UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                  For The Quarterly Period Ended March 31, 2000


                           Commission File No. 0-3362



                           PARAGON TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
             (Exact Name Of Registrant As Specified In Its Charter)



                     Pennsylvania                                22-1643428
       ----------------------------------------              ------------------
            (State Or Other Jurisdiction Of                  (I.R.S. Employer
            Incorporation Or Organization)                   Identification No.)



             600 Kuebler Road, Easton, PA                          18040
      ------------------------------------------                 ---------
       (Address Of Principal Executive Offices)                  (Zip Code)



Registrant's Telephone Number, Including Area Code:             610-252-7321
                                                                ------------



                            SI HANDLING SYSTEMS, INC.
--------------------------------------------------------------------------------
                           (Former Name of Registrant)



Indicate by checkmark  whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.                          Yes   X     No
                                                                -----

Number of shares of common stock,  par value $1.00 per share,  outstanding as of
March 31, 2000: 4,184,878.
                ---------


<PAGE>




                         PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements
------    --------------------
Paragon Technologies, Inc. and Subsidiary
Consolidated Balance Sheets (Unaudited)
March 31, 2000 and December 31, 1999
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                    March           December
                                                                   31, 2000         31, 1999
                                                                  ----------       ----------
<S>                                                                <C>               <C>
Assets
------

Current assets:
   Cash and cash equivalents, principally
     time deposits                                                 $    777           6,242
                                                                     ------          ------

   Receivables:
     Trade (net of allowance for doubtful
       accounts of $55 as of March 31, 2000
       and $54 as of December 31, 1999)                              10,629           6,824
     Notes and other receivables                                        804             952
                                                                     ------          ------
       Total receivables                                             11,433           7,776
                                                                     ------          ------

   Costs and estimated earnings in excess
     of billings                                                      1,713           1,864
                                                                     ------          ------

   Inventories:
     Raw materials                                                    2,779           1,819
     Finished goods and work-in-process                               1,171           1,586
                                                                     ------          ------
       Total inventories                                              3,950           3,405
                                                                     ------          ------

   Deferred income tax benefits                                       1,684           1,684
   Prepaid expenses and other current assets                            483             715
                                                                     ------          ------
       Total current assets                                          20,040          21,686
                                                                     ------          ------

Property, plant and equipment, at cost:
   Land                                                                 327             327
   Buildings and improvements                                         3,717           3,717
   Machinery and equipment                                            6,193           6,078
                                                                     ------          ------
                                                                     10,237          10,122
   Less:  accumulated depreciation                                    6,938           6,788
                                                                     ------          ------
       Net property, plant and equipment                              3,299           3,334
                                                                     ------          ------

Deferred income tax benefits                                            260             260
Investments in joint ventures                                         1,423           1,399
Excess of cost over fair value of net assets
   acquired, less amortization of $233 as of
   March 31, 2000 and $116 as of
   December 31, 1999                                                 18,407          18,524
Other assets, at cost less accumulated
   amortization of $137 as of March 31, 2000
   and $121 as of December 31, 1999                                     186             203
                                                                     ------          ------
       Total assets                                                $ 43,615          45,406
                                                                     ======          ======
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      - 2 -

<PAGE>




Item 1.   Financial Statements (Continued)
------    --------------------
Paragon Technologies, Inc. and Subsidiary
Consolidated Balance Sheets (Unaudited)
March 31, 2000 and December 31, 1999
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                    March           December
                                                                   31, 2000         31, 1999
                                                                  ----------       ----------
<S>                                                                <C>               <C>

Liabilities and Stockholders' Equity

Current liabilities:
   Current installments of long-term debt                          $  1,261           1,578
   Accounts payable                                                   5,820           5,169
   Customers' deposits and billings in excess
     of costs and estimated earnings                                  3,241           5,154
   Accrued salaries, wages, and commissions                             966           1,356
   Income taxes payable                                                 584              49
   Accrued royalties payable                                             91             284
   Accrued product warranties                                           953             903
   Accrued pension and retirement
     savings plan liabilities                                           494             463
   Accrued other liabilities                                            671           1,355
                                                                     ------          ------

     Total current liabilities                                       14,081          16,311
                                                                     ------          ------

Long-term liabilities:
   Long-term debt, excluding current installments:
     Term loan                                                       12,125          12,438
     Subordinated notes payable                                       3,000           3,000
     Other                                                               13              13
                                                                     ------          ------
     Total long-term debt                                            15,138          15,451
   Deferred compensation                                                199             219
                                                                     ------          ------
       Total long-term liabilities                                   15,337          15,670
                                                                     ------          ------

Stockholders' equity:
   Common stock, $1 par value; authorized
     20,000,000 shares; issued and outstanding
     4,184,878 shares as of March 31, 2000
     and 4,184,878 shares as of
     December 31, 1999                                                4,185           4,185
   Additional paid-in capital                                         6,817           6,817
   Retained earnings                                                  3,195           2,423
                                                                     ------          ------

       Total stockholders' equity                                    14,197          13,425
                                                                     ------          ------

       Total liabilities and stockholders' equity                  $ 43,615          45,406
                                                                     ======          ======
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 3 -

<PAGE>




Item 1.   Financial Statements (Continued)
-------   --------------------
Paragon Technologies, Inc. and Subsidiary
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended March 31, 2000 and March 31, 1999
     (In Thousands, Except Share And Per Share Data)

<TABLE>
<CAPTION>

                                                                       Three Months Ended
                                                                  ---------------------------
                                                                    March             March
                                                                   31, 2000         31, 1999
                                                                  ----------       ----------

<S>                                                              <C>                <C>
Net sales                                                        $   18,344             9,738
Cost of sales                                                        13,912             7,541
                                                                  ---------         ---------
Gross profit on sales                                                 4,432             2,197
                                                                  ---------         ---------

Selling, general and
   administrative expenses                                            2,390             1,498
Product development costs                                                49                69
Amortization of goodwill                                                117                 -
Employee severance and
   termination benefits                                                 337                 -
Interest expense                                                        421                11
Interest income                                                         (61)              (42)
Equity in income of joint
   ventures                                                             (24)               (7)
Other income, net                                                       (86)              (54)
                                                                  ---------         ---------
                                                                      3,143             1,475
                                                                  ---------         ---------

