SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 10, 2004
PARAGON TECHNOLOGIES, INC.
(Exact name of issuer as specified in charter)
DELAWARE 1-15729 22-1643428
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation or file Identification
Organization) number) Number)
600 KUEBLER ROAD
EASTON, PENNSYLVANIA 18040
(Address of principal executive offices)
(610) 252-3205
(Registrant's telephone number, including area code)
Item 5. Other Events.
In July 2003, a competitor filed an action against the Company in the
United States District Court for the District of New Jersey alleging that
certain of the Company's products infringed patents held by the competitor and
also asserting claims for breach of contract, unjust enrichment, unfair
competition, tortious interference with prospective economic advantage, and
violation of New Jersey's consumer fraud act as a result of alleged improper use
of the competitor's trade secrets, technology, and other proprietary
information. Based on these allegations, the competitor was seeking monetary
damages and injunctive relief against the Company.
In September 2003, the Company filed an answer denying the material
allegations of the complaint and asserting counterclaims against the competitor.
Discovery has commenced and all fact discovery was scheduled to be completed by
June 30, 2004. Management of the Company, supported by its legal counsel,
believes the competitor's complaint was without merit and instructed counsel to
defend the Company against all charges. During the third quarter of 2003,
Paragon accrued an estimate of $1,020,000 for defense costs associated with the
resolution of the action filed against the Company.
On February 10, 2004, a settlement was reached between the Company and
the competitor. This settlement is a compromise of disputed claims and should
not be construed as an admission by any of the parties to this litigation of any
wrongdoing. Under the settlement, the competitor dismissed the action and agreed
that the Company's products involved in the litigation are immune from suit for
infringement of any of the competitor's intellectual property rights. In
exchange, Paragon agreed to dismiss its counterclaims and paid the competitor
$1,125,000.
As a result of the settlement, the Company recognized additional
expense of $355,000 during the fourth quarter of 2003, thereby bringing the
total costs associated with the litigation recognized during 2003, inclusive of
settlement costs and legal costs, to $1,375,000.
Item 7. Financial Statements and Exhibits
(c) Exhibits-
99.1 News Release dated February 17, 2004
Signatures
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
PARAGON TECHNOLOGIES, INC.
Date: February 17, 2004 By: /s/ Leonard S. Yurkovic
--------------------------------
Leonard S. Yurkovic
President and CEO
PARAGON TECHNOLOGIES, INC.
FORM 8-K
EXHIBIT INDEX
Exhibit No.
99.1 News Release dated February 17, 2004