the Company's
principal  competitors.  ADT has also begun marketing a traveling CCTV system in
the  U.S.  Outside  the  U.S., we are aware of other companies that market other
types  of  traveling  CCTV  systems  including  Lextar  Technologies,  Ltd.  in
Australia, T.E.B., Sensormatic and DETI in France and Moving Cameras Ltd. in the
UK.  Some  of  our  competitors  have  far  greater  financial  resources,  more
experienced  marketing  organizations and a greater number of employees than the
Company.

In  connection  with  the  merger  of  Knogo's  international  EAS business with
Sensormatic in December 1994, Knogo agreed with Sensormatic that Knogo would not
compete  with Sensormatic in selling EAS and conventional CCTV products in areas
outside  of  the United States, Canada and Puerto Rico through the period ending
December 29, 1999. Since then, Sentry has promoted selected EAS systems and tags
through  a  distribution network outside of North America although Sentry is not
permitted  to  use  the  Knogo  name  outside  of  the United States and Canada.


PATENTS  AND  OTHER  INTELLECTUAL  PROPERTY

Although  patent  protection  is  advantageous to Sentry, we do not consider any
single patent or patent license we own or hold to be material to our operations.
We  believe  that  our  competitive  position  ultimately  will  depend  on  our
experience,  know-how  and  proprietary data, engineering, marketing and service
capabilities  and  business  reputation,  all  of which are outside the scope of
patent  protection.

SENTRYVISION
------------

Sentry  has  a  United  States  patent covering the cable-free transmission of a
video  signal  to and from the carriage. This technology prevents degradation of
the  video  signal  which can result from the movement of and prolonged friction
caused  by  the  carriage.  Three  additional  U.S.  patents  were received  for
improvements  made  to  the original technology which has been incorporated into
the SmartTrack product. Sentry also has received a corresponding European patent
and  eleven  foreign  country  patents.  We  intend to seek patent protection on
specific aspects of the SentryVision   system, as well as for certain aspects of
new  systems  which  may be developed for Sentry. There can be no assurance that
any  patents  applied for will be issued, or that the patents currently held, or
new  patents,  if  issued,  will  be  valid  if  contested  or  will provide any
significant  competitive  advantage  to  Sentry.

We are not aware of any infringement of patents or intellectual property held by
third  parties. However, if Sentry is determined to have infringed on the rights
of  others,  Sentry  may be required to obtain licenses from such other parties.
There  can  be  no  assurance  that the persons or organizations holding desired
technology  would grant licenses at all or, if licenses were available, that the
terms of such licenses would be acceptable to the Company. In addition, we could
be  required  to  expend  significant  resources  to  develop  non-infringing
technology.

Sentry  has  also  relied  on the registration of trademarks and trade names, as
well  as on trade secret laws and confidentiality agreements with its employees.
While  we  intend to continue to seek to protect Sentry's proprietary technology
and  developments through patents, trademark registration, trade secret laws and
confidentiality  agreements,  we do not rely on such protection to establish and
maintain  Sentry's  position  in  the  marketplace.  Management  believes  that
improvement  of  Sentry's  existing products, reliance upon trade secrets and on
unpatented  proprietary know-how, and the development of new products will be as
important  as  patent  protection  in establishing and maintaining a competitive
advantage.

EAS  PRODUCTS
-------------

Sentry  has  26  United  States and Canadian patents and one patent applications
relating  to  (i)  the  method  and  apparatus  for the detection of movement of
articles  and persons and accessory equipment employed by Sentry in its Knoscape
RF,  Ranger  and Knoscape MM systems, (ii) various specific improvements used in
the  Knoscape  RF,  Ranger  and Knoscape MM systems and (iii) various electrical
theft detection methods, apparatus and improvements not presently used in any of
Sentry's  EAS  systems.

Sensormatic  and  Knogo  license  certain  patent  rights and technology to each
other,  for  use  in  their  respective  territories,  pursuant  to  the License
Agreement  dated  December  29,  1994,  entered into in connection with the 1994
Sensormatic  transaction.


RESEARCH  AND  DEVELOPMENT

As of December 31, 2002, Sentry Technology Corporation had 9 full time employees
engaged  in  research,  engineering  and  product development.  In addition, the
Company  may retain consultants to assist in specific areas related to research,
engineering  and  product  development.  For  the years ended December 31, 2002,
2001  and  2000,  approximately  $0.5  million,  $0.7  million and $0.9 million,
respectively,  was  expended  on  Company-sponsored  research.

As  a  direct  result  of  prior  efforts  to  improve product reliability, most
engineering  tasks  in  2002 focused on adding features to the SmartTrack System
and  towards reducing the cost of manufactured products.  Enhancements were made
to  the  electro-mechanical,  electronic,  software, and optical portions of the
SmartTrack  System.

Mechanical  reliability  and  extended  service  life  was  accomplished through
various improvements in material and the application of new assembly techniques.

Electronics  controlling  video  modulation  were  improved resulting in sharper
images.  Improved circuit design also contributed to greater system reliability.

Extensive  development  in  software  during  2002  resulted  in  improved  user
interfaces,  additional support for industry protocols, and allowed the use of a
wider  range  of  camera  options.

Improved  optics  through  the  use  of  higher-grade  plastic  enclosures  have
eliminated  image  distortion  and  reduced  the  cost  of  the  system.

Additional  projects  included  revisions  to  EAS  products.

RF  systems have been enhanced through improvements in the electronics resulting
in shorter installation times and greater system stability.  Introducing acrylic
antenna panels for a more modern look enhanced visual aesthetics of the Knoscape
RF  product.

The  Ranger  system  has  been  upgraded  to  use  recently available integrated
circuits  resulting  in  greater  system  stability.


REGULATION

Because Sentry's EAS and CCTV systems use radio transmission and electromagnetic
wave  principles,  such  systems  are  subject  to  regulation  by  the  Federal
Communications Commission ("FCC") under the Communications Act of 1934. In those
instances  where it has been required, certification of such products by the FCC
has  been  obtained.  As  new products are developed by the Company, application
will  be  made  to  the  FCC  for  certification  or licensing when required. No
assurance  can be given that such certification or licensing will be obtained or
that  current rules and regulations of the FCC will not be changed in an adverse
manner.

Sentry's  business  plan  calls  for  the  sale  and use of Sentry's products in
domestic  markets  and,  where  consistent  with  contractual  obligations,  in
international  markets.  Sentry's  products  may  be  subject  to  regulation by
governmental  authorities  in  various  countries  having  jurisdiction  over
electronic  and  communication use. Sentry intends to apply for certification of
its  products  to  comply  with  the  requirements  under the regulations of the
countries  in  which  it plans to market its products. No assurance can be given
that  such  certification will be obtained or that current rules and regulations
in  such  countries  will  not  be  changed  in  a  manner  adverse  to  Sentry.

We  believe  we  are in material compliance with applicable United States, state
and  local  laws  and regulations relating to the protection of the environment.

Industry  Canada,  the  department  of  the  Canadian  federal  government  that
regulates  and  licenses  the radio frequency spectrum in Canada, has brought to
our  attention  that  several  hundred of the units of the earlier generation of
Ranger  1  and 2 EAS devices sold by our Knogo subsidiary to retailers in Canada
do  not  comply  with  the relevant Industry Canada technical standards, and may
cause  interference  to  other  users of the radio spectrum. Industry Canada has
written  to  the  customers  concerned  to apprise them of the situation, and to
demand  that  the  non-compliant  devices  be removed or replaced with compliant
ones.  The  Company  worked  with  Industry  Canada  officials and the retailers
concerned to put in place a replacement program and a schedule that will satisfy
both  the  retailers  and  Industry  Canada.  All  identified  retailers  have
subsequently upgraded to compliant EAS devices. Under the Radiocommunication Act
(Canada)  (the "Act") which it administers, Industry Canada has extensive powers
to,  among other measures, confiscate radio equipment that is non-compliant, and
to  initiate prosecutions for alleged violations of the regulatory provisions in
the  Act.  However,  Industry  Canada's  normal  practice is to use co-operative
approaches to problems of technical non-compliance or radio interference, and to
work  with  the  parties  concerned to resolve such problems within a reasonable
time  frame. As a result of our continuing efforts in co-operating with Industry
Canada,  we  believe  that  all  remaining issues relating to the Ranger 1 and 2
problems  have  been  resolved.


EMPLOYEES

At  December  31,  2002, the Company and its subsidiaries employed 117 full-time
employees, of whom 19 were employed in administrative and clerical capacities, 6
in  engineering, research and development, 26 in production, 20 in marketing and
sales and 46 in customer service and support. None of our employees are employed
pursuant  to  collective  bargaining  agreements.  As  part of our restructuring
plan,  our  headcount  was  reduced  by  approximately  50%  on  March  7, 2003.


PROPERTIES

The  Company's  principal  executive,  sales and administrative offices, and its
production,  research and development and distribution facilities are located in
Hauppauge,  New  York,  in  a 68,000 square foot facility leased by the Company.


LEGAL  PROCEEDINGS

Although  we  are  involved  in  ordinary,  routine litigation incidental to our
business,  we  are  not  presently  a  party  to any other legal proceeding, the
adverse  determination  of which, either individually or in the aggregate, would
be  expected  to  have  a  material  adverse affect on the Company's business or
financial  condition.


SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

During  the fiscal year ended December 31, 2002, there were no matters submitted
to  a vote of the Company's security holders through the solicitation of proxies
or  otherwise.


<PAGE>

                                     PART II
                                     -------

Item  5.     Market  for  the  Company's  Common  Equity and Related Stockholder
-------      -------------------------------------------------------------------
Matters.
-------

     (a)     Price  Range  of  Common  Stock.

     The  following  table  sets forth, for the periods indicated, the high, low
and  closing  sales  prices  per  share  of  common  stock  as  reported  on the
over-the-counter  bulletin  board.

                                     Stock Prices
                                     ------------
                             High             Low             Close
                             ----             ---             -----
    2001
First  Quarter           $   0.093       $   0.040         $  0.045
Second Quarter               0.210           0.045            0.125
Third  Quarter               0.200           0.080            0.110
Fourth Quarter               0.255           0.100            0.150

    2002
First  Quarter           $   0.220       $   0.120         $  0.140
Second Quarter               0.210           0.080            0.100
Third  Quarter               0.100           0.050            0.080
Fourth Quarter               0.070           0.010            0.020

    2003
First  Quarter
(through March 28,2003)  $   0.030       $   0.010         $  0.020


The  Company's  Common Stock is quoted on the OTC Bulletin Board ("OTCBB") using
the  symbol SKVY.  The Company's Class A Preferred Stock ("SKVYP") traded on the
OTCBB  prior  to  its  redemption  effective  January  8,  2001.

     (b)     Holders  of  Common  Stock.

     The  Common  Stock began trading on the American Stock Exchange on February
13,  1997  under the symbol "SKV."  Prior to such date, no public market for the
Common  Stock  existed.  As of March 28, 2003, the Company had 82,560,347 shares
of Common Stock issued and outstanding, which were held by 293 holders of record
and  approximately 2,900 beneficial  owners.

     (c)     Dividends.

     The  payment  of future dividends will be a business decision to be made by
the  Board  of  Directors  of Sentry from time-to-time based upon the results of
operations and financial condition of Sentry and such other factors as the Board
of  Directors  considers  relevant.  Sentry has not paid, and does not presently
intend  to  pay  or  consider  the  payment of, any cash dividends on the Common
Stock.  In  addition,  covenants  in the Company's credit agreement prohibit the
Company  from  paying  cash  dividends  without  the  consent  of  the  lender.

     (d)     Redemption  of  Class  A  Preferred  Stock.

     At  a  special meeting of shareholders held on December 8, 2000, a proposal
was  adopted  to  pay  a one-time stock dividend of .075 of a share of preferred
stock  to  preferred  stockholders  on  the  effective  date  of  the  Dialoc ID
investment,  and  immediately  thereafter  each  share  of  preferred  stock was
reclassified  into  five  shares of common stock.  The Dialoc ID investment took
place  on  January 8, 2001, at which time the preferred shares were reclassified
into  28,666,660  shares  of  common  stock.

     For additional information with respect to the Class A Preferred Stock, see
Note  1  to  the  Consolidated  Financial  Statements.


Item  6.     Selected  Financial  Data
-------      -------------------------

     The  table below sets forth selected consolidated historical financial data
of the Company for the years ended December 31, 1998, 1999, 2000, 2001 and 2002.
This  consolidated  financial  data  includes  certain assets and liabilities of
Knogo,  on  a  historical  basis,  relating  to Knogo's operations in the United
States,  Canada  and  Puerto  Rico  prior  to February 12, 1997 and includes the
results  of  operations  of  Video  Sentry  after  that  date.  The  selected
consolidated  historical  financial  data should be read in conjunction with the
audited  Consolidated Financial Statements of the Company included in Item 8 and
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations"  included  in  Item  7.

<TABLE>
<CAPTION>


                                                                    (AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
<S>                                                                <C>       <C>        <C>        <C>       <C>
Years Ended December 31,. . . . . . . . . . . . . . . . . . . . .     1998       1999       2000      2001      2002
                                                                   --------  ---------  ---------  --------  --------

SELECTED STATEMENT OF OPERATIONS DATA:
Total revenues. . . . . . . . . . . . . . . . . . . . . . . . . .  $28,156   $ 22,281   $ 19,865   $17,299   $14,536
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . .   14,412     14,339     11,120     8,879     7,382
Customer service expenses . . . . . . . . . . . . . . . . . . . .    6,253      5,457      4,464     4,361     4,240
Selling, general and administrative
     expenses . . . . . . . . . . . . . . . . . . . . . . . . . .   10,118      9,169      7,576     5,773     5,227
Restructuring and impairment
    charges . . . . . . . . . . . . . . . . . . . . . . . . . . .        -      3,026      2,981         -         -
Gain on sale of assets. . . . . . . . . . . . . . . . . . . . . .        -        503          -         -         -
Loss before income taxes. . . . . . . . . . . . . . . . . . . . .   (4,483)   (11,034)    (7,821)   (2,911)   (3,356)
Loss before cumulative effect
    of change in accounting principal . . . . . . . . . . . . . .   (4,504)   (11,034)    (7,821)   (2,911)   (3,356)

Cumulative effect of change in accounting principal . . . . . . .        -          -        301         -         -
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (4,504)   (11,034)    (8,122)   (2,911)   (3,356)
Preferred stock dividends . . . . . . . . . . . . . . . . . . . .    1,263      1,326      1,337        25         -

Return to common shareholders from redemption of preferred stock.        -          -          -    27,198         -
Net income (loss) available to
   common shareholders. . . . . . . . . . . . . . . . . . . . . .   (5,767)   (12,360)    (9,459)   24,262    (3,356)
Net income (loss) per common share:
   Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (0.59)     (1.27)     (0.97)     0.40     (0.05)
   Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . .    (0.59)     (1.27)     (0.97)     0.39     (0.05)

As of December 31,

SELECTED BALANCE SHEET DATA:. . . . . . . . . . . . . . . . . . .     1998       1999       2000      2001      2002
                                                                   --------  ---------  ---------  --------  --------
Working capital . . . . . . . . . . . . . . . . . . . . . . . . .  $12,668   $  6,290   $  2,173   $ 2,235   $  (768)
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . .   33,496     22,007     13,845    11,561     7,992
Property, plant and equipment, net. . . . . . . . . . . . . . . .    4,348      3,934      3,324     2,962     2,563
Obligations under capital leases. . . . . . . . . . . . . . . . .    3,241      3,058      2,892     2,751     2,652
Redeemable cumulative preferred stock . . . . . . . . . . . . . .   26,517     27,843     29,180         -         -

Total common shareholders' equity (deficit) . . . . . . . . . . .   (3,975)   (16,335)   (25,794)    2,891      (451)

</TABLE>



Item  7.     Management's  Discussion  and  Analysis  of  Financial
-------      ------------------------------------------------------
     Condition  and  Results  of  Operations.
     ---------------------------------------

CRITICAL  ACCOUNTING  POLICIES

     Management's  discussion and analysis of its financial position and results
of  operations  are  based upon the Company's consolidated financial statements,
which  have  been  prepared  in  accordance with accounting principles generally
accepted  in  the  United States of America.  The preparation of these financial
statements  requires  management to make estimates and judgments that affect the
reported  amounts  of  assets,  liabilities,  revenues  and expenses and related
disclosure  of  contingent  assets and liabilities.  Actual results could differ
from those estimates.  Management believes that the critical accounting policies
and  areas  that require the most significant judgments and estimates to be used
in  the  preparation  of the consolidated financial statements are allowance for
doubtful  accounts,  inventory  obsolescence  and  accrued  warranty.

     Allowance  for  Doubtful  Accounts -- We maintain an allowance for doubtful
trade  accounts  receivable for estimated losses resulting from the inability of
our  customers  to  make  required  payments.  In determining collectibility, we
review available customer financial statement information, credit rating reports
as  well  as  other  external  documents  and  public filings. When it is deemed
probable  that  a  specific  customer  account is uncollectible, that balance is
included  in  the  reserve  calculation.  Actual results could differ from these
estimates  under  different  assumptions.

     Inventory  Obsolescence  --We  write  down  our  inventory  for  estimated
obsolescence  or unmarketable inventory equal to the difference between the cost
of  inventory and the estimated market value based upon assumptions about future
demand  and market conditions.  If actual future demand or market conditions are
less  favorable  than  those we project, additional inventory write-downs may be
required.

