Expresses Deep Concern Regarding the Company's Shareholder-Unfriendly Actions
Intends to Vote for Director Candidates Nominated by Sham Gad at the 2025 Annual Meeting of Shareholders
MISSION VIEJO, CA / ACCESS Newswire / May 29, 2025 / Kevin Ting, who beneficially owns approximately 11.7% of the outstanding shares of common stock of Paragon Technologies, Inc. (OTC PINK:PGNT) ("Paragon" or the "Company"), announced today that he has issued an open letter to Paragon's shareholders. The letter follows the Company's recent pursuit of shareholder-unfriendly governance practices. Mr. Ting also announced his support for Sham Gad's director candidates who are standing for election to the board of directors of Paragon (the "Board") at the Company's 2025 annual meeting of shareholders (the "2025 Annual Meeting").
The full text of the letter is set forth below:
Dear Fellow Paragon Shareholders:
I own approximately 11.7% of the outstanding shares of Paragon Technologies, making me one of the Company's largest shareholders.
Today, I write to you not only as an individual investor but as someone who, like many of you, has been deeply committed to Paragon. Since purchasing my first share in the open market nearly nine years ago, I have witnessed many of the Company's leadership decisions-some of which I agreed with, and others I did not. Regardless of my opinions of those decisions, I chose to trust Paragon's leadership team to act in the best interests of its shareholders and to steer a course toward a prosperous future.
Fast forward to 2025, I have observed the Company pursue what I consider to be a series of deeply troubling initiatives. I fear that Paragon has lost its way and that change is needed for the Company to rediscover its path.
Paragon's Poison Pill
On March 17, 2025, the Company announced that the Board approved the adoption of a shareholder rights plan ("Poison Pill"). I strongly oppose that decision.
For me, this is not merely a matter of corporate policy; it is about preserving the fundamental rights of shareholders and the trust we have placed in management and the Board to uphold them.
While this defensive measure claimed to promote fair and equal treatment for all shareholders and enable investors to realize the long-term value of their investments, it is, in my opinion, a double-edged sword. Such a tool can preempt natural market mechanisms-potentially leaving long-term stockholders in a worse position than before and prevent shareholders from demonstrating their conviction in Paragon's potential, and function to entrench the current Board and management team.
I encourage my fellow shareholders to critically examine the Company's rationale behind adopting its Poison Pill. While it was presented as a safeguard, I believe its implications were to ultimately stifle shareholder communication and undermine the dynamic accountability that a free-market process provides, placing the Company on the leading edge of shareholder disenfranchisement at this critical moment in Paragon's lifecycle.
Recent Stock Grants
The Company's 2024 annual report was released on March 31, 2025. Within this report, I'd like to highlight a statement found on pages 8 and 46: "On January 2, 2025, a stock grant of 5,000 shares was made to the newly elected non-employee directors of the Company, including Mr. Gad." Moreover, on page 5 of the first quarterly report ended on March 31, 2025, I'd like to also highlight item number 6 under Issuance History: "On April 1, 2025, a stock grant of 5,000 shares was made to the interim CEO and director of the company."
Stock grants for board members are widely practiced in corporate America, but it's worth noting that this approach has its critics-and I am one of them. In my opinion, if the goal is to truly align board members' interests with those of shareholders, directors should be required, as part of their role, to purchase shares directly on the open market rather than receiving equity grants that can potentially dilute ownership from existing shareholders. I firmly believe that board members should experience the same risks as we, the shareholders, do.
Now, more than ever, Paragon needs directors who possess both an ownership mentality and confidence in the Company's future. It's imperative that leadership put its capital next to that of shareholders to show alignment of interest and demonstrate conviction in Paragon, its strategy, and its trajectory.
This should be the Paragon way.
Apparent Misuse of the Corporate Machinery
In recent months, the Board has undertaken a series of concerning measures that, I believe, reflect an apathy for shareholder perspectives and rights.
Specifically, since Mr. Gad's removal as Chairman and CEO in August 2024, I have observed the actions of the then-serving Board, as well as those of the new directors appointed in December 2024, which include the following:
On September 27, 2024, Paragon rejected a written consent delivered by shareholders representing a majority of the Company's voting power to remove certain members of the Board on the basis of an apparent technicality.
On September 29, 2024, the Board adopted later-repealed amendments to the Bylaws that materially increased the required level of support for shareholders to act by written consent and purported to cabin the circumstances in which shareholders may remove Paragon's directors.
On March 17, 2025, the Company adopted the Poison Pill with a 10% triggering threshold, chilling the shareholder experience.
In light of these actions, I have become increasingly concerned that as long as Mr. Gad continues to hold a 28.4% ownership stake in Paragon, the current Board will remain in a defensive stance, prioritizing strategies that, in the long run, may be shareholder-unfriendly and value destructive.
Support for Change at the 2025 Annual Meeting
As many of you are aware, on March 18, 2025, Mr. Gad announced a slate of director candidates for election to the Board at the 2025 Annual Meeting. This year's director elections will mark one of the most pivotal moments in Paragon's history, in my estimation.
However, like all of you, I now face the critical decision of whether or not to support Mr. Gad's slate of director nominees. After much consideration, I have decided to put my support behind Mr. Gad and his nominees because they have publicly committed to:
Separate the Chairman and Chief Executive Officer roles.
