10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C.  20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended June 30, 2013.  Commission File Number 1-9720

OR

[    ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From __________ to __________

Commission File Number __________

PAR TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	16-1434688
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
PAR Technology Park
8383 Seneca Turnpike
New Hartford, New York	13413-4991
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:  (315) 738-0600

Indicate by check mark 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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large Accelerated Filer  o Accelerated Filer  o Non Accelerated Filer  o Smaller Reporting Company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o Nox

The number of shares outstanding of registrant's common stock, as of August 1, 2013 – 15,521,316 shares.

TABLE OF CONTENTS

FORM 10-Q

PART I

FINANCIAL INFORMATION

Item Number		Page
Item 1.	Financial Statements (unaudited)
	Consolidated Statements of Operations for the three and six months	1
	ended June 30, 2013 and June 30, 2012
	Consolidated Statements of Comprehensive Income (Loss)	2
	for the three and six months ended June 30, 2013 and June 30, 2012
	Consolidated Balance Sheets at June 30, 2013 and	3
	December 31, 2012
	Consolidated Statements of Cash Flows for the six months ended	4
	June 30, 2013 and June 30, 2012
	Notes to Unaudited Interim Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	17
	PART II
	OTHER INFORMATION
Item 1A.	Risk Factors	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	18
Signatures		19
Exhibit Index		20

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2013			2012			2013			2012
Net revenues:
Product	$	22,257		$	20,142		$	46,173		$	40,312
Service		15,314			16,014			31,334			31,393
Contract		21,945			25,929			48,683			45,973
		59,516			62,085			126,190			117,678
Costs of sales:
Product		14,841			14,041			31,314			25,018
Service		10,904			11,473			22,456			22,038
Contract		20,312			24,584			45,791			43,567
		46,057			50,098			99,561			90,623
Gross margin		13,459			11,987			26,629			27,055
Operating expenses:
Selling, general and administrative		9,494			9,291			19,699			19,434
Research and development		3,706			3,089			7,846			6,638
Amortization of identifiable intangible assets		-			150			-			303
		13,200			12,530			27,545			26,375
Operating income (loss) from continuing operations		259			(543	)		(916	)		680
Other income (expense), net		255			(366	)		221			207
Interest expense		(13	)		(21	)		(26	)		(42	)
Income (loss) from continuing operations before provision for income taxes		501			(930	)		(721	)		845
Provision (benefit) for income taxes		253			(419	)		(600	)		321
Income (loss) from continuing operations		248			(511	)		(121	)		524
Discontinued operations
Income (loss) on discontinued operations (net of tax)		(191	)		(10	)		(206	)		1,420
Net Income (loss)	$	57		$	(521	)	$	(327	)	$	1,944
Basic Earnings per Share
Income (loss) from continuing operations		0.02			(0.03	)		(0.01	)		0.03
Income (loss) from discontinued operations		(0.01	)		-			(0.01	)		0.09
Net Income (loss)	$	0.00		$	(0.03	)	$	(0.02	)	$	0.13
Diluted Earnings per Share:
Income (loss) from continuing operations		0.02			(0.03	)		(0.01	)		0.03
Income (loss) from discontinued operations		(0.01	)		-			(0.01	)		0.09
Net Income (loss)	$	0.00		$	(0.03	)	$	(0.02	)	$	0.13
Weighted average shares outstanding
Basic		15,171			15,098			15,162			15,091
Diluted		15,340			15,098			15,162			15,163

See accompanying notes to consolidated financial statements

1

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2013			2012			2013			2012
Net income (loss)	$	57		$	(521	)	$	(327	)	$	1,944
Other comprehensive income (loss) net of tax:
Foreign currency translation adjustments		(132	)		(181	)		(449	)		(31	)
Comprehensive income (loss)	$	(75	)	$	(702	)	$	(776	)	$	1,913

See accompanying notes to consolidated financial statements

2

PAR TECHNOLOGY CORPORATIONAND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	June 30,			December 31,
Assets	2013			2012
Current assets:
Cash and cash equivalents	$	9,587		$	19,475
Accounts receivable-net		29,965			29,890
Inventories-net		28,236			26,172
Deferred income taxes		12,877			11,037
Income taxes receivable		152			-
Other current assets		3,455			3,236
Total current assets		84,272			89,810
Property, plant and equipment - net		5,570			5,857
Deferred income taxes		5,146			6,280
Goodwill		6,852			6,852
Intangible assets - net		12,881			11,747
Other assets		2,861			3,219
Total Assets	$	117,582		$	123,765
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt	$	161		$	159
Accounts payable		16,735			21,216
Accrued salaries and benefits		5,746			6,397
Accrued expenses		2,746			4,467
Customer deposits		886			1,380
Deferred service revenue		14,636			12,522
Income taxes payable		-			547
Total current liabilities		40,910			46,688
Long-term debt		1,004			1,084
Other long-term liabilities		3,460			3,030
Liabilities of discontinued operations		389			141
Total liabilities		45,763			50,943
Shareholders Equity:
Preferred stock, $.02 par value, 1,000,000 shares authorized, none issued and outstanding		-			-
Common stock, $.02 par value, 29,000,000 shares authorized; 17,229,003 and 17,038,405 shares issued;15,521,316 and 15,330,718 outstanding		344			341
Capital in excess of par value		43,431			43,661
Retained earnings		34,431			34,758
Accumulated other comprehensive loss		(553	)		(104	)
Treasury stock, at cost, 1,707,687 and 1,707,687 shares		(5,834	)		(5,834	)
Total shareholders equity		71,819			72,822
Total Liabilities and Shareholders Equity	$	$117,582		$	123,765

See accompanying notes to consolidated financial statements

3

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the six months ended June 30,
Cash flows from operating activies	2013			2012
Net income (loss)	$	(327	)	$	1,944
(Income) loss from discontinued operations		206			(1,420	)
Adjustments to reconcile net income to net cash provided by (used in)operating activities:
Depreciation and amortization		1,256			1,744
Provision for bad debts		233			140
Provision for obsolete inventory		1,344			1,361
Equity based compensation		(282	)		400
Deferred income tax		(659	)		1,052
Changes in operating assets and liabilities:
Accounts receivable		(308	)		(796	)
Inventories		(3,408	)		431
Income tax receivable/payable		(698	)		(45	)
Other current assets		(219	)		(50	)
Other assets		359			(1,330	)
Accounts payable		(4,481	)		3,232
Accrued salaries and benefits		(652	)		(610	)
Accrued expenses		(1,725	)		(398	)
Customer deposits		(494	)		(423	)
Deferred service revenue		2,114			4,501
Other long-term liabilities		430			262
Net cash provided by (used in) operating activities-continuing operations		(7,311	)		9,995
Net cash used in operating activities-discontinued operations		-			(2,368	)
Net cash provided by (used in) operating activities		(7,311	)		7,627
Cash flows from investing activities:
Capital expenditures		(477	)		(1,539	)
Capitalization of software costs		(1,626	)		(1,622	)
Purchase of investments		-			(250	)
Maturity of investments		-			1,912
Proceeds from sale of business		-			4,000
Net cash provided by (used in) investing activities-continuing operations		(2,103	)		2,501
Net cash provided by (used in) investing activities-discontinued operations		-			-
Net cash provided by (used in) investing activities		(2,103	)		2,501
Cash flows from financing activities:
Payments of long-term debt		(78	)		(971	)
Proceeds from the exercise of stock options		54			27
Net cash used in financing activities-continuing operations		(24	)		(944	)
Net cash used in financing activities-discontinued operations		-			-
Net cash used in financing activities		(24	)		(944	)
Effect of exchange rate changes on cash and cash equivalents		(450	)		(31	)
Net increase (decrease) in cash and cash equivalents		(9,888	)		9,153
Cash and cash equivalents at beginning of period		19,475			7,742
Cash and cash equivalents at end of period		9,587			16,895
Less cash and equivalents of discontinued operations at end of period		-			-
Cash and equivalents of continuing operations at end of period	$	9,587		$	16,895
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest		26			42
Income taxes, net of (refunds)		734			45

See accompanying notes to consolidated financial statements

4

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Summary of Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements have been prepared by PAR Technology Corporation (the "Company" or "PAR") in accordance with U.S. generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements.  Accordingly, these interim financial statements do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of the Company, such unaudited statements include all adjustments (which comprise only normal recurring accruals) necessary for a fair presentation of the results for such periods.  The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results of operations to be expected for any future period.  The consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2012 included in the Company's December 31, 2012 Annual Report to the Securities and Exchange Commission on Form 10-K.

The preparation of consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period.  Significant items subject to such estimates and assumptions include:  the carrying amount of property, plant and equipment, identifiable intangible assets and goodwill, equity based compensation, and valuation allowances for receivables, inventories and deferred income taxes.  Actual results could differ from those estimates.

The current economic conditions and the continued financial volatility in the U.S. and in many other countries in which the Company operates could contribute to decreased consumer confidence and continued economic uncertainty which may adversely impact the Company's operating performance.  Although the Company has seen an improvement in the markets which it serves, the continued instability in these markets could have an impact on purchases of the Company's products, which could result in a reduction of sales, operating income and cash flows.  A decline in these results could have a material adverse impact on the underlying estimates used in deriving the fair value of the Company's reporting units used in support of its annual goodwill impairment test.  These conditions may result in an impairment charge in future periods.

Certain amounts for prior periods have been reclassified to conform to the current period classification.

During the first quarter of fiscal year 2012, the Company sold substantially all of the assets of its Logistics Management business, PAR Logistics Management Systems Corporation (LMS) to ORBCOMM Inc., including but not limited to accounts receivable, inventory, equipment, intellectual property, and customer contracts.  The transaction closed on January 12, 2012.   The results of operations of LMS for three and six months ended June 2013 and 2012 have been recorded as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20, Presentation of Financial Statements – Discontinued Operations.

Note 2 — Accounts Receivable

	(in thousands)
	June 30,			December 31,
	2013			2012
Government segment:
Billed	$	10,480		$	11,226
Advanced billings		(2,049	)		(3,561	)
		8,431			7,665
Hospitality segment:
Accounts receivable - net		21,534			22,225
	$	29,965		$	29,890

At June 30, 2013 and December 31, 2012, the Company had recorded allowances for doubtful accounts of $477,000 and $541,000, respectively, against Hospitality accounts receivable.