Accrued Warranty -- We provide for the estimated cost of product warranty at the
time  revenue  is  recognized.  We  calculate  the  reserve utilizing historical
product  failure  rates  and service repair costs by product family. These rates
are reviewed and adjusted periodically. We utilize judgment for estimating these
costs  and  adjust  our  estimates  as  actual  results  become  available.

     Related  Party  Transactions  --  Details of related party transactions are
included  in  Item  13 and in Notes 2 and 12 of the Financial Statements of this
Form  10-K.

RESULTS  OF  OPERATIONS

YEAR  ENDED  DECEMBER  31,  2002  COMPARED  WITH  YEAR  ENDED  DECEMBER 31, 2001

     Consolidated  revenues  were  16% lower in the year ended December 31, 2002
than  in  the  year ended December 31, 2001.  We sell our products predominantly
into  the retail market.  Our overall domestic revenues continued to be impacted
by  the  post September 11 soft economic environment, resulting in a slowdown or
delay  in  new  retail  store openings of some of our customers.  The backlog of
orders,  which  we  expect  to  deliver  within twelve months, decreased to $5.2
million  at  December 31, 2002 as compared to $6.0 million at December 31, 2001.
Total  revenues  for  the  periods  presented  are  broken  out  as  follows:


                                     2002               2001            Change
                                     ----               ----            ------
                                          (in  thousands)
EAS                               $  2,530           $  5,600           (55%)
CCTV                                 4,578              4,833            (5%)
SentryVision                         2,368              1,772            34%
3M  library  products                  256                622           (59%)
                                  --------           --------
Total  sales                         9,732             12,827           (24%)
Service, installation and other      4,804              4,472             7%
                                  --------           --------
Total  revenues                   $ 14,536           $ 17,299           (16%)
                                  = ======           = ======           ====

     The  decline  in  EAS sales in 2002 is primarily a result of lower sales to
two  of  our  largest EAS customers, which have opened fewer new stores in 2002,
and  lower  sales to our Mexican distributor.  The decrease in CCTV revenues and
increase  in  SentryVision  revenues  is primarily a result of a decision by our
largest  customer  to  resume  purchasing  our  traveling  camera products in 16
existing  store  locations  in  2002.  We  continue  to  see a growing trend for
product  acceptance  and  increased  market  opportunities  for traveling camera
systems  both  domestically  and  internationally.  Sales of 3M library products
declined  due  to 3M's direct sales practices in competition with Sentry, making
it  uneconomical  for  us  to sell 3M products in the library marketplace.  As a
result,  we have cancelled our distribution agreement with 3M effective December
31,  2002.  Service  revenues  increased  as  a  result  of  the  higher base of
installed  systems  no  longer under warranty but were partially offset by lower
installation  revenues  resulting  from  lower  EAS  and  CCTV  sales.
     Cost  of  sales,  as a percentage of sales, were 76% in 2002 as compared to
69%  in 2001.  The reduction of sales in 2002 and related decrease in production
levels resulted in significant manufacturing inefficiencies, including the under
absorption  of  labor  and  overhead.  In  addition, there were higher scrap and
rework  costs  and  higher  provisions  for  slow  moving inventories in 2002 as
compared  to  2001.
     Customer  service expenses decreased 3% in 2002 as compared to 2001 despite
an  increase  in maintenance and service revenues. This is primarily a result of
the successful implementation of a new service delivery model, which reduced our
fixed  costs through a reduction in the number of the Company's customer service
employees  and  a  greater  reliance  on  trained and qualified installation and
service  partners.
     Selling,  general  and administrative expenses decreased 9% to $5.2 million
in  2002  from  $5.8  million  in  2001 primarily as a result of continuing cost
saving  measures  including  further subleasing of our office space, lower phone
costs,  lower  selling  expenses  and  lower  bad  debt  and  warranty  costs.

     Research  and development costs continued to decrease in 2002 when compared
to  the previous year primarily due to a reduction in prototype costs associated
with  the  development of the SentryVision SmartTrack system, which was released
in  2001.

     Interest  expense  decreased  slightly  in  2002 over 2001 primarily due to
lower average borrowings under our revolving credit agreement and lower interest
rates.

     Due  to  net losses, we have not provided for income taxes in either of the
periods  presented.  The  book  benefit  for  taxable  losses  generated in both
periods  presented  was  offset  by  recording a full valuation allowance.  Such
valuation  allowance  was  recorded because management does not believe that the
utilization  of  the  tax  benefits  from  operating losses, and other temporary
differences are "more likely than not" to be realized, as required by accounting
principles  generally  accepted  in  the  United  States  of  America.

     As  a result of the foregoing, Sentry had a net loss of $3.4 million in the
year  ended  December  31, 2002 as compared to a net loss of $2.9 million in the
year  ended  December  31,  2001.

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

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

YEAR  ENDED  DECEMBER  31,  2001  COMPARED  WITH  YEAR  ENDED  DECEMBER 31, 2000

     Consolidated  revenues  were  13% lower in the year ended December 31, 2001
than  in  the  year  ended  December  31,  2000.  Our  overall domestic revenues
continued  to  be  impacted  by  the  soft  economic  environment resulting in a
slowdown  or  delay  in  new retail store openings of some of our customers.  As
part  of  our reorganization of our sales department, more than one-third of our
account  executives  were terminated by June 2001.  Following the release to the
sales  force in September of the new SmartTrack traveling camera system, we were
able  to  hire  replacements  in the middle of the fourth quarter.  In addition,
some  large  contracts expected earlier in the last quarter of the year were not
received  until  the  latter part of December 2001, delaying revenue recognition
until  the  installations  could  be  completed in 2002.  The backlog of orders,
which  we  expect  to deliver within twelve months, increased to $6.0 million at
December  31,  2001  as  compared  to  $5.8  million at December 31, 2000.  Also
Sensormatic  stopped  ordering  EAS  OEM  equipment  resulting in a $1.5 million
reduction  of revenues.  Total revenues for the periods presented are broken out
as  follows:

<PAGE>

                                       2001           2000          Change
                                       ----           ----          ------
                                           (in thousands)
EAS                                 $ 5,600        $ 7,545           (26%)
CCTV                                  4,833          5,340            (9%)
SentryVision                          1,772          1,713             3%
3M  library  products                   622          1,103           (44%)
                                    -------        -------
Total  sales                         12,827         15,701           (18%)
Service, installation and other       4,472          4,164             7%
                                    -------        -------
Total  revenues                     $17,299        $19,865           (13%)
                                    =======        =======           ====

     The  decline  in EAS sales in 2001 is primarily a result of lower OEM sales
to  Sensormatic  and  lower  sales  to  one  of  our major customers.  We do not
currently  expect an increase in sales to Sensormatic in the future. The decline
in  CCTV  was primarily related to a decrease in sales to the same customer.  We
are  encouraged  by  the increase in SentryVision  SmartTrack sales which gained
momentum  since  the product was released to production in September 2001.  Part
of  our  sales strategy was to offer system trials to new and existing customers
under  a  "Test-A-Track"  program.  Under this program, we install a system on a
nominal  cost  trial basis.  At the end of the trial, if satisfied, the customer
purchases the system.  To date, we have received only positive feedback from our
customers  on  the features and reliability of SmartTrack resulting in new sales
opportunities.  In addition, we have offered new SmartTrack carriage upgrades to
existing  customers that result in lower revenue than new system sales.  We have
been  successful  selling  SmartTrack  to  several  domestic  and  international
large-scale security dealer integrators with repeat order opportunities.  We see
a  growing  trend  for product acceptance and increased market opportunities for
traveling  camera  systems  both  domestically and internationally.  Sales of 3M
library  products  declined  as  we focused our sales efforts on Sentry produced
products.  Service  revenues  increased  as  a  result  of  the higher installed
equipment  base  of  systems  no  longer  under  warranty.

     Cost  of sales as a percentage of sales were 69% in 2001 as compared to 64%
in  2000,  excluding  special  charges described below.  Higher scrap and rework
costs  and  production inefficiencies due to reduced volume in our manufacturing
operations  were  the  primary  cause  of  the increase in the percentage in the
current  year.  In  2000, as part of our restructuring plan, we included in cost
of  sales  special charges of $1.0 million primarily representing provisions for
obsolete  or  excess  inventory.  Those  charges,  in  2000,  were a result of a
combination of the introduction of SmartTrack, which replaced earlier generation
SentryVision  systems,  and  the substitution of certain Dialoc ID systems which
were  expected  to  replace  systems  in  our  EAS  product  lines.

     Customer  service expenses decreased 2% in 2001 as compared to 2000 and the
department  generated  a  small  profit  due  primarily  to  the  successful
implementation of a new service delivery model which included a reduction in the
number  of our customer service representatives and increased use of trained and
qualified  installation  and  service  partners.

     Selling,  general and administrative expenses decreased 24% to $5.8 million
in  2001  from  $7.6  million  in  2000 primarily as a result of continuing cost
saving  measures,  reduced infrastructure, lower selling expenses due to reduced
sales  and  the  elimination  of  the  amortization  of  the goodwill, which was
written-off  in  2000.

     Research  and development costs continued to decrease in 2001 when compared
to  the  previous  year due to further consolidation of facilities.  The primary
emphasis  in the current year continued to be directed towards the completion of
the  new SentryVision SmartTrack system, which was released to production at the
end  of  the third quarter.  Additional savings were achieved through the shared
research  and  development  activities  with  Dialoc  ID  as  a  result of their
investment.

     Interest  expense decreased by $0.1 million in 2001 over 2000 primarily due
to  lower  average  borrowings  under  our  revolving credit agreement and lower
interest  rates.

     In  February  1997,  we  acquired the SentryVision product line through the
merger with Video Sentry Corporation and assigned a value of $4.4 million to its
patent  and  existing technology. At that time, we assigned a seven-year life to
the  technology.  After the merger, we encountered severe liquidity problems due
to  declining  sales  of  this  premier  product  due to design faults, repeated
repairs  and  the  customer's  perception  that  SentryVision  was  a costly and
unreliable  product. The cost of conventional CCTV products also declined during
that period and added features made these systems more competitive when compared
to  SentryVision.  In  addition,  several  competitors, including the industry's
leader  -  Sensormatic,  produced  their own cable free traveling camera systems
that  competed  directly  with  us.  We  considered  pursuing a claim for patent
infringement  against  Sensormatic,  but have decided not to pursue the claim at
this  time.  We  have  made such significant changes from the original traveling
CCTV system acquired from Video Sentry that they have become the basis for a new
product,  which  we  have  named  SmartTrack.  With  the  development  of  the
SentryVision  SmartTrack  system  completed  in  the  fourth quarter of 2000, we
re-assessed the remaining carrying value of the intangible assets related to the
original  SentryVision  products.  Based  on  our  review  of  the technological
developments  in the marketplace, we determined that the original traveling CCTV
surveillance  system  goodwill  and  related patents no longer provide us with a
competitive advantage, and as a result, we recorded an impairment charge in 2000
of  approximately $3.0 million related to these assets. These impairment charges
were  calculated by comparing future discounted net cash flows to the goodwill's
carrying  value.  Factors  leading  to  the  impairment  were  a  combination of
historical  losses  and  insufficient  estimated  future  cash  flows  from  the
SentryVision  system.

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

     As  a result of the foregoing, Sentry had a net loss of $2.9 million in the
year  ended  December 31, 2001 as compared to a net loss of $8.1 million in the
year  ended  December 31, 2000.

     We  recorded  preferred stock dividends of $25,000 and $1.3 million in 2001
and  2000.  In  connection  with the waiver of certain financial covenants under
the  agreement  with  our  commercial  lender,  we  were not allowed to pay cash
dividends,  including  the  cash  dividend  on  our  preferred stock which would
otherwise  have  been  payable in August of 1999, February and August 2000. At a
special meeting of shareholders held on December 8, 2000, a proposal was adopted
to  pay  a one-time stock dividend of .075 of a share of Class A Preferred Stock
to  preferred stockholders in lieu of accrued dividends on the effective date of
the Dialoc ID investment, and immediately thereafter to reclassify each share of
preferred stock into five shares of common stock.  The Dialoc ID investment took
place  on  January 8, 2001.  The reclassification of the Class A Preferred Stock
resulted  in  a  return  to  the common shareholders of $27.2 million, which was
recorded  in  the  first quarter of 2001.  This amount represents the difference
between the fair market value of the common stock issued and the carrying amount
of  the  preferred  stock  redeemed.

LIQUIDITY  AND  CAPITAL  RESOURCES

     On  March  22,  2002,  we  entered  into a new three-year revolving line of
credit  and  term  loan  with  the  CIT  Group/Business Credit, Inc. ("CIT") for
maximum borrowings of $8 million, which are subject to certain limitations based
on  a  percentage  of eligible accounts receivable and inventories as defined in
the  agreement.  Interest  on the revolving line of credit is payable monthly at
the  JPMorgan  Chase  Bank  prime rate (4.25% at December 31, 2002), plus 2% per
annum.  We  are  required  to  pay  a  commitment fee of 0.375% per annum on any
unused portion of the credit facility.  Borrowings under the line are secured by
substantially  all  of  our  assets.  The  terms  of  the agreement, among other
matters,  places  restrictions on capital expenditures and prohibits the payment
of  dividends.  As of December 31, 2002, we had borrowings of approximately $2.0
million,  the  maximum  amount  available  under  the facility.  In addition, we
entered  into  a  $100,000 term loan with CIT.  The principal is being repaid to
CIT  in  twelve  equal  monthly  installments  of  $8,333 beginning May 1, 2002.
Interest  on the term note is at prime plus 2.25%.  The balance on the term loan
at  December  31,  2002  was $33,000.  In December 2002, we hired the consulting
firm  of Clear Thinking Group, to provide us with crisis management services and
to  assist  us  in  presenting a plan to CIT to fund an over-advance facility to
assist  Sentry  through its transition to its restructuring plan.  Subsequent to
year-end,  we  were successful in obtaining from CIT an over-advance facility of
up  to  $300,000.

We  will  require positive cash flow from operations to meet our working capital
needs  over  the  next  twelve  months.  We  anticipated  receiving  significant
additional  purchase  orders from specific customers during 2002.  While some of
these  purchase orders were eventually received, the delay of those received and
loss  of  other  orders caused us to: (i) operate in a cash flow deficit for the
year;  (ii)  borrow the maximum amounts available under our credit facility; and
(iii)  pursue  potential  sources  of  debt  or  equity  financing.

     On  October  10,  2002, we entered into a purchase order financing facility
with  EPK Financial Corporation ("EPK").  Purchase order financing is short term
funding  used  to  finance the purchase or manufacture of specific goods that we
have  pre-sold  to  credit  worthy end customers.  Funding entails EPK providing
funds directly to vendors to allow us to secure the inventory we need to fulfill
customers'  orders.  Sentry's costs for each financing transaction will be equal
to  3.5% of Sentry's selling price, plus 1.85% on the maximum outstanding funded
amount  each  ten  calendar  days or portion thereof, until EPK is paid in full,
plus expenses.  In connection with this facility, an Intercreditor Agreement was
entered  into  between  EPK,  CIT  and  Sentry.  Under  this  agreement,  CIT
subordinated  its  rights  and  interests  in  the  collateral  related  to each
transaction to EPK.  Currently, under the terms of the Intercreditors Agreement,
the  maximum  amount  subordinated  to  EPK  at any time is limited to $440,000.
Sentry  will  use the funds provided by EPK to fund vendor purchases to complete
orders  currently  in  backlog.

Through  2002,  we  were  not  successful  in  achieving positive cash flow from
operations  and as a result, our payables to vendors are substantially in excess
of terms.  Most of our vendors have us on a COD basis.  We are currently working
with  several  investment  banking  firms to assist the Company in conducting an
organized  search  and  evaluation regarding a possible corporate transaction to
gain  access  to  greater  resources  and  to  exploit  Sentry's  products  and
technological advances.  We are looking to raise in excess of $4 million in debt
or  equity  financing  to  assist  the  Company in satisfying our trade payables
situation  and  to  achieve  our  longer-term  goals.

We  have  incurred  reduced  revenue  levels,  decreased  financial position and
recurring  operating losses over the past several years.  To further address the
continuing  losses,  our  business  plan  for  2002  included  the  following:

-     Entering  into  a  new  three-year  financing  agreement.
-     Addition  of  new  products, including high-end EAS systems and disposable
      tags  and  labels,  proximity  access control and RFID, through our
      distribution agreement  with  Dialoc  ID.
-     Increased  promotion  of  SmartTrack,  our  new  entry in the SentryVision
      family  of  products.
-     Strengthening  our  international  dealer network with new and financially
      stronger  business  partners.
-     Joint participation with Dialoc ID in trade show activity and a refocus on
      expanding  business  with  existing  customers.
-     Continuation  and  expansion  of  our  Service  Partner program to augment
      service  provided  by  our  employees.
-     Further  subletting  of  office  space  in  our  corporate  offices.
-     Continued  emphasis  on  growing  international  dealer  base.
-     Various  additional  cost  cutting  and  cost  saving  initiatives.

While  we were successful in completing the above named goals, we were unable to
meet  our  projected  revenue  growth  targets.  Our order flow with our largest
customer, Lowe's Home Center increased, but we were unable to replace other lost
business  with  sufficient  new customer orders.   While indications appear that
the  retail  economy  is  picking  up,  we  believe that our markets will remain
sluggish  for  the  next  year.  In  addition, the uncertainties surrounding the
impact  of  the  war  could  have  a  further  impact  on  our  2003  results.

