EXHIBIT 99


                              CAUTIONARY STATEMENT


THE FOLLOWING  CAUTIONARY  STATEMENTS ARE MADE TO PERMIT  PARAGON  TECHNOLOGIES,
INC. TO TAKE ADVANTAGE OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995

The Company  wishes to inform its investors of the following  important  factors
that in some cases have affected,  and in the future could affect, the Company's
results of operations  and that could cause such future results of operations to
differ materially from those expressed in any forward looking statements made by
or on behalf of the Company.  Disclosure  of these factors is intended to permit
the Company to take  advantage of the "safe  harbor"  provisions  of the Private
Securities  Litigation  Reform  Act of 1995.  Many of these  factors  have  been
discussed in prior SEC filings by the Company.  Though the Company has attempted
to list  comprehensively  these important cautionary factors, the Company wishes
to caution  investors that other factors may in the future prove to be important
in affecting the Company's results of operations.


Sales of the Company's  products  depend on the capital  spending  habits of its
customers, which tend to be cyclical.
     Automated,  integrated  materials  handling  systems  using  the  Company's
products  can  range  in  price  from  $100,000  to  several  million   dollars.
Accordingly, purchases of the Company's products represent a substantial capital
investment by its customers, and the Company's success depends directly on their
capital expenditure  budgets.  The Company's future operations may be subject to
substantial  fluctuations  as a  consequence  of domestic  and foreign  economic
conditions, industry patterns, and other factors affecting capital spending.
     Domestic or  international  recessions  or a downturn in one or more of the
Company's major markets and resulting  cutbacks in capital spending would have a
direct, material adverse impact on the Company's business.

The  Company  is  dependent  upon a  limited  number  of  large  contracts,
including contracts with U.S. government agencies.
     The Company is  dependent  upon a limited  number of large  contracts  from
large domestic corporations and certain agencies of the U.S. government.  In the
year  ended  December  31,  2000,  two  customers   accounted  for  revenues  of
$10,979,000 and $8,157,000,  respectively.  In the ten months ended December 31,
1999,  two  customers  accounted  for revenues of  $11,565,000  and  $6,600,000,
respectively.  In the fiscal  year ended  February  28,  1999,  three  customers
accounted for revenues of $8,586,000, $4,347,000, and $4,103,000,  respectively.
No other customer accounted for over 10% of revenues.  This dependence can cause
unexpected  fluctuations  in sales volume and  operating  results from period to
period. Accordingly,  the Company's sales could decline as a result of corporate
or government spending cuts, general budgetary constraints,  and the complex and
competitive government procurement processes.

The Company must accurately  estimate its costs prior to entering into contracts
on a fixed price basis.  The failure to estimate  accurately  can result in cost
overruns which will result in the loss of profits.
     The Company  frequently enters into contracts with its customers on a fixed
price basis. In order to realize a profit on these  contracts,  the Company must
accurately estimate the costs the Company will incur in completing the contract.
Estimating costs for complex systems is more difficult.
     The Company  believes  that it has the ability to  reasonably  estimate the
total costs and applicable gross profit margins at the inception of both typical
and more complex systems.  However, in rare instances,  as occurred in 1999, the
Company determined that it had significantly  underestimated the costs involved,
principally in four major contracts that included enhancements to Order Picking,
Fulfillment, and Replenishment products. The cost overruns associated with these
contracts  resulted in  approximately  $8,700,000 in sales with  $11,700,000  in
related  cost of sales during the ten months  ended  December  31,  1999.  As of
December 31, 1999, the Company had accrued the estimated costs to completion for
these  four  projects.  During  2000,  the  Company  had  $1,491,000  of revenue
associated  with  these  contracts,  with an  additional  loss of  $743,000.  By
December 31, 2000, the Company had obtained customer acceptance for 96% of these
contracts,  which were now in their  warranty  periods,  which periods  continue
through  various  dates,  concluding in the second  quarter of 2002. The Company
believes  that  its  warranty  accruals  and  previously  established  remaining
contract  accruals  for these  projects  will be  adequate  to meet any  related
remaining  obligation of the Company. At times,  uncertainty exists with respect
to the resources  required to accomplish the  contractual  scope of work dealing
with the final  integration of  state-of-the-art  automated  materials  handling
systems. As a result of past experience with cost overruns while integrating new
computer technology to its Order Picking, Fulfillment, and Replenishment product
line, the Company has established  enhanced business controls,  estimating,  and
procurement  disciplines to attempt to reduce future cost  overruns.  Additional
cost  overruns in the future would  negatively  affect the  Company's  financial
performance.

