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 June 30, 2000


                           Commission File No. 1-15729



                           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
June 30, 2000: 4,184,878.
               ---------



<PAGE>


                         PART I - FINANCIAL INFORMATION
                         ------------------------------


Item 1.    Financial Statements
------     --------------------
Paragon Technologies, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, 2000 (Unaudited) and December 31, 1999
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                     June             December
                                                                   30, 2000           31, 1999
                                                                  ----------         ----------
<S>                                                                <C>                  <C>
Assets
------
Current assets:
   Cash and cash equivalents, principally
     time deposits                                                 $  6,769              6,242
                                                                     ------             ------

   Receivables:
     Trade (net of allowance for doubtful
       accounts of $62 as of June 30, 2000
       and $54 as of December 31, 1999)                               8,986              6,824
     Notes and other receivables                                        435                952
                                                                     ------             ------
       Total receivables                                              9,421              7,776
                                                                     ------             ------

   Costs and estimated earnings in excess
     of billings                                                        793              1,864
                                                                     ------             ------

   Inventories:
     Raw materials                                                    1,890              1,819
     Finished goods and work-in-process                                 794              1,586
                                                                     ------             ------
       Total inventories                                              2,684              3,405
                                                                     ------             ------

   Deferred income tax benefits                                       1,684              1,684
   Prepaid expenses and other current assets                            351                715
                                                                     ------             ------
       Total current assets                                          21,702             21,686
                                                                     ------             ------

Property, plant and equipment, at cost:
   Land                                                                 327                327
   Buildings and improvements                                         3,717              3,717
   Machinery and equipment                                            6,296              6,078
                                                                     ------             ------
                                                                     10,340             10,122
   Less:  accumulated depreciation                                    7,089              6,788
                                                                     ------             ------
       Net property, plant and equipment                              3,251              3,334
                                                                     ------             ------

Deferred income tax benefits                                            260                260
Investments in joint ventures                                         1,471              1,399
Excess of cost over fair value of net assets
   acquired, less amortization of $349 as of
   June 30, 2000 and $116 as of
   December 31, 1999                                                 18,291             18,524
Other assets, at cost less accumulated
   amortization of $154 as of June 30, 2000
   and $121 as of December 31, 1999                                     169                203
                                                                     ------             ------
       Total assets                                                $ 45,144             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
June 30, 2000 (Unaudited) and December 31, 1999
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                     June             December
                                                                   30, 2000           31, 1999
                                                                  ----------         ----------
<S>                                                                <C>                  <C>

Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
   Current installments of long-term debt                          $  1,256              1,578
   Accounts payable                                                   4,775              5,169
   Customers' deposits and billings in excess
     of costs and estimated earnings                                  4,898              5,154
   Accrued salaries, wages, and commissions                           1,552              1,356
   Income taxes payable                                                 603                 49
   Accrued royalties payable                                            159                284
   Accrued product warranties                                           902                903
   Accrued pension and retirement
     savings plan liabilities                                           525                463
   Accrued other liabilities                                            561              1,355
                                                                     ------             ------
     Total current liabilities                                       15,231             16,311
                                                                     ------             ------

Long-term liabilities:
   Long-term debt, excluding current installments:
     Term loan                                                       11,813             12,438
     Subordinated notes payable                                       3,000              3,000
     Other                                                               13                 13
                                                                     ------             ------
     Total long-term debt                                            14,826             15,451
   Deferred compensation                                                105                219
                                                                     ------             ------
       Total long-term liabilities                                   14,931             15,670
                                                                     ------             ------

Stockholders' equity:
   Common stock, $1 par value; authorized
     20,000,000 shares; issued and outstanding
     4,184,878 shares as of June 30, 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                                                  3,980              2,423
                                                                     ------             ------

       Total stockholders' equity                                    14,982             13,425
                                                                     ------             ------

       Total liabilities and stockholders' equity                  $ 45,144             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 Six Months Ended June 30, 2000 and June 30, 1999
     (In Thousands, Except Share And Per Share Data)

