Arizona Tribune - Mr. Gad Corrects Patently False and Misleading Statements by Paragon Board Members Timothy Eriksen, Howard Brownstein, David Lontini, and Samuel Weiser in an Effort to Distract Shareholders from Their Wasteful Spending

NEW YORK, NY / ACCESS Newswire / May 9, 2025 / Hesham "Sham" Gad, the largest stockholder of Paragon Technologies, Inc. (OTC PINK:PGNT) ("Paragon" or the "Company"), owning approximately 28.4% of the Company's outstanding shares, today issues the following statement to the Company's stockholders:

Dear Fellow Stockholders

Words simply cannot describe the continued harm - both financially and reputationally - that I believe Paragon's directors, Timothy Eriksen, Howard Brownstein, David Lontini, and Samuel Weiser, are exposing the Company to with their persistent false and misleading statements. Having failed to obtain meaningful shareholder support even despite their continued slanderous efforts towards me, they have now turned their vitriol towards Paragon's subsidiaries by insulting and attacking their performance, and in doing so, they insult the hard work and commitment that Paragon's executives and employees have demonstrated time and time again for Paragon stockholders.

With nearly every utterance these directors make, they are insulting the very key people who have generated enormous value for the Company and its stockholders. I am shocked by the lack of appreciation and respect that these incumbent directors are showing for the Company's personnel and I have grave concerns that should these directors continue to remain on the Board, they will have all but ensured that key executives will no longer be interested in remaining with Paragon, thereby exposing the Company - and your investment - to material and avoidable risk.

Let's examine their lies versus the truth:

Lie #1: "No Plan. No Vision. No Track Record of Success."

Truth: Since my tenure as CEO of Paragon in 2014 until I was removed, Paragon delivered an 11% annualized return to shareholders. This value was delivered through a vision of transforming Paragon into a diversified holding company, which has been executed successfully in the most important way that counts: value creation to shareholders.

Lie #2: "Neglect of SI Systems, a core business that deteriorated under his watch due to lack of investment and strategic oversight."

Truth: This particular lie blatantly illustrates the incompetence and utter lack of understanding of SI by these directors and should alarm shareholders that they would make such a statement. From 2011 through 2016, SI Systems was run by "industry expert" CEOs, who proceeded to provide SI with "strategic oversight" and "investment skills" that these directors assert I am lacking.

Below are the two tables showing SI Systems Earnings Before Income Tax during the years 2011through 2016 (when SI was run by outside CEO's) and from 2017 to 2024, when I took the helm of SI.

Before Mr. Gad

Mr. Gad Takes the Helm of SI Systems

For six years prior to my management of SI, aggregate earnings before tax was a loss of $224,000. Over the next eight years, under my management, SI's aggregate earnings before tax were approximately $5.7 million, achieved with no outside capital. In addition, when I assumed the helm of SI, prior management had taken on debt to "invest" in SI. Under my management, we paid down all the debt and SI has been debt-free for years.

Lie #3: "Mismanagement of Paragon's foreign subsidiary, SED International de Colombia S.A.S., which remains exposed to significant currency and political risk."

This fabrication should deeply trouble long-term stockholders, as it attacks the integrity and commitment that Ronell Rivera has dedicated to SED Colombia since we acquired it.

Again, let's let the numbers do the talking. Below are SED's annual revenues and net income since we acquired the business:

($ in thousands)

For eight consecutive years, every year since Paragon's acquisition, SED has delivered generally consistent revenue growth and net income growth. For these incumbent directors to say that SED has "exposed Paragon to significant currency and political risk" is an insulting and disgusting display of a lack of gratitude for the value Mr. Rivera and SEDC have delivered to Paragon shareholders. SEDC has exposed Paragon to growth and shareholder value creation. In aggregated SEDC has generated $15.7 million in profits, approximately $12.5 million in profits for Paragon 80% ownership of SEDC. Speaking of risk, during the pandemic years when many businesses were facing severe risk, Mr. Rivera and I, alongside the dedicated team at SEDC, seized upon the historic low interest rates and exceptional surge in the IT market due to increased demand for remote work, digital transformation, and infrastructure upgrades that led to record-breaking performance.