5

Note 3 — Inventories

Inventories are primarily used in the manufacture and service of Hospitality products.  The components of inventory consist of the following:

	(in thousands)
	June 30,		December 31,
	2013		2012
Finished Goods	$	14,458	$	13,012
Work in process		627		352
Component parts		3,817		3,673
Service parts		9,334		9,135
	$	28,236	$	26,172

Note 4 — Identifiable intangible assets

The Company capitalizes certain costs related to the development of computer software sold by its Hospitality segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs in the period the costs are incurred.  Software development costs incurred after establishing technological feasibility (as defined within ASC 985-20) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers.  Software costs capitalized during the three and six months ended June 30, 2013 were $965,000 and $1,626,000, respectively.  Capitalized software for the three and six months ended June 30, 2012 was $942,000 and $1,622,000, respectively

Annual amortization, charged to cost of sales when the product is available for general release to customers, is computed using the greater of (a) the straight-line method over the remaining estimated economic life of the product, generally three to seven years or (b) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization of capitalized software costs for the three and six months ended June 30, 2013 was $400,000 and $492,000, respectively.  Amortization for the three and six months ended June 30, 2012 was $398,000  and $764,000.

The Company acquired identifiable intangible assets in connection with its acquisitions in prior years.  Amortization for the three and six months ended June 30, 2012 was $150,000 and $303,000, respectively.  The related intangible assets were fully amortized in 2012.

The components of identifiable intangible assets are:

	(in thousands)
	June 30,			December 31,
	2013			2012
Acquired and internally developed software costs	$	13,614		$	11,988
Trademarks (non-amortizable)		1,800			1,800
		15,414			13,788
Less accumulated amortization		(2,533	)		(2,041	)
	$	12,881		$	11,747

The future amortization of these intangible assets assuming straight-line amortization of capitalized software costs is as follows (in thousands):

2013	$	783
2014		1,626
2015		1,547
2016		1,518
2017		1,493
2018		1,419
Thereafter		2,695
Total	$	11,081

6

Note 5 — Stock Based Compensation

The Company applies the fair value recognition provisions of ASC Topic 718 Stock-Based Compensation.  The Company recorded stock based compensation expense of $64,000 for the three months ended June 30, 2013 and a net benefit of $282,000 for the six months ended.  The amount recorded for the six months ended June 30, 2013 was recorded net of benefits of $538,000, as the result of forfeitures of unvested stock awards prior to the completion of the requisite service period. Total stock-based compensation expense included within operating expenses for the three and six months ended June 30, 2012 was $236,000 and $400,000, respectively.  At June 30, 2013, the unrecognized compensation expense related to non-vested equity awards was $776,000 (net of estimated forfeitures), which is expected to be recognized as compensation expense in fiscal years 2013 through 2017

During 2013, the Company has granted a total of 264,000 equity awards as approved by the Company's Compensation Committee of its Board of Directors to various employees of the Company under the 2005 Equity Incentive Plan.  All awards granted in 2013 are time vested over specific service periods as defined in the agreements.

During 2012, the Company's issued approximately 183,000 restricted stock awards to various employees at a per share price of $0.02.  The awards were approved by the Compensation Committee of its Board of Directors under the 2005 Equity Incentive Plan.  Included in the shares granted are 121,000 performance based restricted stock which vest upon the achievement of financial goals from fiscal years 2012 through 2014.  These grant agreements expire if the related performance conditions are not met by December 31, 2014.  The Company has not recognized any compensation expense associated with these performance based awards as the achievement of the performance target was not deemed probable during the current period.

.

Note 6 — Earnings per share

Earnings per share are calculated in accordance with ASC Topic 260, which specifies the computation, presentation and disclosure requirements for earnings per share (EPS).  It requires the presentation of basic and diluted EPS.  Basic EPS excludes all dilution and is based upon the weighted average number of common shares outstanding during the period.  Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

For the three and six months ended June 30, 2013 there was 474,000 and 579,000 respective, anti-dilutive stock options outstanding.  For the three and six months ended June 30, 2012, there were 652,000 and 647,000, respectively, anti-dilutive stock options outstanding.

The following is a reconciliation of the weighted average shares outstanding for the basic and diluted EPS computations (in thousands, except per share data):

	For the three months
	ended June 30,
	2013		2012
Income (loss) from continuing operations	$	248	$	(511	)
Basic:
Shares outstanding at beginning of period		15,161		15,088
Weighted average shares issued during the period, net		10		10
Weighted average common shares, basic		15,171		15,098
Earnings (loss) from continuing operations per common share, basic	$	0.02	$	(0.03	)
Diluted:
Weighted average common shares, basic		15,171		15,098
Dilutive impact of stock options and restricted stock awards		169		-
Weighted average common shares, diluted		15,340		15,098
Earnings (loss) from continuing operations per common share, diluted	$	0.02	$	(0.03	)

7

	For the six months
	ended June 30,
	2013			2012
Income (loss) from continuing operations	$	(121	)	$	524
Basic:
Shares outstanding at beginning of period		15,151			15,051
Weighted average shares issued during the period, net		11			40
Weighted average common shares, basic		15,162			15,091
Earnings (loss) from continuing operations per common share, basic	$	(0.01	)	$	0.03
Diluted:
Weighted average common shares, basic		15,162			15,091
Dilutive impact of stock options and restricted stock awards		-			72
Weighted average common shares, diluted		15,162			15,163
Earnings (loss) from continuing operations per common share, diluted	$	(0.01	)	$	0.03

Note 7 — Segment and Related Information

The Company's reportable segments are strategic business units that have separate management teams and infrastructures that offer different products and services.

The Company has two reportable segments, Hospitality and Government.  The Hospitality segment offers integrated solutions to the hospitality industry.  These offerings include industry leading hardware and software applications utilized at restaurants, resorts, hotels and spas.  In addition, the Company also provides technology in support of food safety and task management.  This segment offers customer support including field service, installation, twenty-four hour telephone support and depot repair.  The Government segment develops and delivers geospatial and full motion video solutions to federal/state governments and industry; and provides communications and information technology support services to the United States Department of Defense.  Intersegment sales and transfers are not significant.

Information noted as "Other" primarily relates to the Company's corporate, home office operations.

8

Information as to the Company's segments is set forth below.  Amounts below exclude discontinued operations.

	(In thousands)
	For the three months ended June 30,						For the six months ended June 30,
	2013			2012			2013			2012
Revenues:
Hospitality	$	37,571			36,156		$	77,507		$	71,705
Government		21,945			25,929			48,683			45,973
Total	$	59,516		$	62,085		$	126,190		$	117,678
Operating income (loss) from continuing operations:
Hospitality	$	(971	)	$	(1,558	)	$	(2,693	)	$	(1,192	)
Government		1,475			1,251			2,697			2,272
Other		(245	)		(236	)		(920	)		(400	)
		259			(543	)		(916	)		680
Other income, net		255			(366	)		221			207
Interest expense		(13	)		(21	)		(26	)		(42	)
Income (loss) from continuing operations before provision for income taxes	$	501		$	(930	)	$	(721	)	$	845
Depreciation and amortization:
Hospitality	$	687		$	782		$	1,056		$	1,525
Government		10			19			22			38
Other		15			118			178			181
Total	$	712		$	919		$	1,256		$	1,744
Capital expenditures:
Hospitality	$	1,258		$	1,885		$	2,030		$	3,016
Government		-			-			-			-
Other		-			103			73			145
Total	$	1,258		$	1,988		$	2,103		$	3,161
Revenues by geographic area:
United States	$	49,151		$	54,205		$	107,165		$	102,570
Other Countries		10,365			7,880			19,025			15,108
Total	$	59,516		$	62,085		$	126,190		$	117,678

9

The following table represents identifiable assets by business segment:

	(in thousands)
	June 30,		December 31,
	2013		2012
Identifiable assets:
Hospitality	$	85,844	$	88,298
Government		10,220		9,012
Other		21,518		26,455
Total	$	117,582	$	123,765

The following table represents identifiable assets by geographic area based on the location of the assets:

	(in thousands)
	June 30,		December 31,
	2013		2012
United States	$	99,034	$	107,149
Other Countries		18,548		16,616
Total	$	117,582	$	123,765

The following table represents Goodwill by business segment:

	(in thousands)
	June 30,		December 31,
	2013		2012
Hospitality	$	6,116	$	6,116
Government		736		736
Total	$	6,852	$	6,852

Customers comprising 10% or more of the Company's total revenues are summarized as follows:

	For the Three Months Ended June 30,						For the six Months Ended June 30,
	2013			2012			2013			2012
Hospitality segment:
McDonald's Corporation		20	%		19	%		16	%		18	%
Yum! Brands, Inc.		16	%		14	%		15	%		14	%
Government segment:
U.S. Department of Defense		37	%		42	%		39	%		39	%
All Others		27	%		25	%		30	%		29	%
		100	%		100	%		100	%		100	%

10

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

Forward-Looking Statement

This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934.  Any statements in this document that do not describe historical facts are forward-looking statements.  Forward-looking statements in this document (including forward-looking statements regarding the continued health of the Hospitality industry, future information technology outsourcing opportunities, changes in contract funding by the U.S. Government, the impact of current world events on our results of operations, the effects of inflation on our margins, and the effects of interest rate and foreign currency fluctuations on our results of operations) are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  When we use words such as "intend," "anticipate," "believe," "estimate," "plan," "will," or "expect", we are making forward-looking statements.  We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable based on information available to us on the date hereof, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we presently may be planning.  We have disclosed certain important factors that could cause our actual future results to differ materially from our current expectations, including a decline in the volume of purchases made by one or a group of our major customers; risks in technology development and commercialization; risks of downturns in economic conditions generally, and in the quick-service sector of the hospitality market specifically; risks associated with government contracts; risks associated with competition and competitive pricing pressures; and risks related to foreign operations.  Forward-looking statements made in connection with this report are necessarily qualified by these factors.  We are not undertaking to update or revise publicly any forward-looking statements if we obtain new information or upon the occurrence of future events or otherwise.

Overview

PAR's technology solutions for the Hospitality segment feature software, hardware and support services tailored for the needs of restaurants, luxury hotels, resorts and spas, casinos, cruise lines, movie theatres, theme parks and retailers.  The Company's Government segment provides technical expertise in the contract development of advanced systems and software solutions for the U.S. Department of Defense and other federal agencies, as well as information technology and communications support services to the U.S. Department of Defense.

The Company's products sold in the Hospitality segment are utilized in a range of applications by thousands of customers.  The Company faces competition across all of its markets within the Hospitality segment, competing on the basis of product design, features and functionality, quality and reliability, price, customer service, and delivery capability.  PAR's continuing strategy is to provide complete integrated technology solutions and services with industry leading customer service in the markets in which it participates.  The Company conducts its research and development efforts to create innovative technology offerings that meet and exceed customer requirements and also have a high probability for broader market appeal and success.