<TABLE>
<CAPTION>
                                        Three Months Ended              Six Months Ended
                                   ---------------------------     -------------------------
                                       June           June             June           June
                                     30, 2000       30, 1999         30, 2000       30, 1999
                                   ------------   ------------     ------------    ----------
<S>                                 <C>            <C>              <C>            <C>

Net sales                            $ 16,689         11,934           35,033         21,672
Cost of sales                          12,173          9,711           26,085         17,252
                                       ------         ------           ------         ------
Gross profit on sales                   4,516          2,223            8,948          4,420
                                       ------         ------           ------         ------

Selling, general and
   administrative expenses              2,868          1,776            5,258          3,274
Product development costs                  60            179              109            248
Amortization of goodwill                  117             14              233             14
Employee severance and
   termination benefits                     -              -              337              -
Interest expense                          416              4              837             15
Interest income                           (75)           (28)            (136)           (70)
Equity in income of joint
  ventures                                (48)           (43)             (72)           (50)
Other income, net                        (123)           (37)            (208)           (91)
                                       ------         ------           ------         ------
                                        3,215          1,865            6,358          3,340
                                       ------         ------           ------         ------

Earnings before
   income taxes                         1,301            358            2,590          1,080
Income tax expense                        516            138            1,033            419
                                       ------         ------           ------         ------
Net earnings                        $     785            220            1,557            661
                                       ======         ======           ======         ======

Basic earnings per share            $     .19            .06              .37            .18
                                       ======         ======           ======         ======

Diluted earnings per share          $     .19            .05              .36            .17
                                       ======         ======           ======         ======

Weighted average shares
   outstanding                      4,184,878      3,705,688        4,184,878      3,705,368
Dilutive effect of stock
   options                                819         13,993            1,430         15,906
Dilutive effect of phantom
   stock units                         12,544         14,715           15,874         14,120
                                    ---------      ---------        ---------      ---------
Weighted average shares
   outstanding assuming
   dilution                         4,198,241      3,734,396        4,202,182      3,735,394
                                    =========      =========        =========      =========
</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 Six Months Ended June 30, 2000 and June 30, 1999
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                         Six Months Ended
                                                                    --------------------------
                                                                       June            June
                                                                      30, 2000       30, 1999
                                                                    -----------     ----------

<S>                                                                  <C>               <C>
Cash flows from operating activities:
   Net earnings                                                      $  1,557             661
   Adjustments to reconcile net earnings
     to net cash provided (used)
     by operating activities:
       Depreciation of plant and equipment                                301             151
       Amortization of intangibles                                        266              25
       Gain on disposition of equipment                                    (2)              -
       Equity in income of joint ventures                                 (72)            (50)
       Change in operating assets and liabilities,
         net of effects of the acquisition of
         Modular Automation Corp. and
         Ermanco Incorporated:
           Receivables                                                 (1,645)         (2,334)
           Costs and estimated earnings in
              excess of billings                                        1,071           3,969
           Inventories                                                    721             (24)
           Deferred income tax benefits                                     -            (207)
           Prepaid expenses and other current assets                      364              27
           Other noncurrent assets                                          1            (135)
           Accounts payable                                              (394)         (1,822)
           Customers' deposits and billings in excess
              of costs and estimated earnings                            (256)         (3,311)
           Accrued salaries, wages, and
              commissions                                                 196             (76)
           Income taxes payable                                           554             238
           Accrued royalties payable                                     (125)           (119)
           Accrued pension and retirement
              savings plan liabilities                                     62              47
           Accrued product warranties                                      (1)            194
           Accrued other liabilities                                     (563)           (161)
           Deferred compensation                                         (114)            (18)
                                                                       ------          ------
   Net cash provided (used) by operating activities                     1,921          (2,945)
                                                                       ------          ------

Cash flows from investing activities:
   Proceeds from the disposition of equipment                               2               -
   Additional consideration paid in connection
     with Ermanco acquisition                                            (231)              -
   Acquisition of Modular Automation Corp.,
     net of cash acquired                                                   -            (928)
   Additions to property, plant and equipment                            (218)           (274)
                                                                       ------          ------
   Net cash used by investing activities                                 (447)         (1,202)
                                                                       ------          ------
</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 Six Months Ended June 30, 2000 and June 30, 1999
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                         Six Months Ended
                                                                    --------------------------
                                                                       June            June
                                                                      30, 2000       30, 1999
                                                                    -----------     ----------