Earnings before
   income taxes                                                       1,289               722
Income tax expense                                                      517               281
                                                                  ---------         ---------
Net earnings                                                     $      772               441
                                                                  =========         =========

Basic earnings per share                                         $      .18               .12
                                                                  =========         =========

Diluted earnings per share                                       $      .17               .12
                                                                  =========         =========

Weighted average shares
   outstanding                                                    4,184,878         3,705,048
Dilutive effect of stock
   options                                                            2,246            17,819
Dilutive effect of phantom
   stock units                                                       18,120            13,525
                                                                  ---------         ---------
Weighted average shares
   outstanding assuming
   dilution                                                       4,205,244         3,736,392
                                                                  =========         =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 4 -

<PAGE>




Item 1.   Financial Statements (Continued)
-------   --------------------
Paragon Technologies, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2000 and March 31, 1999
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>

                                                                       Three Months Ended
                                                                  ---------------------------
                                                                    March             March
                                                                   31, 2000         31, 1999
                                                                  ----------       ----------

<S>                                                                <C>                <C>
Cash flows from operating activities:
   Net earnings                                                    $    772              441
   Adjustments to reconcile net earnings
     to net cash used
     by operating activities:
       Depreciation of plant and equipment                              150               58
       Amortization of intangibles                                      133                7
       Gain on disposition of equipment                                  (2)               -
       Equity in income of joint ventures                               (24)              (7)
       Change in operating assets and liabilities,
         net of effects of the acquisition of
         Ermanco Incorporated:
           Receivables                                               (3,657)          (2,433)
           Costs and estimated earnings in
              excess of billings                                        151              904
           Inventories                                                 (545)             239
           Deferred income tax benefits                                   -             (165)
           Prepaid expenses and other current assets                    232              138
           Other noncurrent assets                                        1              (88)
           Accounts payable                                             651             (943)
           Customers' deposits and billings in excess
              of costs and estimated earnings                        (1,913)          (1,472)
           Accrued salaries, wages, and
              commissions                                              (390)              31
           Income taxes payable                                         535              315
           Accrued royalties payable                                   (193)              27
           Accrued pension and retirement
              savings plan liabilities                                   31               (3)
           Accrued product warranties                                    50              124
           Accrued other liabilities                                   (453)              22
           Deferred compensation                                        (20)              (3)
                                                                     ------           ------
   Net cash used by operating activities                             (4,491)          (2,808)
                                                                     ------           ------

Cash flows from investing activities:
   Proceeds from the disposition of equipment                             2                -
   Additional consideration paid in connection
     with Ermanco acquisition                                          (231)               -
   Additions to property, plant and equipment                          (115)            (202)
                                                                     ------           ------
   Net cash used by investing activities                               (344)            (202)
                                                                     ------           ------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 5 -

<PAGE>




Item 1.  Financial Statements (Continued)
Paragon Technologies, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited) (Continued)
For the Three Months Ended March 31, 2000 and March 31, 1999
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                                  ---------------------------
                                                                    March             March
                                                                   31, 2000         31, 1999
                                                                  ----------       ----------

<S>                                                                <C>                <C>
Cash flows from financing activities:
   Sale of common shares in connection
     with employee incentive stock option plan                            -               14
   Repayment of long-term debt                                         (630)              (2)
   Repurchase and retirement of common stock                              -             (242)
                                                                     ------           ------
     Net cash used by financing activities                             (630)            (230)
                                                                     ------           ------

   Decrease in cash and cash equivalents                             (5,465)          (3,240)
   Cash and cash equivalents, beginning
     of period                                                        6,242            4,785
                                                                     ------           ------
   Cash and cash equivalents, end of period                        $    777            1,545
                                                                     ======           ======

   Supplemental disclosures of cash flow information:
     Cash paid during the period for:
       Interest                                                    $    780                1
                                                                     ======           ======
       Income taxes                                                $     36               12
                                                                     ======           ======

   Supplemental disclosures of noncash
   investing and financing activities:
     Issuance  of 6,011  common  shares in
       exchange  for  2,250  common  shares
       delivered to the Company by an officer
       in connection with the employee
       incentive stock option.                                     $      -               28
                                                                     ======           ======
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 6 -

<PAGE>




Item 1.       Financial Statements (Continued)
-------       --------------------
Paragon Technologies, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Three Months Ended March 31, 2000 and March 31, 1999


(1)  The  information  contained  in this Form 10-Q report is  unaudited  and is
     subject to  year-end  adjustments  and audit.  However,  in the  opinion of
     management,   the  interim  financial   statements  furnished  reflect  all
     adjustments  and  accruals,  which are  necessary  to a fair  statement  of
     results for the interim periods presented. The financial statements include
     the  accounts  of the  Company  and  Ermanco  Incorporated  ("Ermanco"),  a
     wholly-owned   subsidiary  company,   after  elimination  of  inter-company
     balances and transactions.  Results for interim periods are not necessarily
     indicative of results  expected for the fiscal year. Refer to the Company's
     Form 10-K for the ten months  ended  December  31,  1999 for more  complete
     financial information.

     On September  30, 1999,  the Board of Directors of the Company  approved an
     amendment to Article I, Section 1.03 of the Company's  Bylaws to change the
     fiscal year end of the Company  from the Sunday  nearest to the last day of
     February to December  31. The  Company  filed a Form 10-K for the  10-month
     period ending December 31, 1999 to cover the transition  period.  The prior
     year  comparative  financial  information in this Form 10-Q report reflects
     the months of January, February, and March 1999.

     On  February 9, 2000,  the Board of  Directors  of the Company  approved an
     amendment to Article 1 of the Company's Articles of Incorporation to change
     the  name  of the  Company  from  SI  Handling  Systems,  Inc.  to  Paragon
     Technologies,  Inc.  ("Paragon"  or the  "Company").  Paragon  will  be the
     corporate  entity currently  consisting of two separate brands:  SI Systems
     (formerly referred to as "SI Easton") and Ermanco Incorporated ("Ermanco").
     This amendment became effective on April 5, 2000.

     On March 9, 2000, the Company's  common stock began trading on the American
     Stock  Exchange  (Amex)  under the symbol  "PTG."  Prior to this date,  the
     Company's  common  stock was traded on The Nasdaq  Stock  Market  under the
     symbol "SIHS."