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The Company's inability to complete or integrate future acquisitions effectively
could harm the Company's future growth.
     From time to time, the Company may consider the acquisition of companies or
technologies  that  management  believes may  complement or extend the Company's
current  products,  businesses,  or  technologies.  In the last three years, the
Company  has made some  acquisitions  of  various  sizes,  including  the recent
acquisition  of  Ermanco.   In  the  future,   the  Company  may  make  material
acquisitions of, or large  investments in, other businesses that offer products,
services,  and technologies that management  believes will further the Company's
strategic  objectives.  Any future acquisitions or investments the Company might
make would present risks commonly  associated with these types of  transactions,
including:
     o difficulty in combining the technology, operations, or work force of the
       acquired business;
     o failure to achieve  anticipated  operating savings;
     o disruptions of the Company's on-going businesses;
     o restructuring charges will be greater than anticipated;
     o difficulties in realizing the Company's potential financial and strategic
       position through the successful integration of the acquired business;
     o difficulty in maintaining uniform standards, controls, procedures, and
       policies;
     o potential  negative impact in results of operations due to amortization
       of goodwill or other  intangible  assets acquired; and
     o the diversion of management attention.
     The  Company  plans to  consider  expansion  opportunities  as they  arise,
although the Company's  ongoing  operating  results,  the restrictive  covenants
associated  with the  financing  obtained  from  the  Company's  principal  bank
associated with the Ermanco  acquisition on September 30, 1999, the economics of
the  expansion,  and the  circumstances  justifying  the  expansion  will be key
factors in  determining  the amount of the  resources the Company will devote to
further  expansion.  The risks described  above,  either  individually or in the
aggregate,  could materially impair the Company's  business,  operating results,
and financial condition.

The  Company's  indebtedness  is secured by  substantially  all of the Company's
assets.
     The Company has incurred  indebtedness  in connection  with an  acquisition
made in 1999 and also has a credit  facility  to fund  daily  operations.  These
obligations are secured by substantially all of the Company's assets.  The terms
of the indebtedness  impose  restrictions on the Company and require  compliance
with covenants related to the Company's  financial status. At December 31, 1999,
the Company was in violation of certain covenants  associated with its term debt
and  credit  facility  due to  losses  incurred  in 1999  and  related  contract
accruals.  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.  Throughout  2000,  the
Company  was  and is  anticipated  to  continue  to be in  compliance  with  the
covenants  associated  with the term debt and credit  facility.  If the  Company
encounters  difficulties with its business,  the Company could default under its
financing  arrangements,  which would make it very  difficult for the Company to
obtain  financing  in the future on  acceptable  terms.  If the Company  were to
default under financing  arrangements  that are secured by the Company's assets,
the creditors under those  arrangements could foreclose upon the assets securing
the Company's obligations.

The Company faces intense  competition  which could harm the Company's  business
and results of operation.
     The Company faces  substantial  competition in the market for its products.
Product line  expansion by existing  competitors  also may affect the  Company's
market  position.  Successful  product  innovation by competitors that reach the
market  prior to  comparable  innovation  by the Company or that are amenable to
patent protection may adversely affect the Company's financial performance.

The  Company  depends  on key  personnel  and may not be  able to  retain  these
employees  or  recruit  additional  qualified  personnel,  which  would harm the
Company's business.
     The Company believes that it has developed a strong  management team, which
intends to continue the Company's growth and profitability. However, the loss or
unavailability of certain key management personnel and the inability to attract,
assimilate,  or retain additional highly qualified employees in the future could
adversely affect the Company's business and prospects.


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The Company may face costly intellectual property infringement claims.
     The Company  occasionally  has faced  unanticipated  intellectual  property
litigation,  which has  involved  unbudgeted  expenditures.  The costs and other
effects of any future,  unanticipated  legal or  administrative  proceedings may
affect the Company's financial performance.