<S>                                                                  <C>               <C>
Cash flows from financing activities:
   Sale of common shares in connection
     with employee incentive stock option plan                              -              34
   Repayment of long-term debt                                           (947)             (5)
   Dividends paid on common stock                                           -            (371)
   Repurchase and retirement of common stock                                -            (290)
                                                                       ------          ------
     Net cash used by financing activities                               (947)           (632)
                                                                       ------          ------

   Increase (decrease) in cash and cash equivalents                       527          (4,779)
   Cash and cash equivalents, beginning
     of period                                                          6,242           4,785
                                                                       ------          ------
   Cash and cash equivalents, end of period                         $   6,769               6
                                                                       ======          ======

   Supplemental disclosures of cash flow
   information:
     Cash paid during the period for:
       Interest                                                     $   1,095               2
                                                                       ======          ======
       Income taxes                                                 $     307             374
                                                                       ======          ======

   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
Six Months Ended June 30, 2000 and June 30, 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 April,  May,  and June 1999,  and January  through June 1999,
     respectively.

     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.

                                      - 7 -

<PAGE>




Item 1.    Financial Statements (Continued)
------     --------------------
Paragon Technologies, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Six Months Ended June 30, 2000 and June 30, 1999


     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  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 were
     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 April,  May, and June 1999,
     and January through June 1999, respectively.

(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.



                                      - 8 -

<PAGE>




Item 1.    Financial Statements (Continued)
------     --------------------
Paragon Technologies, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Six Months Ended June 30, 2000 and June 30, 1999


     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.

     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 six months  ended June 30,
     1999 are as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                        For the Six Months Ended
                                                              June 30, 1999
                                                        ------------------------

     <S>                                                        <C>
     Net sales                                                  $ 36,164
                                                                  ======
     Net earnings                                               $  1,266
                                                                  ======
     Basic earnings per share                                   $    .30
                                                                  ======
     Diluted earnings per share                                 $    .29
                                                                  ======
</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.



                                      - 9 -

<PAGE>




Item 1.    Financial Statements (Continued)
------     --------------------
Paragon Technologies, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Six Months Ended June 30, 2000 and June 30, 1999


     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  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 six months ended                    Automated Material     Conveyor
     June 30, 2000:                               Handling Systems       Systems        Total
     -------------------------------             ------------------     ---------     -------
     <S>                                              <C>                 <C>           <C>
     Sales                                            $ 15,221            19,812        35,033
     Earnings before interest expense,
       interest income, equity in
       income of joint ventures, and
       income taxes                                      1,043             2,176         3,219
     Total assets                                       15,843            29,301        45,144
     Capital expenditures                                   77               141           218
     Depreciation and amortization
       expense                                             202               365           567
</TABLE>

     Geographic segment information was as follows (in thousands):

<TABLE>
<CAPTION>

     For the six months ended
     June 30, 2000:                     Domestic    Europe and Asia     Canada      Total
     ------------------------------     --------    ---------------     ------     ------
     <S>                                <C>              <C>              <C>      <C>
     Sales                              $ 32,587         1,951            495      35,033
     Earnings before interest
       expense, interest
       income, equity in income
       of joint ventures,
       and income taxes                    3,219             -              -       3,219
     Total assets                         45,144             -              -      45,144
     Capital expenditures                    218             -              -         218
     Depreciation and
       amortization expense                  567             -              -         567
</TABLE>

     Inter-segment sales for the six months ended June 30, 2000 totaled $88,000.

                                     - 10 -

<PAGE>




Item 1.    Financial Statements (Continued)
------     --------------------
Paragon Technologies, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Six Months Ended June 30, 2000 and June 30, 1999


(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.


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 increased to $6,769,000 at June 30,
2000 from  $6,242,000  at December 31, 1999.  The  increase  resulted  from cash
provided by operating activities totaling  $1,921,000.  Partially offsetting the
increase  in cash and cash  equivalents  from this source was the  repayment  of
long-term  debt of  $947,000,  purchases of capital  equipment of $218,000,  and
additional  consideration  and costs of  $231,000  paid in  connection  with the
Ermanco  acquisition.  Funds used by operating  activities during the six months
ended June 30, 1999 were $2,945,000.
     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.

