Sham Gad Issues Open Letter to Paragon Technologies Stockholders Responding to Audit Committee 'Findings' and Setting the Record Straight

Associated Press

11-02-2025

Believes the Board, Under Sam Weiser's Oversight, Has Fostered an Anti-Stockholder Culture and Embraced Entrenchment Tactics
Provides Update on Pending Lawsuit Challenging Apparent Entrenchment Actions
Urges Stockholders to Focus on the Facts
NEW YORK, NY / ACCESS Newswire / February 11, 2025 / Hesham 'Sham' Gad, who beneficially owns approximately 28.4% of the outstanding shares of common stock of Paragon Technologies, Inc. (OTC Pink:PGNT) ('Paragon' or the 'Company'), today issued an open letter to Paragon stockholders, responding to the Audit Committee's investigation of him and providing an update on his litigation challenging certain actions taken by the Company, which is currently pending in the Court of Chancery of the State of Delaware.
The full text of the letter is set forth below:
Dear Fellow Paragon Stockholders:
For the past several months, you have been receiving seemingly inaccurate and misleading information that I believe has been designed to divert your attention from the entrenchment activities taken by the Company under Sam Weiser's oversight that potentially violate Delaware law and are costing the Company and its stockholders significant money. As you may know, on November 1, 2024, litigation was commenced in the Delaware Court of Chancery challenging certain amendments to the Company's bylaws and other actions taken by the former Board in an apparent effort to entrench their positions and disenfranchise Paragon stockholders (the 'Entrenchment Litigation'). The actions challenged in the Entrenchment Litigation were taken in apparent direct response to the exercise of stockholder rights under Delaware law. I will not relitigate the Entrenchment Litigation here, but highly encourage all stockholders to read the publicly available filings and to educate themselves about the Board's concerning behavior.
While the Entrenchment Litigation remains pending, the Company has also embarked on an apparent smear campaign against me personally. At the forefront of this campaign is the supposed Audit Committee's 'independent investigation' into my vague 'conduct,' which the Company announced approximately one business day after the commencement of the Entrenchment Litigation and without any specific concerns or goals stated. So far, I have sought to stay above the fray and have remained silent in the face of what I view as the Company's inaccurate and defamatory press releases, knowing that sinking to this disingenuous level could lead to harm to Paragon, a company that I have worked diligently for many years to build on behalf of all stockholders. However, I am becoming increasingly concerned that Mr. Weiser is spending significant shareholder capital to protect his position and further his apparent vendetta against me, and enough is enough. The Company's stockholders deserve the full truth so that they can make informed decisions about their Company.
Three months have now passed since the Audit Committee began its 'independent investigation' and on February 4, 2025, the Company issued a press release with interim findings concerning alleged 'potential misstatements' made by me (the 'February Press Release'). These findings are telling-despite having months to review the allegations in this matter, the Audit Committee has not announced any concerns regarding my prior governance of the Company. All that was announced were cherry-picked partial disclosures about how I may have not timely informed the Company about decades old run-ins with the law that were already known to the Company and its stockholders prior to the Audit Committee's investigation.
To set the record straight, at the time I joined the Paragon Board in 2010, my plea agreement with respect to the 'theft by taking' charge had been fully exonerated and discharged without criminal conviction under Georgia state law effective on June 2, 2009. When I joined the Board in 2010, I acted in good faith in reliance on the State of Georgia's Order of Discharge, which stated that I had no adjudication of guilt or criminal conviction, and therefore nothing to disclose. Furthermore, regarding the indictment for false statements, as fully and clearly disclosed in the Company's annual reports for several years, I pled not guilty, and the charges were later dismissed. The Company conveniently omits any mention of my discharge and exoneration under Georgia law or the dismissal of the 2011 indictment from the February Press Release. Assuming the best, the Audit Committee simply did not know these facts, which raises serious doubts concerning their work-product and credibility, and assuming the worst, the Audit Committee actively sought to conceal these facts from its stockholders in the February Press Release to intentionally mislead them.
During my tenure with Paragon, I never tried to hide these past incidents and never intentionally mislead anyone about these issues. Moreover, had the Audit Committee simply asked me about these prior incidents, I could have directed them to their ultimate resolutions. This would have allowed the Audit Committee to fully and accurately describe them in the February Press Release, rather than issuing partial disclosures that, in my view, render the entire announcement erroneous and materially misleading to stockholders.
Other apparent lies or misstatements in the February Press Release also raise significant concern. While largely irrelevant to the real issues at stake, the press release further states that I have not cooperated with the internal investigation. This too is preposterous. While I have no obligation to cooperate, I, through my counsel, have already offered to provide all the information relating to these matters in electronic format, since this information had already been gathered in connection with the Entrenchment Litigation and is readily available. Even more interesting, when I was terminated, the Company took physical possession of my relevant Company devices. This makes the claim that I failed to provide access to these materials either, at best, a sign of ignorance or, at worst, a deliberate attempt to mislead stockholders further.
The Path Forward for Paragon
Notwithstanding the foregoing, I want to encourage stockholders to not get distracted by the Company's mudslinging and remain focused on the hard facts in front of them. During my time as CEO of the Company, over the seven-year period from 2017 (after we acquired SED International de Colombia in late 2016 and SI Systems, LLC's restructuring began to take shape) to 2023, Paragon has:
1 Net profits aggregated from each of Paragon's Annual Reports for the years 2017 through 2023. 2 Shareholder's equity figures from Paragon's 2017 and 2023 Annual Reports. 3 Book value per share based on shareholders equity divided by then shares outstanding from Paragon's 2017 and 2023 Annual Reports. 4 Based on Paragon's opening and closing stock prices on January 1, 2017 and December 31, 2023, respectively. Source: Yahoo! Finance.
Despite this success, I was unceremoniously terminated and a supposedly 'independent investigation' commenced to find reasons to actually justify the termination.
As the largest stockholder of the Company, my interests are fully aligned with yours. In contrast, I believe that Mr. Weiser has never purchased a single share of Paragon stock in the open market during his 13 years as a director and has sold most of his Company equity grants to me.In my view, Mr. Weiser does not have real skin in the game and is seeking to entrench and enrich himself to the detriment of Paragon stockholders.
I care deeply for Paragon and its stockholders, and Paragon's long-term results speak for themselves. I have purposely avoided joining the public fight in any way that could cause long-term damage to the Company.
Unfortunately, I do not believe the same can be said for Paragon's current leadership. Stockholders are urged to read the court filings in the Entrenchment Litigation, particularly the amended complaint for the entire story. Specifically, in the Entrenchment Litigation stockholders will see that Paragon's leadership tacitly admitted that its September 2024 bylaw amendments violated Delaware law by proactively repealing the amendments instead of opposing my motion for summary judgment. Stockholders will also see that Paragon, Mr. Weiser and former director Jack Jacobs have engaged multiple sets of legal counsel, expending significant stockholder money in an attempt to defend the entrenching actions of Messrs. Weiser and Jacobs, who have redacted court filings in a way that hides relevant information from its stockholders. Stockholders should ask themselves, why does this Board, which claims to be working in the interest of full shareholder transparency, continue to allow significant legal expense to be incurred in order to defend anti-stockholder actions and censor information from its stockholders?
My devotion to Paragon and its stakeholders has never wavered and my interests are fully aligned with yours. I have always held myself accountable for any business decisions that have not worked out for stockholders during my leadership and have always focused on taking those learnings and using them to build a stronger Paragon. I will continue to work tirelessly to secure a bright future for Paragon for the benefit of its true owners, its stockholders.
Sincerely,