The Company is focused on expanding four distinct parts of its Hospitality businesses.  First, it is investing in the market introduction and deployment of ATRIO^®, its next generation, cloud-based property management software for the Hotel/Resort/Spa market.  Second, the Company is investing in the enhancement of existing software and the development of the Company's SureCheck^® product for food safety and task management applications.  Third, the Company continues to work on building more robust and extensive third-party distribution channels.  Fourth, as the Company's customers continue to expand in international markets, PAR has created an international infrastructure focused on that expansion.

The Quick Serve Restaurant (QSR) market, PAR's primary market, continues to perform well for the majority of large, international companies, despite worldwide macroeconomic uncertainty.  However, the Company has seen an impact of these current economic conditions on smaller, regional QSR organizations, whose business is slowing because of higher unemployment and lack of consumer confidence in certain regions.  The Company is continuing to reassess the alignment of its product and service offerings to support improved operational efficiency and profitability going forward.  These conditions could have a material adverse impact on the Company's significant estimates, specifically the fair value of its assets related to its legacy products.

Approximately 39% of the Company's revenues are generated by its Government business.  The Company's focus is to expand two separate aspects of its Government business: services and solutions. Through outstanding performance of existing service contracts and investing in enhancing its business development processes, the Company is able to consistently win renewal of expiring contracts, extend existing contracts, and secure additional new business.  With its intellectual property and investment in new technologies, the Company provides solutions to the U.S. Department of Defense and other federal/state agencies with systems integration, products and highly-specialized services.  The general uncertainty in U.S. defense total workforce policies (military, civilian and contract), procurement cycles and spending levels for the next several years may impact the performance of this business segment.

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Results of Operations —

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

During the first quarter of fiscal year 2012, the Company sold substantially all of the assets of its Logistics Management business, PAR Logistics Management Systems Corporation (LMS) to ORBCOMM Inc., including but not limited to accounts receivable, inventory, equipment, intellectual property, and customer contracts.  The transaction closed on January 12, 2012.   The results of operations of LMS for the periods presented ending June 30, 2013 and 2012 have been recorded as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20, Presentation of Financial Statements – Discontinued Operations.  All prior period amounts have been reclassified to conform to the current period presentation.  Refer to Note 2 "Discontinued Operations" in the Notes to the Consolidated Financial Statements for further discussion.

PAR reported revenues of $59.5 million for the quarter ended June 30, 2013, a decrease of 4.1% from the $62.1 million reported for the quarter ended June 30, 2012.  PAR reported net income from continuing operations of $248,000 or $0.02 per diluted share for the second quarter of 2013 versus a net loss of $511,000 or $0.03 per share for the same period in 2012.  During the quarter, PAR reported a net loss from discontinued operations of $191,000 or $0.01 per share versus a net loss of $10,000 or $0.00 per share for the same period in 2012.

Product revenues were $22.3 million for the quarter ended June 30, 2013, an increase of 10.5% from the $20.1 million recorded in 2012.  This increase was primarily the result of increased sales to YUM! Brands^® and Carl's Jr.^® units of CKE Restaurants, Inc.^®.  Product revenue also benefited from increased sales through the Company's third-party distribution channels.  Additionally, international product revenue was up 47.6% primarily the result of increased sales to McDonald's^®  in China.  

Service revenues were $15.3 million for the quarter ended June 30, 2013, a decrease of 4.4% from the $16.0 million reported for the same period in 2012.  This decrease was partially attributable to a decline in installation services for certain accounts that did not recur in 2013.

Contract revenues were $21.9 million for the quarter ended June 30, 2013, compared to $25.9 million reported for the same period in 2012, a decrease of 15.4%.  This decrease is attributable to the timing of services rendered on the Company's Intelligence, Surveillance, and Reconnaissance (ISR) systems integration contracts with the U.S. Army.  This decrease was partially offset by increases in technical services contracts with the Department of Defense.

Product margins for the quarter ended June 30, 2013 were 33.3%, an increase from 30.3% for the same period in 2012.  This increase was driven by improved efficiency through the execution of profit initiatives during 2013.

Service margins were 28.8% for the quarter ended June 30, 2013, an increase from the 28.4% recorded for the same period in 2012 as a result of reduced expense associated with third party contractors supporting field service contracts.

Contract margins were 7.4% for the quarter ended June 30, 2013, compared to 5.2% for the same period in 2012.  This increase was due to favorable modifications of certain contracts that were extended during the quarter, partially offset by investments in the Company's ISR technologies.    The most significant components of contract costs in 2013 and 2012 were labor and fringe benefits.  For the second quarter of 2013, labor and fringe benefits were $9.8 million or 48.5% of contract costs compared to $10.0 million or 40.5% of contract costs for the same period in 2012.  This increase in percentage is mostly attributable to the lower amount of subcontract revenue in 2013 associated with the Company's ISR systems integration contract with the U.S. Army.

Selling, general and administrative expenses for the quarter ended June 30, 2013 were $9.5 million, a slight increase compared to $9.3 million recorded for the same period in 2012.  The slight increase is attributable to costs primarily incurred from investments made within the Company's international Hospitality operations.

Research and development expenses were $3.7 million for the quarter ended June 30, 2013, an increase from the $3.1 million recorded for the same period in 2012.  This increase was associated with software development costs for products within the Hospitality segment due to the timing of the establishment of technological feasibility in accordance with the related accounting guidance.

During 2013, the Company did not have any amortization expense associated with acquired identifiable intangible assets.  During the second quarter of 2012, the Company incurred expense of $150,000 in amortization expense.  This decrease was due to certain acquired intangible assets that became fully amortized in 2012.

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Other income was $255,000 for the quarter ended June 30, 2013 compared to expense of $366,000 for the same period in 2012.  Other income/expense primarily includes unrealized gains/losses on the Company's investments, market value fluctuations of the Company's deferred compensation plan, rental income, strategic product development partnerships, and foreign currency gains and losses.  The income in 2013 is primarily related to strategic product development partnerships within the Company's Hospitality businesses and a lower fair value adjustment with respect to the Company's deferred compensation plan.  The loss for the second quarter 2012 included a loss of $572,000 associated with the sale of equity shares received as consideration for the sale of the Company's Logistics Management business in the first quarter of 2012.  This decrease was partially offset by foreign currency gains.

Interest expense primarily represents interest charged on the Company's short-term borrowing requirements from banks and from long-term debt.  Interest expense was $13,000 for the quarter ended June 30, 2013 as compared to $21,000 for the same period in 2012.  This reduction is associated with lower outstanding borrowing in 2013 as compared to the same period in 2012.

For the quarter ended June 30, 2013, the Company's effective income tax expense was 50%, compared to a benefit of 45% for the same period in 2012.  This variance from the federal statutory rate was due to the mix of projected taxable income from the Company's domestic and foreign jurisdictions expected for full year fiscal 2013.    The variance from the federal statutory rate in 2012 was due to state and foreign taxes.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

During the first quarter of fiscal year 2012, the Company sold substantially all of the assets of its Logistics Management business, PAR Logistics Management Systems Corporation (LMS) to ORBCOMM Inc., including but not limited to accounts receivable, inventory, equipment, intellectual property, and customer contracts.  The transaction closed on January 12, 2012.   The results of operations of LMS for the periods presented ending June 30, 2013 and 2012 have been recorded as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20, Presentation of Financial Statements – Discontinued Operations.  All prior period amounts have been reclassified to conform to the current period presentation.  Refer to Note 2 "Discontinued Operations" in the Notes to the Consolidated Financial Statements for further discussion.

PAR reported revenues of $126.2 million for the six months ended June 30, 2013, an increase of 7.2% from the $117.7 million reported for the same period in 2012.  PAR reported a net loss from continuing operations of $121,000 or $0.01 loss per share for the six months ended June 30, 2013 versus net income of $524,000 or $0.03 per diluted share for the same period in 2012.  During the six months end June 30, 2013, PAR reported a net loss from discontinued operations of $206,000 or $0.01 loss per  share versus net income from discontinued operations of $1.4 million or $0.09 per diluted share for the same period in 2012.

Product revenues were $46.2 million for the six months ended June 30, 2013, an increase of 14.5% from the $40.3 million recorded in 2012.  This increase was primarily the result of increased sales to YUM! Brands and Carl's Jr. units of CKE Restaurants, Inc.  Product revenue also benefited from increased sales through the Company's third-party distribution channels.  Additionally, international product revenue was up 37.4% primarily the result of increased sales to McDonald's in China.  Partially offsetting this increase was a decrease in sales of the Company's SureCheck product, noting the Company executed a transaction with a significant launch customer in the six months ended June 30, 2012.

Service revenues were $31.3 million for the six months ended June 30, 2013, relatively flat from the $31.4 million reported for the same period in 2012.  During the year, the Company experienced a decline in call center revenue resulting from a modification to existing service contracts, which was offset by growth in revenue from the Company's depot repair operation resulting from new contracts.  In 2013, the Company also experienced an increase in software maintenance revenue associated with the sales of its SureCheck product.

Contract revenues were $48.7 million for the six months ended June 30, 2013, an increase of 5.9% compared to $46.0 million reported for the same period in 2012.  This increase is mostly attributable to the Company's Intelligence, Surveillance, and Reconnaissance (ISR) systems integration contracts with the U.S. Army as well as increases driven by new contracts with the U.S. Department of Defense.

Product margins for the six months ended June 30, 2013 were 32.2%, a decrease from 37.9% for the same period in 2012.  This decrease was driven by an unfavorable product mix resulting from reduced SureCheck software revenue associated with a large sale to a launch customer executed in 2012 that did not recur in 2013.

Service margins were 28.3% for the six months ended June 30, 2013, a decrease from the 29.8% recorded for the same period in 2012 primarily the result of unfavorable margin earned on the Company's call center operation.

Contract margins were 5.9% for the six months ended June 30, 2013, compared to 5.2% for the same period in 2012.  This increase was due to favorable modifications of certain contracts that were extended during the quarter, partially offset by investments in the Company's ISR technologies.    The most significant components of contract costs in 2013 and 2012 were labor and fringe benefits.  For the six months ended June 2013, labor and fringe benefits were $20.3 million or 44% of contract costs compared to $20.6 million or 47% of contract costs for the same period in 2012.  This decrease in percentage is mostly attributable to the amount of subcontract revenue associated with the Company's ISR systems integration contracts with the U.S. Army.

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Selling, general and administrative expenses for the six months ended June 30, 2013 were $19.7 million, an increase compared to $19.4 million recorded for the same period in 2012.  The increase is attributable to costs primarily incurred from separation and litigation related matters that were resolved during the first quarter.