Immediately terminate Paragon's Poison Pill.
Refrain from implementing equity incentive plans.
Adopt a reasonable stock ownership commitment, requiring directors to acquire Paragon shares through open markets purchases.
Focus on high-quality investments-profitable businesses at attractive valuations.
Continue evolving SI into a specialized, niche system integrator.
Expand SEDC beyond Colombia into other regions and countries, leveraging various vendor partnerships to support credit lines, sales teams, product personnel, and performance-based financial incentives.
Pursue strategic acquisition opportunities to expand and further diversify Paragon's revenue base.
Mr. Gad also has the support of Ronnell Rivera, the current President of SED International De Colombia (SEDC), who has chosen to serve as one of Mr. Gad's director nominees. From where I stand, Mr. Gad's recruitment of Mr. Rivera was transformative and for eight consecutive years they have had an effective working relationship. Mr. Rivera's contribution to the Company's business has been critically important and his continued efforts will be necessary to Paragon's success going forward. Furthermore, I understand that some of you may have concerns about my support for Mr. Gad, given certain business and investment decisions during his tenure as Chairman and CEO that did not yield the desired outcomes. While those decisions were unfortunate, I recognize that perfection is unattainable in the investment world. As Rob Walling wisely said, 'It's easy to criticize from the stands." As an investor, I must keep my eyes forward and focused on the road ahead, not on the rearview mirror. Mr. Gad built a resilient company that weathered those challenges and delivered meaningful shareholder value. When I consider the hand Mr. Gad was dealt with when he took over Paragon, compared to what it has become today, it's clear that he transformed the company for the better-especially through the acquisition of SEDC.
I truly believe that the experiences Mr. Gad has faced over the past few months have afforded him invaluable lessons and given him a newfound perspective that will strengthen the Company on a go-forward basis.
More importantly, I also believe that Mr. Gad's director candidates have the backgrounds, experiences, shareholder alignment, and qualifications necessary to guide Paragon to a brighter future for all long-term shareholders. Accordingly, I intend to vote my shares in support of Mr. Gad's slate at the 2025 Annual Meeting.
Conclusion
It's crucial that the Board and management team undertake the work necessary to realize sustainable, positive outcomes for all of the Company's stakeholders. Continued uncertainty and hawkishness is in the best interest of no one. Put simply, the morass in which Paragon currently finds itself in is untenable.
As stated at the beginning of this letter, I have been a Paragon shareholder for nearly nine years. I have always been, and continue to be, an enthusiastic investor in the Company, filled with optimism about the potential of its businesses.
I want nothing more than the future success of Paragon-and I hope you do, too.
Appreciatively,
Kevin Ting
CONTACT:
DISCLAIMER
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in any state to any person. This press release does not recommend the purchase or sale of a security. There is no assurance or guarantee with respect to the prices at which any securities of Paragon Technologies, Inc. ("Paragon" or the "Company") will trade, and such securities may not trade at prices that may be implied herein. In addition, this press release and the discussions and opinions herein are for general information only and are not intended to provide or be investment advice. This press release contains forward-looking statements. Forward-looking statements are statements that are not historical facts and may include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects," "anticipates," "believes," "intends," "estimates," "plans," "will be" and similar expressions. Although Kevin Ting ("Mr. Ting") believes that the expectations reflected in forward-looking statements contained herein are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties-many of which are difficult to predict and are generally beyond the control of Paragon or Mr. Ting-that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. In addition, the foregoing considerations and any other publicly stated risks and uncertainties should be read in conjunction with any risks and cautionary statements discussed or identified by the Company. The forward-looking statements speak only as of the date hereof and, other than as required by applicable law, Mr. Ting does not undertake any obligation to update or revise any forward-looking information or statements. Certain information included in this material is based on data obtained from sources considered to be reliable. Further, any analyses set forth herein should not be viewed as factual and should not be relied upon as an accurate prediction of future results. All figures are unaudited estimates and, unless required by law, are subject to revision without notice. Mr. Ting currently beneficially owns shares of the Company. Mr. Ting is an investor and trades (i.e., buys and sells) securities and intends to continue trading in the securities of the Company. You should assume Mr. Ting will from time to time sell all or a portion of his holdings of the Company in open market transactions or otherwise, buy additional shares (in open market or privately negotiated transactions or otherwise), or trade in options, puts, calls, swaps or other derivative instruments relating to such shares. Consequently, Mr. Ting's beneficial ownership of shares of, and/or economic interest in, the Company may vary over time depending on various factors, with or without regard to Mr. Ting's views of the Company's business, prospects, or valuation (including the market price of the Company's shares), including, without limitation, other investment opportunities available to Mr. Ting, concentration of positions in Mr. Ting's portfolio, conditions in the securities markets, and general economic and industry conditions. Without limiting the generality of the foregoing, in the event of a change in the Company's share price on or following the date hereof, Mr. Ting may buy additional shares or sell all or a portion of his holdings of the Company (including, in each case, by trading in options, puts, calls, swaps, or other derivative instruments relating to the Company's shares). Mr. Ting also reserves the right to change the opinions expressed herein and his intentions with respect to his investment in the Company, and to take any actions with respect to his investment in the Company as he may deem appropriate, and disclaims any obligation to notify the market or any other party of any such changes or actions, except as required by law.
SOURCE: Kevin Ting
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