(2)  SI/BAKER, INC.
     --------------
     Paragon Technologies, Inc., (formerly,"SI Handling Systems, Inc.") and
     McKesson Automated Prescription Systems, Inc. ("McKesson APS"), formerly
     known as Automated Prescription Systems, Inc., are co-venturers in a joint
     venture named SI/BAKER, INC.("SI/BAKER" or the "joint venture").  On
     September 29, 1998, McKesson Corporation [NYSE: MCK], a healthcare supply
     management company, announced the completion of its acquisition of
     Automated Prescriptions Systems, Inc.  Automated Prescription Systems,
     Inc. was renamed McKesson Automated Prescription Systems, Inc.  The
     SI/BAKER joint venture draws upon the automated materials handling systems
     experience of SI Systems and the automated pill counting and dispensing
     products of McKesson APS to provide automated pharmacy systems.  Each
     member company contributed $100,000 in capital to fund the joint venture.

     The  joint  venture  designs  and  installs  computer   controlled,   fully
     automated,  integrated  systems for managed care pharmacy  operations.  The
     joint venture's  systems are viewed as labor saving devices,  which address
     the issues of  improved  productivity  and cost  reduction.  Systems can be
     expanded as customers'  operations  grow and they may be integrated  with a
     wide variety of components to meet specific customer needs.

     Schedule A contains the SI/BAKER, INC. financial statements.  The
     information contained in the SI/BAKER, INC. financial statements is
     unaudited and is subject to year-end adjustments and audit.  However, in
     the opinion of management, the interim financial

                                     - 7 -

<PAGE>




Item 1.   Financial Statements (Continued)
-------   --------------------
Paragon Technologies, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Three Months Ended March 31, 2000 and March 31, 1999


     statements  furnished  reflect  all  adjustments  and  accruals,  which are
     necessary to a fair statement of results for the interim periods presented.

     On  November  4, 1999,  the Board of  Directors  of  SI/BAKER  approved  an
     amendment to Article VII, Section 5 of the Bylaws to change the fiscal year
     end of the Company from the last day of February to December 31. SI/BAKER's
     financial  statements for the 10-month  period ending December 31, 1999 was
     included  in the  Company's  report  on Form 10-K for the  10-month  period
     ending December 31, 1999. The prior year comparative  financial information
     in this Form 10-Q  report  reflects  the months of January,  February,  and
     March 1999.

(3)  Modular Automation Corp.
     -----------------------
     On April 13, 1999, the Company acquired all of the outstanding common stock
     of Modular Automation Corp. ("MAC") of Greene, New York for $1,957,000. The
     acquisition  required a net cash outlay of $928,000.  The purchase price of
     the  acquisition  was allocated to the assets  acquired based on fair value
     with the remainder  representing  goodwill.  The acquired  Automated Guided
     Vehicle ("AGV")  products and personnel were integrated into the SI Systems
     operation.  As of December 31, 1999, the AGV product line  associated  with
     the MAC  acquisition  was  abandoned.  The write-off of certain  long-lived
     assets,  including  goodwill,  totaling  $561,000  was  recognized  in  the
     Consolidated  Statement of Operations for the ten months ended December 31,
     1999 in accordance with the criteria set forth by SFAS No. 121.

     On the basis of a pro forma consolidation of the result of operations as if
     the  acquisition  of MAC had taken  place on January  1,  1999,  management
     believes that the  acquisition  would not have had a material effect on the
     reported amounts.

(4)  Ermanco Incorporated
     --------------------
     On September 30, 1999, the Company  acquired all of the outstanding  common
     stock of  Ermanco  Incorporated.  Ermanco,  headquartered  in Spring  Lake,
     Michigan,  designs and installs  complete conveyor systems for a variety of
     manufacturing  and  warehousing  applications.  Under  terms  of the  Stock
     Purchase  Agreement and based on the definitive  closing balance sheet, the
     Company  acquired  all of the  outstanding  common  stock of Ermanco  for a
     purchase price of  $22,801,000  consisting of $15,301,000 in cash, of which
     $1,551,000  is held in escrow  ($801,000  was  released  in January  2000),
     $3,000,000 in promissory notes payable to fourteen stockholders of Ermanco,
     and 481,284 shares of the Company's common stock with a value of $4,500,000
     based on the average  closing price of $9.35 of the Company's  common stock
     for the five  trading  days  immediately  preceding  the date of the  Stock
     Purchase Agreement, August 6, 1999. The Company financed $14,000,000 of the
     acquisition  through term debt. The acquisition  required a net cash outlay
     of $2,264,000.

     The acquisition was accounted for as purchase in accordance with APB No. 16
     and,  accordingly,  the acquired assets and assumed  liabilities  have been
     recorded  at their  estimated  fair value at the date of  acquisition.  The
     amount of goodwill  recorded at the time of acquisition was $18,640,000 and
     is being amortized over a period of 40 years.

                                      - 8 -

<PAGE>




Item 1.   Financial Statements (Continued)
-------   --------------------
Paragon Technologies, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Three Months Ended March 31, 2000 and March 31, 1999


     On the basis of a pro forma  consolidation  of the results of operations of
     Ermanco,  as if the  acquisition  had taken  place on January 1, 1999,  the
     following pro forma financial  results for the three months ended March 31,
     1999 are as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                      For the Three Months Ended
                                                            March 31, 1999
                                                      --------------------------
     <S>                                                       <C>
     Net sales                                                 $ 16,638
                                                                 ======
     Net earnings                                              $    535
                                                                 ======
     Basic earnings per share                                  $    .13
                                                                 ======
     Diluted earnings per share                                $    .13
                                                                 ======
</TABLE>

(5)  Major Segments of Business
     --------------------------
     Operating  segments are defined as  components  of an  enterprise  in which
     separate financial  information is available and evaluated regularly by the
     chief operating decision maker in deciding how to allocate resources and in
     assessing  performance.  The Company identified such segments based on both
     management responsibility and types of products offered for sale.

     On September 30, 1999, Paragon Technologies, Inc. (formerly, "SI Handling
     Systems, Inc.") ("the Company") concluded the acquisition of all of the
     outstanding common stock of Ermanco Incorporated ("Ermanco").  Ermanco
     operates as a wholly-owned subsidiary of the Company.