Research and development expenses were $7.8 million for the six months ended June 30, 2013, an increase from the $6.6 million recorded for the same period in 2012.  This increase was associated with software development costs for products within the Hospitality segment due to the timing of the establishment of technological feasibility in accordance with the related accounting guidance.

During 2013, the Company did not have any amortization expense associated with acquired identifiable intangible assets.  During the six months ended June 30, 2012, the Company incurred expense of $303,000 in amortization expense.  This decrease was due to certain acquired intangible assets that became fully amortized in 2012.

Other income was $221,000 for the six months ended June 30, 2013 compared to income of $207,000 for the same period in 2012.  Other income/expense primarily includes unrealized gains/losses on the Company's investments, market value fluctuations of the Company's deferred compensation plan, rental income, strategic product development partnerships, and foreign currency gains and losses.   The income in 2013 is primarily related to strategic product development partnerships within the Company's Hospitality businesses and a lower fair value adjustment with respect to the Company's deferred compensation plan.  The income recorded for the six months ended June 30, 2012 was due to our strategic product development partnerships and favorable currency gains offset by loss incurred from the liquidation of the ORBCOMM, Inc. common stock.

Interest expense primarily represents interest charged on the Company's short-term borrowing requirements from banks and from long-term debt.  Interest expense was $26,000 for the six months ended June 30, 2013 as compared to $42,000 for the same period in 2012.  This reduction is associated with lower outstanding borrowing in 2013 as compared to the same period in 2012.

For the six months ended June 30, 2013, the Company's effective income tax benefit was 83%, compared to expense of 38% for the same period in 2012.  The variance from the federal statutory rate in 2013 was due to a benefit of $410,000 received in connection with the American Taxpayer Relief Act of 2012 that was signed into law in January 2013.  The credit related to retroactive tax relief for certain tax law provisions that expired in 2012.  Because the legislation was signed into law after the end of PAR's 2012 fiscal year, the retroactive effects of the bill will be reflected in the first quarter of 2013.  Excluding the retroactive application of this credit, the Company's expected effective federal rate is 26%.  This remaining variance from the federal statutory rate was due to the mix of projected taxable income from the Company's domestic and foreign jurisdictions.   The variance from the federal statutory rate in 2012 was due to state and foreign taxes.

Liquidity and Capital Resources

The Company's primary sources of liquidity have been cash flow from operations and its bank line of credit.  Cash used in operating activities of continuing operations was $7.3 million for the six months ended June 30, 2013 compared to cash provided of $10.0 million for the same period in 2012.  In 2013, cash was used in operations due to the Company's net loss and change in working capital requirements, primarily associated with an increase in inventory due to the Company's transition of its hardware product lines, decreases in accrued expenses and accounts payable from timing of payments made to vendors, specifically for inventory purchases and timing of payments associated with the Company's ISR contract with the U.S. Government.   This was partially offset by the add back of non-cash charges, as well as an increase in deferred service revenue due to the timing of customer service contracts.  In 2012, cash was generated by the Company's net income plus the add back of non-cash charges, offset by reductions to changes in operating assets and liabilities.  The most significant changes to the Company's operating assets and liabilities were the increase in accounts payable due to the timing of vendor payments, specifically those associated with its ISR contract with the U.S. Government, an increase in deferred service revenue due to the timing of customer service contracts.  These were partially offset by an increase in accounts receivable due to the timing of collections of advanced service and maintenance contract billings.

Cash used by investing activities from continuing operations was $2.1 million for the six months ended June 30, 2013 versus cash provided by investing activities of $2.5 million for the same period in 2012.  In 2013, capital expenditures of $477,000 were primarily for purchases of office and computer equipment.  Capitalized software was $1.6 million and was associated with certain Hospitality software platforms.    In 2012, the Company received cash proceeds of $4 million related to the sale of its Logistics Management business and generated $1.9 million from the maturity of its investments.  Capital expenditures were $1.5 million and were primarily for tooling associated with the Company's new hardware products, as well as for purchases of office and computer equipment.  Capitalized software was $1.6 million and was associated with the Company's next generation Hospitality software platforms.

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Cash used in financing activities from continuing operations was $24,000 for the six months ended June 30, 2013 versus $944,000 in 2012.  In 2013, the Company decreased its long-term debt by $78,000 and benefited $54,000 from the exercise of employee stock options.  In 2012, the Company decreased its long-term debt by $971,000 and benefited $27,000 from the exercise of employee stock options.

The Company maintains a credit facility which provides borrowing availability up to $20 million (with the option to increase to $30 million) in the form of a line of credit.  This agreement allows the Company, at its option, to borrow funds at the LIBOR rate plus the applicable interest rate spread or at the bank's prime lending rate (3.25 % at June 30, 2013).  This agreement expires in June 2014.  At June 30, 2013, the Company did not have any outstanding balance on this line of credit.  The weighted average interest rate paid by the Company was 3.25% during fiscal year 2013.  This agreement contains certain loan covenants including leverage and fixed charge coverage ratios.  In February 2013, the agreement was amended to allow the Company to exclude certain extraordinary or non-recurring, non-cash expenses, charges or losses, and certain litigation expenses incurred during the fourth quarter of 2012.  The exclusion of these charges will be applied to the Company's debt covenant calculation through December 31, 2013.  Additionally, as part of this amendment, the Company modified its definition of Earnings before Interest Taxes, Depreciation and Amortization (EBITDA), to exclude certain non-cash charges for the remainder of the agreement.  The Company is in compliance with these amended covenants at June 30, 2013.  This credit facility is secured by certain assets of the Company.

The Company has a $1.2 million mortgage loan, collateralized by certain real estate.  This mortgage matures on November 1, 2019.  The Company's fixed interest rate is currently 4.05% through October 1, 2014.  Beginning on October 1, 2014 and through the maturity date of the loan, the fixed rate will be converted to a new rate equal to the then-current five year fixed advanced rate charged by the New York Federal Home Loan bank, plus 225 basis points.  The annual mortgage payment including interest through October 1, 2014 totals $207,000.

During fiscal year 2013, the Company anticipates that its capital requirements will not exceed approximately $7-$8 million.  The Company does not usually enter into long term contracts with its major Hospitality segment customers.  The Company commits to purchasing inventory from its suppliers based on a combination of internal forecasts and actual orders from customers.  This process, along with good relations with suppliers, minimizes the working capital investment required by the Company.  Although the Company lists two major customers, McDonald's and Yum! Brands, it sells to hundreds of individual franchisees of these corporations, each of which is individually responsible for its own debts.  These broadly made sales substantially reduce the impact on the Company's liquidity if one individual franchisee reduces the volume of its purchases from the Company in a given year.  The Company, based on internal forecasts, believes its existing cash, line of credit facilities and its anticipated operating cash flow, will be sufficient to meet its cash requirements through the next twelve months.  However, the Company may be required, or could elect, to seek additional funding prior to that time.  The Company's future capital requirements will depend on many factors including its rate of revenue growth, the timing and extent of spending to support product development efforts, potential growth through strategic acquisition, expansion of sales and marketing, the timing of introductions of new products and enhancements to existing products, and market acceptance of its products.  The Company cannot assure additional equity or debt financing will be available on acceptable terms or at all.  The Company's sources of liquidity beyond twelve months, in management's opinion, will be its cash balances on hand at that time, funds provided by operations, funds available through its lines of credit and the long-term credit facilities that it can arrange.

Recently Issued Accounting Pronouncements Not Yet Adopted

In July 2013, the Financial Accounting Standards Board (FASB) issued guidance eliminating diversity in practice surrounding the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires entities to net an unrecognized tax benefit with a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if the carryforward would be used to settle additional tax due upon disallowance of a tax position. The amendment is effective for fiscal periods beginning after December 15, 2013 with early adoption permitted. The impact on PAR's financial statements upon adoption of this amendment is currently being evaluated and as required, will be adopted on January 1, 2014.

In February 2013, the FASB issued guidance requiring an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the amount the entity agreed to pay for the arrangement between them and the other entities that are also obligated to the liability and any additional amount the entity expects to pay on behalf of the other entities. The amendments are effective for fiscal periods (and interim reporting periods within those years) beginning after December 15, 2013. While we do not expect a material impact on PAR's financial statements upon adoption, the effects on future periods will depend upon the nature and significance of future transactions subject to the amendments.

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In March 2013, the Financial Accounting Standards Board (FASB) clarified that, when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. The cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The FASB also clarified that if a business combination is achieved in stages related to a previously held equity method investment (step-acquisition) that is a foreign entity, the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss as of the acquisition date shall include any foreign currency translation adjustment related to that previously held investment. The amendments are effective prospectively for fiscal years beginning after December 15, 2013, with early adoption permitted. While we do not expect a material impact on PAR's financial statements upon adoption, the effects on future periods will depend upon the nature and significance of future transactions subject to the amendments.

Recently Adopted Accounting Pronouncements

On July 27, 2012, the FASB issued Accounting Standards Update 2012-02, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment ("ASU 2012-02"). ASU 2012-02 is intended to reduce the cost and complexity of the annual indefinite-lived intangible assets impairment testing by providing entities an option to perform a "qualitative" assessment to determine whether further impairment testing is necessary. As such, there is the possibility that quantitative assessments would not need to be performed if it is more likely than not that no impairment exists. The Company is required to adopt the provisions of ASU 2012-02, which is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of ASU 2012-02 did not have a significant impact on the Company's financial position or results of operations.

Critical Accounting Policies

In our Annual Report on Form 10-K for the year ended December 31, 2012, we disclose accounting policies, referred to as critical accounting policies, that require management to use significant judgment or that require significant estimates.  Management regularly reviews the selection and application of our critical accounting policies.  There have been no updates to the critical accounting policies contained in our Annual Report on Form 10-K for the year ended December 31, 2012.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

INFLATION

Inflation had little effect on revenues and related costs during the six months ended June, 30, 2013.  Management anticipates that margins will be maintained at acceptable levels to minimize the effects of inflation, if any.

INTEREST RATES

As of June 30, 2013, the Company does not have any variable debt.  As such, the Company believes that an adverse change in interest rates of 100 basis points would not have a material impact on our business, financial condition, results of operations or cash flows.

FOREIGN CURRENCY

The Company's primary exposures relate to certain non-dollar denominated sales and operating expenses in Europe and Asia. These primary currencies are the Great British Pound, the Euro, the Australian dollar, the Singapore dollar and the Chinese Renminbi.  Management believes that foreign currency fluctuations should not have a significant impact on our business, financial condition, and results of operations or cash flows due to the current volume of business affected by foreign currencies.

