Dear Sentry Shareholders:  

Significant cost reductions and personnel changes have now been implemented in the finance and operations departments. This has resulted in among other things, improved performance in our service department reversing a trend of persistent losses.

Continuing R&D efforts have produced significant upgrades to our QuickCheck™ self service system for libraries as well as a new electromagnetic book check security label deactivator with a companion workstation that deactivates and reactivates security strips while scanning barcode labels. The products will be released late in the first quarter.

Our international business continues to strengthen with new dealers in Europe and Latin America. Recently we installed our SmartTrack™ systems in Sodimac, a subsidiary of Latin America’s largest retail group.

Domestically, SmartTrack™ continues to be sold to major retail accounts. We believe our new OperationalVideo™ applications featuring SmartTrack™ business management solutions over the internet will open significant growth opportunities.

Thank you for your ongoing support of Sentry.

Sincerely,                                                                   

Peter L. Murdoch

President and CEO