As  a  result, in December 2002, the Board of Directors approved a restructuring
plan to strengthen our operating efficiencies and to better align our operations
with  current  economic  and market conditions.  The revised business plan calls
for  the  following:

-     Significantly  downsize  our  operations  including  the  elimination  of
      approximately  60  of  117  positions  to  support a business with sales
      of approximately  $15  million.
-     Negotiate  with  the current landlord to move out of its present corporate
      facility  and  relocate  to  a  smaller  and  less  costly  facility.
-     Dedicate  a  substantial  portion  of  our  remaining  resources  towards
      maintaining  and  improving  our  relationships  with  our 30 largest
      customers.
-     Outsource  all  non-essential  manufacturing  and  assembly  operations to
      qualified  subcontractors.
-     Further expand our Service Partner program to augment service provided by
      our  employees.
-     Negotiate  a  settlement  with  past  due  trade  vendors.

On January 7, 2003, we initiated our restructuring plan.  Due to the size of the
layoff,  Sentry  was  required  to give the terminated employees a 60-day notice
period.  The  costs  associated  with  these  restructuring  activities  will be
expensed as they are incurred.  We believe the successful implementation of this
restructuring  will  result  in  substantial  gross  margin  improvements  and
reductions  in  operating  expenses  beginning  after the first quarter of 2003.

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  that  additional  debt  or equity financing will be available on
terms that are satisfactory to Sentry, or that any such debt or equity financing
will  be  sufficient to provide the full amount of funding necessary. Our future
cash requirements are expected to depend on numerous factors, including, but not
limited  to: (i) the ability to generate positive cash flow from operations, and
the  extent  thereof,  (ii)  the  ability  to raise additional capital or obtain
additional  financing,  and  (iii)  economic  conditions.

Sentry  will  require  liquidity  and  working  capital  to finance increases in
receivables  and  inventory  associated  with sales growth, payments to past due
vendors  and,  to a lesser extent, for capital expenditures.  We had no material
capital  expenditure  or  purchase  commitments  as  of  December  31,  2002.

Under  the  terms  of  the  share purchase agreement, Dialoc ID had the right to
acquire  up  to  51%  of our common stock.  On May 13, 2002, Dialoc ID exercised
their  purchase right for an additional 14,500,000 shares of newly issued common
stock  at  an  exercise  price  of  $0.001  per  share.  As  a  result  of  this
transaction,  as  of  December  31,  2002,  Dialoc  ID  owned  42,067,017 shares
representing  48.1%  of  our common stock outstanding.  On January 7, 2003, they
brought their ownership to 51% through the exercise of 4,516,475 shares of newly
issued  common  stock  at  an  exercise  price  of  $0.001  per  share.

Currently,  Dialoc  ID  is  not able to provide additional financial support for
Sentry.  If  we  are  not  able to raise additional debt or equity financing, we
could  be  forced  into a bankruptcy or be required to liquidate our assets.  In
this  scenario,  most  likely,  our secured lender would receive the bulk of any
proceeds.

     The  table  below  summarizes  aggregate maturities of future minimum lease
payments  under  noncancelable  operating  and capital leases as of December 31,
2002.

Contractual                    Less than       1-3        4-5        After 5
Obligations           Total      1 Year       Years      Years        Years
-----------                    ---------      -----      -----       -------
                                   (In Thousands)

Operating Leases     $ 2,877     $  205     $   617     $   411     $ 1,644
Capital Leases         5,301        394       1,148         753       3,006
                     -------     ------     -------     -------     -------
Total                $ 8,178     $  599     $ 1,765     $ 1,164     $ 4,650
                     =======     ======     =======     =======     =======


RECENT  ACCOUNTING  PRONOUNCEMENTS

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

In  August  2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations."  SFAS  No.  143  addresses  financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated  asset  retirement costs.  We are required to adopt the provisions of
SFAS  No.  143  effective  January 1, 2003.  The adoption of SFAS No. 143 is not
expected  to  have  a  material  impact  on  our  financial  statements.

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

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

In  June  2002,  SFAS  No.  146,  "Accounting  for Costs Associated with Exit or
Disposal  Activities"  was  issued.  This  statement  provides  guidance  on the
recognition  and  measurement of liabilities associated with disposal activities
and  is  effective for the Company on January 1, 2003. The costs associated with
our  restructuring plan, which are not expected to be material, will be expensed
as  incurred  in  2003  in  accordance  with  SFAS  No.  146.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation  -  Transition  and  Disclosure, an amendment of FASB Statement No.
123,"  which  amends SFAS No. 123, "Accounting for Stock-Based Compensation," to
provide  alternative  methods  of  transition for a voluntary change to the fair
value  based  method  of  accounting  for stock-based employee compensation. The
transition  and  annual  disclosure provisions of SFAS No. 148 are effective for
fiscal  years  ending  after December 15, 2002. In addition, SFAS No. 148 amends
the  disclosure requirements of SFAS No. 123 to require prominent disclosures in
both  annual and interim financial statements about the method of accounting for
stock-based  employee compensation and the effect of the method used on reported
results.  The  Company  will continue to account for stock-based compensation to
employees  under  APB  Opinion  No.  25  and  related  interpretations.

INFLATION

     The  Company  does  not consider inflation to have a material impact on the
results  of  operations.


CAUTIONARY  STATEMENT  REGARDING  FORWARD-LOOKING  STATEMENTS

     The  "Management's  Discussion  and  Analysis  of  Financial  Condition and
Results  of  Operations"  and  other sections of this Annual Report on Form 10-K
contain  "forward-looking  statements"  (as  defined  in  the Private Securities
Litigation  Reform  Act  of  1995  or  the  "PSLRA")  that  are based on current
expectations,  estimates and projections about the industry in which the Company
operates,  as  well  as  management's  beliefs  and  assumptions.  Words such as
"expects," "anticipates" and "believes" and variations of such words and similar
expressions  generally indicate that a statement is forward-looking. The Company
wishes  to  take  advantage  of  the  "safe  harbor"  provisions of the PSLRA by
cautioning  readers  that many important factors discussed herein, among others,
may  cause the Company's results of operations to differ from those expressed in
the  forward-looking  statements.  These factors include:  (i) the risk that any
delay or cancellation of orders from one or more of Sentry's two major customers
may  have  a  material adverse effect on the Company's financial condition; (ii)
the risk that anticipated growth in the demand for the Company's products in the
retail,  commercial and industrial sectors will not develop as expected, whether
due  to  competitive  pressures in these markets or to any other failure to gain
market  acceptance  of  the  Company's products; (iii) the risk that anticipated
revenue  growth through the domestic and international dealers programs does not
develop  as  expected;  (iv)  the  risk that the Company may not find sufficient
qualified Service Partners to provide future installation services; (v) the risk
that  the  Company  will  not be able to retain key personnel due to its current
financial condition; (vi) the risk that the borrowing availability under the new
credit  facility will not be adequate to meet the Company's growth requirements;
and  (vii) the risk arising from the large market position and greater financial
and  other resources of Sentry's principal competitors, as described under "Item
1.  Business-Competition."

                                       24


Item  8.      Financial  Statements  and  Supplementary  Data.
-------       -----------------------------------------------


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

                               REPORT ON AUDITS OF
                               -------------------
                        CONSOLIDATED FINANCIAL STATEMENTS
                        ---------------------------------
                          AND SUPPLEMENTARY INFORMATION
                          -----------------------------

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                  --------------------------------------------



                                    CONTENTS
                                    --------

                                                                    Page
                                                                    ----
CONSOLIDATED  FINANCIAL  STATEMENTS:

     Independent  auditors'  reports                            F-1  -  F-2

     Balance  sheets                                                F-3

     Statements  of  operations                                     F-4

     Statements  of  shareholders'  equity                          F-5

     Statements  of  cash  flows                                    F-6

     Notes  to  financial  statements                           F-7  -  F-23


SUPPLEMENTARY  INFORMATION:

     Schedule  II  -  Valuation  and  Qualifying  Accounts          F-24


<PAGE>


                                     ------
                          Independent Auditors' Report
                          ----------------------------


To  the  Board  of  Directors  and  Stockholders  of
Sentry  Technology  Corporation
Hauppauge,  New  York


We have audited the accompanying consolidated balance sheet of Sentry Technology
Corporation  and  subsidiaries  (the "Company") as of December 31, 2002, and the
related  consolidated  statements  of operations, shareholders' equity (deficit)
and  cash flows for the year then ended.  Our audit also includes information as
of  and for the year ended December 31, 2002 included in the financial statement
schedule  listed  in the Index at item 15(a)(2).  These financial statements and
the  financial  statement  schedule  are  the  responsibility  of  the Company's
management.  Our  responsibility  is  to  express an opinion on the consolidated
financial  statements  and  the financial statement schedule based on our audit.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audit  provides  a
reasonable  basis  for  our  opinion.

In  our  opinion,  such consolidated financial statements present fairly, in all
material  respects,  the financial position of Sentry Technology Corporation and
subsidiaries  as  of  December 31, 2002, and the results of their operations and
their  cash  flows  for  the  year  then  ended  in  conformity  with accounting
principles  generally  accepted  in  the United States of America.  Also, in our
opinion,  such  information  as  of  and  for  the  year ended December 31, 2002
included in the financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material  respects  the  information  set  forth  therein.

The  accompanying  consolidated financial statements have been prepared assuming
the  Company  will  continue  as a going concern.  As discussed in Note 4 to the
consolidated  financial  statements,  the  Company's  recurring  losses  from
operations  and  negative  cash  flow position raise substantial doubt about its
ability  to  continue as a going concern.  Management's plans in regard to these
matters  are also described in Note 4.  The consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


/s/  Holtz  Rubenstein  &  Co.,  LLP


Melville,  New  York
February  28,  2003

<PAGE>


INDEPENDENT  AUDITORS'  REPORT
To  the  Board  of  Directors  and  Stockholders  of
Sentry  Technology  Corporation
Hauppauge,  New  York


We have audited the accompanying consolidated balance sheet of Sentry Technology
Corporation  and  subsidiaries  (the "Company") as of December 31, 2001, and the
related  consolidated  statements  of  operations, shareholders' equity and cash
flows  for  each  of  the  two years in the period ended December 31, 2001.  Our
audits  also included the financial statement schedule for each of the two years
in  the  period  ended  December  31, 2001 listed in the Index at item 15(a)(2).
These  financial  statements  and  the  financial  statement  schedule  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  the  consolidated  financial statements and the financial statement
schedule  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our  opinion,  such consolidated financial statements present fairly, in all
material  respects,  the financial position of Sentry Technology Corporation and
subsidiaries  as  of  December 31, 2001, and the results of their operations and
their cash flows for each of the two years in the period ended December 31, 2001
in conformity with accounting principles generally accepted in the United States
of  America.  Also,  in  our  opinion,  such  financial statement schedule, when
considered  in  relation  to  the  basic  2001  and  2000 consolidated financial
statements  taken  as  a  whole,  presents  fairly  in all material respects the
information  set  forth  therein.

/s/  Deloitte  &  Touche  LLP

Jericho,  New  York
March  22,  2002



                          SENTRY TECHNOLOGY CORPORATION
                          -----------------------------
                                AND SUBSIDIARIES
                                ----------------
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                    (IN THOUSANDS, EXCEPT PAR VALUE AMOUNTS)

<TABLE>
<CAPTION>


                                                                               December 31,
<S>                                                                     <C>             <C>
                                                                                 2002       2001
                                                                        --------------  ---------
ASSETS
----------------------------------------------------------------------
Current Assets:
   Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .  $         266   $    423
   Accounts receivable, less allowance for doubtful accounts
      of  $303 and $763, respectively. . . . . . . . . . . . . . . . .          1,472      2,713
   Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,145      4,740
   Prepaid expenses and other current assets . . . . . . . . . . . . .            237        399
          Total current assets . . . . . . . . . . . . . . . . . . . .          5,120      8,275
                                                                        --------------  ---------
PROPERTY, PLANT AND EQUIPMENT, net . . . . . . . . . . . . . . . . . .          2,563      2,962
PATENTS, less accumulated amortization of $338 and $296, respectively.            207        234
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            102         90
                                                                        $       7,992   $ 11,561
                                                                        --------------  ---------

LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------------------------
Current Liabilities:
   Revolving line of credit and term loan. . . . . . . . . . . . . . .  $       2,067   $  2,599
   Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . .          1,807      1,153
   Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . .          1,523      1,864
   Obligations under capital leases - current portion. . . . . . . . .             97        121
   Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . .            394        303
          Total current liabilities. . . . . . . . . . . . . . . . . .          5,888      6,040
                                                                        --------------  ---------

OBLIGATIONS UNDER CAPITAL LEASES, noncurrent portion . . . . . . . . .          2,555      2,630
          Total liabilities. . . . . . . . . . . . . . . . . . . . . .          8,443      8,670
                                                                        --------------  ---------

COMMITMENTS AND CONTINGENCIES (Notes 2, 8 and 13)
SHAREHOLDERS' EQUITY (DEFICIT):
   Common stock, $0.001 par value; authorized 140,000 shares,
      issued and outstanding 78,044 and 61,543 shares, respectively. .             78         62
   Additional paid-in capital. . . . . . . . . . . . . . . . . . . . .         44,521     44,403
   Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . .        (44,930)   (41,574)
   Note receivable from shareholder. . . . . . . . . . . . . . . . . .           (120)         -
                                                                                        ---------
         Total shareholders' equity (deficit). . . . . . . . . . . . .           (451)     2,891
                                                                        --------------

                                                                        $       7,992   $ 11,561
</TABLE>

                 See notes to consolidated financial statements



<PAGE>
                          SENTRY TECHNOLOGY CORPORATION
                          -----------------------------
                                AND SUBSIDIARIES
                                ----------------
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------
<TABLE>
<CAPTION>
                                                 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                               Years Ended
                                                               December  31,
                                                               -------------
<S>                                             <C>          <C>             <C>
                                                      2002            2001         2000
                                                -----------  --------------  -----------
REVENUES:
  Sales. . . . . . . . . . . . . . . . . . . .  $    9,732   $      12,827   $   15,701
  Service revenues and other . . . . . . . . .       4,804           4,472        4,164
                                                -----------  --------------  -----------
                                                    14,536          17,299       19,865
                                                -----------  --------------  -----------
COST AND EXPENSES:
  Cost of sales. . . . . . . . . . . . . . . .       7,382           8,879       11,120
  Customer service expenses. . . . . . . . . .       4,240           4,361        4,464
  Selling, general and administrative expenses       5,227           5,773        7,576
  Research and development . . . . . . . . . .         548             661          862
  Asset impairment charges . . . . . . . . . .           -               -        2,981
                                                -----------  --------------  -----------
                                                    17,397          19,674       27,003
                                                -----------  --------------  -----------
OPERATING LOSS . . . . . . . . . . . . . . . .      (2,861)         (2,375)      (7,138)
INTEREST EXPENSE . . . . . . . . . . . . . . .         495             536          683
                                                -----------  --------------  -----------
LOSS BEFORE INCOME TAXES AND CUMULATIVE
   EFFECT ON CHANGE IN ACCOUNTING PRINCIPLE. .      (3,356)         (2,911)      (7,821)

INCOME TAXES . . . . . . . . . . . . . . . . .           -               -            -
                                                -----------  --------------  -----------
NET LOSS BEFORE CUMULATIVE EFFECT OF
   CHANGE IN ACCOUNTING PRINCIPLE. . . . . . .      (3,356)         (2,911)      (7,821)
CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE. . . . . . . . . . . .           -               -         (301)
                                                -----------  --------------  -----------
NET LOSS . . . . . . . . . . . . . . . . . . .      (3,356)         (2,911)      (8,122)
PREFERRED STOCK DIVIDENDS. . . . . . . . . . .           -             (25)      (1,337)
RETURN TO COMMON SHAREHOLDERS FROM
   REDEMPTION OF PREFERRED STOCK . . . . . . .           -          27,198            -
                                                -----------  --------------  -----------
NET INCOME (LOSS) ATTRIBUTED TO
   COMMON SHAREHOLDERS . . . . . . . . . . . .  $   (3,356)  $      24,262   $   (9,459)
                                                ===========  ==============  ===========
NET INCOME (LOSS) PER COMMON SHARE BEFORE
   CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE:
   Basic . . . . . . . . . . . . . . . . . . .  $    (0.05)  $        0.40   $    (0.94)
                                                ===========  ==============  ===========
   Diluted . . . . . . . . . . . . . . . . . .  $    (0.05)  $        0.39   $    (0.94)
                                                ===========  ==============  ===========
NET INCOME (LOSS) PER COMMON SHARE:
   Basic . . . . . . . . . . . . . . . . . . .  $    (0.05)  $        0.40   $    (0.97)
                                                ===========  ==============  ===========
   Diluted . . . . . . . . . . . . . . . . . .  $    (0.05)  $        0.39   $    (0.97)
                                                ===========  ==============  ===========
WEIGHTED AVERAGE COMMON SHARES:
   Basic . . . . . . . . . . . . . . . . . . .      72,193          60,468        9,751
                                                ===========  ==============  ===========
   Diluted . . . . . . . . . . . . . . . . . .      72,193          62,008        9,751
                                                ===========  ==============  ===========
</TABLE>

                 See  notes  to  consolidated  financial  statements

<PAGE>

                          SENTRY TECHNOLOGY CORPORATION
                          -----------------------------
                                AND SUBSIDIARIES
                                ----------------
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 -----------------------------------------------
                                 (IN THOUSANDS)
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                  --------------------------------------------