     The Company's Easton, Pennsylvania operations (hereafter referred to as "SI
     Systems") is a systems integrator  supplying  automated  materials handling
     systems to manufacturing, order selection, and distribution operations. The
     systems are designed,  sold,  manufactured,  installed, and serviced by its
     own staff,  or by others,  for SI Systems,  at its direction,  generally as
     labor-saving  devices to improve productivity and reduce costs. SI Systems'
     products are utilized to automate the movement or selection of products and
     are often integrated with other automated equipment,  such as conveyors and
     robots. SI Systems'  products involve both standard and specially  designed
     components and include  integration of  non-proprietary  automated handling
     technologies so as to provide solutions for its customers' unique materials
     handling  needs.  SI Systems' staff develops and designs  computer  control
     programs required for the efficient operation of the systems.

     Although SI Systems is not  dependent on any single  customer,  much of its
     revenue is derived  from  contracts  to design,  manufacture,  and  install
     large-scale   materials   handling   systems  for  major   North   American
     corporations and the federal government.

     Ermanco is a  manufacturer  of light to medium duty unit handling  conveyor
     products,  serving the material handling industry through local independent
     distributors  in North  America.  Ermanco also provides  complete  conveyor
     systems  for  a  variety  of  applications,   including  distribution,  and
     manufacture of computers and electronic  products,  utilizing primarily its
     own manufactured  conveyor products,  engineering services by its own staff
     or subcontracted,  and  subcontracted  installation  services.  The systems
     product line of Ermanco accounts for  approximately  40% of Ermanco's total
     revenues, and the balance is from distribution (resale).

     SI Systems' products are sold on a fixed price basis.  Generally,  contract
     terms provide for progress  payments and a portion of the purchase price is
     withheld by the buyer until

                                      - 9 -

<PAGE>




Item 1.   Financial Statements (Continued)
-------   --------------------
Paragon Technologies, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Three Months Ended March 31, 2000 and March 31, 1999


     the system has been accepted. Ermanco's products and services are also sold
     on a fixed  price  basis.  Generally,  contract  terms  are net 30 days for
     product sales, with progressive payments for system-type projects.

     Prior to the acquisition, the Company operated in one major market segment.
     With the  addition of the Ermanco  operations,  the Company now operates in
     two major market  segments,  and products are sold worldwide as follows (in
     thousands):

<TABLE>
<CAPTION>

     For the three months ended                  Automated Material     Conveyor
     March 31, 2000:                              Handling Systems       Systems        Total
     ---------------------------------           ------------------     ---------      ------
     <S>                                              <C>                <C>           <C>
     Sales                                            $ 7,740            10,604        18,344
     Earnings before interest expense,
       interest income, equity in
       income of joint ventures, and
       income taxes                                       301             1,324         1,625
     Total assets                                      13,354            30,261        43,615
     Capital expenditures                                  25                90           115
     Depreciation and amortization
       expense                                            101               182           283
</TABLE>

     Geographic segment information was as follows (in thousands):
<TABLE>
<CAPTION>
     For the three months ended
     March 31, 2000:                  Domestic     Europe and Asia       Canada       Total
     ----------------------------     --------     ---------------       ------      ------
     <S>                              <C>                <C>               <C>       <C>
     Sales                            $ 16,828           1,243             273       18,344
     Earnings (loss) before
       interest expense, interest
       income, equity in income
       of joint ventures,
       and income taxes                 1,625               -               -         1,625
     Total assets                      43,615               -               -        43,615
     Capital expenditures                 115               -               -           115
     Depreciation and
       amortization expense               283               -               -           283
</TABLE>

     Intersegment  sales for the three  months  ended  March  31,  2000  totaled
$3,000.

(6)  Long-Term Debt
     --------------
     On March 30, 2000, the Company  received a waiver of certain loan covenants
     as well as an  amendment  to the term  loan and line of  credit  agreements
     relative to future  covenant  requirements,  a variable  term loan interest
     rate increase to LIBOR plus 3%, and  limitations on the payment of interest
     on subordinated debt.



                                     - 10 -

<PAGE>




Item 2.  Management's Discussion and Analysis of Financial Condition and Results
-------  -----------------------------------------------------------------------
         of Operations
         -------------