The  Company's  failure to protect its  intellectual  property  and  proprietary
technology may significantly impair the Company's competitive advantage.
     Third  parties may infringe or  misappropriate  the  Company's  copyrights,
trademarks,  and similar  proprietary rights. The Company cannot be certain that
the steps the Company has taken to prevent the misappropriation of the Company's
intellectual property are adequate,  particularly in foreign countries where the
laws may not protect the Company's  proprietary rights as fully as in the United
States.  The Company  relies on a  combination  of patent,  copyright  and trade
secret  protection  and  nondisclosure   agreements  to  protect  the  Company's
proprietary  rights.  However,  the  Company  cannot be certain  that patent and
copyright   law  and  trade  secret   protection   will  be  adequate  to  deter
misappropriation  of the Company's  technology,  that any patents  issued to the
Company will not be  challenged,  invalidated or  circumvented,  that the rights
granted thereunder will provide  competitive  advantages to the Company, or that
the claims  under any patent  application  will be  allowed.  The Company may be
subject to or may initiate interference  proceedings in the United States Patent
and Trademark  Office,  which can demand  significant  financial and  management
resources.  The process of seeking  patent  protection can be time consuming and
expensive,  and there can be no  assurance  that  patents will issue from future
applications or that the Company's  existing patents or any new patents that may
be  issued  will be  sufficient  in  scope or  strength  to  provide  meaningful
protection or any commercial advantage to the Company.
     The Company may in the future initiate  claims or litigation  against third
parties  for  infringement  of the  Company's  proprietary  rights  in  order to
determine  the scope and  validity of the  Company's  proprietary  rights or the
proprietary  rights of the Company's  competitors.  These claims could result in
costly  litigation  and the diversion of the Company's  technical and management
personnel.

The Company relies on distributors to sell many of Ermanco's products.
     The Company  believes that its ability to sell Ermanco's  products  through
distributors  will  continue  to be  important  to the  Company's  success.  The
Company's relationships with distributors are generally not exclusive,  and some
of the Company's  distributors may expend a significant amount of effort or give
higher priority to selling products of the Company's competitors. In the future,
any of these  distributors may discontinue their  relationships with the Company
or form additional competing  arrangements with the Company's  competitors.  The
loss of, or a  significant  reduction in sales from,  distributors  to which the
Company  sells a  significant  amount  of the  Company's  product  could  have a
material adverse effect on the Company's results of operations.
     As the Company enters new geographic and applications  markets, the Company
must locate  distributors  to assist it in building sales in those markets.  The
Company may not be successful  in obtaining  effective  new  distributors  or in
maintaining  sales  relationships  with  them.  If a  number  of  the  Company's
distributors  experience financial problems,  terminate their relationships with
the Company or  substantially  reduce the amount of the Company's  products they
sell, or if the Company fails to build an effective systems  integrator  channel
in any  new  markets,  the  Company's  sales  and  operating  results  would  be
materially adversely affected.

The Company's presence in international markets exposes it to risk.
     With the Company's  acquisition of Ermanco,  the Company has  experienced a
greater presence in international  markets.  Maintenance and continued growth of
this  segment of the  Company's  business  may be  affected by changes in trade,
monetary and fiscal  policies,  laws and  regulations  of the United  States and
other trading nations by foreign currency exchange rate fluctuations.


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Availability of product components could harm the Company's profitability.
     The Company obtains raw materials and certain manufactured  components from
third party suppliers.  Although the Company deems that it maintains an adequate
level of raw material inventory,  even brief unanticipated delays in delivery by
suppliers, including those due to capacity constraints, labor disputes, impaired
financial  condition  of  suppliers,   weather  emergencies,  or  other  natural
disasters,  may adversely affect the Company's  ability to satisfy its customers
on a timely basis and thereby affect the Company's financial performance.

The  Company  may be  subject to product  liability  claims,  which may harm the
Company's business, financial condition, and results of operations regardless of
the outcome.
     On a few  occasions,  the Company has  received  communications  from third
parties  asserting  that the  Company's  products  have caused  bodily injury to
others.  Product liability claims can be expensive,  difficult to defend and may
result in large judgments or settlements against the Company. In addition, third
party  collaborators  and  licensees  may not protect the Company  from  product
liability claims.  Although the Company  maintains  product liability  insurance
which it deems to be adequate,  claims could  exceed the  coverage  obtained.  A
successful product liability claim in excess of the Company's insurance coverage
could  harm  the  Company's  business,   financial  condition,  and  results  of
operations.  In  addition,  any  successful  claim may prevent the Company  from
obtaining  adequate  product  liability  insurance in the future on commercially
desirable terms.  Even if a claim is not successful,  defending such a claim may
be time-consuming.



















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