News Release

FOR IMMEDIATE RELEASE CONTACT: Peter L. Murdoch

President & CEO

(631) 739-2000

SENTRY TECHNOLOGY CORPORATION REPORTS SECOND QUARTER PROFIT

RONKONKOMA, New York, August 12, 2008, -- Sentry Technology Corporation (OTC Bulletin Board: SKVY) today reported financial results for the Company’s second quarter ended June 30, 2008.

Revenues increased 66% on a comparative basis from $2,428,000 in the second quarter of 2007 to $4,029,000 in the second quarter of 2008. The Company achieved an operating profit of $349,000 and a net income of $8,000 in the second quarter this year compared to a net loss of $898,000, in the second quarter last year. The net profit includes a foreign exchange loss of $65,000 in the second quarter of 2008 as a result of the U.S. dollar valuation of the Company’s Canadian dollar bank loan as well as receivables denominated in U.S. dollars.

For the first six months ended June 30, 2008, revenues were $6,071,000 compared to revenues of $5,096,000 reported in the first six months of the prior year. Sentry had a net loss of $879,000 in the first half of 2008, compared to a net loss of $1,622,000 in the first half of 2007.

“We are very pleased to report our first quarterly net profit since the fourth quarter of 2004. At the beginning of 2005 we lost a major customer that represented approximately 30% of our total revenue causing a significant financial challenge for Sentry,” said Peter L. Murdoch, President and CEO of Sentry Technology Corporation. “Our dedicated team of employees has battled to regain the lost revenue while introducing important new products like OperationalVideo™. We are also benefiting from strong international SmartTrack™ sales and the implementation of cost reduction measures. The combination of sales and cost control initiatives has resulted in the substantial improvement reported in the second quarter.”

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 including QuickCheck™ patron self-service kiosks. 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 manage operations, deter shoplifting and internal theft and by industrial and institutional customers to protect assets and people. Recently the Company launched OVportal™, a video information portal over the internet offering retailers an OperationalVideo™ solution to manage security, merchandising, sign placement and procedure compliance. OVportal™ uses the SmartTrack™ traveling CCTV system and the Company’s real-time video server to provide remote viewing and control of retail operations. OperationalVideo™ is the next major trend in online video and OVportal™ is a leading, cost effective, market proven solution. For further information, please visit our website at www.sentrytechnology.com.

# # #

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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

Three Months Ended Six Months Ended

June 30, June 30,

2008 2007 2008 2007

(Unaudited) (Unaudited)

REVENUES

Sales $ 3,402 $ 1,991 $ 5,114 $ 4,320

Service, installation and other revenues 627 437 957 776

4,029 2,428 6,071 5,096

COST OF SALES AND EXPENSES:

Cost of sales 1,884 1,106 2,903 2,376

Customer service expenses 555 485 1,105 940

Selling, general and administrative expenses 1,095 1,395 2,074 2,592

Research and development 146 185 293 391

3,680 3,171 6,375 6,299

INCOME (LOSS) FROM OPERATIONS 349 (743) (304) (1,203)

INTEREST AND FINANCING EXPENSE, net 327 193 564 406

INCOME (LOSS) BEFORE INCOME TAXES

AND MINORITY INTEREST 22 (936) (868) (1,609)

INCOME TAX EXPENSE (RECOVERY) 6 (20) 6 7

INCOME (LOSS) BEFORE MINORITY INTEREST 16 (916) (874) (1,616)

MINORITY INTEREST EXPENSE (INCOME) 8 (18) 5 6

NET INCOME (LOSS) $ 8 $ (898) $ (879) $ (1,622)

EARNINGS (LOSS) PER SHARE

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

WEIGHTED AVERAGE NUMBER OF

COMMON SHARES OUTSTANDING

Basic and diluted 120,744 120,744 120,744 120,744

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)

June 30, December 31,

2008 2007

(Unaudited) (Audited)

ASSETS

Current Assets:

Cash and cash equivalents $ 1,389 $ 256

Short-term investments 199 202

Accounts receivable, less allowance for doubtful

accounts of $149 in 2008 and $209 in 2007, respectively 845 3,014

Inventory, net 3,124 3,299

Prepaid expenses and other assets 899 858

Total current assets 6,456 7,629

PROPERTY AND EQUIPMENT, net 556 634

OTHER ASSETS 266 269

TOTAL ASSETS $ 7,278 $ 8,532

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities:

Bank indebtedness, demand loan and revolving line of credit $ 4,120 $ 4,551

Accounts payable 612 1,223

Accrued liabilities 1,667 1,539

Obligations under capital leases - current portion 2 2

Deferred income 265 145

Convertible debenture 2,000 1,986

Total current liabilities 8,666 9,446

OBLIGATIONS UNDER CAPITAL LEASES -

less current portion 6 7

DEFERRED TAX LIABILITY 114 117

Total liabilities 8,786 9,570

MINORITY INTEREST 1,205 1,200

STOCKHOLDERS’ DEFICIT (2,713) (2,238)

TOTAL LIABILITIES AND STOCKHOLDERS’

DEFICIT $ 7,278 $ 8,532