<TABLE>
<CAPTION>


<S>                                                 <C>        <C>          <C>           <C>              <C>
                                                                                                              Note
                                                                            Additional                     Receivable
                                                        Common Stock          Paid-in     Accumulated         from
                                                    Shares        Amount      Capital       Deficit         Shareholder
                                                    ------        ------

BALANCE, January 1, 2000 . . . . . . . . . . . . .    9,751    $     10     $  14,196     $ (30,541)       $     -

Net loss and comprehensive loss. . . . . . . . . .        -           -             -        (8,122)             -
Preferred stock dividends. . . . . . . . . . . . .        -           -        (1,337)            -              -
                                                    -------    --------     ----------    ----------       -----------

BALANCE, December 31, 2000 . . . . . . . . . . . .    9,751          10        12,859       (38,663)             -

Net loss and comprehensive loss. . . . . . . . . .        -           -             -        (2,911)             -
Preferred stock dividends. . . . . . . . . . . . .        -           -           (25)            -              -
Redemption of preferred stock for common stock . .   28,667          29        29,176             -              -
Net proceeds from common stock issued to Dialoc ID   23,050          23         2,388             -              -
Exercise of stock options. . . . . . . . . . . . .       75           -             5             -              -
                                                    -------    --------     ----------   ----------        -----------

BALANCE, December 31, 2001 . . . . . . . . . . . .   61,543          62        44,403       (41,574)             -

Net loss and comprehensive loss. . . . . . . . . .        -          -              -        (3,356)             -
Net proceeds from common stock issued to Dialoc ID   14,500          14             -             -              -
Exercise of stock options. . . . . . . . . . . . .    2,001           2           118             -           (120)
                                                    -------    --------     ----------   ----------        -----------

BALANCE, December 31, 2002 . . . . . . . . . . . .   78,044    $     78     $  44,521    $  (44,930)       $  (120)
                                                    =======    ========     ==========   ==========        ===========

<S>                                                 <C>                 <C>


                                                       Total
                                                       Common           Redeemable
                                                    Shareholders'       Cumulative
                                                       Equity           Preferred
                                                      (Deficit)           Stock
                                                    ------------        ----------
BALANCE, January 1, 2000 . . . . . . . . . . . . .  $  (16,335)         $ 27,843

Net loss and comprehensive loss. . . . . . . . . .      (8,122)                -
Preferred stock dividends. . . . . . . . . . . . .      (1,337)            1,337
                                                    -----------        ---------

BALANCE, December 31, 2000 . . . . . . . . . . . .     (25,794)           29,180

Net loss and comprehensive loss. . . . . . . . . .      (2,911)                -
Preferred stock dividends. . . . . . . . . . . . .         (25)               25
Redemption of preferred stock for common stock . .      29,205           (29,205)
Net proceeds from common stock issued to Dialoc ID       2,411                 -
Exercise of stock options. . . . . . . . . . . . .           5                 -
                                                    -----------         ---------

BALANCE, December 31, 2001 . . . . . . . . . . . .       2,891                 -

Net loss and comprehensive loss. . . . . . . . . .      (3,356)                -
Net proceeds from common stock issued to Dialoc ID          14                 -
Exercise of stock options. . . . . . . . . . . . .           -                 -
                                                    -----------         ---------

BALANCE, December 31, 2002 . . . . . . . . . . . .  $     (451)         $      -
                                                    ===========         =========
</TABLE>


                 See notes to consolidated financial statements


<PAGE>


                          SENTRY TECHNOLOGY CORPORATION
                          -----------------------------
                                AND SUBSIDIARIES
                                ----------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                      Years  Ended
                                                                      December  31,
<S>                                                          <C>        <C>       <C>
                                                                 2002      2001       2000
                                                             ---------  --------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss. . . . . . . . . . . . . . . . . . . . . . . . .  $ (3,356)  $(2,911)  $ (8,122)
  Adjustments to reconcile net loss to net cash provided by
      (used in) operating activities:
           Depreciation and amortization. . . . . . . . . .       474       505        632
           Amortization of intangibles and other assets . .        42        33      1,010
  Provision for bad debts . . . . . . . . . . . . . . . . .      (226)       37        224
  Loss on impairment of assets. . . . . . . . . . . . . . .         -         -      2,981
  Changes in operating assets and liabilities:
     Accounts receivable. . . . . . . . . . . . . . . . . .     1,467       428      3,436
     Inventories. . . . . . . . . . . . . . . . . . . . . .     1,595       534        (16)
     Prepaid expenses and other assets. . . . . . . . . . .       142       188       (232)
     Accounts payable and accrued liabilities . . . . . . .       313    (1,079)       239
     Deferred income. . . . . . . . . . . . . . . . . . . .        91       (49)       133
       Net cash provided by (used in) operating activities.       542    (2,314)       285
                                                             ---------  --------  ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, plant and equipment . . . . . . . .       (41)     (124)        23
  Intangibles . . . . . . . . . . . . . . . . . . . . . . .       (15)      (20)       (11)
      Net cash provided by (used in) investing activities .       (56)     (144)        12
                                                             ---------  --------  ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings under the revolving line of credit . . . .      (566)     (321)      (155)
  Proceeds of term loan . . . . . . . . . . . . . . . . . .       100         -          -
  Repayment of term loan. . . . . . . . . . . . . . . . . .       (67)        -          -
  Repayment of obligations under capital leases . . . . . .      (124)     (141)      (166)
  Proceeds from exercise of stock options . . . . . . . . .         -         5          -
  Proceeds of sale of stock, net. . . . . . . . . . . . . .        14     2,411          -
     Net cash provided by (used in) financing activities. .      (643)    1,954       (321)
                                                             ---------  --------  ---------

DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . .      (157)     (504)       (24)
CASH AND CASH EQUIVALENTS, beginning of year. . . . . . . .       423       927        951
                                                             ---------  --------  ---------
CASH AND CASH EQUIVALENTS, end of year. . . . . . . . . . .  $    266   $   423   $    927
                                                             =========  ========  =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for:
  Interest. . . . . . . . . . . . . . . . . . . . . . . . .  $    524   $   548   $    680
                                                             =========  ========  =========

  Income taxes. . . . . . . . . . . . . . . . . . . . . . .  $      -   $     -   $      -
                                                             =========  ========  =========
</TABLE>

                      See notes to consolidated statements




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                  --------------------------------------------




1.     BASIS  OF  PRESENTATION:
       -----------------------

     Sentry  Technology  Corporation  ("Sentry")  a  publicly  traded  Delaware
Corporation,  was  established  to effect the merger of Knogo North America Inc.
("Knogo  N.A.")  and  Video  Sentry  Corporation  ("Video  Sentry")  which  was
consummated  on  February 12, 1997.  The merger resulted in Knogo N.A. and Video
Sentry  becoming wholly owned subsidiaries of Sentry.  The term "Company" refers
to  Sentry  as of and subsequent to February 12, 1997 and to Knogo N.A. prior to
such  date.  Prior  to  the  merger,  Video  Sentry  was  engaged in the design,
development  and  marketing  of  a  traveling closed circuit television security
surveillance  system  throughout  the  United  States.

     Pursuant  to  the merger agreement, Sentry issued one share of common stock
for  each  one  share  of Video Sentry common stock outstanding at the effective
time  of the merger.  Sentry also issued one share of common stock and one share
of  Class  A  Preferred  Stock for each 1.2022 shares of Knogo N.A. common stock
outstanding.  The  Sentry  Class A Preferred Stock had a face value of $5.00 per
share  and  a cumulative dividend rate of 5.0% (the first two years of which are
paid-in-kind).  The  preferred  was  nonvoting  and  subject  to  a  mandatory
redemption  four  years  from  the  date  of issuance and optional redemption by
Sentry  at  any  time  after one year from the date of issuance.  The redemption
price  was equal to $5.00 per preferred share (plus accrued and unpaid dividends
as  of  the  redemption  date). The preferred stock was non convertible, but the
redemption  price  could,  in  certain circumstances, be paid in common stock at
Sentry's  option.  The  total  number  of  Sentry preferred shares authorized is
10,000,000.

     In January 2001, the Company entered into a capital transaction with Dialoc
ID  Holding  B.V. ("Dialoc ID").  All preferred stock was redeemed prior to that
transaction.


2.     INVESTMENT  BY  DIALOC  ID:
       --------------------------

     On  January  8, 2001, Dialoc ID, formerly known as Dutch A&A Holding, B.V.,
acquired  23,050,452  shares  of  our  common  stock for $3 million, of which $1
million  was paid in January 2001, $1 million was paid on April 30, 2001 and the
remaining  $1  million  was paid on August 31, 2001.  Dialoc ID is a Netherlands
company  which,  through  its  subsidiaries,  is in the business of development,
manufacture,  sale  and  distribution of various kinds of identification, access
control  and anti-theft electronic article surveillance systems and accessories.
Concurrent  with  the  share  purchase  agreement,  the  Company  entered into a
distribution  agreement  with  Dialoc  ID  allowing  the  Company  access to new
products  of  Dialoc  ID and allowing Dialoc ID access to the Company's products
for  an  initial  period  of  not  less  than  two  years.


<PAGE>

     As  of  January 8, 2001, Dialoc ID owned 37.5% of the Company's outstanding
common  stock.  Under the share purchase agreement, at any time prior to January
8,  2002,  Dialoc  ID  had  the right to increase its ownership of the Company's
common  stock  to a total of 51% of the shares of common stock then outstanding.
If  the  average  market  value of the Company's common stock, measured over any
10-day  trading period during the one year period following January 8, 2001, was
at  least  $15.0  million, the purchase price for the additional shares shall be
determined  by multiplying the actual number of shares to be purchased by $.001.
In  November  2001, this market capitalization threshold was met.  At that time,
the Board of Directors agreed to extend Dialoc ID's purchase right until January
8, 2003 in exchange for an extension of the distribution agreement for one year.
On May 14, 2002, Dialoc ID exercised its right to purchase 14,500,000 additional
common  shares  at a price of $.001 per share.  As a result of this transaction,
as of December 31, 2002, Dialoc ID owned 42,067,017 shares representing 48.1% of
the  Company's common stock outstanding.  On January 7, 2003, they brought their
ownership  to  51%  through the exercise of 4,516,475 additional shares of newly
issued  common  stock  at  an  exercise  price  of  $0.001  per  share.

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

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


3.     SIGNIFICANT  ACCOUNTING  POLICIES:
       ---------------------------------

     a.     Business
            --------

          The  Company  is  engaged  in  one  segment  and line of business, the
design,  manufacture, distribution, installation and service of systems designed
to  be  used  by  retailers  to  deter  shoplifting  and  employee  theft and by
commercial,  manufacturing  and  governmental  customers  to  protect people and
assets.

     b.     Principles  of  consolidation
            -----------------------------

          The  consolidated  financial  statements  include  the accounts of the
Company  and its wholly owned and majority owned subsidiaries.  All intercompany
balances  and  transactions  have  been  eliminated  in  consolidation.


     c.     Revenue  recognition  and  change  in  accounting  principle
            ------------------------------------------------------------

          The  Company manufactures security devices which it offers for sale or
lease.  For the years ended December 31, 2002, 2001 and 2000, leases of security
devices  were  not  material.

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

          In  accordance with SAB 101, the Company changed its accounting method
for recognizing revenue on the sale of equipment where post-shipment obligations
exist.  Previously,  the  Company  recognized  revenue  for equipment when title
transferred, generally upon shipment.  Beginning with the first quarter of 2000,
the  Company  began  recognizing  revenue when installation is complete or other
post-shipment  obligations  have  been  satisfied.  The cumulative effect of the
change  in  accounting method is a non-cash increase in net loss of $301,000, or
$0.03  per  share  for  the  year  ended  December  31,  2000.

          Service  revenues  are recognized when earned and maintenance revenues
are  recognized  ratably  over  the  service  contract  period.

          Included  in  accounts  receivable  at  December  31, 2002 and 2001 is
unbilled  accounts  receivable  of  $21,000  and  $41,000,  respectively.

     d.     Cash  and  cash  equivalents
            ----------------------------

          The  Company  considers  all  highly liquid temporary investments with
original  maturities  of  less  than  ninety  days  to  be  cash  equivalents.

     e.     Allowance  for  doubtful  accounts
            ----------------------------------

          Losses  from  uncollectible accounts are provided for by utilizing the
allowance  for  doubtful  accounts  method  based  upon management's estimate of
uncollectible  accounts.  Management  specifically  analyzed accounts receivable
and  analyzes  potential  bad debts, customer concentrations, credit worthiness,
current  economic  trends  and changes in customer payment terms when evaluating
the  allowance  for  doubtful  accounts.

     f.     Inventories
            -----------

          Inventories  are  stated  at  the  lower  of cost (first-in, first-out
method)  or  market.

     g.     Product  warranty
            -----------------

          Provisions  for  estimated  expenses related to product warranties are
made  at  the  time  products  are  sold.  These estimates are established using
historical  information  on  the nature, frequency, and average cost of warranty
claims.

     h.     Depreciation  and  amortization
            -------------------------------

          Depreciation  of  security  devices  on  lease and property, plant and
equipment  is  provided
for  using  the  straight-line method over their related estimated useful lives.
Security  devices  on  lease generally have estimated useful lives of six years,
except  the  cost  of security devices related to operating leases with purchase
options  are  depreciated  over  the  life  of  the  lease.


     i.     Patents
            -------

          Cost and expenses incurred in obtaining patents are amortized over the
remaining life of the patents, not exceeding 17 years, on a straight-line basis.
Estimated  annual amortization expense for the next five succeeding fiscal years
will  range  from  $20,000  to  $26,000.

     j.     Impairment  of  long-lived  assets
            ----------------------------------

          The  Company  reviews  its  long-lived assets, property and equipment,
intangible  assets and other assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of these assets may not be fully
recoverable.  To  determine recoverability of its long-lived assets, the Company
evaluates  the  probability  that  future  undiscounted  net cash flows, without
interest  charges,  will  be  less  than  the  carrying  amount  of  the assets.
Impairment  is  measured  at  fair  value.

     k.     Fair  value  of  financial  instruments
            ---------------------------------------

          It  is  management's belief that the carrying amounts of the Company's
financial instruments (cash and cash equivalents, accounts receivable, revolving
line  of  credit,  accounts  payable  and  obligations  under  capital  leases)
approximate  their  fair  value  at  December 31, 2002 and 2001 due to the short
maturity  of  these  instruments  or  due  to  the  terms  of  such  instruments
approximating instruments with similar terms currently available to the Company.

     l.     Deferred  income
            ----------------

          Deferred  income  consist  of  rentals related to operating leases and
maintenance  contracts  billed  or  paid  in  advance.

     m.     Income  taxes
            -------------

          The  Company  accounts for income taxes under SFAS No. 109, Accounting
for  Income  Taxes,  which requires an asset and liability approach to financial
accounting  and reporting for income taxes.  Deferred tax assets and liabilities
are determined based on differences between financial reporting and tax bases of
assets  and  liabilities,  and are measured using the enacted tax rates and laws
that  will  be  in  effect  when  the  differences  are  expected  to  reverse.

          The  Company  and  its  subsidiaries  file  consolidated  tax returns.

     n.     Stock-based  compensation
            -------------------------

          The  Company  accounts  for  stock-based awards to employees using the
intrinsic  value  method  in accordance with Accounting Principles Board Opinion
No.  25,  "Accounting  for  Stock  Issued  to  Employees."

     o.     Foreign  currency  translation
            ------------------------------

          The  functional  currency  of the Company's foreign entity is the U.S.
dollar.  Unrealized foreign exchange transaction losses are included in selling,
general  and  administrative  expenses  and  amounted  to approximately $16,000,
$28,000  and  $31,000  for  the  years  ended  December 31, 2002, 2001 and 2000,
respectively.

<PAGE>

     p.     Shipping  and  handling  costs
            ------------------------------

          The  Company  includes  shipping  and  handling costs in cost of goods
sold.

     q.     Use  of  estimates
            ------------------

          The  preparation of financial statements in conformity with accounting
principles  generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets  and  liabilities  and disclosure of contingent assets and liabilities at
the  date  of  the financial statements and the reported amounts of revenues and
expenses  during  the  reporting period.  Actual results could differ from those
estimates.

     r.     Reclassifications
            -----------------

          Certain  prior  year  balances  have been reclassified to conform with
current  year  classifications.

     s.     Recent  accounting  pronouncements
            ----------------------------------

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


     In  August  2001,  the  FASB  issued  SFAS  No.  143, "Accounting for Asset
Retirement  Obligations."  SFAS  No.  143  addresses  financial  accounting  and
reporting  for obligations associated with the retirement of tangible long-lived
assets  and  the  associated asset retirement costs.  The Company is required to
adopt the provisions of SFAS No. 143 effective January 1, 2003.  The adoption of
SFAS  No.  143  is  not  expected  to  have  a  material impact on the financial
statements.