                                     - 11 -

<PAGE>




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

Liquidity And Capital Resources (Continued)
-------------------------------
     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 June 30,
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 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%. On July 27, 2000, the Company  prepaid,  without penalty,
$1,150,000  of the term loan with the variable  interest  rate.  The  prepayment
consisted of two quarterly payments of $575,000  pertaining to the final year of
the term loan.
     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 June 30, 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 June 30, 2000,  SI/BAKER did not have any
borrowings under the facility, the facility expires effective August 31, 2000.

                                     - 12 -

<PAGE>




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


Liquidity And Capital Resources (Continued)
-------------------------------
     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,  as part of its focus on its core business and  strategy,  has
decided to sell unused land, and the remaining  assets and customer lists of its
current AGV and Automated Storage and Retrieval Systems ("ASRS") product lines.
     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 June 30, 2000.


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

(a)  Six Months Ended June 30, 2000  Versus Six Months Ended June 30, 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 April,  May, and June 1999,  and January  through
June 1999, respectively.
     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 six
months ended June 30, 2000 include the operations of Ermanco. However, the prior
year  comparative  information in this Form 10-Q does not reflect the operations
of Ermanco.
     The  Company's  net  earnings  for the six months  ended June 30, 2000 were
$1,557,000  compared to net  earnings of $661,000  for the six months ended June
30,  1999.  Unfavorably  impacting  the net earnings of  $1,557,000  for the six
months ended June 30, 2000 were employee  severance and termination  benefits of
$337,000.
     The total backlog at June 30, 2000 was  approximately  $19,608,000.  During
the six months  ending June 30,  2000,  the  Company  received  orders  totaling
approximately $30,956,000.
     Net sales of  $35,033,000  for the six months ended June 30, 2000 increased
61.7%  compared to net sales of  $21,672,000  for the six months  ended June 30,
1999. The sales  increase of $13,361,000 is comprised of Ermanco's  contribution
to product sales approximating $19,812,000,  offset by a decrease in SI Systems'
sales of  approximately  $6,451,000 for the six months ended June 30, 2000, when
compared to the six months ended June 30, 1999.  The SI Systems'  sales decrease
in the six months ended June 30, 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 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 25.5% for the six months ended
June 30,  2000  compared  to  20.4%  for the six  months  ended  June 30,  1999.
Ermanco's gross profit as a

                                     - 13 -

<PAGE>




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


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

(a) Six Months Ended June 30, 2000 Versus Six Months Ended June 30, 1999
    --------------------------------------------------------------------
    (Continued)
percentage  of sales was 24.9%  for the six  months  ended  June 30,  2000.  The
increase in the gross profit  percentage  for the six months ended June 30, 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 six  months  ended June 30,  2000.
Offsetting the impact of the favorable performances on several contracts was the
recognition  of additional  losses on a major contract  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 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  $3,570,000  attributable to these contracts will be recognized at
no gross profit throughout the remainder of this calendar year.
     Selling,  general and administrative  expenses of $5,258,000 were higher by
$1,984,000  for the six months  ended June 30, 2000 than in the six months ended
June 30, 1999.  The increase of $1,984,000  is comprised of additional  costs of
operations  totaling  approximately  $2,377,000 related to Ermanco,  offset by a
decrease  in  SI  Systems'  selling,  general  and  administrative  expenses  of
approximately  $393,000 for the six months ended June 30, 2000, when compared to
the six months ended June 30, 1999. The decrease in SI Systems' selling, general
and  administrative  expenses  was  primarily  attributable  to the  prior  year
comparable  period  containing a larger amount of costs  associated with product
promotion  and sales  efforts  aimed at expanding the customer base of business.
These expenses were impacted as a result of the restructuring initiative whereby
employees were separated from the Company.
     Product  development  costs of $109,000  were lower by $139,000 for the six
months  ended  June  30,  2000  than in the six  months  ended  June  30,  1999.
Development programs in the six months ended June 30, 2000 included enhancements
to the Company's conveyor  technology,  and horizontal  transportation and order
selection product lines.  Development  programs in the six months ended June 30,
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 and Modular  Automation  Corp.
('MAC") on April 13, 1999.  Goodwill  amortization  expense  associated with the
Ermanco   acquisition  during  the  six  months  ended  June  30,  2000  totaled
approximately  $233,000.  There was no goodwill  amortization expense associated
with the Ermanco  acquisition  in the  comparable  prior year  period.  Goodwill
amortization  expense  associated with the MAC acquisition during the six months
ended  June 30,  1999  totaled  approximately  $14,000.  There  was no  goodwill
amortization  expense  pertaining to the MAC acquisition in the six months ended
June 30, 2000 due to the write-off during the ten months ended December 31, 1999
of  certain  long-lived  assets,   primarily   goodwill,   associated  with  the
elimination  of  the  Automated  Guided  Vehicle  product  line  related  to the
acquisition of MAC.