Lie #4: "A poor performing real estate portfolio, that we believe was likely purchased so Gad could take company paid trips to Las Vegas."

Again, this statement is empty words. In terms of returns from real estate as an asset class, our annual return measured as the sum of net rental income return plus annual appreciation, our real estate investment returns met or exceeded expectations, and my time in Las Vegas was documented as legitimate business expense. Despite the facts, these directors are staying true to their form of making unsubstantiated accusations seemingly based exclusively on wild speculation and their desperation to remain on the Board. As I developed Ohana's reputation and real estate contacts there, that led to Ohana's acquisition of two additional units that were seller financed at 0% percent interest during a period of rising interest rates.

I have never shied away from the overall underperformance of the investment portfolio and shareholders who I've spoken with know I take full responsibility for that underperformance. The investment portfolio represented less than 10% of Paragon's assets - nevertheless the results were not acceptable. I am very confident that if my slate of directors, including myself, are elected to the Board, these results will improve as we will work to ensure that the Company is disciplined in its deployment of capital and focuses on investments in high-quality, profitable businesses at attractive valuations.

As my May 5^th press release established, despite the Weiser-led directors' relentless and reckless accusations against me, only one person has been shown, with evidence, to be lying: Sam Weiser. He fabricated information to support his invalid compensation, and this pattern of fabrication continues today. Sadly, his hand-picked directors took no action when they were alerted to his dishonest activities. Even worse, together these directors now maintain that path of false and misleading narratives while continuing to waste stockholder money - YOUR money - in doing so.

For nine months, first with Weiser and Jacobs, and now with Weiser's new hand-picked directors, they have failed to provide a real plan for Paragon, only empty words. Moreover, their disingenuous statements about the Company's and subsidiaries' performance cited above clearly underscore that these directors have no real understanding of our business.

Our plan would be the plan that I, along with the dedicated executives at Paragon, had been implementing:

1. When I took over leadership of SI Systems in 2017, I needed to confirm that SI Systems could deliver results after years of underperforming with prior CEO's. I did that, but I also learned that any investment into SI had to be measured and validated to ensure the return would be satisfactory. In doing this analysis, along with our senior managers at SI, we began implementing a well-formulated, measurable step-by-step plan to transform SI into a niche small systems integrator.

2. SEDC has proven its resiliency and reputation as a best-in-class distributor thanks to the vision and leadership of Mr. Rivera, who has truly excelled at delivering value. Starting in 2023, he and I began discussing and implementing the strategic vision that we had all along when we acquired SEDC - to ultimately scale it outside of Colombia into other regions and countries, where it would have a competitive advantage because our vendor partners are in favor of our expansion to those locations and we believe they would likely support that expansion by providing capital investment via credit lines, sales and product personnel, and financial incentives based on results.

3. Continue to seek out proactive acquisition opportunities to continue diversifying our revenue base.

The continued false narrative being spun by these directors will likely succeed in doing one thing only: harming the Company and its stockholders. Their decisions to make false statements that show a complete lack of professional decorum for our managers is, in my view, a low blow that illustrates the extent that these directors will go to remain in power.

Rather than continuing to waste shareholder money denigrating the Company and its hard-working management and employees, the Board should be working as expeditiously as possible to let the shareholders decide the future of the Company.

I am unwavering in my commitment to the Company and firmly believe that the re-implementation of the plan I was pursing while I was CEO will deliver real results for shareholders and continued growth opportunities for the Company. I believe my slate of five uniquely qualified candidates with significant stockholder alignment, product innovation, business turnaround, capital allocation and extensive industry experience, if elected, will be ready to work on day one. I believe we urgently need directors who will return the focus of the Company to implementing a strategic vision that delivers for shareholders.

Thank you for your support and I look forward to letting Paragon stockholders decide the future of our Company.

Sincerely,

Sham Gad

CONTACT:

[email protected]

SOURCE: Sham Gad

View the original press release on ACCESS Newswire

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