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

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

     In  June  2002, SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal  Activities"  was  issued.  This  statement  provides  guidance  on the
recognition  and  measurement of liabilities associated with disposal activities
and  is  effective for the Company on January 1, 2003. The costs associated with
our  restructuring plan, which are not expected to be material, will be expensed
as  incurred  in  2003  in  accordance  with  SFAS  No.  146.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation  -  Transition  and  Disclosure, an amendment of FASB Statement No.
123,"  which  amends SFAS No, 123, "Accounting for Stock-Based Compensation," to
provide  alternative  methods  of  transition for a voluntary change to the fair
value  based  method  of  accounting for stock-based employee compensation.  The
transition  and  annual  disclosure provisions of SFAS No. 148 are effective for
fiscal  years  ending after December 15, 2002.  In addition, SFAS No. 148 amends
the  disclosure requirements of SFAS No. 123 to require prominent disclosures in
both  annual and interim financial statements about the method of accounting for
stock-based  employee compensation and the effect of the method used on reported
results.  The  Company  will continue to account for stock-based compensation to
employees  under  APB  Opinion  No.  25  and  related  interpretations.


4.     FINANCIAL  CONDITION  AND  LIQUIDITY:
       ------------------------------------

     The  Company  anticipated  receiving significant additional purchase orders
from  specific  customers  during  2002.  While  some  of  these purchase orders
eventually  were  received,  the delays  experienced have caused the Company to:
(i) operate in a cash flow deficit for the year; (ii) borrow the maximum amounts
available  under its credit facility; and (iii) pursue potential sources of debt
or  equity  financing.

     On  October  10,  2002, the Company entered into a purchase order financing
facility  with EPK Financial Corporation ("EPK").  Funding entails EPK providing
funds directly to vendors to allow the Company to secure the inventory needed to
fulfill  customer orders.  Sentry's costs for each financing transaction will be
equal  to  3.5% of Sentry's selling price, plus 1.85% on the maximum outstanding
funded  amount  each  ten calendar days or portion thereof, until EPK is paid in
full,  plus  expenses.  In  connection  with  this  facility,  an  Intercreditor
Agreement  was  entered  into  between  EPK, the CIT Group/Business Credit, Inc.
("CIT"), with whom the Company has a  revolving line of credit (see Note 8), and
Sentry.  Under  this agreement, CIT subordinated its rights and interests in the
collateral  related  to  each transaction to EPK.  Currently, under the terms of
the Intercreditors Agreement, the maximum amount subordinated to EPK at any time
is  limited  to  $440,000.  Sentry uses the funds provided by EPK to fund vendor
purchases  to  complete  orders currently in backlog.  At December 31, 2002, the
amount  owed  to  EPK  was  approximately  $6,000.

     Through  2002,  Sentry  was  not successful in achieving positive cash flow
from  operations  and  as a result, its payables to vendors are substantially in
excess  of  terms.  Many  of its vendors are currently providing products to the
Company  on  a  COD  basis.  The  Company  is  currently  working  with  several
investment  banking  firms  to  assist  it in conducting an organized search and
evaluation  regarding a possible corporate transaction to gain access to greater
resources  and  to exploit Sentry's products and technological advances.  Sentry
is  looking  to  raise  in  excess  of $4 million in debt or equity financing to
assist the Company in satisfying its trade payables situation and to achieve its
longer-term  goals.

     The  Company  has  incurred  reduced  revenue  levels,  decreased financial
position and recurring operating losses over the past several years.  To further
address  the  continuing  losses,  Sentry's  business plan for 2002 included the
following:

-     Entering  into  a  new  three-year  financing  agreement.

-     Signing  of a distribution agreement with Dialoc ID, providing Sentry with
      access  to  new  products  and  shared  technologies.

-     Improvements  in  existing  products  and  service  capabilities.

-     Continued  emphasis  on  growing  international  dealer  base.

-     Various  cost  cutting  and  cost  saving  initiatives.

     While  Sentry  was  successful  in completing the above named goals, it was
unable  to  meet its projected revenue growth targets.  The Company's order flow
with  our  largest  customer, Lowe's Home Center increased, but it was unable to
replace  other  lost  business  with  sufficient  new  customer  orders.

     As  a  result,  in  December  2002,  the  Board  of  Directors  approved  a
restructuring  plan  for 2003 to strengthen the Company's operating efficiencies
and  to better align its operations with current economic and market conditions.
The  revised  business  plan  calls  for  the  following:

-     Significantly  downsize  operations  including  the  elimination  of
approximately  60  of  117  positions  to  support  a  business  with  sales  of
approximately  $15  million.

-     Negotiate  with  the current landlord to move out of the Company's present
corporate  facility  and  relocate  to  a  smaller  and  less  costly  facility.

-     Outsource  all  non-essential  manufacturing  and  assembly  operations to
qualified  subcontractors.

-     Further  expand  Sentry's  Service  Partner  program  to  augment  service
provided  by  our  employees.

-     Negotiate  a  settlement  with  past  due  trade  vendors.

     On  January  7,  2003, Sentry initiated its restructuring plan.  Due to the
size  of  the  layoff,  Sentry  was  required to give the terminated employees a
60-day  notice period.  The costs associated with these restructuring activities
will  be  expensed  as  they  are incurred.  The Company believes the successful
implementation  of  this  restructuring  will result in substantial gross margin
improvements  and  reductions  in  operating  expenses beginning after the first
quarter  of  2003.

     There can be no assurance, however, that changes in Sentry's plans or other
events  affecting  its  operations  will not result in accelerated or unexpected
cash  requirements, or that the Company will be successful in achieving positive
cash  flow  from  operations or that additional debt or equity financing will be
available  on  terms  that  are satisfactory to Sentry, or that any such debt or
equity  financing  will  be  sufficient  to  provide  the full amount of funding
necessary.  Sentry's future cash requirements are expected to depend on numerous
factors,  including,  but  not  limited to: (i) the ability to generate positive
cash  flow  from  operations,  and the extent thereof, (ii) the ability to raise
additional  capital  or  obtain  additional  financing,  and  (iii)  economic
conditions.

     Sentry  will  require liquidity and working capital to finance increases in
receivables  and  inventory  associated  with sales growth, payments to past due
vendors  and,  to a lesser extent, for capital expenditures.  The Company had no
material  capital  expenditure  or purchase commitments as of December 31, 2002.

     Currently,  Sentry's  major  shareholder, Dialoc ID, is not able to provide
additional  financial  support  for Sentry.  If the Company is not able to raise
additional  debt or equity financing, we could be forced into a bankruptcy or be
required  to  liquidate  its  assets.  In  this  scenario, most likely, Sentry's
secured  lender  would  receive  the  bulk  of  any  proceeds.


5.     INVENTORIES:
       -----------

     Inventories  consist  of  the  following:

                                        December 31,
                                        ------------
                                    2002          2001
                                    ----          ----
                                      (In Thousands)
                                      --------------
Raw  materials                   $   513        $  1,139
Work-in-process                      618             520
Finished  goods                    2,014           3,081

Total                            $ 3,145        $  4,740

     The  components  of  inventory  shown  are  net  of reserves for excess and
obsolete  inventory  totaling  $3,610,000 and $3,497,000 as of December 31, 2002
and  2001,  respectively.


6.     PROPERTY,  PLANT  AND  EQUIPMENT:
       --------------------------------

     Property,  plant  and  equipment  are  stated at cost and are summarized as
follows:

                             Estimated
                              Useful
                               Lives          December 31,
                              (Years)     2002          2001
                                          ----          ----
                                            (In Thousands)
                                            --------------

Building                         20      $  3,033     $  3,033
Machinery  and  equipment     3  -  10      2,076        2,060
Furniture,  fixtures  and
    office  equipment         3  -  10      3,700        3,691
Leasehold  improvements       3  -  10        312          312
                                         --------     ---------
                                            9,121        9,096
                                         --------     ---------
Less  allowance for depreciation            6,558        6,134
                                         --------     ---------
                                         $  2,563     $  2,962
                                         ========     =========

<PAGE>

Depreciation  expense  on  property,  plant and equipment in 2002, 2001 and 2000
totaled  $466,000,  $486,000  and  $587,000,  respectively.


7.     ACCRUED  LIABILITIES:
       --------------------

Accrued  liabilities  consist  of  the  following:
                                                            December 31,
                                                            ------------
                                                         2002          2001
                                                         ----          ----
                                                           (In Thousands)
                                                           --------------

Accrued salaries, employee benefits and payroll taxes  $  522       $  621
Accrued  warranty                                         268          337
Other  accrued  liabilities                               733          906
                                                       ------       -------
                                                       $1,523       $1,864

8.     REVOLVING  LINE  OF  CREDIT:
       ---------------------------


     On March 22, 2002, the Company entered into a new three year revolving line
of credit and term loan with CIT for maximum borrowings of $8 million, which are
subject  to  certain  limitations  based  on  a  percentage of eligible accounts
receivable  and  inventories  as  defined  in  the  agreement.  Interest  on the
revolving  line  of  credit  is payable monthly at the JPMorgan Chase Bank prime
rate  (4.25%  at December 31, 2002), plus 2% per annum.  The Company is required
to  pay a commitment fee of 0.375% per annum on any unused portion of the credit
facility.  Borrowings  under  the  line  are secured by substantially all of the
Company's  assets.  The  terms  of  the  agreement,  among other matters, places
restrictions  on  capital  expenditures  and prohibits the payment of dividends.
The  Company  had  borrowings  on  the  line of credit totaling $2,034,000 as of
December  31,  2002.  In addition, the Company entered into a $100,000 term loan
with  CIT.  The  principal  is  currently  being  repaid  to CIT in twelve equal
monthly  installments  of  $8,333,  which began May 1, 2002.  The balance on the
term loan at December 31, 2002 was $33,000.  Interest on the term note is at the
JPMorgan  Chase  Bank  prime  plus 2.25%.  At December 31, 2001, the Company had
borrowings  of  $2,599,000  under  a  line  of  credit  with  another  financial
institution  at  an  interest  rate  of  6.52%.


9.     OBLIGATIONS  UNDER  CAPITAL  AND  OPERATING  LEASES:
       ---------------------------------------------------

     In December 1996, the Company completed a sale-leaseback transaction on the
Company's  corporate  headquarters.  The  Company  received  net  proceeds  of
approximately  $4.5  million  which approximated the carrying amount of the land
and  building.  The lease covers a period of 20 years with quarterly payments of
$145,000.  The  lease  agreement  allows  for  an increase in lease payments for
years 4 through 20 based on a formula tied to the Consumer Price Index.  Because
the  fair  market value of the land on which the principal premises is built was
greater  than  25  percent of the total fair value of the leased premises at the
inception  of  the  lease, the land and building have been considered separately
for the purposes of applying the criteria of SFAS No. 13, Accounting for Leases.
The land portion of the lease has been classified as an operating lease.  Future
minimum  payments  related  to  the land portion of the lease are as follows (in
thousands):

<PAGE>

                                   Year Ending
                                  December 31,
                                  ------------

                                      2003        $    206
                                      2004             206
                                      2005             206
                                      2006             206
                                      2007             206
                                 Thereafter          1,847
                                                    ------
                                                  $  2,877

     Rent  expense  for  2002, 2001 and 2000 was $173,000, $155,000 and $155,000
per  year,  respectively.

     The  building  portion of the lease has been classified as a capital lease.
The  Company also leases certain computer and office equipment and related items
under  noncancellable  capital  lease  arrangements  at  varying  interest rates
expiring  through  2007.


     Minimum  annual  rentals  are  as  follows  (in  thousands):

                                Year Ending
                                December 31,
                                ------------

                                    2003          $  394
                                    2004             383
                                    2005             383
                                    2006             383
                                    2007             377
                               Thereafter          3,381
                                                 -------
                                                   5,301
                                                 -------
         Less  amount  representing  interest      2,649
         Present  value  of  minimum  rentals      2,652
                                                 -------
                       Less  current  portion         97
                                                 -------
                          Noncurrent  portion    $ 2,555

     As  a  result  of the sale-leaseback transaction, a capitalized lease asset
and  obligation in the amount of $3,033,000 was recorded at the inception of the
lease.  The  net  book  value  of  the building was $2,123,000 and $2,275,000 at
December  31, 2002 and 2001, respectively.  The building is being amortized on a
straight-line  basis  over  the  20-year  lease  term.  The  capitalized  lease
obligation  is  being amortized under the interest method over the 20-year lease
period,  utilizing  an  imputed  interest  rate  of  approximately  11%.

     The  Company  has  entered  into  sublease  agreements with two parties for
portions  of  its  present  corporate  facility.  Rental  income  under  these
agreements,  included  in  selling,  general  and  administrative  expenses,
approximated  $370,000,  $200,000,  and  $139,000  in  2002,  2001  and  2000,
respectively.  Minimum  future  rental  payments  due  under  these  agreements
approximated  $469,000  at  December  31,  2002.

     Computer  and  office  equipment and related items under capital leases are
included  in  property  and  equipment  and  other  assets with a gross value of
$325,000  and  $299,000  at  December  31, 2002 and 2001 and a net book value of
$29,000  and  $65,000  at  December  31,  2002  and  2001,  respectively.


10.     COMMON  SHAREHOLDERS'  EQUITY:
        -----------------------------

     a.     Earnings  Per  Share  ("EPS")
            -----------------------------

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

<TABLE>
<CAPTION>

<S>                                           <C>       <C>       <C>
                                                 2002      2001      2000
                                              --------  --------  --------
                                        (In Thousands, Except Per Share Amounts)
                                       --------------------------------------------
Numerator:
 Net Income (Loss):
 Loss before cumulative effect of
   accounting change . . . . . . . . . . . .  $(3,356)  $(2,911)  $(7,821)
 Effect of preferred stock dividends . . . .        -       (25)   (1,337)
 Return to common shareholders from
   redemption of preferred stock . . . . . .        -    27,198         -
                                                    -    24,262    (9,158)
                                              --------  --------  --------
 Cumulative effect of accounting change. . .        -         -      (301)
 Net income (loss) attributed to
   common shareholders . . . . . . . . . . .  $(3,356)  $24,262   $(9,459)


Denominator:
 Denominator for basic earning per share -
   weighted average shares . . . . . . . . .   72,193    60,468     9,751
 Effect of dilutive stock options. . . . . .        -     1,540         -

 Denominator for diluted earnings per share.   72,193    62,008     9,751


Basic Earnings per Common Share:
 Before cumulative effect of accounting
   change. . . . . . . . . . . . . . . . . .  $ (0.05)  $  0.40   $ (0.94)
 Cumulative effect of accounting change. . .        -         -     (0.03)
 Basic earnings per common share . . . . . .  $ (0.05)  $  0.40   $ (0.97)
                                              --------  --------  --------

 Diluted earnings per common share . . . . .  $ (0.05)  $  0.39   $ (0.97)
</TABLE>


          Since  the  Company  had  a  net loss for 2002 and 2000, the effect of
common  stock  options  and  warrants  would  be  antidilutive.


     b.     Stock  options
            --------------

          In February 1997, the Company adopted the 1997 Stock Incentive Plan of
Sentry  Technology  Corporation  (the  "1997  Plan").  The  1997  Plan initially
provided  for  grants  up  to 2,250,000 options to purchase the Company's common
stock.  Under the antidilution provisions of the 1997 Plan, the shares available
for grant were increased by 1,719,365 shares, as a result of the preferred stock
redemption  in  January 2001.  In March 2001, the Board of Directors approved an
additional increase of 3,600,000 shares available for grant pending ratification
by  Sentry's  shareholders.  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 nonqualified 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.  However, the Dialoc ID investment constituted
a  change  in control under the 1997 Plan, resulting in the immediate vesting of
all  shares issued prior to January 8, 2001.  All outstanding stock options were
issued  at  not less than the fair value of the related common stock at the date
of  grant.  At  December  31,  2002,  7,257,738  common shares were reserved for
issuance  in  connection  with  the  exercise  of  stock  options.

          In  January  2001,  the  Company  issued 2,000,000 non-qualified stock
options  to  Mr. Murdoch, its Chief Executive Officer, at the price of $0.06 per
share,  which  was  the fair value on the date of the grant.  On March 27, 2002,
Mr.  Murdoch  exercised  the option through the issuance of a promissory note in
the  amount  of  $120,000.  The  principal  of the note is secured by the option
shares  and  is  repayable  no later than January 8, 2006.  Mr. Murdoch will not
have  any  personal  liability for the principal of the note if the value of the
option  shares  is not sufficient to repay the note.  The note bears interest at
prime  (currently  4.25%) less .75%.  The note has been reflected as a reduction
of  shareholders'  equity  on  the  consolidated  balance  sheet.

          In  connection  with  redemption  of  Sentry  Class  A Preferred Stock
described  in Note 2, employees and directors who held options to purchase units
of  preferred  stock  were  granted  substitute  options  under the 1997 Plan to
purchase an aggregate of 1,719,365 shares of Sentry Common Stock at the ratio of
five  (5)  common  shares  to  each  preferred  share  under  option.

          In  October  1999,  the  Company  issued  200,000  non-qualified stock
options  to the Interim Chief Executive Officer at the price of $0.19 per share,
which  was the fair value on the date of grant.  The options are fully vested at
December  31,  2002  and  expired  on  January  8,  2003.