Liquidity And Capital Resources
-------------------------------
     The Company's cash and cash equivalents  decreased to $777,000 at March 31,
2000 from $6,242,000 at December 31, 1999. The decrease  resulted from cash used
by operating  activities  totaling  $4,491,000,  repayment of long-term  debt of
$630,000,   purchases  of  capital   equipment  of  $115,000,   and   additional
consideration  and  costs  of  $231,000  paid in  connection  with  the  Ermanco
acquisition.  Funds used by operating  activities  during the three months ended
March 31, 1999 were $2,808,000.
     On April 13, 1999, the Company acquired all of the outstanding common stock
of Modular  Automation  Corp.  ("MAC") of Greene,  New York for $1,957,000.  The
acquisition  required a net cash outlay of $928,000.  The purchase  price of the
acquisition  was allocated to the assets  acquired  based on fair value with the
remainder  representing  goodwill. The acquired Automated Guided Vehicle ("AGV")
products and personnel were integrated into the SI Systems  operation.  However,
as of  December  31,  1999,  the  AGV  product  line  associated  with  the  MAC
acquisition was abandoned. The write-off of certain long-lived assets, including
goodwill,  totaling  $561,000 was  recognized in the  Consolidated  Statement of
Operations  for the ten months ended  December 31, 1999 in  accordance  with the
criteria set forth by SFAS No. 121.
     On September 30, 1999,  the Company  completed the  acquisition  of all the
outstanding  common  stock  of  Ermanco   Incorporated   ("Ermanco").   Ermanco,
headquartered in Spring Lake, Michigan,  designs and installs complete conveying
systems for a variety of manufacturing and warehousing  applications.  Under the
terms  of  the  Stock  Purchase  Agreement,  the  Company  acquired  all  of the
outstanding  common  stock  of  Ermanco  for a  purchase  price  of  $22,801,000
consisting  of  $15,301,000  in cash,  of  which  $1,551,000  is held in  escrow
($801,000 was released in January 2000),  $3,000,000 in promissory notes payable
to the fourteen  stockholders  of Ermanco,  and 481,284  shares of the Company's
common stock with a value of  $4,500,000  based on the average  closing price of
$9.35 of the  Company's  common  stock  for the five  trading  days  immediately
preceding the date of the Stock Purchase Agreement,  August 6, 1999. The Company
financed  $14,000,000  of the  acquisition  through term debt.  The  acquisition
required a net cash outlay of $2,264,000.
     The  acquisition was accounted for as a purchase in accordance with APB No.
16 and,  accordingly,  the  acquired  assets and assumed  liabilities  have been
recorded at their estimated fair value at the date of acquisition. The amount of
goodwill  recorded  at the  time of  acquisition  was  $18,640,000  and is being
amortized over a period of 40 years.
     On the closing date of the acquisition, the Company entered into employment
agreements  with four  employees.  Leon C.  Kirschner and Steven  Shulman,  both
principal stockholders of Ermanco, joined the Board of Directors of the Company.
     In  order  to  complete  the  Ermanco  acquisition,  the  Company  obtained
financing  from its principal  bank.  The Company  entered into a new three-year
line of credit  facility  which may not exceed the  lesser of  $6,000,000  or an
amount  based  on  a  borrowing  base  formula  tied   principally  to  accounts
receivable,  inventory,  and fair market  value of the  Company's  property  and
plant, and liquidation  value of equipment,  plus an amount equal to $2,500,000.
This amount will be reduced by  $625,000  every six months  during the first two
years of the line of credit  facility until such amount reaches zero,  minus the
unpaid  principal  balance of the term loan described  below. The line of credit
facility is to be used primarily for working capital  purposes.  As of March 31,
2000, the Company did not have any borrowings under the line of credit facility.
     The Company  financed  $14,000,000 of the acquisition  through a seven-year
term loan  from its bank.  During  the  first  two years of the term  loan,  the
Company will repay equal quarterly  payments of $312,500 plus accrued  interest.
After the second anniversary of the September 30, 1999 closing date, the Company
will make equal quarterly payments of $575,000, plus interest. The interest rate
on $7,000,000 of the term loan is variable at a rate

                                     - 11 -

<PAGE>




Item 2.  Management's Discussion and Analysis of Financial Condition and Results
-------  -----------------------------------------------------------------------
         of Operations
         -------------

Liquidity And Capital Resources (Continued)
-------------------------------
equal to the three-month LIBOR Market Index Rate plus three percent. The Company
also entered into an interest rate swap  agreement for fifty percent of the term
loan to hedge the floating interest rate. The seven-year  interest rate swap for
$7,000,000 was at a fixed rate of 9.38%.
     To obtain the line of credit and term loan, the Company  granted the bank a
security interest in all personal property,  including,  without limitation, all
accounts, deposits, documents,  equipment, fixtures, general intangibles, goods,
instruments,  inventory,  letters  of  credit,  money,  securities,  and a first
mortgage on all real estate.  The line of credit  facility and term loan contain
various  restrictive  covenants  relating  to  additional  indebtedness,   asset
acquisitions or dispositions, investments, guarantees, payment of dividends, and
maintenance of certain financial ratios.  The Company was in compliance with all
covenants, as amended, as of March 31, 2000.
     The promissory notes issued to the fourteen stockholders of Ermanco totaled
$3,000,000,  have a term of seven years,  and bear interest at an annual rate of
ten percent in years one through  three,  twelve percent in years four and five,
and fourteen percent in years six and seven. The weighted average interest rates
on the promissory notes is 11.714% over the term of the notes. Interest shall be
payable quarterly, in cash or under certain conditions,  in the Company's common
stock upon approval of the Company's  Board of Directors.  The promissory  notes
may be prepaid prior to the end of the seven-year term provided that there is no
debt  outstanding  under its line of credit  facility  and term loan.  Effective
April 1, 2000,  the  Company is  prohibited  from  making any cash  payments  of
subordinated  debt and interest until the Company is in full compliance with all
the financial  covenants as originally  set forth in the Loan Agreement with the
Company's principal bank.
     On March 4, 1996, SI/BAKER established a $2,500,000 line of credit facility
(the  "facility")  with its principal bank (the "bank").  Under the terms of the
facility, SI/BAKER's parent companies, Paragon Technologies, Inc. (formerly, "SI
Handling Systems, Inc.") and McKesson Automated Prescription Systems, Inc., have
each  provided  a  limited  guarantee  and  surety  in an  amount  not to exceed
$1,000,000  for a combined  guarantee of  $2,000,000 to the bank for the payment
and  performance  of  the  related  note,  including  any  further  renewals  or
modifications  of the facility.  During the fiscal year ended March 1, 1998, the
bank  increased  the  borrowing  availability  to  $3,000,000  and  extended the
expiration  date of the facility.  On March 31, 2000,  SI/BAKER did not have any
borrowings under the facility, the facility expires effective August 31, 2000.
     The Company believes that its financial resources consisting of its current
assets,  anticipated  cash flow, and the available line of credit  facility will
adequately finance its operating requirements for the foreseeable future.
     The  Company  plans to  consider  expansion  opportunities  as they  arise,
although ongoing  operating  results of the Company,  the restrictive  covenants
associated with the recent financing obtained from the Company's principal bank,
the economics of the expansion,  and the circumstances  justifying the expansion
will be key factors in  determining  the amount of  resources  the Company  will
devote to further  expansion.  The  Company  did not have any  material  capital
commitments as of March 31, 2000.