                                     - 14 -

<PAGE>




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


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

(a)  Six Months Ended June 30, 2000 Versus Six Months Ended June 30, 1999
     --------------------------------------------------------------------
     (Continued)
     Employee severance and termination  benefits of $337,000 for the six months
ended  June  30,  2000  was  associated  with  a  first  quarter   restructuring
initiative, whereby the Company separated approximately sixteen employees.
     Interest  expense of  $837,000  was higher by  $822,000  for the six months
ended June 30, 2000 than in the six months ended June 30, 1999.  The increase in
interest  expense was primarily  attributable to the term debt and  subordinated
notes issued in connection with the Ermanco acquisition,  which was completed on
September 30, 1999.
     Interest  income of $136,000 was higher by $66,000 for the six months ended
June 30, 2000  compared to the six months ended June 30,  1999.  The increase in
interest  income  was  primarily  attributable  to the  higher  level  of  funds
available for short-term investments.
     Equity in income of joint ventures  represents the Company's  proportionate
share of its  investments  in the SI-Egemin and SI/BAKER joint ventures that are
being  accounted  for under the equity  method.  The net  favorable  variance of
$22,000 in the equity in income of joint  ventures for the six months ended June
30, 2000, was comprised of a favorable variance of $125,000  attributable to the
SI/BAKER  joint  venture,  as  compared to the six months  ended June 30,  1999.
Offsetting  the increase of  SI/BAKER's  favorable  variance was an  unfavorable
variance of approximately $103,000 attributable to the SI-Egemin joint venture.
     The  favorable  variance of $125,000 for the six months ended June 30, 2000
in the equity in income of the SI/BAKER  joint  venture was primarily due to its
increased sales of approximately  $2,666,000 as compared to the six months ended
June 30, 1999, plus a reduction of $82,000 in product development  expenses,  an
increase of $65,000 in interest income, net, and an increase of $41,000 in other
income,  net,  associated  with  royalty  income.   Partially  offsetting  these
favorable variances was SI/BAKER's increase of $106,000 in revenue-based royalty
costs due to the parent companies.
     The unfavorable variance of $103,000 for the six months ended June 30, 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 and Ermanco license agreements.
     The Company incurred income tax expense of $1,033,000 during the six months
ended  June 30,  2000,  compared  to  income  tax  expense  of  $419,000  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.

(b)  Three Months Ended June 30, 2000 Versus Three Months Ended June 30, 1999
     ------------------------------------------------------------------------
     With the  exception  of the  following  Statement of  Operations  captions,
changes in the second  quarter of calendar  year 2000 compared to the prior year
were consistent with those previously noted above for the six-month period.
     Net sales of $16,689,000 for the three months ended June 30, 2000 increased
39.8% compared to net sales of  $11,934,000  for the three months ended June 30,
1999. The sales increase of $4,755,000 is comprised of Ermanco's contribution to
product  sales  approximating  $9,293,000,  offset by a decrease  in SI Systems'
sales of approximately $4,538,000 for the three months ended June 30, 2000, when
compared to the three months ended June 30, 1999. With the exception of slightly
higher  Lo-Tow  and  Cartrac  sales,  the  decrease  in SI  System's  sales  was
experienced  across the  Company's  other product lines with the majority of the
decrease relating to sales of the Company's Order Selection product line.