<PAGE>

          Stock  option transactions for the years ended December 31, 2002, 2001
and  2000  are  as  follows:

<TABLE>
<CAPTION>
<S>                         <C>          <C>
                            Weighted     Average
                            Number       Exercise
                            of Shares    Price

Balance, January 1, 2000 .   1,658,259   $    2.21

Granted. . . . . . . . . .     612,000        0.07
Exercised. . . . . . . . .           -           -
Canceled . . . . . . . . .    (255,886)       2.66
Balance, December 31, 2000   2,014,373        1.50
                            -----------  ---------

Granted. . . . . . . . . .   4,259,365        0.32
Exercised. . . . . . . . .     (75,000)       0.07
Canceled . . . . . . . . .    (377,258)       0.90
Balance, December 31, 2001   5,821,480        0.49
                            -----------  ---------

Granted. . . . . . . . . .           -           -
Exercised. . . . . . . . .  (2,001,000)       0.06
Canceled . . . . . . . . .    (479,188)       0.87

Balance, December 31, 2002   3,341,292   $    0.69
</TABLE>


    Significant option groups outstanding at December 31, 2002 and related
option  price  and  life  information  were  as  follows:
<TABLE>
<CAPTION>

<S>              <C>          <C>             <C>
                              Weighted
                              Average
                              Remaining
Range of. . . .  Number       Contractual     Number
Exercise Price.  Outstanding    Life          Exercisable
---------------
0.05 - 0.09. .    1,001,500      7.38          640,300
0.31 - 0.62. .    1,157,356      3.87        1,157,356
1.05 - 3.00. .    1,182,436      4.52        1,182,436
                 ----------     -----        ---------
                  3,341,292      5.15        2,980,092
                 ==========     =====        =========
</TABLE>

          At  December  31,  2002, options to purchase an aggregate of 2,980,092
common  shares  were  vested  and  currently  exercisable  at a weighted average
exercise  price  of  $0.76  and  an  additional  361,200  options  vest at dates
extending  through  the year 2006, expiring through 2011.  At December 31, 2002,
options  for  3,916,466  common  shares  were  available  for  future  grants.

          As  discussed  in  Note  3,  the  Company accounts for its stock-based
awards using the intrinsic value method in accordance with Accounting Principles
Board  Opinion  No. 25, Accounting for Stock Issued to Employees and its related
interpretations.  Accordingly,  as  all  options  have  been granted at exercise
prices  equal to fair market value on the date of grant, no compensation expense
has been recognized in the financial statements for employee stock arrangements.

          SFAS  No.  123,  Accounting for Stock-Based Compensation, requires the
disclosure  of  pro  forma  net  income  and  earnings per share had the Company
adopted  the  fair  value method as of the beginning of fiscal 1995.  Under SFAS
No. 123, the fair value of stock-based awards to employees is calculated through
the  use  of  option  pricing  models, even though such models were developed to
estimate  the  fair value of freely tradable, fully transferable options without
vesting  restrictions,  which  significantly  differ  from  the  Company's stock
options  awards.  These  models  also  require subjective assumptions, including
future  stock  price  volatility  and  expected  time to exercise, which greatly
affect  the  calculated  values.  No options were granted in 2002.  The weighted
average  fair  value of the options granted for the year ended December 31, 2001
and  2000  is  estimated  at  $0.05,  and  $0.06, using the Black-Scholes option
pricing model with the following weighted average assumptions:  expected life of
five  years;  stock  volatility,  147%  in  2001  and  260.5% in 2000; risk free
interest  rates,  4.8%  in  2001  and  6.2% in 2000, and no dividends during the
expected  term.  The  Company's  calculations  are  based  on  a multiple option
valuation  approach  and  forfeitures  are  recognized  as  they  occur.  If the
computed  fair values of the post 1995 awards had been amortized to expense over
the  vesting  period  of  the  awards, pro forma net income (loss) attributed to
common  shareholders would have been $(3,350,000) (($0.05) per diluted share) in
2002,  $23,600,000  ($0.38  per diluted share) in 2001 and $(9,929,000) (($1.02)
per  diluted share) in 2000.  However, the impact of outstanding nonvested stock
options  granted prior to 1995 has been excluded from the pro forma calculation;
accordingly, the 2002, 2001 and 2000 pro forma adjustments are not indicative of
future  period  pro  forma  adjustments,  when the calculation will apply to all
applicable  stock  options.

     c.     Warrants
            --------

          In  1999  the  Company  issued  warrants to purchase 150,000 shares of
common stock at an exercise price of $0.13.  Such warrants expire in March 2008.
At  December  31,  2002,  150,000  common  shares  were reserved for issuance in
connection  with  these  warrants.


11.     INCOME  TAXES:
        -------------

     The  reconciliation between total tax expense and the expected U.S. Federal
income  tax  is  as  follows:

<TABLE>
<CAPTION>
<S>                                     <C>       <C>     <C>
                                           2002    2001      2000
                                        --------  ------  --------
                                              (In Thousands)
                                        --------------------------

Expected tax benefit at 34%. . . . . .  $(1,141)  $(990)  $(2,761)
Add:
 Nondeductible expenses. . . . . . . .       26      27       386
 U.S. losses producing no tax benefit.    1,115     963     2,375

                                        $     -   $   -   $     -
</TABLE>


     As  of  December 31, 2002, the Company had net operating loss carryforwards
of  approximately  $30  million,  which  expire  through  the  year  2022.  The
utilization  of these net operating loss carryforwards will likely be subject to
substantial annual limitations imposed by the Internal Revenue Code Section 382.

<PAGE>

     Significant  components  of deferred tax assets and liabilities at December
31,  2002  and  2001  are  comprised  of:

<TABLE>
<CAPTION>
<S>                                  <C>                    <C>
                                            Deferred Tax Assets
                                               (Liabilities)
                                         2002                 2001
                                     ------------------------------
    (In Thousands)
-----------------------------------
Assets:
 Accounts receivable. . . . . . . .  $        121           $   305
 Inventories. . . . . . . . . . . .         1,569             1,550
 Accrued liabilities. . . . . . . .           107               142
 Property, plant and equipment. . .           181                85
 Net operating loss carryforwards .        11,993            10,521
 Tax credit carryforwards . . . . .             -               209
 Gross deferred tax assets. . . . .        13,971            12,812
                                     ------------          --------
 Less valuation allowance . . . . .        13,971            12,782
                                                -                30
                                     ------------          --------
Liabilities:
 Tollgate taxes . . . . . . . . . .             -               (30)
 Gross deferred tax liabilities . .             -               (30)
                                     ------------          --------

 Net deferred tax asset (liability)  $          -          $     -
</TABLE>

     The  increase  in  the valuation allowance for the years ended December 31,
2002  and  2001 was primarily attributable to the increase in net operating loss
carryforwards.  A  full  valuation  allowance  has been recorded against the net
deferred  tax assets because it is more likely than not that such asset will not
be  realized  in  the  foreseeable  future.


12.     RELATED  PARTY  TRANSACTIONS:
        ----------------------------

     As a result of the Dialoc ID investment, Sentry entered into a distribution
agreement with Dialoc ID, which contemplates a two-way distribution relationship
between  the  companies.  Under  the  agreement,  Sentry  has the rights to sell
Dialoc  ID's  EAS,  access  control and RFID products and accessories and Sentry
gives  Dialoc  ID  the rights to sell its EAS and CCTV products and accessories.
Pricing  for  products  under the agreements are at the lowest prices charged to
affiliates.  In  addition,  Dialoc  ID  received  an  annual  management fee for
product  marketing  and product engineering management from Sentry in the amount
of  $50,000 and $100,000 in 2002 and 2001, respectively.  Also, Peter Murdoch, a
shareholder  of Dialoc ID through a trust, receives an annual salary of $150,000
in the capacity of President of Sentry.  This amount has been reduced to $50,000
for  2003.  Purchases from Dialoc ID were $30,000 and $182,000 in 2002 and 2001,
respectively.  Services  and sales to Dialoc ID were $79,000 and $19,000 in 2002
and  2001, respectively.  The net amount payable to Dialoc ID as of December 31,
2002  was  $140,000.


13.     COMMITMENTS  AND  CONTINGENCIES:
        -------------------------------

     a.     401(k)  Plan
            ------------

     In  January  1997,  the  Company  adopted the Sentry Technology Corporation
Retirement  Savings  401(k)  Plan  (the  "Plan").  The  Plan  permits  eligible
employees  to make voluntary contributions to a trust, up to a maximum of 35% of
compensation, subject to certain limitations, with the Company making a matching
contribution  equal  to  a  designated  percentage  of  the  eligible employee's
deferral  election.  The  Company  may  also  contribute  a  discretionary
contribution,  subject  to  certain  conditions,  as  defined  in the Plan.  The
Company contributed approximately $48,000, $68,000, and $117,000 to the Plan for
the  years  ended  December  31,  2002,  2001  and  2000,  respectively.

     b.     Employment  agreements
            ----------------------

          The  Company  and  several  key  executives  entered  into  employment
agreements  with  remaining terms of one to two years for which the Company will
have  a  minimum  commitment  of  $339,000.

     c.     Litigation
            ----------

          The  Company  is  a  party  to litigation matters and claims which are
normal  in  the  course of its operations.  While the results of such litigation
and  claims  cannot  be  predicted  with certainty, management believes that the
final  outcome  of such matters will not have a materially adverse effect on the
Company's consolidated financial position, results of operations and cash flows.


14.     MAJOR  CUSTOMERS  AND  CREDIT  CONCENTRATIONS:
        ---------------------------------------------

     The  Company  grants  credit to customers who are principally in the retail
industry  and  libraries.  During  2002,  2001  and 2000, revenues from a single
customer  represented  approximately  40%,  22%  and  14%  of  total  revenues,
respectively.  During  2001  and  2000,  revenues  from  a  different  customer
represented  11%  and  15%  of  total revenues, respectively.  No other customer
accounted  for  more than 10% of total revenues for fiscal  2002, 2001 and 2000.


15.     REVENUE  BY  PRODUCT  LINE:
        --------------------------

     Revenues  by  product  line  are  as  follows:
<TABLE>
<CAPTION>
<S>                          <C>      <C>      <C>
                                2002     2001     2000
                             -------  -------  -------
  (In Thousands)
---------------------------

EAS . . . . . . . . . . . .  $ 2,530  $ 5,600  $ 7,545
CCTV. . . . . . . . . . . .    4,578    4,833    5,340
Sentry Vision . . . . . . .    2,368    1,772    1,713
3 M library products. . . .      256      622    1,103
Service revenues and other.    4,804    4,472    4,164
                             -------  -------  -------
Total revenues. . . . . . .  $14,536  $17,299  $19,865
                             =======  =======  =======
</TABLE>


16.     ASSET  IMPAIRMENT:
        -----------------

     In the fourth quarter of 2000, the Company reassessed the carrying value of
the  goodwill  and  related  patents generated from the Video Sentry merger as a
result  of  the  introduction  of  SmartTrack,  the  next  generation  in  the
SentryVision  family  of  products.  Based  on  a  review  of  the technological
developments  in  the  marketplace, the Company determined that the goodwill and
related  patents  associated  with  the  Company's  original  traveling  CCTV
surveillance system no longer provided the Company with a competitive advantage.
As  a  result,  the  Company recorded an impairment charge of $2,981,000 for the
year  ended  December  31,  2000.

     This  impairment  charge  was calculated by comparing future discounted net
cash  flows to the goodwill's carrying value.  Factors leading to the impairment
were  a  combination of historical losses and insufficient estimated future cash
flows  from  the  earlier  generation  SentryVision  system.


17.      SELECTED  QUARTERLY  FINANCIAL  INFORMATION  (UNAUDITED):
         ---------------------------------------------------------

     The  table  below  sets  forth  selected  unaudited financial data for each
quarter  of  the  last two years.  Loss per share data is computed independently
for  each  of  the quarters presented and therefore may not sum to the total for
the  year.


<TABLE>
<CAPTION>
<S>                      <C>            <C>            <C>             <C>             <C>

                         1st  Quarter   2nd  Quarter   3rd  Quarter    4th  Quarter    Year
                         ------------   ------------   ------------    ------------    ----
                                         (In  Thousands,  Except  Per Share Data)
2002
----
Revenue                      4,742         3,181           3,425          3,188         14,536
Gross  Profit  (Loss)        1,315           568             564            467          2,914
Net  Loss                     (350)       (1,085)         (1,048)          (873)        (3,356)
Basic  Income  (Loss)
   Per  Common  Share    $   (0.01)     $  (0.02)      $   (0.01)      $  (0.01)       $ (0.05)
Diluted  Income  (Loss)
   Per  Common  Share    $   (0.01)     $  (0.02)      $   (0.01)      $  (0.01)       $ (0.05)


  2001
  ----
Revenue                      4,670         4,005           4,329          4,295         17,299
Gross  Profit  (Loss)        1,150           878             936          1,095          4,059
Net  Loss                     (694)         (861)           (717)          (639)        (2,911)
Basic  Income  (Loss)
   Per  Common  Share    $    0.46      $   (0.01)     $   (0.01)      $  (0.01)       $  0.40
Diluted  Income  (Loss)
   Per  Common  Share    $    0.46      $   (0.01)     $   (0.01)      $  (0.01)       $  0.39

</TABLE>

                            SUPPLEMENTARY INFORMATION
                            -------------------------
                          SENTRY TECHNOLOGY CORPORATION
                          -----------------------------
                                AND SUBSIDIARIES
                                ----------------
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                 -----------------------------------------------
                                 (IN THOUSANDS)
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                  --------------------------------------------
<TABLE>
<CAPTION>

<S>                                        <C>          <C>           <C>         <C>           <C>

                                                                COLUMN C
                                                                --------
              COLUMN A                      COLUMN B            Additions         COLUMN D      COLUMN E
-----------------------------------------  -----------          ---------         ---------     ---------

                                           Balance,     Charged to    Other                     Balance,
                                           Beginning    Cost and      Accounts/   Deductions/   End
            Descriptions                   of Year      Expenses      Describe    Describe      of Year
                                                                         (1)         (2)
                                           -----------  ------------  ----------  -----------   --------
Year Ended December 31, 2002:
Allowance for doubtful accounts . . . . .  $      763   $      (225)  $        2  $        237  $    303
                                           ===========  ============  ==========  ============  ========

Reserve for excess and obsolete inventory  $    3,497   $       819               $        706  $  3,610
                                           ===========  ============              ============  ========

Year Ended December 31, 2001:
Allowance for doubtful accounts . . . . .  $      890   $        37   $        -  $        164  $    763
                                           ===========  ============  ==========  ============  ========

Reserve for excess and obsolete inventory  $    3,354   $       535               $        392  $  3,497
                                           ===========  ============              ============  ========

Year Ended December 31, 2000:
Allowance for doubtful accounts . . . . .  $      683   $       224   $       42  $         59  $    890
                                           ===========  ============  ==========  ============  ========

Reserve for excess and obsolete inventory  $    3,404   $     1,186               $      1,236  $  3,354
                                           ===========  ============              ============  ========

(1) Recoveries of accounts written off.
(2) Amounts written off.

</TABLE>

Item  9.      Changes  in  and  Disagreements with Accountants on Accounting and
-------       ------------------------------------------------------------------
Financial  Disclosure.
---------------------

     None.


     PART  III
     ---------


Item  10.      Directors  and  Executive  Officers  of  the  Registrant.
--------       --------------------------------------------------------

DIRECTORS

     The  following  sets  forth  information  regarding  the persons serving as
Directors  of  Sentry:

     PETER  L.  MURDOCH,  age  49,  has  been  the President and Chief Executive
Officer,  Director  and Chairman of the Board since January 8, 2001.  He is also
the  President  of  ID  Security  Systems Canada Inc.  Mr. Murdoch has extensive
experience  in  the  retail  security  industry  as  well  as  in  the  sales of
technology-based products.  He has been Managing Director of ID Security Systems
Canada,  Inc.  since  its inception in 1987.  Beginning in 1997 he has served as
member  of  the management committee of Dialoc ID.  Prior to joining ID Security
Systems  Canada,  Inc.,  Mr.  Murdoch  was  Vice President of Sales for Catalyst
International Business Systems.  He is an economics graduate from the University
of Western Ontario.  Mr. Murdoch's term as a Director expires at the 2003 Annual
Meeting.

     WILLEM  ANGEL,  age  70,  has  been  a  Director of Sentry Technology since
January  8, 2001.  Mr. Angel was appointed to the Board of Directors when it was
expanded  from  five to seven members.  Mr. Angel is Chairman & C.E.O. of Dialoc
ID  and  has a long history in the EAS and identification business dating to the
start  of  ID  Engineering in 1970.  In 1977 he co-founded ID Engineering Europe
creating  an EAS manufacturing and sales organization serving Western Europe. In
1987,  his company expanded into Canada, opening ID Security Systems Canada Inc,
leading  to  the  creation  of Dialoc ID in 1989 and the Dialoc International in
1991  which  manufactures  and markets EAS, Access Control, and RFID products to
dealers  and  distributors worldwide.  Mr. Angel's term as a Director expires at
the  next  Annual  Meeting.

COR S.A. DE NOOD, age 58, has been a Director of Sentry Technology since January
8,  2001.  Mr.  De  Nood  is  the  Vice President and Chief Technical Officer of
Dialoc  ID.  In 1977, he co-founded the ID Engineering Europe, Dialoc ID in 1989
and  Dialoc International B.V. in 1991.  As co-founder of ID Engineering, Cor de
Nood  has  more  than  30  years  of  experience  developing,  designing,  and
manufacturing  EAS  and  identification  systems.  In  his  capacity  as  Chief
Technical  Officer  of  Dialoc  ID,  Mr.  De  Nood  has  developed  key  ongoing
relationships with Philips Electronics, TNO (the Dutch research council) and the
University  of  Eindhoven  which  greatly  assist  his  companies  in developing
products  and  pursuing  fundamental research projects.  Mr. De Nood's term as a
Director  expires  at  the  2003  Annual  Meeting.

