Paragon Technologies Inc - PGNT STOCK NEWS

Hesham 'Sham' Gad, the largest stockholder of Paragon Technologies (OTC PINK:PGNT) with approximately 28.4% ownership, has announced his intention to solicit proxies and consents for his proposed slate of five director candidates for election to the Company's Board of Directors.

The announcement, made on March 26, 2025, follows his previous press release from March 18, 2025, which detailed information about the director candidates and expressed concerns regarding the Board's entrenchment actions and wasteful spending. Gad emphasized his commitment to working towards securing a bright future for Paragon for the benefit of its stockholders.

Hesham 'Sham' Gad, Paragon Technologies' (OTC PINK:PGNT) largest stockholder with 28.4% ownership, has nominated five director candidates for election to the company's Board at the 2025 Annual Meeting. This move follows his removal as Chairman and CEO in August 2024 and subsequent corporate governance disputes.

The nominated slate includes David Duquette (Littoral Power Systems CEO), James Kaufman (former Ernst & Young Senior Partner), Elodie Leoni (project management expert), Ronell Rivera (SEDC President), and Sham Gad himself. The nominees aim to separate Chairman and CEO roles, terminate the recently adopted poison pill, and implement stock ownership commitments through open market purchases.

Gad criticizes the current Board's recent adoption of a poison pill that would dilute stockholders acquiring 10% or more of shares, viewing it as an entrenchment tactic that restricts stockholder communications. He argues that no strategic plan has been delivered since his removal, while company resources are being spent on defending entrenchment actions.

Paragon Technologies (OTC Pink:PGNT) has announced the adoption of a duration stockholder rights plan by its Board of Directors, set to be voted on at the 2025 Annual Meeting. The plan aims to protect against hostile takeovers without fair control premiums.

Key features of the Rights Plan include:

• One right per common stock share will be issued to stockholders of record by March 31, 2025
• Rights become exercisable if an entity acquires 10% ownership (20% for passive investors)
• Qualifying stockholders can purchase shares at a 50% discount if triggered
• Similar protection applies in merger scenarios after 20% ownership threshold
• Board can exchange rights at one common stock share per right
• Existing stockholders above thresholds are grandfathered with restrictions on additional purchases

Paragon Technologies (OTC PINK:PGNT) Nominating Committee has responded to former CEO Sham Gad's open letter, challenging his claims about company performance. The committee alleges that Gad presented misleading information by selectively choosing dates to enhance his performance metrics.

The committee disputes several of Gad's claims, including:

• The reported $17 million in net profits (2017-2023) omits $2 million in losses from 2013-2016 and includes $4.2 million from non-economic purchase gain accounting
• Shareholders' equity growth claims exclude poor performance periods and incorrectly include non-controlling interests
• The actual shareholders' equity CAGR during Gad's tenure was 11.3% (including purchase gain) or 8.9% (excluding gain), roughly half of his claimed 20.4%
• Stock price performance under Gad's chairmanship (7.7% CAGR) underperformed major indices like NASDAQ (14.6%) and S&P500 (13.4%)

Hesham 'Sham' Gad, who owns 28.4% of Paragon Technologies (OTC Pink:PGNT), has issued an open letter to stockholders responding to the Audit Committee's investigation and providing litigation updates. The letter addresses what Gad describes as misleading information and entrenchment activities under Sam Weiser's oversight.

Gad defends his record, stating that during his 2017-2023 CEO tenure, Paragon achieved:

• Over $17 million in aggregate net profits
• Growth in shareholders' equity from $2.8M to $22M (20.4% CAGR)
• Increase in book value per share from $1.66 to $13.04
• Stock price growth from $1.20 to $9.00 (33.5% CAGR)

The letter challenges the Audit Committee's findings regarding past legal matters, stating these issues were previously resolved and known to the company. Gad criticizes the current leadership's spending on legal expenses and argues that his interests remain aligned with stockholders.

Paragon Technologies (OTC PINK:PGNT) provided an update on its Audit Committee's independent investigation of terminated CEO Hesham M. Gad. The investigation, initiated in December 2024, initially focused on Gad's handling of company funds and fiduciary obligations but has expanded to include potential misstatements made to the company in 2010-2011.

The investigation revealed that Gad had pleaded guilty to a felony charge of 'theft by taking' in 2008 and was criminally indicted in 2011 for allegedly making false statements to governmental authorities. These events were not disclosed in Paragon's 2010 and 2011 Annual Reports, despite requirements to report such information.

The Audit Committee noted that Gad has not meaningfully cooperated with the investigation, failing to provide access to his devices and Electronically Stored Information. The committee remains committed to understanding potential misconduct and strengthening internal controls.

Paragon Technologies (OTC PINK:PGNT) has appointed three new independent directors: David Lontini, Howard Brownstein, and Tim Eriksen, while announcing the retirement of Jack Jacobs after 12 years of service, effective December 31, 2024. The board will temporarily expand from three to six directors before reducing to five upon Jacobs' retirement.

The new directors bring diverse expertise: Eriksen is CEO of Solitron Devices and specializes in micro-cap stocks; Brownstein has extensive experience in corporate governance and investment banking; and Lontini, current Chairman of Check Cap , is known for operational optimization. They will exclusively compose the company's Audit, Compensation, and Nominating Committees, with Brownstein, Lontini, and Eriksen serving as respective chairs.

Paragon Technologies (OTC PINK:PGNT) has announced that its Audit Committee has initiated an independent investigation into Hesham M. Gad's conduct, engaging legal counsel from Holland & Knight LLP. The company previously removed Gad from his positions as Chairman of the Board and CEO on August 9, 2024, followed by his termination as President of SI Systems, and all remaining positions within Paragon and its subsidiaries on November 4, 2024. While the Audit Committee is committed to a thorough investigation, the duration and outcome remain uncertain.

Paragon Technologies (OTC PINK:PGNT) has announced an upcoming investor update call scheduled for November 21, 2024, at 4:00 p.m. EDT. The call will review the company's third quarter performance for the period ending September 30, 2024. Participants can pre-register to receive a unique PIN for immediate access, or join via provided toll-free and international dial-in numbers. A replay will be available on the company's website's Investor Relations section.