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Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

Based on an evaluation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2013, the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), conducted under the supervision of and with the participation of the Company's chief executive officer and principal financial officer, such officers have concluded that the Company's disclosure controls and procedures, which are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and designed to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is accumulated and communicated to management including the chief executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures, are effective as of the Evaluation Date.

(b) Changes in Internal Control over Financial Reporting.

There was no change in the Company's internal controls over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act during the quarter ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, such internal controls over financial reporting.

Item 1A. Risk Factors

The Company is exposed to certain risk factors that may affect operations and/or financial results.  The significant factors known to the Company are described in the Company's most recently filed Annual Report on Form 10-K.  There have been no material changes from the risk factors as previously disclosed in the Company's Annual Report on Form 10-K.

 

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On May 1, 2013, PAR Technology Corporation furnished a report on Form 8-K pursuant to Item 2.02 (Results of Operations and Financial Condition) of that Form relating to its financial information for the quarter ended March 31, 2013, as presented in the press release of May 1, 2013 and furnished thereto as an exhibit.

On May 30, 2013, PAR Technology Corporation furnished a report on Form 8-K pursuant to Item 5.07 (Submission of Matters to a Vote of Security Holders) of that Form relating to the annual meeting of the shareholders held May 30, 2013 and the results of shareholder voting on the matters before the meeting.  The shareholders (i) elected both nominees for director on the Company's Board of Directors; (ii) approved, on an advisory basis, the compensation paid to the Company's Named Executive Officers, as disclosed pursuant to Item 402(m) through (q) of Regulation S-K compensation tables and narrative discussion set forth in the Company's 2013 Proxy Statement; and (iii)approved, on an advisory basis, having an advisory vote on the compensation of the Company's Named Executive Officers set forth in the Company's proxy statement every one (1) year.

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Item 6. Exhibits

List of Exhibits

Exhibit No.	Description of Instrument
10.1	Form of Restricted Stock Agreement Pursuant to the 2005 Equity Incentive Plan
31.1	Certification of Chief Executive Officer & President Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Vice President, Controller and Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer & President and Vice President, Controller and Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

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.

	PAR TECHNOLOGY CORPORATION
	(Registrant)
Date:  August 8, 2013
	/s/STEVEN M. MALONE
	Steven M. Malone
	Vice President, Controller and Chief Accounting Officer

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Exhibit Index

Exhibit No.	Description of Instrument	Sequential Page Number
10.1	Form of Restricted Stock Agreement Pursuant to the 2005 Equity Incentive Plan	E-1
31.1	Certification of Chief Executive Officer & President Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	E-2
31.2	Certification of Vice President, Controller and Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	E-3
32.1	Certification of Chief Executive Officer & President and Vice President, Controller and Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	E-4

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EX-10.1

Table of Contents

PAR TECHNOLOGY CORPORATION

RESTRICTED STOCK AGREEMENT

PURSUANT TO THE 2005 EQUITY INCENTIVE PLAN

AGREEMENT made this ____ day of ______, 20__ (the "Effective Date"), between PAR Technology Corporation, a Delaware corporation (the "Company"), and _____________ (the "Stockholder").

WITNESSETH:

WHEREAS, the shareholders of the Company previously approved, and the Company continues to maintain, the PAR Technology Corporation 2005 Equity Incentive Plan, as amended, ("Plan");

WHEREAS, for purposes of this Agreement, all defined terms, as indicated by the capitalization of the first letter of such term, shall have the meanings specified in the Plan to the extent not specified in this Agreement;

WHEREAS, the above-named Stockholder is serving, or will henceforth serve, as _____________ of the Company (a "Business Relationship"); and

WHEREAS, pursuant and subject to the terms of the Plan, and in accordance with the terms of this Agreement, the Company wishes for the Stockholder to have a proprietary interest in the Company's financial success by granting such Stockholder the right to purchase _________ shares of the Company's Common Stock (the "Restricted Shares"). The right to purchase was approved by the Board on _____________.

NOW, THEREFORE, for good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1.  ACQUISITION OF SHARES

1.1Purchase of Shares.  The Stockholder shall purchase the Restricted Shares, subject to the terms and conditions set forth in this Agreement, at a purchase price of $.02 per Restricted Share ("Per Share Purchase Price").  The aggregate purchase price of ______________ Dollars ($________) (the "Purchase Price") for the Restricted Shares shall be paid by the Stockholder.

1.2Stock Power.  Simultaneously with execution of this Agreement, the Stockholder shall execute the Stock Power attached hereto as Attachment A.  Upon receipt of the Stock Power and full payment of the Purchase Price by the Company for the Restricted Shares, the Company shall issue and hold in escrow one or more certificates in the name of the Stockholder for that number of Restricted Shares purchased by the Stockholder, subject to the restrictive legend described in Section 4.6, and subject to the other terms and conditions of this Agreement.  As an alternative to issuing physical certificates, the Company may record ownership of the Restricted Shares, and the applicable restrictions, in book form (or in any other form of un-certificated ownership).

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ARTICLE 2.  BUSINESS RELATIONSHIP; VESTING; FORFEITURE; COMPANY REPURCHASE RIGHT

2.1Business Relationship.  For purposes of this Agreement, a Business Relationship with the Company shall include a Business Relationship with an affiliate or subsidiary of the Company (i.e., any business organization controlling, controlled by, or under common control with, the Company).

2.2Vesting.  The Restricted Shares shall vest pursuant to those terms set forth in Attachment B which the Company has identified via X or other notation to be applicable to the Restricted Shares acquired pursuant to this Agreement.  Until vesting has been achieved the Restricted Shares shall be referred to as Unvested Restricted Shares.  Upon vesting the Restricted Shares shall be referred to as Vested Restricted Shares.

2.3Forfeiture, Claw Back and Company's Repurchase Rights.

(a)Forfeiture.  Unvested Restricted Shares shall be forfeited and subject to the Company's Repurchase Rights described below upon the earlier of (i) the date the Stockholder ceases to have a Business Relationship with the Company, for any reason or no reason, or (ii) the date of expiration of the measurement period for any performance vesting triggers (including the associated catch-up provisions, if any) ("Forfeiture Date").  The Company shall repurchase (the "Repurchase Right") from the Stockholder, each of the Unvested Restricted Shares for the Per Share Purchase Price stated in Section 1.1 above.  In no event shall the Repurchase Right obligate the Company to purchase from the Stockholder any Vested Shares.

(b)Termination for Cause.  In addition to the Repurchase Right described in 2.2(a), above, in the event the Business Relationship between the Stockholder and the Company is terminated by the Company "for Cause" (as defined in the Plan), all rights and benefits to Stockholder under this Agreement shall immediately terminate and the Company shall have the right, but not the obligation, to repurchase (for the Per Share Purchase Price stated in Section 1.1 and in accordance with the procedure stated in Section 2.2(d) any or all of the Vested Restricted Shares.

(c)[APPLICABLE TO PERFORMANCE VESTING ONLY].  Return of Shares (Claw Back) of Shares with Performance Vesting.  To the extent that the Company's Board of Directors determines that Restricted Shares were considered vested under a performance measurement and that such vesting was based on materially inaccurate financial information or any other materially inaccurate performance criteria, (a) such Restricted Shares shall no longer be treated as vested, (b) such Restricted Shares shall be forfeited, and (c) to the extent released to the Stockholder from the escrow described in this Agreement, such Restricted Shares shall be returned (or the gross cash equivalent repaid) by the Stockholder to the Company.  Stockholder agrees to return such Restricted Shares (or to make such repayment) within 10 business days of the Board of Directors' demand.  Within 10 business days of the Company's receipt of returned Restricted Shares, the Company shall pay to the Stockholder the amount actually paid by the Stockholder for the returned Restricted Shares pursuant to Section 1.1.  In the case of a repayment of the cash equivalent, the amount to be repaid to the Company shall equal (x) the value of the applicable Restricted Shares, determined as the average of the closing prices for the Company's Common Stock on the five trading days that immediately precede the date of the Board of Directors' demand, minus (y) the amount actually paid by the Stockholder for the applicable Restricted Shares pursuant to Section 1.1.

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(d)Exercise of Repurchase Right and Closing.

(i) The Company shall exercise the Repurchase Right by delivering or mailing to the Stockholder (or his estate), in accordance with Section 5.9, written notice of exercise within 30 days after the Forfeiture Date or the date the Business Relationship between the Stockholder and the Company is terminated by the Company "for Cause".

(ii) Within 10 days after his receipt of the Company's notice of the exercise of the Repurchase Right described above, the Stockholder (or his estate or escrow agent) shall tender to the Company at its principal offices the certificate or certificates, if applicable, representing the Restricted Shares which the Company has elected to purchase, duly endorsed in blank by the Stockholder or with duly executed stock powers attached thereto, all in form suitable for the transfer of such Restricted Shares to the Company.  If ownership of the Restricted Shares is reflected in book form (or in any other form of un-certificated ownership), the Stockholder shall execute and provide any and all such documentation or other authorization suitable for the transfer of such Restricted Shares to the Company.

(iii) After the time at which any Restricted Shares are required to be delivered to the Company for transfer to the Company pursuant to subsection (ii) above, the Company shall not pay any dividend to the Stockholder on account of such Restricted Shares or permit the Stockholder to exercise any of the privileges or rights of a stockholder with respect to such Restricted Shares, but shall, insofar as permitted by law, treat the Company as the owner of such Restricted Shares.

(iv) The Company shall not purchase any fraction of a Restricted Share upon exercise of the Repurchase Right, and any fraction of a Restricted Share shall be rounded to the nearest whole Restricted Share (with any one-half Restricted Share being rounded upward).

ARTICLE 3.  ESCROW; RESTRICTIONS ON TRANSFER

3.1Escrow and Restriction on Transfer of Unvested Restricted Shares.  All Unvested Restricted Shares shall be held in escrow by the Company.  While in escrow, the Stockholder shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively "transfer"), any of the Unvested Restricted Shares, or any interest therein.

3.2Market "Stand-Off" Agreement.  The Stockholder hereby agrees that, during the period of duration (not to exceed one hundred eighty (180) days) specified by the Company and an underwriter of Common Stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Act, such Stockholder shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by the Stockholder at any time during such period except shares included in such registration; provided, however, that all officers and directors of the Company enter into similar agreements. The market "stand-off" agreement established pursuant to this Section shall survive termination or expiration of this Agreement.

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3.3Additional Escrow and Restrictions on Transfer.  Additional escrow and restrictions on transfer shall apply pursuant to those terms set forth in Attachment C which the Company has identified via X or other notation to be applicable to the Restricted Shares acquired pursuant to this Agreement.