     ROBERT  D.  FURST,  JR.,  age  50, has been a Director of Sentry Technology
since  its  inception.  Prior  thereto  he  was  a  Director  of  Video  Sentry
Corporation,  our  predecessor,  from  January 1993 until February 1997.  He was
Chairman of the Board of Video Sentry from July 1996 and Chief Executive Officer
from  August  1996  until  February  1997.  Mr.  Furst  was  one of the original
shareholders  of Video Sentry.  He is also the founder and managing principal of
Alternative  Strategy  Advisers  LLC, an alternative investment management firm.
Mr.  Furst  is  a member of the Chicago Board of Trade and has been a securities
and  commodities  trader  since  1980. Mr. Furst is a continuing director on the
Board  of  Directors  after  the  completion  of  the Dialoc ID Investment.  Mr.
Furst's  term  as  a  Director  expires  at  the  next  Annual  Meeting.

JONATHAN  G.  GRANOFF,  age  52,  has been a Director of Sentry Technology since
January  8,  2001.  Mr.  Granoff was appointed to the Board of Directors when it
was  expanded  from  five  to seven members. Mr. Granoff is the President of the
Global Security Institute and United Nations representative for Lawyers Alliance
for  World  Security.  He  is  also  Chairman  of  the  American Bar Association
Committee on Arms Control and Disarmament.  Mr. Granoff has been in the practice
of  law  since  1979.  Formerly  Mr.  Granoff served at Nutri Systems Inc. as an
attorney  and Director of Franchising.  Mr. Granoff's term as a Director expires
at  the  2002  Annual  Meeting.

EXECUTIVE  OFFICERS  EXECUTIVE  OFFICERS

     The  following  sets  forth  information  regarding  the persons serving as
executive  officers  of  the  Company:



 NAME                            AGE
 ----                          ------
Peter  L.  Murdoch               49

OFFICE
------
Our  President  and  Chief  Executive  Officer since January 8, 2001. He is also
President  of  ID  Security  Systems  Canada,  Inc.  Mr.  Murdoch  has extensive
experience  in  the  retail  security  industry  as  well  as  in  the  sales of
technology-based  products.  He  was  Managing  Director  of ID Security Systems
Canada,  Inc.  since  its  inception in 1987. Beginning in 1997 he has served as
member  of  the  management committee of Dialoc ID. Prior to joining ID Security
Systems  Canada,  Inc.,  Mr.  Murdoch  was  Vice President of Sales for Catalyst
International  Business Systems. He is an economics graduate from the University
of  Western  Ontario.


 NAME                               AGE
 ----                             ------
Peter  J. Mundy                     46

OFFICE
------
Our Vice President-Finance and Chief Financial Officer. Mr. Mundy also serves as
our  Secretary  and  Treasurer.  Mr.  Mundy  was Vice President - Finance, Chief
Financial  Officer,  Secretary  and  Treasurer  of Knogo North America Inc. from
December  1994.  Prior  thereto,  Mr.  Mundy  served  as  an  officer  of  Knogo
Corporation  where  he  was  Vice President - Corporate Controller from May 1994
and,  prior  to  such  time, Corporate Controller and Controller since 1982. Mr.
Mundy  is  a  Certified  Public  Accountant.



 NAME                               AGE
 ----                             ------
John F. Whiteman                    44

OFFICE
------
Mr.  Whiteman  became our Senior Vice President - Sales and Marketing in January
1998.  Prior thereto he was Senior Vice President - Sales and Marketing of Knogo
North  America  Inc.  since  January  1997; Vice President Sales - West of Knogo
North  America  Inc. and Knogo Corporation from 1994 to 1996; and, prior to such
time,  served  in various sales positions with Knogo Corporation since 1986. Mr.
Whiteman  resigned  effective  December  2002.



SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE

          Section  16(a)  of  the Securities Exchange Act of 1934 (the "Exchange
Act")  requires  the Company's officers, Directors and persons who own more than
10%  of a registered class of the Company's equity securities to file reports of
ownership  and  changes in ownership with the Securities and Exchange Commission
and  the  American  Stock  Exchange.  Officers,  Directors  and  greater  than
ten-percent  Stockholders  are  required  by  Securities and Exchange Commission
regulations  to  furnish  the Company with copies of all such reports they file.

              Based solely on a review of the copies of reports furnished to the
Company,  or  written representations that no Forms 5 were required, the Company
believes  that during the fiscal year ended December 31, 2002, all Section 16(a)
filing  requirements  applicable  to  its  officers,  Directors and greater than
ten-percent  beneficial  owners  were  complied  with.


<PAGE>
------
Item  11.      Executive  Compensation.
--------       -----------------------

SUMMARY  COMPENSATION  TABLE

     The  following  table summarizes the compensation for our fiscal year ended
December  31,  2002  of  our  Chief  Executive  Officer  and two other executive
officers:


<TABLE>
<CAPTION>
<S>                                                 <C>     <C>             <C>               <C>                 <C>
                                                                                                LONG-TERM           ALL OTHER
                                                             ANNUAL COMPENSATION               COMPENSATION        COMPENSATION (1)
                                                            ---------------------             --------------      -----------------

NAME AND . . . . . . . . . . . . . . . . . . . . .                                                SECURITIES
PRINCIPAL POSITION . . . . . . . . . . . . . . . .     YEAR      SALARY        BONUS              UNDERLYING
                                                                                                  OPTIONS(#)
--------------------------------------------------  ---------  -----------  -----------        ---------------


Peter L. Murdoch . . . . . . . . . . . . . . . . .    2002      $ 87,500(2)       -                      -               -
President and CEO. . . . . . . . . . . . . . . . .    2001       150,000          -                2,000,000             -

Peter J. Mundy,                                       2002       131,160          -                      -             $1,967
Vice President, Finance,                              2001       131,160          -                      -              2,492
Secretary and Treasurer                               2000       126,970    $ 25,394(4)              150,000            4,568
Vice President - Finance, Secretary and Treasurer


John F. Whitemen                                      2002       161,051          -                      -             $2,416
Former Sr. Vice President                             2001       161,051          -                      -              3,060
Sales and Marketing (3)                               2000       155,906      31,181(4)              150,000            5,100
________________________

</TABLE>


(1)     Amounts shown consist of our matching contributions under the Retirement
Savings  401(k)  Plan.

(2)     Mr.  Murdoch  deferred  $62,500  of  salary  in  2002.

(3)     Mr.  Whiteman  resigned  effective  December  2002.

(4)     Amounts  represent  retention  bonuses  paid  on  December  31,  2000.

     As  to  various  items  of  personal  benefits,  we have concluded that the
aggregate  amount  of  such  benefits  with  respect to each individual does not
exceed  the  lesser of $50,000 or 10% of the annual salary and bonus reported in
the  table  for  such  individual.


OPTIONS  GRANTED  IN  LAST  FISCAL  YEAR  Options  Granted  in  Last Fiscal Year

     No  options  were  granted  during  fiscal  year  2002.

AGGREGATED  OPTION  EXERCISES  IN  LAST  FISCAL  YEAR AND FISCAL YEAR END OPTION
VALUESAggregated Option Exercises In Last Fiscal Year And Fiscal Year End Option
Values

     The following table sets forth for each of the persons named in the Summary
Compensation  Table  the  number of options exercised during 2002 and the amount
realized  by  each  such  officer.  In  addition,  the table shows the number of
options  that  the  named  executive  officer held as of December 31, 2002, both
exercisable  (E) and unexercisable (U), and the value of such options as of that
date.


<TABLE>
<CAPTION>
<S>                     <C>               <C>              <C>                           <C>
                                                           NUMBER  OF  UNEXERCISED       VALUE OF UNEXERCISED IN
                                                           OPTIONS AT YEAR-END (#)       THE  MONEY  OPTIONS  AT
                                                                                               YEAR END ($)
                           SHARES
                        ACQUIRED  ON       VALUE                  EXERCISABLE/            EXERCISABLE/
NAME                    EXERCISE  (#)     REALIZED  ($)          UNEXERCISABLE            UNEXERCISABLE
----                    -------------     -------------          -------------            -------------
Peter L. Murdoch        2,000,000(1)        260,000                E        -              E         -
                                                                   U        -              U         -

Peter J. Mundy                -                -                   E  669,218              E         -
                                                                   U        -              U         -

John  F.  Whiteman            -                -                   E        -              E         -
                                                                   U        -              U         -

</TABLE>

                                       28

(1)     In  March  2002,  Mr.  Murdoch  exercised  a  non-qualified stock option
through  the  issuance  of  a  promissory  note  in the amount of $120,000.  The
principal  of the note is secured by the option shares and is repayable no later
than  January  8,  2006.  Mr.  Murdoch  will  have no personal liability for the
principal  on  the  note  if the value of the option shares is not sufficient to
repay  the  note.  The  note  bears  interest  at  prime  less  .75%.

_______________

COMPENSATION  OF  DIRECTORSCompensation  Of  Directors

     Directors  who  are  also  our  full-time  employees  receive no additional
compensation for their services as Directors.  In response to Sentry's financial
condition,  the  Directors  agreed  to  waive  their  annual  retainer for 2002.

     In  addition,  each non-employee Director is eligible to participate in our
1997  Stock  Incentive Plan.   On February 20, 2001, each non-employee Director,
at  that  time,  received  a  grant  of options to purchase 30,000 shares of our
common  stock  at an exercise price of $0.0625, vesting in equal portions over a
three-year  period.

EMPLOYMENT  AGREEMENTS AND COMPENSATION OF EXECUTIVE OFFICERS; CHANGE OF CONTROL
ARRANGEMENTS  Employment  Agreements  And  Compensation  Of  Executive Officers;
Change  Of  Control  Arrangements

     The  Board  set  Peter  L.  Murdoch's  compensation,  in  the  capacity  of
President, at an annual salary of $150,000 per year for 2001 and 2002.  For 2003
the  amount  has  been  set  at  $50,000.  In  addition, he received options for
2,000,000  shares  of Sentry common stock at an option price of $0.06 per share.
These  options were exercised on March 27, 2002.Report Of The Board Of Directors
With  Respect  To  Compensation

     Our  Board  of  Directors  approves  the  compensation  paid  to  our other
executive  officers,  approving  or disapproving the recommendation of the Chief
Executive  Officer.  The Board of Directors also determines the amount of shares
and  exercise  prices for any stock option grants under our 1997 Stock Incentive
Plan,  and  the  amount  of  our  matching  contribution  percentage  under  our
Retirement  Savings  401(k)  Plan,  respectively.

     Currently,  Mr.  Mundy  is  compensated  pursuant  to  a written employment
agreement  providing  for  his  base  salary. This agreement provides for annual
salary  increases  intended to maintain his base salary against increases in the
cost  of living as measured by the United States Department of Labor.  Mr. Mundy
has  waived  these  increases  for  the  years  2002  and  2003.

     The  employment  agreement  for Mr. Mundy renews automatically on January 8
for  one-year  terms.  His  annual  salary  is  presently  $131,160.

     The employment agreement for Mr. Mundy also provides that in the event of a
change in control, the term of his employment will be automatically extended for
a  period  of one year, following the date of such change in control.  Following
such  change  in  control,  Mr.  Mundy  will  have  the  right  to terminate his
employment  for  good reason, as defined, while continuing to receive the salary
and bonus otherwise payable thereunder for the remainder of the employment term.
Additionally, the employment agreement provides that in the event of a change in
control  all  options held by Mr. Mundy, whether or not then vested, would fully
vest.  If  the  change in control was not approved by a majority of the Existing
Directors (as defined in our Certificate of Incorporation), he would be entitled
to receive, for each option for which the exercise price is less than the market
price  of  our  common  stock, cash in cancellation of such options in an amount
equal  to  such  difference.

     On July 17, 2000, we established a retention arrangement for several of our
senior  officers, including Messrs. Mundy and Whiteman.  They each were entitled
to  receive  a  bonus  payment equal to 20% of their annual base compensation if
they were our employee on the earlier of December 31, 2000 or the closing of the
Dialoc  ID investment.  These amounts were paid on December 31, 2000.  Each also
received  a  grant of 150,000 options to purchase our common stock at $0.065 per
share.  These  options  initially were to vest one-third on grant, one-third six
months  from the date of grant, and the remainder on July 17, 2001.  However, as
a  result  of  the  change  of  control,  these  options  became  fully  vested.

The  Board of Directors endorses the view that the value of compensation paid to
our executive officers, and the Chief Executive Officer in particular, should be
closely  linked  to increases in the value of our common stock. Accordingly, our
Board  supports  option  awards  under  our  1997  Stock  Incentive  Plan  and
participation by executive officers in the Retirement Savings 401(k) Plan, which
includes  our common stock fund among its investment alternatives. A substantial
portion of the total compensation of the executive officers, including the Chief
Executive  Officer,  is wholly dependent on increases in the value of our common
stock.

The  number  of stock options granted to executive officers is not determined by
reference  to  any  formulas  but is determined by the Board's evaluation of the
particular  officer's  ability  to  influence  our  long-term  growth  and
profitability.  Our  Board  also  considers  our  performance  against  certain
competitors,  its  general  performance  against  internal  goals established by
management  and  the  executive's  relative  contribution  thereto.

<PAGE>

<TABLE>
<CAPTION>
<S>                                     <C>         <C>         <C>         <C>         <C>

SENTRY TECHNOLOGY CORPORATION
STOCK PERFORMANCE DATA
(APPEARS AS A LINE GRAPH)
12/31/98 TO 12/31/02

                                          12/31/98    12/31/99    12/31/00    12/31/01   12/31/02
Sentry Technology Corporation. . . . .  $      100  $       15  $       10  $       24  $       3
S&P 600 Small Cap Index. . . . . . . .  $      100  $      112  $      111  $      106  $      85
S&P Elec. Equip. Index . . . . . . . .  $      100  $      206  $      170  $       87  $      42

</TABLE>

<PAGE>


Item  12.      Security  Ownership  of Certain Beneficial Owners and Management.
--------       ----------------------------------------------------------------

     The following table sets forth the beneficial ownership of our common stock
at  March  28,  2003, as to each (i) beneficial owner of five percent or more of
the  common  stock, (ii) Sentry Director, (iii) executive officer of Sentry, and
(iv)  all  Directors  and  executive  officers  as  a group.  On March 28, 2003,
82,560,347  shares  of  common  stock  were  outstanding.

<TABLE>
<CAPTION>

<S>                                                                 <C>            <C>
                                                                    SHARES OF      PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS. . . . . . . . . . . . . . .  COMMON STOCK   OF CLASS(1)
------------------------------------------------------------------  -------------  -----------

Dialoc ID Holdings B.V.
Daltonstraat 42-44
3846 BX Harderwijk . . . . . . . . . . . . . . . . . . . . . . . .
The Netherlands. . . . . . . . . . . . . . . . . . . . . . . . . .  42,067,017          51%
William A. Perlmuth
c/o Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY  10038. . . . . . . . . . . . . . . . . . . . . . . .   6,100,052 (2)       7.4%

Walter & Edwin Schloss
Associates L.P.
350 Park Avenue
New York, NY  10022. . . . . . . . . . . . . . . . . . . . . . . .     4,095,958         5.0%

                                                                      SHARES OF      PERCENT
DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . .  COMMON STOCK   OF CLASS(1)
------------------------------------------------------------------  -------------  -----------
Peter L. Murdoch(5). . . . . . . . . . . . . . . . . . . . . . . .     2,101,500          2.5%
Peter J. Mundy . . . . . . . . . . . . . . . . . . . . . . . . . .       865,185 (3)      1.0%
Willem Angel(5). . . . . . . . . . . . . . . . . . . . . . . . . .        50,000 (4)        *
Cor S. A. De Nood(5) . . . . . . . . . . . . . . . . . . . . . . .        20,000 (4)        *
Jonathan G. Granoff. . . . . . . . . . . . . . . . . . . . . . . .        80,000 (4)        *
Robert D. Furst, Jr. . . . . . . . . . . . . . . . . . . . . . . .       608,916 (6)        *
All Sentry Directors and executive officers as a group (6 persons)     3,725,601 (7)      4.5%
</TABLE>

___________________
*     Less  than  one  percent

(1)     Based  on  82,560,347 shares of common stock outstanding as of March 28,
2003.  Each  figure  showing  the  percentage of outstanding shares beneficially
owned  has  been  calculated  by treating as outstanding and owned the shares of
common stock that could be purchased by the indicated person within 60 days upon
the  exercise  of  stock  options.

(2)     Consists of (a) 5,199,499 shares of common stock held by Mr. Perlmuth as
Executor  of  the Estate of Arthur J. Minasy, (b) 877,516 shares of common stock
held  by  Mr.  Perlmuth  as trustee under trusts for the benefit of Mr. Minasy's
adult  children, and (c) 23,037 shares of common stock beneficially owned by Mr.
Perlmuth.  Under  the  policies  of  the law firm of which he is of counsel, Mr.
Perlmuth  will share any economic benefits of the options with the other members
of  such  firm.  Mr.  Perlmuth resigned his position as a member of the Board of
Directors  on  June  18,  2002.

(3)     Includes  669,218  shares  of common stock issuable upon the exercise of
stock  options  exercisable  within  60  days  from  the  date  hereof.

(4)     Includes  20,000 shares of common stock exercisable upon the exercise of
stock  options  exercisable  within  60  days  from  the  date  hereof.

(5)     Excludes  shares  of  Common  Stock  owned by Dialoc ID of which Messrs.
Murdoch,  Angel  and  DeNood  are  shareholders.

(6)     Includes  44,000  shares  of  common stock issuable upon the exercise of
stock  options  exercisable  within  60  days  from  the  date  hereof.

