News Release

FOR IMMEDIATE RELEASE CONTACT: Peter L. Murdoch

President & CEO

(631) 739-2000

SENTRY TECHNOLOGY CORPORATION REPORTS SECOND QUARTER RESULTS

RONKONKOMA, New York, August 14, 2007, -- Sentry Technology Corporation (OTC Bulletin Board: SKVY) today reported financial results for the Company’s second quarter ended June 30, 2007.

Revenues for the second quarter were $2,428,000 compared to revenues of $2,932,000 reported in the second quarter of the prior year. Principally as a result of lower revenue levels, Sentry had a net loss of $898,000, or $(0.01) per share, in the second quarter of 2007 compared to net loss of $598,000 or $(0.00) per share, in the second quarter of last year. In the second quarter of 2007 the Company booked a foreign exchange loss of $292,000 and $337,000 year to date as a result of an increase in the value of the Canadian dollar.

For the first six months ended June 30, 2007, revenues were $5,096,000 compared to revenues of $5,640,000 reported in the first six months of the prior year. Sentry had a net loss of $1,622,000, or $(0.01) per share, in the first half of 2007, compared to a net loss of $1,328,000, or $(0.01) per share, in the first half of 2006.

“While revenues for the first half of the year were below forecast, we expect a dramatic increase in business in the third and fourth quarters,” said Peter L. Murdoch, President and CEO of Sentry Technology Corporation. “The order rate over the past two months has exceeded our expectations. Our year to date order backlog has increased from $1.4 million as of December 31, 2006 to $3.3 million as of June 30, 2007 and $6.1 million as of July 31, 2007. Export orders for SmartTrack™ have more than doubled compared with the same period last year and the introduction of OperationalVideo™ in 34 locations at Steve & Barry’s will create a significant new revenue stream while proving the concept for other major retailers that are interested in our new technology. Our library business continues to be strong with major wins for self-service systems at the Dallas Public and Palm Beach public libraries. Contracts are being signed both in our library and video market sectors with existing satisfied customers and with new accounts. We expect this momentum to continue into future quarters.”

Sentry Technology Corporation designs, manufactures, sells and installs a complete line of Closed Circuit Television (CCTV) solutions, Electro-Magnetic (EM) and RFID based Library Management systems as well as Radio Frequency (RF) and Electro-Magnetic (EM) EAS systems. The CCTV product line features SentryVisionâ, SmartTrack, a proprietary, patented traveling Surveillance System. The Company’s products are used by libraries to secure inventory and improve operating efficiency, by retailers to deter shoplifting and internal theft and by industrial and institutional customers to protect assets and people. For further information, please visit our website at www.sentrytechnology.com.

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This press release may include information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements may involve risk and uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the Company's Securities and Exchange Commission filings.

CONSOLIDATED BALANCE SHEETS

(In thousands)

June 30, December 31,

2007 2006

(Unaudited) (Audited)

ASSETS

Current Assets:

Cash and cash equivalents $ 266 $ 360

Short-term investments 94 259

Accounts receivable, less allowance for doubtful

accounts of $183 and $160, respectively 1,310 2,251

Inventory 3,384 3,005

Prepaid expenses and other assets 334 306

Total current assets 5,388 6,181

PROPERTY, PLANT AND EQUIPMENT, net 625 609

GOODWILL 1,564 1,564

OTHER ASSETS 314 480

TOTAL ASSETS $ 7,891 $ 8,834

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Bank indebtedness, demand loan and revolving line of credit $ 3,035 $ 3,030

Accounts payable 1,038 609

Accrued liabilities 1,005 1,078

Obligations under capital leases - current portion 2 3

Deferred income 246 185

Total current liabilities 5,326 4,905

OBLIGATIONS UNDER CAPITAL LEASES -

less current portion 8 8

DEFERRED TAX LIABILITY 99 91

CONVERTIBLE DEBENTURE 1,966 1,945

Total liabilities 7,399 6,949

MINORITY INTEREST 1,243 1,237

STOCKHOLDERS’ (DEFICIT) EQUITY (751) 648

TOTAL LIABILITIES AND STOCKHOLDERS’

(DEFICIT) EQUITY $ 7,891 $ 8,834

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended Six Months Ended

June 30, June 30,

2007 2006 2007 2006

(Unaudited) (Unaudited)

REVENUES

Sales $ 1,991 $ 2,526 $ 4,320 $ 4,811

Service, installation and other 437 406 776 829

2,428 2,932 5,096 5,640

COST OF SALES AND EXPENSES:

Cost of sales 1,106 1,302 2,376 2,558

Customer service expenses 485 558 940 1,081

Selling, general and administrative expenses 1,395 1,324 2,592 2,677

Research and development 185 204 391 404

3,171 3,388 6,299 6,720

OPERATING LOSS (743) (456) (1,203) (1,080)

INTEREST AND FINANCING EXPENSE, net 193 86 406 168

LOSS BEFORE INCOME TAXES AND

MINORITY INTEREST (936) (542) (1,609) (1,248)

INCOME TAX (RECOVERY) EXPENSE (20) 30 7 40

LOSS BEFORE MINORITY INTEREST (916) (572) (1,616) (1,288)

MINORITY INTEREST 18 (26) (6) (40)

NET LOSS $ (898) $ (598) $ (1,622) $ (1,328)

LOSS PER SHARE

Basic and diluted $ (0.01) $ (0.00) $ (0.01) $ (0.01)

WEIGHTED AVERAGE NUMBER OF

COMMON SHARES OUTSTANDING

Basic and diluted 120,744 120,729 120,744 120,689