                                     - 15 -

<PAGE>




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


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

(b)  Three Months Ended June 30, 2000 Versus Three Months Ended June 30, 1999
     ------------------------------------------------------------------------
     (Continued)
     Gross profit as a percentage  of sales was 27.1% for the three months ended
June 30,  2000  compared  to 18.6% for the three  months  ended  June 30,  1999.
Ermanco's  gross profit as a percentage  of sales was 26.2% for the three months
ended June 30, 2000.  The increase in the gross profit  percentage for the three
months  ended June 30,  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
three  months  ended  June 30,  2000.  Offsetting  the  impact of the  favorable
performances on several  contracts was the recognition of additional losses on a
major  contract  where  significant  cost  overruns,  resulting in losses,  were
experienced during the ten months ended December 31, 1999.
     Selling,  general and administrative  expenses of $2,868,000 were higher by
$1,092,000  for the three  months  ended June 30, 2000 than in the three  months
ended June 30, 1999. The increase of $1,092,000 is comprised of additional costs
of operations totaling approximately  $1,327,000 related to Ermanco, offset by a
decrease  in  SI  Systems'  selling,  general  and  administrative  expenses  of
approximately  $235,000 for the three months ended June 30, 2000,  when compared
to the three months ended June 30,  1999.  The decrease in SI Systems'  selling,
general and administrative expenses was primarily attributable to the prior year
comparable  period  containing a larger amount of costs  associated with product
promotion  and sales  efforts  aimed at expanding the customer base of business.
These expenses were impacted as a result of the restructuring initiative whereby
employees were separated from the Company.

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 expectaions.

                                     - 16 -

<PAGE>




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


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 six
months ended June 30, 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.



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


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

             (a)   Exhibit 27 - Financial Data Schedule.

             (b)   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.


                                     - 17 -

<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:      August 14, 2000
        ----------------------
















                                     - 18 -

<PAGE>




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











                                 SI/BAKER, INC.

                              Financial Statements
                                  June 30, 2000


























                                     - 19 -

<PAGE>




SI/BAKER, INC.
Balance Sheets
June 30, 2000 (Unaudited) and December 31, 1999
  (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                 June              December
                                                               30, 2000            31, 1999
                                                               --------            --------

<S>                                                            <C>                   <C>
Assets
------
Current assets:
   Cash and cash equivalents, principally
     time deposits                                             $  2,828               2,895
                                                                 ------              ------

Receivables:
   Trade                                                          3,023               1,358
   Other receivables                                                155                 129
                                                                 ------              ------
     Total receivables                                            3,178               1,487
                                                                 ------              ------

   Costs and estimated earnings in
     excess of billings                                           1,242               2,159
   Deferred income tax benefits                                     391                 391
   Prepaid expenses and other current
     assets                                                         213                  53
                                                                 ------              ------

       Total current assets                                       7,852               6,985
                                                                 ------              ------

   Machinery and equipment, at cost                                 215                 194
   Less:  accumulated depreciation                                  136                 121
                                                                 ------              ------
   Net machinery and equipment                                       79                  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                                            $  7,953               7,100
                                                                 ======              ======
</TABLE>



                                     - 20 -

<PAGE>




SI/BAKER, INC.
Balance Sheets
June 30, 2000 (Unaudited) and December 31, 1999
  (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                                 June              December
                                                               30, 2000            31, 1999
                                                               --------            --------

<S>                                                            <C>                    <C>
Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:

   Accounts payable:
     Trade                                                     $  1,114                 739
     Affiliated companies                                           183                  64
                                                                  -----               -----
       Total accounts payable                                     1,297                 803
                                                                  -----               -----

   Customers' deposits and billings in
     excess of costs and estimated
     earnings                                                     2,117               2,114
   Accrued salaries, wages, and
     commissions                                                    197                 247
   Income taxes payable                                              33                 143
   Accrued royalties payable                                        397                 361
   Accrued product warranties                                       960                 842
   Accrued other liabilities                                         89                  77
                                                                  -----               -----
       Total current liabilities                                  5,090               4,587
                                                                  -----               -----