                                     - 12 -

<PAGE>




Item 2.  Management's Discussion and Analysis of Financial Condition and Results
-------  -----------------------------------------------------------------------
         of Operations
          -------------

Results Of Operations
---------------------

Three Months Ended March 31, 2000 Versus Three Months Ended March 31, 1999
--------------------------------------------------------------------------
     On September  30, 1999,  the Board of Directors of the Company  approved an
amendment to Article I, Section 1.03 of the Bylaws to change the fiscal year end
of the Company  from the Sunday  nearest to the last day of February to December
31. For the year ended  December  31,  1999,  the fiscal year  consisted  of ten
months.  The prior  year  comparative  financial  information  in this Form 10-Q
report reflects the months of January, February, and March 1999.
     On September 30, 1999, the Company  concluded the acquisition of all of the
outstanding common stock of Ermanco  Incorporated.  Ermanco operates as a wholly
owned  subsidiary  of Paragon  Technologies,  Inc. and the results for the three
months  ended March 31, 2000 include the  operations  of Ermanco.  However,  the
prior  year  comparative  information  in the Form  10-Q  does not  reflect  the
operations of Ermanco.
     The  Company's  net earnings for the three months ended March 31, 2000 were
$772,000  compared to net  earnings of $441,000 for the three months ended March
31,  1999.  Unfavorably  impacting  the net  earnings of $772,000  for the three
months ended March 31, 2000 were employee severance and termination  benefits of
$337,000.
     The total backlog at March 31, 2000 was approximately  $24,290,000.  During
the  first  three  months  of  2000,  the  Company   received   orders  totaling
approximately $18,950,000.
     Net  sales of  $18,344,000  for the  three  months  ended  March  31,  2000
increased  88.4%  compared to net sales of $9,738,000 for the three months ended
March 31,  1999.  The sales  increase of  $8,606,000  is  comprised of Ermanco's
contribution to product sales approximating $10,604,000, offset by a decrease in
SI Systems' sales of  approximately  $1,998,000 for the three months ended March
31,  2000,  when  compared  to the three  months  ended March 31,  1999.  The SI
Systems'  sales  decrease in the three months ended March 31, 2000 was primarily
attributable  to a smaller  backlog of orders at  December  31,  1999,  versus a
larger backlog of orders at December 31, 1998. SI Systems  experienced a decline
in sales across all product lines, with the majority of the decrease relating to
sales of the Cartrac,  Lo-Tow,  and Order Selection product lines. The Company's
business is  dependent  upon a limited  number of large  contracts  with certain
customers. This dependence can cause unexpected fluctuations in sales volume.
     Gross profit as a percentage  of sales was 24.2% for the three months ended
March 31, 2000  compared  to 22.6% for the three  months  ended March 31,  1999.
Ermanco's  gross profit as a percentage  of sales was 23.8% for the three months
ended March 31, 2000. The increase in the gross profit  percentage for the three
months  ended March 31, 2000 was  attributable  to  enhanced  internal  controls
relative to pricing practices and favorable  performances on several  contracts,
principally for SI Systems' higher margin proprietary products lines,  initiated
in the prior fiscal year that were  completed or nearing  completion  during the
first three months ended March 31, 2000.  Partially offsetting the impact of the
favorable performances on several contracts was the recognition of approximately
$1,125,000  in sales at no gross profit  margin on three major  contracts  where
significant cost overruns,  resulting in losses, were experienced during the ten
months ended December 31, 1999.
     Estimates relative to loss contracts,  which the Company  experienced to an
unusual  extent in the period  ended  December  31, 1999,  are  inherently  more
difficult to make than those in which the contract  has  proceeded  according to
original expectations. Uncertainty exists with

                                     - 13 -

<PAGE>




Item 2.  Management's Discussion and Analysis of Financial Condition and Results
-------  -----------------------------------------------------------------------
         of Operations
         -------------

Results Of Operations (Continued)
---------------------

Three Months Ended March 31, 2000 Versus Three Months Ended March 31, 1999
--------------------------------------------------------------------------
(Continued)
respect to the  resources  required to accomplish  the  contractual
scope or work dealing with the final integration of  state-of-the-art  automated
materials  handling systems.  Consequently,  while the Company believes the full
effect of both projected and presently  incurred cost overruns has been accrued,
current  estimates  may need to be revised  as  additional  information  becomes
available.  Also the backlog of orders of approximately  $2,800,000 attributable
to  these  contracts  will be  recognized  at no  gross  profit  throughout  the
remainder of this calendar year.
     Selling,  general and administrative  expenses of $2,390,000 were higher by
$892,000 in the three months ended March 31, 2000 than in the three months ended
March 31, 1999.  The increase of $892,000 is  comprised of  additional  costs of
operations  totaling  approximately  $1,050,000 related to Ermanco,  offset by a
decrease  in  SI  Systems'  selling,  general  and  administrative  expenses  of
approximately  $160,000 for the three months ended March 31, 2000, when compared
to the three months ended March 31, 1999.  The decrease in SI Systems'  selling,
general and administrative expenses was primarily attributable to the prior year
comparable  period  containing  larger amount of costs  associated  with product
promotion  and  sales  efforts  aimed  at  expanding  the  customer  base of the
business.
     Product  development  costs of  $49,000  were lower by $20,000 in the three
months  ended March 31,  2000,  than in the three  months  ended March 31, 1999.
Development progress in the three months ended March 31, 2000 and March 31, 1999
included  enhancements  to the  Company's  horizontal  transportation  and order
selection product lines.
     Amortization of goodwill  represented costs associated with the acquisition
of Ermanco Incorporated on September 30, 1999. Goodwill amortization expense for
the three months ended March 31, 2000 totaled approximately $117,000.  There was
no goodwill  amortization expense associated with the Ermanco acquisition in the
comparable prior year period.
     Employee  severance  and  termination  benefits of  $337,000  for the three
months  ended March 31, 2000 was  associated  with a  restructuring  initiative,
whereby the Company separated approximately sixteen employees.
     Interest  income of $61,000  for the three  months  ended  March 31,  2000,
increased  by $19,000,  when  compared to the three months ended March 31, 1999.
The increase in interest  income was primarily  attributable  to higher level of
funds available for short-term  investments  during the three months ended March
31, 2000.
     Equity in income of joint ventures  represents the Company's  proportionate
share of its investment in the SI-Egemin and SI/BAKER joint ventures,  which are
being  accounted  for under the equity  method.  The net  favorable  variance of
approximately  $17,000 in the equity in income of joint  ventures  for the three
months  ended  March  31,  2000,  was  comprised  of  a  favorable  variance  of
approximately $59,000 attributable to the SI/BAKER joint venture, as compared to
the three  months ended March 31, 1999.  Offsetting  the increase of  SI/BAKER's
favorable  variance  was  an  unfavorable  variance  of  approximately   $42,000
attributable to the SI-Egemin joint venture.
     The favorable variance of $59,000 for the three months ended March 31, 2000
in the equity in income of  SI/BAKER  joint  venture  was  primarily  due to its
increased  sales of  approximately  $1,067,000  as compared to the three  months
ended  March  31,  1999.  SI/BAKER  also  experienced  a  reduction  in  product
development expenses in the amount of approximately  $59,000, and an increase in
interest income,  net of approximately  $43,000 for the three months ended March
31,  2000,  as compared to the three  months  ended  March 31,  1999.  Partially
offsetting  these  favorable  variances  was  SI/BAKER's  increase of $43,000 in
revenue-based royalty costs due to the parent companies.