3.4Transfers in Violation of Agreement.  If any transfer of the Unvested Restricted Shares, or Vested Shares, is made or attempted contrary to the provisions of this Agreement, the Company shall have the right to purchase the Restricted Shares or Vested Shares, as applicable, from the owner thereof or his transferee at any time before or after the transfer, as herein provided.  In the event that the Company elects to exercise its right under this Section, it may do so by canceling the certificate(s) representing the affected Unvested Restricted Shares or Vested Shares and depositing the purchase price, which shall be the Purchase Price, in a bank account for the benefit of Stockholder, whereupon such Unvested Restricted Shares or Vested Shares, as applicable, shall be, for all purposes, canceled and neither the Stockholder nor any transferee shall have any rights as one of its stockholders with respect to such Unvested Restricted Shares or Vested Shares, as applicable, for any purpose, including without limitation dividend and voting rights, until there has been compliance with all applicable provisions of this Agreement.  In addition to any other legal or equitable remedies which it may have, the Company may enforce its rights by actions for specific performance (to the extent permitted by law).

ARTICLE 4.  RESTRICTIVE COVENANTS

4.1Restrictive Covenants.  In consideration for the grant of the Restricted Shares, Stockholder agrees to those restricted covenants set forth in Attachment D which the Company has identified via X or other notation to be applicable to the Restricted Shares acquired pursuant to this Agreement

4.2If the Stockholder violates any of the restrictive covenants described in Attachment D and marked as being applicable or in any policy of the Company, then in addition to any other legal and equitable remedies (including injunctive relief) that may be available to the Company, this Agreement shall immediately terminate and the Company shall have the right to repurchase (for the Per Share Purchase Price stated in Section 1.1 and in accordance with the procedure stated in Section 2.3(d)) any of the Restricted Shares whether or not such shares have vested.

ARTICLE 5.  MISCELLANEOUS

5.1Adjustments for Stock Splits, Stock Dividends, etc.  If from time to time during the term of the Repurchase Right there is any stock split-up, stock dividend, stock distribution or other reclassification of the Common Stock of the Company, any and all new, substituted or additional securities to which the Stockholder is entitled by reason of his or her ownership of the Restricted Shares shall be immediately subject to the Repurchase Right, the restrictions on transfer and the other provisions of this Agreement in the same manner and to the same extent as the Restricted Shares, and the Purchase Price shall be appropriately adjusted.

5.2Investment and Tax Representations.  The Stockholder represents, warrants and covenants as follows:

(a)He has had such opportunity as he has deemed adequate to obtain from representatives of the Company such information as is necessary to permit him to evaluate the merits and risks of an investment in the Company.  The Stockholder acknowledges that certain of such information may be forward-looking and is therefore speculative and subject to known and unknown risks and uncertainties and other factors which may cause the actual performance of the Company to be materially and adversely different from any performance expressed or implied by such forward-looking statements.

(b)He has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in an investment in the Restricted Shares and to make an informed investment decision with respect to such investment.

(c)He can afford the complete loss of the value of the Restricted Shares and is able to bear the economic risk of holding such Restricted Shares for an indefinite period of time.

(d)He understands that (i) the Federal income tax consequences to the Stockholder of the purchase and sale of the Shares will vary depending upon whether the Stockholder makes an election under Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) the Stockholder understands that the Company is not providing the Stockholder with any advice as to whether to make such election, (iii) the Stockholder has been advised to seek, and has sought, the counsel of his or his own tax advisor as to whether, where and how to make such election, (iv) such election, if made, must be filed with the Internal Revenue Service within 30 days of the date of this Agreement, and (v) the Stockholder must notify the Company upon making such election.  A sample election form is provided in Attachment E.

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5.3Withholding Taxes.

(a)The Stockholder acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Stockholder any federal, state or local taxes of any kind required by law to be withheld with respect to the purchase of the Restricted Shares by the Stockholder.

(b)If the Stockholder elects, in accordance with Section 83(b) of the Code to recognize ordinary income in the year of acquisition of the Restricted Shares, the Company will require at the time of such election an additional payment for withholding tax purposes based on the difference, if any, between the purchase price for such Restricted Shares and the fair market value of such Restricted Shares as of the date of the purchase of such Restricted Shares by the Stockholder.

5.4No Rights to Business Relationship.  Nothing contained in this Agreement shall be construed as giving the Stockholder any right to continue his or her Business Relationship with the Company.

5.5Waiver; Disposition of Stock.  From time to time the Company may waive its rights hereunder either generally or with respect to one or more specific transfers which have been proposed, attempted or made.  All action to be taken by the Company hereunder shall be taken by vote of a majority of its disinterested members of the Board of Directors then in office.  Any Restricted Shares which the Company has elected to purchase hereunder may be disposed of by the Board of Directors in such manner as it deems appropriate, with or without further restrictions upon the transfer thereof.

5.6Restrictive Legends.  All certificates representing Restricted Shares shall have affixed thereto legends in substantially the following form:

"The shares of stock represented by this certificate are subject to restrictions on transfer and an option to purchase set forth in a certain Restricted Stock Agreement between the corporation and the registered owner of this certificate (or his predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the Corporation."

5.7Acknowledgments by Stockholder.  Stockholder acknowledges that he has been advised, and that Stockholder understands, that:

(a)the grant of the Restricted Shares and the issuance of any shares pursuant to this Agreement may be subject to, or may become subject to, applicable reporting, disclosure and holding period restrictions imposed by Rule 144 under the Securities Act of 1933 ("Rule 144") and Section 16 of the Securities Exchange Act of 1934 ("Section 16"); and

(b)shares acquired could be subject to Section 16(a) reporting requirements as well as the short swing trading prohibition contained in Section 16(b) which precludes any profit taking with respect to any stock transactions which occur within any six-month period.

The Stockholder further acknowledges receipt of a copy of the Plan.

5.8Successors and Assigns; Assignment.  This Agreement shall be binding upon the parties hereto and their heirs, representatives, successors and assigns.  The Company may assign its rights hereunder either generally or from time to time.

5.9Notices.  All notices to a party hereto shall be in writing and shall be deemed to have been adequately given if delivered in person or if given by registered or certified mail, postage prepaid:

If to the Company:PAR Technology Corporation

PAR Technology Park

8383 Seneca Turnpike

New Hartford, NY  13413-4991

Attn:  Legal Department

If to the Stockholder:                                                                           _____________________

_____________________

_____________________

_____________________

or to such other address as any party may from time to time designate for itself by notice in writing given to the other parties hereto.

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5.10Term and Termination.  This Agreement shall remain in effect until all Repurchase Rights contained in this Agreement have expired.

5.11Amendments.  This Agreement may be amended or modified in whole or in part only by an instrument in writing signed by the Company and the Stockholder.

5.12Entire Agreement.  This Agreement is entered into pursuant to and subject to the terms of the Plan, the applicable terms of which are incorporated herein by reference.  This Agreement, Exhibits to this Agreement and applicable terms of the Plan constitute the entire agreement between the parties, and all premises, representations, understandings, warranties and agreements with reference to the subject matter hereof have been expressed herein or in the documents incorporated herein by reference.

5.13Applicable Law; Severability.  This Agreement shall be governed by and construed and enforced in accordance with New York law.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited by or invalid under any such law, that provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of that provision or any other provisions of this Agreement.

5.14Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed in original but all of which together shall constitute one and the same instrument.

5.15Effect of Heading.  Any table of contents, title of any article or section heading herein contained is for convenience or reference only and shall not affect the meaning of construction of any of the provisions hereof.

IN WITNESS WHEREOF, the Stockholder has hereunto set his hand and the Company has authorized this Agreement to be signed by its officers thereunto duly authorized, effective as an instrument under seal.

PAR TECHNOLOGY CORPORATION

By:

Name:  ______________________

Title:  CEO  & President

_________________, Stockholder

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ATTACHMENT A

IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to PAR Technology Corporation

________ shares of the common stock of PAR Technology Corporation represented by Certificate(s) No (s). inclusive, standing in the name of the undersigned on the books of said Company.

The undersigned does hereby irrevocably constitute and appoint the Treasurer or Secretary of PAR Technology Corporation as attorney to transfer the said stock, as the case may be, on the books of said Company, with full power of substitution in the premises.

 Dated: (x)Person Executing This Stock Power Sign Here

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ATTACHMENT B

VESTING

1.2.[Company to mark all that apply]

___  Time Vesting.  If the Stockholder maintains a continuous Business Relationship with the Company, the Restricted Shares shall vest in accordance with the schedule set forth below:

___  Performance Vesting – One Installment.  If the Stockholder maintains a continuous Business Relationship with the Company through _______________ (the end of the performance measurement period), and if __________________________________________, then the Stockholder shall vest in 100% percent of the Restricted Shares.

___  Performance Vesting – Multiple Installments. Terms of vesting shall be as set forth in Attachment B-1.

___  As an exception to the vesting requirements described above, or Attachment B-1, as the case may be, if a Change in Control (as defined in the Plan) occurs prior to the ___________ anniversary of the Effective Date, and if the Stockholder maintains a continuous Business Relationship with the Company through the effective date of the Change in Control, the Stockholder shall (to the extent not already vested) vest in all of the Restricted Shares as of the effective date of the Change in Control.

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ATTACHMENT B-1

Terms for Performance Vesting – Multiple Installments.

1. If the Stockholder maintains a continuous Business Relationship with the Company through _______________ (the end of the performance measurement period of the first installment), and if __________________ [insert the metric or metrics which will trigger vesting of first installment], then the Stockholder shall vest _____ percent of the Restricted Shares.

2. If the Stockholder maintains a continuous Business Relationship with the Company through ____________ (the end of the performance measurement period of the second installment), and if __________________ [insert the metric or metrics which will trigger vesting of second installment], then the Stockholder shall vest in either

a. ____ percent of the Restricted Shares, if the Stockholder previously vested in Restricted Shares pursuant to 1 above, or

b. ____ percent of the Restricted Shares, if the Stockholder did not previously vest in Restricted Shares pursuant to 1 above.

[If more than 2 installments, add the following paragraph as many times as required to reach 100% vesting]

(___) If the Stockholder maintains a continuous Business Relationship with the Company through ____________ (the end of the performance measurement period of the [insert third, fourth as appropriate] installment), and if __________________ [insert the metric or metrics which will trigger vesting of each installment], then the Stockholder shall vest in either

a. ____ percent of the Restricted Shares, if the Stockholder previously vested in Restricted Shares pursuant to (__) above, or

b. ____ percent of the Restricted Shares, if the Stockholder did not previously vest in Restricted Shares pursuant to (__) above.

