Sentry Technology Reports Quarterly Loss

RONKONKOMA, N.Y. -- Sentry Technology Corporation today reported financial results for the Company's second quarter ended June 30, 2005.

Revenues for the second quarter were $4,267,000 compared to revenues of $4,279,000 reported in the second quarter of the prior year. Revenues from the former ID Systems group contributed $1.7 million in EAS sales in the current quarter compared to $0.9 million in the prior year. Operating profit was $119,000 in the second quarter of 2005 compared to $120,000 in the second quarter of 2004. There was a net loss in the second quarter of 2005 of $30,000, or $(0.00) per share, compared to net income of $12,000, or $0.00 per share, in the second quarter of last year.

For the first six months ended June 30, 2005, revenues were $6,760,000 compared to revenues of $7,253,000 reported in the first six months of the prior year. While EAS revenues increased due to the acquisition of ID Systems in April of 2004, the reduction in total revenues was attributable to lower installation and maintenance revenues as well as lower sales of conventional CCTV products and the Company's proprietary SmartTrack traveling camera systems to domestic customers. Principally as a result of lower revenue levels, Sentry had a net loss of $790,000, or $(0.01) per share in the first half of 2005, compared to a net loss of $180,000, or $(0.00) per share, in the first half of 2004.

"We are pleased with the second quarter results," said Peter Murdoch, President and CEO of Sentry Technology Corporation. "While total revenues in the second quarter of 2005 are unchanged compared with second quarter of 2004, we achieved this despite a $1.3 million reduction in business from Lowe's Home Centers compared with the same quarter last year. Non-Lowe's revenue increased by 45%."

Mr. Murdoch continued, "The fact that the revenue levels have recovered in such a short time frame is a result of our strategy to focus on core business and to increase the number of sales reps and international dealers. We now have sales reps located across North America and more than 25 dealers in international markets delivering a broad range of security applications in the retail, library, public transportation, commercial and industrial markets. Sentry no longer relies primarily on a single dominant customer to be successful. We believe that this more balanced marketing approach will produce positive results in the future."