                                     - 14 -

<PAGE>




Item 2.  Management's Discussion and Analysis of Financial Condition and Results
-------  -----------------------------------------------------------------------
         of Operations
         -------------

Results Of Operations (Continued)
---------------------

Three Months Ended March 31, 2000 Versus Three Months Ended March 31, 1999
--------------------------------------------------------------------------
(Continued)
     The  unfavorable  variance of $42,000 for the three  months ended March 31,
2000 in the equity in income of the SI-Egemin joint venture was  attributable to
start-up costs. The SI-Egemin joint venture was initiated in July 1999.
   The favorable variance in other income,  net was primarily  attributable to
an increase in the  revenue-based  royalty  income related to the SI/BAKER joint
venture.
     The Company incurred income tax expense of $517,000 during the three months
ended  March 31,  2000,  compared  to income  tax  expense  of  $281,000  in the
comparable  prior year  period.  Income tax  expense was  generally  recorded at
statutory federal and state tax rates expected to apply for each fiscal year.

Cautionary Statement
--------------------
     Certain  statements  contained  herein are not based on historical fact and
are  "forward-looking  statements"  within the meaning of the Private Securities
Litigation  Reform  Act of 1995 or by the  Securities  and  Exchange  Commission
rules, regulations,  and releases. The Company intends that such forward-looking
statements be subject to the safe harbors created  thereby.  Among other things,
they regard the Company's acquisition activities, earnings, liquidity, financial
condition,  and  certain  operational  matters.  Words or phrases  denoting  the
anticipated  results  of  future  events,   such  as  "anticipate,"   "believe,"
"estimate,"  "expect,"  "may,"  "will," "will  likely," "are expected to," "will
continue," "should," "project," and similar expressions that denote uncertainty,
are intended to identify such forward-looking  statements.  The Company's actual
results,  performance,  or achievements could differ materially from the results
expressed in, or implied by, such "forward-looking  statements": (1) as a result
of risks and uncertainties  identified in connection with those  forward-looking
statements,  including  those factors  identified  herein,  and in the Company's
other  publicly  filed  reports;  (2) as a  result  of risks  and  uncertainties
associated  with the  Ermanco  acquisition,  including  the  failure  to realize
anticipated  benefits  of such  acquisition,  the failure to  integrate  Ermanco
successfully with the Company, and any unforeseen  complications  related to the
Ermanco  acquisition;  (3) as a result of risks  associated  with the  Company's
restructuring,  including the failure to achieve anticipated  operating savings,
and  the  possibility  that  the  restructuring  charges  will be  greater  than
anticipated;  (4) as a result of factors  over which the Company has no control,
including  the  strength  of  domestic  and  foreign  economies,  sales  growth,
competition,  certain costs increases,  and any potential  exposures relating to
Year 2000 matters; or (5) if the factors on which the Company's  conclusions are
based do not conform to the Company's expectations.

Quantitative and Qualitative Disclosures
----------------------------------------
     The  Company's  primary  market risk  exposure is from  changes in interest
rates.  The Company's policy is to manage interest rate exposure through the use
of a combination of fixed and floating rate debt  instruments,  and in the three
months ended March 31, 2000, an interest  rate swap  agreement.  Generally,  the
Company seeks to match the terms of its debt with its purpose.  The Company uses
a  variable  rate  line of  credit  facility  to  provide  working  capital  for
operations.  On September  30, 1999,  the Company  entered into an interest rate
swap  agreement  for  50% of its  new  term  loan  from  its  principal  bank to
effectively  convert half of the term loan from a variable  rate note to a fixed
rate note. A standard  interest  rate swap  agreement  involves the payment of a
fixed rate times a notional  amount by one party in exchange for a floating rate
times the same notional  amount from another party.  The counterpart to the swap
agreement is the Company's principal bank.
     The Company  does not believe that its  exposures to interest  rate risk or
foreign currency exchange risk, risks from commodity  prices,  equity prices and
other market  changes that affect market risk sensitive  instruments,  including
the interest rate swap agreement, are material to its results of operations.

                                     - 15 -

<PAGE>




                           PART II - OTHER INFORMATION
                           ---------------------------


Item 5.   Other Information
-------   -----------------

     On March 9, 2000, the Company's  common stock began trading on the American
Stock Exchange  (Amex) under the symbol "PTG." Prior to this date, the Company's
common stock was traded on The Nasdaq Stock Market(sm) under the symbol "SIHS."
     Effective April 5, 2000, SI Handling Systems,  Inc. amended its Articles of
Incorporation in order to change its name to Paragon  Technologies,  Inc. A Form
8-K was  filed  on  April  7,  2000  regarding  this  change  to the name of the
Corporation.
     Effective May 10, 2000, Ronald J. Semanick became Vice President - Finance,
Chief Financial Officer, and Treasurer of the Company.


Item 6.   Exhibits and Reports on Form 8-K
-------   --------------------------------

     (a)  Exhibit 27 - Financial Data Schedule.

     (b)  No reports on Form 8-K were filed during the quarter ended March 31,
          2000.























                                     - 16 -

<PAGE>




Paragon Technologies, Inc. and Subsidiary





                                    SIGNATURE
                                    ---------

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                        PARAGON TECHNOLOGIES, INC.
                                        (formerly, "SI Handling, Systems, Inc.")

                                        /S/ William R. Johnson
                                        ----------------------------------------

                                        William R. Johnson
                                        President & CEO


Dated:   May 15, 2000
         ------------



















                                     - 17 -

<PAGE>




                                                                      Schedule A
                                                                      ----------











                                 SI/BAKER, INC.