(___) If the Stockholder maintains a continuous Business Relationship with the Company through ___________, and if the _______________ for at least____ out the _____ applicable installments described in (_____) above meet or exceed the applicable threshold (_____________), then the Stockholder shall vest in ___ percent of the Restricted Shares.  (For purposes of this paragraph (__), the "catch-up" provisions in subparagraphs 2.b, ______ [insert other paragraphs as appropriate] above shall be disregarded.)

(___) To the extent Restricted Shares do not become vested pursuant to the terms of this Attachment B above on or before the ______ anniversary of the Effective Date, such "Unvested Restricted Shares" shall be forfeited as of the earlier of such ________ anniversary or the date of termination of the Business Relationship of the Stockholder with the Company.  The forfeiture of such Unvested Restricted Shares shall be pursuant to the terms of Section ___ (Forfeiture) of this Agreement.

ATTACHMENT C

Additional Escrow and Restrictions on Transfer

[Company to mark all that apply]

____  Escrow and Restriction on Transfer of All Restricted Shares.  All Unvested and Vested Restricted Shares shall be held in escrow by the Company.  While in escrow, the Stockholder shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively "transfer"), any of the Restricted Shares, or any interest therein.  Subject to other restrictions contained herein, as and when vested pursuant to the terms of this Agreement:

(a) affected Restricted Shares shall be released from the escrow to the Stockholder in such number of shares as the Company reasonably estimates will be sufficient (when sold by the Stockholder) to pay income and employment taxes that become due as a result of vesting;

(b) ____ percent (____%) of the Restricted Shares that remain undistributed after the release described in (a) above shall be released from the escrow to the Stockholder; and

(c) ____ percent (____%) of the Restricted Shares that remain undistributed after the release described in (a) above shall be released from the escrow to (or on behalf of) the Stockholder upon the earliest of:  

(i) the first anniversary of the date of termination of the Business Relationship of the Stockholder with the Company,

(ii) the Stockholder's death, or

(iii) the closing of a Change in Control.  

____Restrictions on Transfer of Vested Restricted Shares.  The Stockholder shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively "transfer"), any of the Vested Restricted Shares, or any interest therein prior to

_____________ [Insert event(s) or date(s) after which Vested Restricted Shares will be allowed to be transferred.  If more than a single event or date, state percentage of Vested Restricted Shares associated with each such event or date].

____Company's Right to Purchase Vested Restricted Shares.  Any conflicting provision of this Agreement notwithstanding, prior to the Stockholder's intended disposition or transfer of any Vested Restricted Shares that are no longer subject to any holding periods described in this Agreement, the Stockholder shall provide advance written notice to the Company of such intended disposition or transfer.  Such advance written notice shall be provided at least 10 days but not more than 20 days in advance of the intended disposition or transfer.  The Company shall have seven days following its receipt of the Stockholder advance notice during which the Company may elect to purchase the Vested Shares that the Stockholder intends to dispose of or transfer.  If the Company elects to purchase such Vested Shares, the Company shall provide the Stockholder with written notice of the Company's election to purchase the Vested Shares and shall complete the purchase within five business days of the Company's notice of its election.  The per share purchase price for the Vested Shares purchased by the Company shall equal the average of the closing prices for a share of the Company's Common Stock on the five trading days that immediately precede the date the purchase is completed.  The Stockholder (or his estate or escrow agent) shall tender to the Company at its principal offices the certificate or certificates, if applicable, representing the Vested Shares which the Company has elected to purchase, duly endorsed in blank by the Stockholder or with duly executed stock powers attached thereto, all in form suitable for the transfer of such Vested Shares to the Company.  If ownership of the Vested Shares is reflected in book form (or in any other form of un-certificated ownership), the Stockholder shall execute and provide any and all such documentation or other authorization suitable for the transfer of such Vested Shares to the Company.

____Other [Describe]

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ATTACHMENT D

Restrictive Covenants

[Company to mark all that apply]

____Confidentiality.  Stockholder agrees that he shall not, without the prior written consent of the Company, disclose or use in any way, either during employment by the Company or thereafter, except to perform services as an employee or director of the Company, any confidential business or technical information or trade secret that is not in the public domain acquired in the course of employment by the Company.  Stockholder acknowledges and agrees that it would be difficult to fully compensate the Company for damages resulting from the breach or threatened breach of the foregoing provision and, accordingly, that the Company shall be entitled to temporary preliminary and permanent injunctive relief to enforce such provision.  This provision with respect to injunctive relief shall not, however, diminish the Company's right to claim and recover damages.  Stockholder covenants to use his best efforts to prevent the publication or disclosure of any trade secret or confidential information that is not in the public domain concerning the business or finances of the Company or the Company's affiliates, or any of its or their dealings, transactions or affairs which may come to his knowledge in the pursuance of his duties or employment.

____Non-Competition.  While Stockholder is employed by the Company, and for a period of one year after employment with the Company ends for any reason, Stockholder shall not, directly or indirectly, own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected as an officer, employee, partner, director, individual proprietor, lender, consultant or otherwise with, or have any financial interest in, or aid or assist anyone else in providing services or products to or on behalf of, any of the Company's direct competitors (which include, by way of example and not limitation, _________________________) in any way, in any jurisdiction(s) in which the Company (inclusive of any group, affiliate, division or subsidiary of the Company) operates, has clients or customers, or otherwise conducts or is engaged in business, whether within or outside the United States; provided, however, that ownership of not more than 5% of the voting stock of any publicly held corporation shall not constitute a violation of this paragraph.

____Non-Solicitation.  While Stockholder is employed by the Company, and for a period of one year after employment with the Company ends for any reason, Stockholder shall not directly or indirectly solicit (other than on behalf of the Company) business or contracts for any products or services of the type provided, developed or under development by the Company during employment by the Company, from or with (i) any person or entity which was a customer of the Company for such products or services as of, or within 24 months prior to, the date of termination of employment with the Company, or (ii) any prospective customer which the Company was soliciting as of, or within 24 months prior to, termination.  Additionally, while Stockholder is employed by the Company, and for a period of two years after employment with the Company ends for any reason, Stockholder will not directly or indirectly contract with any such customer or prospective customer for any product or service of the type provided, developed or which was under development by the Company during employment with the Company.  Stockholder will not at any time knowingly interfere or attempt to interfere with any transaction, agreement or business relationship in which the Company was involved or was contemplating during Stockholder's employment with the Company, including but not limited to relationships with investors, prospective investors, customers, prospective customers, agents, contractors, vendors, service providers and suppliers.

____Non-Recruitment. While Stockholder is employed by the Company, and for a period of one year after employment with the Company ends for any reason, Stockholder shall not, directly or indirectly, solicit, recruit or hire, or in any manner assist in the hiring, solicitation or recruitment, of any individual who is or was an employee of the Company, or who otherwise provided services to the Company, within 24 months prior to the termination of Stockholder's employment with the Company.

____Other. [Describe]

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ATTACHMENT E

Election under Section 83(b) on Behalf of Taxpayer

(Soft copy available upon request)

The undersigned Taxpayer hereby elects under Section 83(b) of the Internal Revenue Code of 1986, as amended, and Section 1.83-2(a) of the Income Tax Regulations, to include in his gross income the excess of the fair market value of the property described below over the amount paid therefor by the Taxpayer.  In compliance with Reg. § 1.83-2(e) the Taxpayer provides the following information:

1. The Taxpayer's name, address and taxpayer identification number are as follows:

Name:

Address:

Taxpayer identification number:

2. The property with respect to which this election is being made is:  _________________ shares of common stock of PAR Technology Corporation, a Delaware corporation (the "Company"), $0.02 par value per share (the "Shares").

3. The date of the transfer of the Shares is _________, 20___.  This election is made for the taxable year of the Taxpayer ending December 31, 20____.

4. The nature of the restrictions to which the Shares are subject is as follows:

5. The fair market value of such Shares at the time of transfer to the Taxpayer, determined without regard to any lapse restrictions as defined in Reg. § 1.83-3(i), is ____________ per share.

6. The amount paid for the Shares is $0.02 per share.

7. A copy of this election has been furnished by personal delivery to the Company.

The date of this election is ___, 20__.

______________________________
Taxpayer

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EX-31.1

Table of Contents

Exhibit 31.1

PAR TECHNOLOGY CORPORATION

STATEMENT OF EXECUTIVE OFFICER

I, Ronald J. Casciano certify that:

1. I have reviewed this report on Form 10-Q of PAR Technology Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial

reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.  

Date: August 8, 2013	/s/Ronald J. Casciano
	Chief Executive Officer & President

E-2

EX-31.2

Table of Contents

Exhibit 31.2

PAR TECHNOLOGY CORPORATION

STATEMENT OF EXECUTIVE OFFICER

I, Steven Malone, certify that:

1. I have reviewed this report on Form 10-Q of PAR Technology Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial

reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.  

Date: August 8, 2013	/s/Steven Malone
	Steven Malone
	Vice President, Controller and Chief Accounting Officer

E-3

EX-32.1

Table of Contents

Exhibit 32.1

PAR TECHNOLOGY CORPORATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PAR Technology Corporation (the "Company") on Form 10-Q for the quarter ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Ronald J. Casciano, Chief Executive Officer & President and Steven Malone, Vice President, Controller and Chief Accounting Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1. The Report fully complies with the requirement of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.    