(7)     Includes  773,218  shares  of common stock issuable upon the exercise of
stock  options  exercisable  within  60  days  from  the  date  hereof.


Item  13.        Certain  Relationships  and  Related  Transactions.
--------         --------------------------------------------------

     As a result of the Dialoc ID investment, Sentry entered into a distribution
agreement with Dialoc ID, which contemplates a two-way distribution relationship
between  the  companies.  Under  the  agreement,  Sentry  has the rights to sell
Dialoc  ID's  EAS,  access  control and RFID products and accessories and Sentry
gives Dialoc ID the rights to sell its EAS and CCTV products and accessories and
Sentry  gives  Dialoc  ID  the  rights  to  sell  its  EAS and CCTV products and
accessories.  Pricing for products under the agreements are at the lowest prices
charged to affiliates.  In addition, Dialoc ID received an annual management fee
for  product  marketing  and  product  engineering management from Sentry in the
amount  of  $50,000  and  100,000  in  2002 and 2001, respectively.  Also, Peter
Murdoch,  a  shareholder of Dialoc ID through a trust, receives an annual salary
of  $150,000  in  the capacity of President of Sentry.  Purchases from Dialoc ID
were $30,000 and $182,000 in 2002 and 2001, respectively.  Services and sales to
Dialoc  ID  were  $79,000  and  $19,000 in 2002 and 2001, respectively.  The net
amount  payable  to  Dialoc  ID  as  of  December  31,  2002  was  $140,000.


                                     PART IV
                                     -------

Item  14.  Controls  and  Procedures.
--------   -------------------------

       (a)  Evaluation  of disclosure controls and procedures. An evaluation was
performed  under  the  supervision  and  with the participation of the Company's
management,  including  the  Chief  Executive  Officer (CEO) and Chief Financial
Officer (CFO), of the effectiveness of the design and operation of the Company's
disclosure controls and procedures within 90 days before the filing date of this
Form  10-K. Based on their evaluation, the Company's principal executive officer
and  principal  financial  officer  have concluded that the Company's disclosure
controls  and  procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities  Exchange  Act  of 1934 (the "Exchange Act")) are effective to ensure
that  information  required  to  be  disclosed by the Company in reports that it
files  or  submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules  and  forms.

       (b)  Changes in internal controls. There have been no significant changes
in  the Company's internal controls or in other factors that could significantly
affect  internal  controls  subsequent  to  their  evaluation.  There  were  no
significant  deficiencies  or  material  weaknesses, and therefore there were no
corrective  actions  taken.

Item  15.  Exhibits,  Financial  Statement  Schedules  and  Reports on Form 8-K.
--------   --------------------------------------------------------------------

(a)     The following documents are filed as a part of this report on Form 10-K:

(1)  (2)     Consolidated  Financial  Statements  of  the  Company  and  its
subsidiaries  for  the  year  ended  December  31,  2002 and Financial Statement
Schedules  required to be filed by Items 8 and 14(d) of Form 10-K.  See Table of
Contents  to  Consolidated Financial Statements of Sentry Technology Corporation
and  its  subsidiaries  on  page  24.

(3)     Exhibits  required  to  be  filed  by  Item  601  of  Regulation  S-K:


     Management  Contracts  or  Compensatory  Plans  or  Arrangements:
     -----------------------------------------------------------------

10.1     1997  Stock  Incentive Plan.  Incorporated by reference to Exhibit 10.5
to  the  Company's  Registration  Statement  on  Form  S-4  (No.  333-20135).

10.2     Retirement  Savings  401(k) Plan.  Incorporated by reference to Exhibit
10.6  to  the  Company's  Registration  Statement  on  Form S-4 (No. 333-20135).

10.3     Employment  Agreement,  dated  as  of  February  12,  1997, between the
Company  and  Peter  J. Mundy.  Incorporated by reference to Exhibit 10.2 to the
Company's  Registration  Statement  on  Form  S-4  (No.  333-20135).


<PAGE>

Other  Exhibits:
---------------

2.1     Amended  and  Restated  Agreement and Plan of Reorganization and Merger,
dated as of November 27, 1996 among Video Corporation, Knogo North America Inc.,
Sentry  Technology  Corporation,  Viking Merger Corp. and Strip Merger Corp., as
amended  by  Amendment  No.  1  to  Amended  and  Restated Agreement and Plan of
Reorganization  and  Merger,  dated  as  of  January  10, 1997.  Incorporated by
reference  to  Exhibit  2.1 to Company's Registration Statement on Form S-4 (No.
333-20135).

3.1     Amended  and  Restated  Certificate  of  Incorporation  of  the Company,
together  with  Form  of  Certificate  of  Designations  of  Sentry  Technology
Corporation  Class  A Preferred Stock.  Incorporated by reference to Exhibit 3.1
to  Company's  Registration  Statement  on  Form  S-4  (No.  333-20135).

3.2     Bylaws  of  the  Company.  Incorporated  by  reference to Exhibit 3.2 to
Company's  Registration  Statement  on  Form  S-4  (No.  333-20135).

10.6     Contribution  and Divestiture Agreement dated December 29, 1994 between
Knogo  Corporation  and  Knogo  North America Inc.  Incorporated by reference to
Exhibit  10.8  to  the  Company's  annual  report  on Form 10-K for fiscal 1997.

10.7     License Agreement dated December 29, 1994 between Knogo Corporation and
Knogo  North  America  Inc.  Incorporated  by  reference  to Exhibit 10.9 to the
Company's  annual  report  on  Form  10-K  for  fiscal  1997.

10.8     Lease  Agreement  dated  December  24, 1996 between Knogo North America
Inc. and NOG (NY) QRS 12-23, Inc.  Incorporated by reference to Exhibit 10.10 to
the  Company's  annual  report  on  Form  10-K  for  fiscal  1997.

10.9     Distribution Agreement dated March 26, 1996 between Knogo North America
Inc.  and Minnesota Mining and Manufacturing Company.  Incorporated by reference
to  Exhibit  10.11  to the Company's annual report on Form 10-K for fiscal 1997.

10.11     Amendment No. 1 dated December 22, 1998, to the Distribution Agreement
dated  March  26, 1996 between Knogo North America Inc. and Minnesota Mining and
Manufacturing  Company.  Incorporated  by  reference  to  Exhibit  10.13  to the
Company's  annual  report  on  Form  10-K  for  fiscal  1998.

10.16     First  Amendment,  dated September 18, 2000, to Lease Agreement (dated
December  24,  1996)  between  the  Company  and  NOG  (NY)  QRS  12-23,  Inc.,
incorporated  by  reference to Exhibit 10.19 to Company's Registration Statement
on  Form  S-4  (No.  333-47018).

10.19     Warrant  between  the  Company  and  NOG  (NY)  QRS 12-23, Inc., dated
September  13,  2000,  for   150,000 shares at $0.125 per share, incorporated by
reference  to Exhibit 10.22 to Company's Registration Statement on Form S-4 (No.
333-47018).

10.24     Securities  Purchase  Agreement,  dated August 8, 2000, between Sentry
Technology  Corporation and Dialoc ID, incorporated by reference to Exhibit 10.1
to  Company's  Current  Report  on  Form  8-K,  dated  August  10,  2000.

10.25     Distribution  Agreement,  dated  January  8,  2001, between Sentry and
Dialoc  ID,  incorporated  by  reference  to  Exhibit  B  of Exhibit 10.1 to the
Company's  Current  Report  on  Form  8-K,  dated  August  10,  2000.

10.29     Financing  Agreement  between  Knogo  North  America  Inc. and The CIT
Group/Business  Credit,  Inc. dated March 22, 2002, incorporated by reference to
Exhibit  10.29  to  Company's  annual  report  on  Form  10-K  for  fiscal 2001.

10.30     Master  Agreement  between  Sentry  Technology  Corporation  and  EPK
Financial  Corporation,  dated  October  10,  2002, incorporated by reference to
Exhibit  10.30 to the Company's Quarterly Report on Form 10-Q dated November 14,
2002.

10.31     Master  Agreement  between  Knogo North America Inc. and EPK Financial
Corporation,  dated October 10, 2002, incorporated by reference to Exhibit 10.31
to  the  Company's  Quarterly  Report  on  Form  10-Q  dated  November 14, 2002.

10.32     Intercreditor  Agreement  between  Knogo  North  America  Inc.,  EPK
Financial Corporation and The CIT Group/Business Credit, Inc., dated October 16,
2002,  incorporated  by  reference  to  Exhibit 10.32 to the Company's Quarterly
Report  on  Form  10-Q  dated  November  14,  2002.

10.33     Letter  amendment  to  the Intercreditor Agreement between Knogo North
America Inc., EPK Financial Corporation and The CIT Group/Business Credit, Inc.,
dated  January  14,  2003.

21     Subsidiaries  of the Company.  Incorporated by reference to Exhibit 21 to
the  Company's  annual  report  on  Form  10-K  for  fiscal  1997.

23.1     Consent  of  Holtz  Rubenstein  &  Co.,  LLP

23.2     Consent  of  Deloitte  &  Touche  LLP

99.1     Certification  Pursuant  to 18 U.S.C. Section 1350, as Adopted Pursuant
to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002.

99.2     Certification  Pursuant  to 18 U.S.C. Section 1350, as Adopted Pursuant
to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002.

(b)  Reports  on  Form  8-K.

There  were  no  Forms  8-K filed by the registrant during the fourth quarter of
2002.


<PAGE>
                                   SIGNATURES
                                   ----------

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act  of  1934, the Company has duly caused this report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized.

SENTRY  TECHNOLOGY  CORPORATION


By:     /s/  Peter  J.  Mundy
        ---------------------
        Peter  J.  Mundy
        Vice  President-Finance,
        Chief  Financial  Officer,
        Secretary  and  Treasurer


Dated:  March  31,  2003

<PAGE>

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed below by the following persons in the
capacities  and  on  the  date  indicated.

Signature                                    Title
---------                                    -----

/s/  Peter  L.  Murdoch     Chief  Executive  Officer  and  Director
-----------------------
Peter  L.  Murdoch

/s/  Peter  J.  Mundy       Vice  President-Finance,
---------------------
Peter  J.  Mundy            Chief  Financial  and  Accounting  Officer,
                            Secretary  and  Treasurer


/s/  Willem  Angel          Director
------------------
Willem  Angel

/s/ Robert D. Furst,  Jr.   Director
--------------------------
Robert  D. Furst, Jr.

--------------------------  Director
Jonathan  G.  Granoff


/s/  Cor  S.A.  De  Nood    Director
--------------------------
Cor  S.A.  De  Nood



Dated:  March  31,  2003

<PAGE>


CERTIFICATION  PURSUANT TO RULE 13-A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF  1934,  AS  ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I,  Peter  L.  Murdoch,  certify  that:

1.      I  have  reviewed  this  annual report on Form 10-K of Sentry Technology
Corporation;

2.     Based  on  my  knowledge,  this annual report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.     Based  my  knowledge,  the  financial  statements,  and  other  financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.     The  registrant's  other  certifying  officer  and  I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

        a.  designed  such  disclosure  controls  and  procedures  to ensure the
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;

        b.  evaluated  the effectiveness of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
annual  report  (the  "Evaluation  Date");  and

        c.  presented  in  this  annual  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date.

5.     The  registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
function):

        a.  all  significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

        b.  any  fraud,  whether  or  not  material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls.

6.     The  registrant's  other  certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.


Dated:  March  31,  2003


By:     /s/  Peter  L.  Murdoch
        -----------------------
Name:   Peter  L.  Murdoch
Title:  Chief  Executive  Officer

<PAGE>

CERTIFICATION  PURSUANT TO RULE 13-A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF  1934,  AS  ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I,  Peter  J.  Mundy,  certify  that:

1.     I  have  reviewed  this  annual  report on Form 10-K of Sentry Technology
Corporation;

2.     Based  on  my  knowledge,  this annual report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.     Based  my  knowledge,  the  financial  statements,  and  other  financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.     The  registrant's  other  certifying  officer  and  I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

        a.  designed  such  disclosure  controls  and  procedures  to ensure the
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;

        b.  evaluated  the effectiveness of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
annual  report  (the  "Evaluation  Date");  and

        c.  presented  in  this  annual  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date.

5.     The  registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
function):

        a.  all  significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

        b.  any  fraud,  whether  or  not  material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls.

6.     The  registrant's  other  certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.


Dated:  March  31,  2003

By:     /s/  Peter  J.  Mundy
        ---------------------
Name:   Peter  J.  Mundy
Title:  Chief  Financial  Officer


<PAGE>

EXHIBIT  INDEX

10.33     Letter  amendment  to  the Intercreditor Agreement between Knogo North
America Inc., EPK Financial Corporation and The CIT Group/Business Credit, Inc.,
dated  January  14,  2003.

23.1     Consent  of  Holtz  Rubenstein  &  Co.,  LLP

23.2     Consent  of  Deloitte  &  Touche  LLP

99.1     Certification  Pursuant  to 18 U.S.C. Section 1350, as Adopted Pursuant
to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002.

99.2     Certification  Pursuant  to 18 U.S.C. Section 1350, as Adopted Pursuant
to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002.


<PAGE>

                                                  EXHIBIT  10.33


LETTER  AMENDMENT  TO  THE  INTERCREDITOR  AGREEMENT BETWEEN KNOGO NORTH AMERICA
INC.,  EPK  FINANCIAL CORPORATION AND THE CIT GROUP/BUSINESS CREDIT, INC., DATED
JANUARY  14,  2003.




This  letter  shall serve as an amendment to the Intercreditor Agreement between
KNOGO  NORTH  AMERICA  INC. ("KNOGO"), EPK FINANCIAL CORPORATION ("EPK") and THE
CIT  GROUP/BUSINESS  CREDIT,  INC.  ("CIT")  dated  October  16,  2002.

Point  2(a) shall now read as follows:  "Notwithstanding anything herein to the
contrary,  CIT  subordination  of  its  liens hereunder is limited solely to EPK
Collateral  which  has  been  designated  in a Purchase Order Certificate and in
which  EPK  has filed and perfected its security interest and shall apply to EPK
Obligations  not  to  exceed  $440,300.00  "

All  other terms and conditions of the Intercreditor Agreement dated October 16,
2002  and  the  amendment to the Intercreditor Agreement dated November 20, 2002
shall  remain  unchanged.

Dated  on  this  14  day  of  January,  2003.

KNOGO  NORTH  AMERICA  INC.


By:         /s/  Peter  J.  Mundy
     ---------------------------------

Title:             VP-CFO
       -------------------------------


EPK  FINANCIAL  CORPORATION


By:           /s/  Edward  King
     ---------------------------------

Title:          President
       -------------------------------



THE  CIT  GROUP/BUSINESS  CREDIT,  INC.

By:         /s/  Andrew  Hausspiegel
     ---------------------------------

Title:           Vice  President
        ------------------------------




<PAGE>


                                                  Exhibit  23.1


 CONSENT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS



We  consent  to  the  incorporation  by  reference in Registration Statement No.
333-34929  and  333-34867  of  Sentry  Technology Corporation on Form S-8 of our
report  dated  February 28, 2003 appearing in this Annual Report on Form 10-K of
Sentry  Technology  Corporation  for  the  year  ended  December  31,  2002.



/s/  Holtz  Rubenstein  &  Co.,  LLP


Melville,  New  York
March  28,  2003


<PAGE>


                                             Exhibit  23.2

INDEPENDENT  AUDITORS'  CONSENT




We  consent  to  the  incorporation by reference in Registration Statement No.'s
333-34929  and  333-34867  of  Sentry  Technology Corporation on Form S-8 of our
report  dated  March  22, 2002, relating to the Company's consolidated financial
statements  for  the  years  ended December 31, 2001 and 2000, appearing in this
Annual  Report  on Form 10-K of Sentry Technology Corporation for the year ended
December  31,  2002.




/s/  Deloitte  &  Touche  LLP

Jericho,  New  York
March  28,  2003








<PAGE>


                                             Exhibit  99.1


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


I,  Peter  L.  Murdoch,  certify  pursuant to 18 U.S.C. Section 1350, as adopted
pursuant  to  Section  906  of  the  Sarbanes-Oxley Act of 2002, that the Annual
Report of Sentry Technology Corporation on Form 10-K for the annual period ended
December  31,  2002  fully  complies  with the requirements of Section 13(a) and
15(d)  of the Securities and Exchange Act of 1934 and that information contained
in  such Annual Report on Form 10-K fairly presents in all material respects the
financial  condition  and results of operation of Sentry Technology Corporation.



By:     /s/  Peter  L.  Murdoch
        -----------------------
Name:     Peter  L.  Murdoch
Title:    Chief  Executive  Officer


<PAGE>

                                             Exhibit  99.2


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


I,  Peter  J.  Mundy,  certify  pursuant  to  18 U.S.C. Section 1350, as adopted
pursuant  to  Section  906  of  the  Sarbanes-Oxley Act of 2002, that the Annual
Report of Sentry Technology Corporation on Form 10-K for the annual period ended
December  31,  2002  fully  complies  with the requirements of Section 13(a) and
15(d)  of the Securities and Exchange Act of 1934 and that information contained
in  such Annual Report on Form 10-K fairly presents in all material respects the
financial  condition  and results of operation of Sentry Technology Corporation.



By:     /s/  Peter  J.  Mundy
        ---------------------
Name:   Peter  J.  Mundy
Title:  Chief  Financial  Officer