                              Financial Statements
                                 March 31, 2000























                                     - 18 -

<PAGE>




SI/BAKER, INC.
Balance Sheets (Unaudited)
March 31, 2000 and December 31, 1999
  (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                 March             December
                                                               31, 2000            31, 1999
                                                              ----------          ---------
<S>                                                             <C>                  <C>
Assets

Current assets:
   Cash and cash equivalents, principally
     time deposits                                              $ 2,626              2,895
                                                                  -----              -----

Receivables:
   Trade                                                          1,438              1,358
   Other receivables                                                127                129
                                                                  -----              -----
     Total receivables                                            1,565              1,487
                                                                  -----              -----

   Costs and estimated earnings in
     excess of billings                                           3,426              2,159
   Deferred income tax benefits                                     391                391
   Prepaid expenses and other current
     assets                                                         128                 53
                                                                  -----              -----

       Total current assets                                       8,136              6,985
                                                                  -----              -----

   Machinery and equipment, at cost                                 201                194
   Less:  accumulated depreciation                                  126                121
                                                                  -----              -----
   Net machinery and equipment                                       75                 73
                                                                  -----              -----

   Equipment leased to customer                                     487                487
   Less:  accumulated depreciation                                  487                467
                                                                  -----              -----
     Net equipment leased to customer                                 -                 20
                                                                  -----              -----

   Deferred income tax benefits                                      22                 22
                                                                  -----              -----

       Total assets                                             $ 8,233              7,100
                                                                  =====              =====
</TABLE>



                                     - 19 -

<PAGE>




SI/BAKER, INC.
Balance Sheets (Unaudited)
March 31, 2000 and December 31, 1999
  (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                 March             December
                                                               31, 2000            31, 1999
                                                              ----------          ---------
<S>                                                             <C>                  <C>
Liabilities and Stockholders' Equity

Current liabilities:

   Accounts payable:
     Trade                                                      $   674                 739
     Affiliated companies                                           137                  64
                                                                  -----               -----
       Total accounts payable                                       811                 803
                                                                  -----               -----

   Customers' deposits and billings in
     excess of costs and estimated
     earnings                                                     2,985               2,114
   Accrued salaries, wages, and
     commissions                                                    238                 247
   Income taxes payable                                              40                 143
   Accrued royalties payable                                        475                 361
   Accrued product warranties                                       958                 842
   Accrued other liabilities                                         80                  77
                                                                  -----               -----
       Total current liabilities                                  5,587               4,587
                                                                  -----               -----

Stockholders' equity:
   Common stock, $1 par value; authorized
     1,000 shares; issued 200 shares                                  -                   -
   Additional paid-in capital                                       200                 200
   Retained earnings                                              2,446               2,313
                                                                  -----               -----
       Total stockholders' equity                                 2,646               2,513
                                                                  -----               -----

       Total liabilities and stockholders'
         equity                                                 $ 8,233               7,100
                                                                  =====               =====
</TABLE>


                                     - 20 -

<PAGE>




SI/BAKER, INC.
Statements of Operations (Unaudited)
Three Months Ended March 31, 2000 and and March 31, 1999
  (In Thousands)

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                   --------------------------
                                                                       March           March
                                                                     31, 2000        31, 1999
                                                                   ------------    ----------
<S>                                                                  <C>               <C>
Net sales                                                            $ 3,433           2,366
Cost of sales                                                          2,875           1,929
                                                                       -----           -----

Gross profit on sales                                                    558             437
                                                                       -----           -----

Selling, general and
   administrative
   expenses                                                              269             267
Product development
   costs                                                                  16              75
Royalty expense to
   parent companies                                                      137              94
Interest income                                                          (43)             (9)
Interest expense                                                           -               9
Other income, net                                                        (45)            (41)
                                                                       -----           -----
                                                                         334             395
                                                                       -----           -----

Earnings before
   income taxes                                                          224              42
Income tax expense                                                        91              28
                                                                       -----           -----

Net earnings                                                         $   133              14
                                                                       =====           =====
</TABLE>




                                     - 21 -

<PAGE>




SI/BAKER, INC.
Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 2000 and March 31, 1999
  (In Thousands)

<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                        -----------------------
                                                                         March          March
                                                                        31, 2000       31, 1999
                                                                        --------       --------
<S>                                                                     <C>              <C>
Cash flows from operating activities:
   Net earnings                                                         $   133             14
   Adjustments to reconcile net earnings to net
     cash provided (used) by operating activities:
       Depreciation of machinery and
         equipment and leased equipment                                      25             39
       Changes in operating assets and
         liabilities:
           Receivables                                                      (78)            76
           Costs and estimated earnings
              in excess of billings                                      (1,267)           168
           Deferred tax benefit                                               -             35
           Prepaid expenses and other
              current assets                                                (75)           142
           Other assets                                                       -              -
           Accounts payable                                                   8            (68)
           Customers' deposits and
              billings in excess of costs
              and estimated earnings                                        871            (89)
           Accrued salaries, wages, and
              commissions                                                    (9)           (30)
           Income taxes payable                                            (103)            18
           Accrued royalties payable                                        114             57
           Accrued product warranties                                       116             45
           Accrued other liabilities                                          3              4
           Deferred compensation                                              -             12
                                                                          -----          -----
Net cash provided (used)
   by operating activities                                                 (262)           423
                                                                          -----          -----

Cash flows from investing activities:
   Additions to machinery and equipment                                     (7)             (7)
                                                                          -----          -----
     Net cash used by investing activities                                  (7)             (7)
                                                                          -----          -----

Increase (decrease) in cash and cash equivalents                           (269)           416
Cash and cash equivalents,
   beginning of period                                                    2,895            250
                                                                          -----          -----
Cash and cash equivalents, end of period                                $ 2,626            666
                                                                          =====          =====

Supplemental disclosure of cash flow information:
     Cash paid (received) during the period for:
       Income taxes                                                     $   254           (175)
                                                                          =====          =====
       Interest                                                         $     -              -
                                                                          =====          =====
</TABLE>

                                     - 22 -

<PAGE>




                           PARAGON TECHNOLOGIES, INC.

                                    FORM 10-Q

                                  EXHIBIT INDEX



Exhibit No.
----------

10.17    First Amendment to Term Note and Loan Agreement.

10.18    Modification Number One to Loan Agreement.

10.19    Second Amendment to Line of Credit.

27       Financial Data Schedule.



                                     - 23 -