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SED INTERNATIONAL HOLDINGS, INC.

(Name of Registrant as Specified in its Charter)

PARAGON TECHNOLOGIES, INC.

GAD PARTNERS FUND LP

GAD CAPITAL MANAGEMENT LLC

JACK H. JACOBS

HESHAM M. GAD

DENNIS L. CHANDLER

SAMUEL S. WEISER

KLAUS-DIETER WURM

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Paragon Files Suit Against SED International Holdings to Hold Annual Meeting

Re-Issues Warning to SED Board regarding Entrenchment Activities

October 2, 2013 – Paragon Technologies, Inc. has today filed litigation against SED International Holdings, Inc. (NYSE MKT: SED) in Gwinnett County, Georgia to force SED to call and hold its 2013 annual meeting of shareholders, which SED is required under its by-laws and applicable law to hold by the end of December 2013. Paragon, together with its director nominees and one of its affiliates, is the largest shareholder of SED, holding approximately 32.83% of SED’s shares.

The existing SED board has failed to call its annual meeting in accordance with its historical practices, and Paragon believes the SED board is taking every action possible to avoid a shareholder vote, including ignoring Paragon’s previous valid and lawful notice calling a special meeting of shareholders to remove and replace the SED board.

Paragon calls on the existing SED board to allow shareholders their fundamental right to vote on the election of directors. Paragon intends to hold the SED board responsible for not allowing shareholders to decide who will be the directors of SED. Paragon again calls on the existing SED board to cease its entrenchment activities in response to Paragon’s proxy contest and significant stock holdings and shareholder support.

Paragon also restates its warning to the existing SED board that if it takes any action between now and the 2013 annual meeting of shareholders to thwart or impede Paragon's efforts to elect a new SED board, Paragon will immediately file suit against the SED directors to protect the SED business and its shareholders. If any third party is involved in any such actions, whether through the pretext of a corporate transaction or otherwise, Paragon will also file suit against such third party.

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As of the date hereof, Paragon Technologies, Inc., its largest shareholder Gad Partners Fund LP, and Paragon’s director nominees together beneficially own 1,695,481 shares of common stock of SED International Holdings, Inc., representing approximately 32.83% of SED’s outstanding shares, based on the 5,165,500 shares reported by SED as being outstanding as of September 19, 2013 in its Annual Report on Form 10-K filed with the Securities and Exchange Commission with respect to its fiscal year ended June 30, 2013.

Paragon Technologies, Inc., Gad Partners Fund LP, Gad Capital Management LLC and Paragon’s board nominees will be participants in Paragon’s solicitation of proxies for the election of these nominees to the SED board of directors. Paragon intends to make a preliminary filing with the SEC of a proxy statement and accompanying proxy card to be used to solicit votes for the election of director nominees at the 2013 annual meeting of shareholders of SED. SED SHAREHOLDERS SHOULD READ PARAGON’S PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING SED’S ANNUAL MEETING AND THE SOLICITATION BY PARAGON OF PROXIES TO BE USED AT THE ANNUAL MEETING. SHAREHOLDERS WILL BE ABLE TO OBTAIN COPIES OF PARAGON’S PROXY STATEMENT AND OTHER PROXY SOLICITATION MATERIALS, FREE OF CHARGE, FROM PARAGON, ITS PROXY ADVISOR OR THE SEC’S WEBSITE LOCATED AT WWW.SEC.GOV.

Shareholder Contact:

Alliance Advisors

Peter Casey, 973-873-7710