Stockholders' equity:
   Common stock, $1 par value; authorized
     1,000 shares; issued 200 shares                                  -                   -
   Additional paid-in capital                                       200                 200
   Retained earnings                                              2,663               2,313
                                                                  -----               -----
       Total stockholders' equity                                 2,863               2,513
                                                                  -----               -----

       Total liabilities and stockholders'
         equity                                                $  7,953               7,100
                                                                  =====               =====
</TABLE>


                                     - 21 -

<PAGE>




SI/BAKER, INC.
Statements of Operations (Unaudited)
Six Months Ended June 30, 2000 and and June 30, 1999
  (In Thousands)

<TABLE>
<CAPTION>
                                        Three Months Ended               Six Months Ended
                                   ---------------------------     --------------------------
                                       June           June             June            June
                                     30, 2000       30, 1999         30, 2000        30, 1999
                                   ------------   ------------     ------------    ----------
<S>                                   <C>             <C>              <C>            <C>
Net sales                             $ 4,585          2,986            8,018          5,352
Cost of sales                           3,793          2,366            6,668          4,295
                                        -----          -----            -----          -----

Gross profit on sales                     792            620            1,350          1,057
                                        -----          -----            -----          -----

Selling, general and
   administrative
   expenses                               273            289              542            556
Product development
   costs                                   59             84               75            157
Royalty expense to
   parent companies                       183            119              320            214
Interest income                           (28)            (9)             (71)           (18)
Interest expense                            -              3                -             12
Other income, net                         (51)           (15)             (96)           (55)
                                        -----          -----            -----          -----
                                          436            471              770            866
                                        -----          -----            -----          -----

Earnings before
   income taxes                           356            149              580            191
Income tax expense                        139             63              230             91
                                        -----          -----            -----          -----

Net earnings                          $   217             86              350            100
                                        =====          =====            =====          =====
</TABLE>


                                     - 22 -

<PAGE>




SI/BAKER, INC.
Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 2000 and June 30, 1999
  (In Thousands)

<TABLE>
<CAPTION>
                                                                           Six Months Ended
                                                                       ------------------------
                                                                          June          June
                                                                        30, 2000      30, 1999
                                                                       ----------    ----------
<S>                                                                     <C>            <C>
Cash flows from operating activities:
   Net earnings                                                         $   350           100
   Adjustments to reconcile net earnings to net
     cash provided (used) by operating activities:
       Depreciation of machinery and
         equipment and leased equipment                                      35            97
       Changes in operating assets and
         liabilities:
           Receivables                                                   (1,691)          335
           Costs and estimated earnings
              in excess of billings                                         917            (2)
           Deferred tax benefit                                               -            35
           Prepaid expenses and other
              current assets                                               (160)          139
           Accounts payable                                                 494            (5)
           Customers' deposits and
              billings in excess of costs
              and estimated earnings                                          3           351
           Accrued salaries, wages, and
              commissions                                                   (50)           20
           Income taxes payable                                            (110)           34
           Accrued royalties payable                                         36           127
           Accrued product warranties                                       118            97
           Accrued other liabilities                                         12            (3)
           Deferred compensation                                              -          (111)
                                                                          -----         -----
Net cash provided (used)
   by operating activities                                                  (46)        1,214
                                                                          -----         -----

Cash flows from investing activities:
   Additions to machinery and equipment                                     (21)          (13)
                                                                          -----         -----
     Net cash used by investing activities                                  (21)          (13)
                                                                          -----         -----

Increase (decrease) in cash and cash equivalents                            (67)        1,201
Cash and cash equivalents,
   beginning of period                                                    2,895           250
                                                                          -----         -----
Cash and cash equivalents, end of period                                $ 2,828         1,451
                                                                          =====         =====

Supplemental disclosure of cash flow information:
     Cash paid (received) during the period for:
       Income taxes                                                     $   375          (175)
                                                                          =====         =====
       Interest                                                         $     7            21
                                                                          =====         =====
</TABLE>

                                     - 23 -

<PAGE>




                           PARAGON TECHNOLOGIES, INC.

                                    FORM 10-Q

                                  EXHIBIT INDEX
                                  -------------



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

27       Financial Data Schedule.






















                                     - 24 -