/s/Ronald J. Casciano

Ronald J. Casciano

Chief Executive Officer & President

August 8, 2013

/s/Steven Malone

Steven Malone

Vice President, Controller and Chief Accounting Officer

August 8, 2013

E-4

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Earnings per share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings per share [Abstract]

Reconciliation of the weighted average shares outstanding for the basic and diluted EPS computations

The following is a reconciliation of the weighted average shares outstanding for the basic and diluted EPS computations (in thousands, except per share data):

	For the three months
	ended June 30,
	2013		2012
Income (loss) from continuing operations	$	248	$	(511	)
Basic:
Shares outstanding at beginning of period		15,161		15,088
Weighted average shares issued during the period, net		10		10
Weighted average common shares, basic		15,171		15,098
Earnings (loss) from continuing operations per common share, basic	$	0.02	$	(0.03	)
Diluted:
Weighted average common shares, basic		15,171		15,098
Dilutive impact of stock options and restricted stock awards		169		-
Weighted average common shares, diluted		15,340		15,098
Earnings (loss) from continuing operations per common share, diluted	$	0.02	$	(0.03	)

	For the six months
	ended June 30,
	2013			2012
Income (loss) from continuing operations	$	(121	)	$	524
Basic:
Shares outstanding at beginning of period		15,151			15,051
Weighted average shares issued during the period, net		11			40
Weighted average common shares, basic		15,162			15,091
Earnings (loss) from continuing operations per common share, basic	$	(0.01	)	$	0.03
Diluted:
Weighted average common shares, basic		15,162			15,091
Dilutive impact of stock options and restricted stock awards		-			72
Weighted average common shares, diluted		15,162			15,163
Earnings (loss) from continuing operations per common share, diluted	$	(0.01	)	$	0.03

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 9,587	$ 19,475
Accounts receivable-net	29,965	29,890
Inventories-net	28,236	26,172
Income taxes receivable	152	0
Deferred income taxes	12,877	11,037
Other current assets	3,455	3,236
Total current assets	84,272	89,810
Property, plant and equipment - net	5,570	5,857
Deferred income taxes	5,146	6,280
Goodwill	6,852	6,852
Intangible assets - net	12,881	11,747
Other assets	2,861	3,219
Total Assets	117,582	123,765
Current liabilities:
Current portion of long-term debt	161	159
Accounts payable	16,735	21,216
Accrued salaries and benefits	5,746	6,397
Accrued expenses	2,746	4,467
Customer deposits	886	1,380
Deferred service revenue	14,636	12,522
Income taxes payable	0	547
Total current liabilities	40,910	46,688
Long-term debt	1,004	1,084
Other long-term liabilities	3,460	3,030
Liabilities of discontinued operations	389	141
Liabilities Total	45,763	50,943
Shareholders' Equity:
Preferred stock, $.02 par value, 1,000,000 shares authorized
Common stock, $.02 par value, 29,000,000 shares authorized; 17,229,003 and 17,038,405 shares issued; 15,521,316 and 15,330,718 outstanding	344	341
Capital in excess of par value	43,431	43,661
Retained earnings	34,431	34,758
Accumulated other comprehensive loss	(553)	(104)
Treasury stock, at cost, 1,707,687 and 1,707,284 shares	(5,834)	(5,834)
Total shareholders' equity	71,819	72,822
Total Liabilities and Shareholders' Equity'	$ 117,582	$ 123,765

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Identifiable intangible assets

6 Months Ended

Jun. 30, 2013

Identifiable intangible assets [Abstract]

Identifiable intangible assets

Note 4 — Identifiable intangible assets

The Company capitalizes certain costs related to the development of computer software sold by its Hospitality segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs in the period the costs are incurred.  Software development costs incurred after establishing technological feasibility (as defined within ASC 985-20) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers.  Software costs capitalized during the three and six months ended June 30, 2013 were $965,000 and $1,626,000, respectively.  Capitalized software for the three and six months ended June 30, 2012 was $942,000 and $1,622,000, respectively

Annual amortization, charged to cost of sales when the product is available for general release to customers, is computed using the greater of (a) the straight-line method over the remaining estimated economic life of the product, generally three to seven years or (b) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization of capitalized software costs for the three and six months ended June 30, 2013 was $400,000 and $492,000, respectively.  Amortization for the three and six months ended June 30, 2012 was $398,000  and $764,000.

The Company acquired identifiable intangible assets in connection with its acquisitions in prior years.  Amortization for the three and six months ended June 30, 2012 was $150,000 and $303,000, respectively.  The related intangible assets were fully amortized in 2012.

The components of identifiable intangible assets are:

	(in thousands)
	June 30,			December 31,
	2013			2012
Acquired and internally developed software costs	$	13,614		$	11,988
Trademarks (non-amortizable)		1,800			1,800
		15,414			13,788
Less accumulated amortization		(2,533	)		(2,041	)
	$	12,881		$	11,747

The future amortization of these intangible assets assuming straight-line amortization of capitalized software costs is as follows (in thousands):

2013	$	783
2014		1,626
2015		1,547
2016		1,518
2017		1,493
2018		1,419
Thereafter		2,695
Total	$	11,081

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Segment and Related Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 H Segment	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Segment and Related Information [Abstract]
Number of reportable segments	2
Number of hours of telephone support for hospitality segment (in hours)	24
Information as to the Company's segments [Abstract]
Revenues	$ 59,516	$ 62,085	$ 126,190	$ 117,678
Operating income (loss)	259	(543)	(916)	680
Other income, net	255	(366)	221	207
Interest expense	(13)	(21)	(26)	(42)
Income from continuing operations before provision for income taxes	501	(930)	(721)	845
Depreciation and amortization	712	919	1,256	1,744
Capital expenditures	1,258	1,988	2,103	3,161
Revenues by geographic area:
United States	49,151	54,205	107,165	102,570
Other Countries	10,365	7,880	19,025	15,108
Revenue, net	59,516	62,085	126,190	117,678
Hospitality [Member]
Information as to the Company's segments [Abstract]
Revenues	37,571	36,156	77,507	71,705
Operating income (loss)	(971)	(1,558)	(2,693)	(1,192)
Depreciation and amortization	687	782	1,056	1,525
Capital expenditures	1,258	1,885	2,030	3,016
Revenues by geographic area:
Revenue, net	37,571	36,156	77,507	71,705
Government [Member]
Information as to the Company's segments [Abstract]
Revenues	21,945	25,929	48,683	45,973
Operating income (loss)	1,475	1,251	2,697	2,272
Depreciation and amortization	10	19	22	38
Capital expenditures	0	0	0	0
Revenues by geographic area:
Revenue, net	21,945	25,929	48,683	45,973
Other [Member]
Information as to the Company's segments [Abstract]
Operating income (loss)	(245)	(236)	(920)	(400)
Depreciation and amortization	15	118	178	181
Capital expenditures	$ 0	$ 103	$ 73	$ 145

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Segment and Related Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment and Related Information [Abstract]

Information of the Company's segments

	(In thousands)
	For the three months ended June 30,						For the six months ended June 30,
	2013			2012			2013			2012
Revenues:
Hospitality	$	37,571			36,156		$	77,507		$	71,705
Government		21,945			25,929			48,683			45,973
Total	$	59,516		$	62,085		$	126,190		$	117,678
Operating income (loss) from continuing operations:
Hospitality	$	(971	)	$	(1,558	)	$	(2,693	)	$	(1,192	)
Government		1,475			1,251			2,697			2,272
Other		(245	)		(236	)		(920	)		(400	)
		259			(543	)		(916	)		680
Other income, net		255			(366	)		221			207
Interest expense		(13	)		(21	)		(26	)		(42	)
Income (loss) from continuing operations before provision for income taxes	$	501		$	(930	)	$	(721	)	$	845
Depreciation and amortization:
Hospitality	$	687		$	782		$	1,056		$	1,525
Government		10			19			22			38
Other		15			118			178			181
Total	$	712		$	919		$	1,256		$	1,744
Capital expenditures:
Hospitality	$	1,258		$	1,885		$	2,030		$	3,016
Government		-			-			-			-
Other		-			103			73			145
Total	$	1,258		$	1,988		$	2,103		$	3,161
Revenues by geographic area:
United States	$	49,151		$	54,205		$	107,165		$	102,570
Other Countries		10,365			7,880			19,025			15,108
Total	$	59,516		$	62,085		$	126,190		$	117,678

Identifiable assets by business segment

The following table represents identifiable assets by business segment:

	(in thousands)
	June 30,		December 31,
	2013		2012
Identifiable assets:
Hospitality	$	85,844	$	88,298
Government		10,220		9,012
Other		21,518		26,455
Total	$	117,582	$	123,765

Identifiable assets by geographic area

The following table represents identifiable assets by geographic area based on the location of the assets:

	(in thousands)
	June 30,		December 31,
	2013		2012
United States	$	99,034	$	107,149
Other Countries		18,548		16,616
Total	$	117,582	$	123,765

Goodwill by business segment

The following table represents Goodwill by business segment:

	(in thousands)
	June 30,		December 31,
	2013		2012
Hospitality	$	6,116	$	6,116
Government		736		736
Total	$	6,852	$	6,852

Revenue percentage by customer/segment

Customers comprising 10% or more of the Company's total revenues are summarized as follows:

	For the Three Months Ended June 30,						For the six Months Ended June 30,
	2013			2012			2013			2012
Hospitality segment:
McDonald's Corporation		20	%		19	%		16	%		18	%
Yum! Brands, Inc.		16	%		14	%		15	%		14	%
Government segment:
U.S. Department of Defense		37	%		42	%		39	%		39	%
All Others		27	%		25	%		30	%		29	%
		100	%		100	%		100	%		100	%

Table of Contents

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Segment and Related Information, Revenue By Major Customer (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	100.00%	100.00%	100.00%	100.00%
McDonald's Corporation [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	16.00%	18.00%	20.00%	19.00%
Yum! Brands, Inc. [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	15.00%	14.00%	16.00%	14.00%
U.S. Department of Defense [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	39.00%	39.00%	37.00%	42.00%
All Others [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	30.00%	29.00%	27.00%	25.00%

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Segment and Related Information, Reconciliation of Segment Assets (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Identifiable assets by business segment [Abstract]
Identifiable assets	$ 117,582	$ 123,765
Goodwill by business segment [Abstract]
Goodwill	6,852	6,852
UNITED STATES
Identifiable assets by business segment [Abstract]
Identifiable assets	99,034	107,149
Other Countries [Member]
Identifiable assets by business segment [Abstract]
Identifiable assets	18,548	16,616
Hospitality [Member]
Identifiable assets by business segment [Abstract]
Identifiable assets	85,844	88,298
Goodwill by business segment [Abstract]
Goodwill	6,116	6,116
Government [Member]
Identifiable assets by business segment [Abstract]
Identifiable assets	10,220	9,012
Goodwill by business segment [Abstract]
Goodwill	736	736
Other [Member]
Identifiable assets by business segment [Abstract]
Identifiable assets	$ 21,518	$ 26,455

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income (loss)	$ (327)	$ 1,944
(Income) loss from discontinued operations	206	(1,420)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	1,256	1,744
Provision for bad debts	233	140
Provision for obsolete inventory	1,344	1,361
Equity based compensation	(282)	400
Deferred income tax	(659)	1,052
Changes in operating assets and liabilities:
Accounts receivable	(308)	(796)
Inventories	(3,408)	431
Income tax refunds/payable	(698)	(45)
Other current assets	(219)	(50)
Other assets	359	(1,330)
Accounts payable	(4,481)	3,232
Accrued salaries and benefits	(652)	(610)
Accrued expenses	(1,725)	(398)
Customer deposits	(494)	(423)
Deferred service revenue	2,114	4,501
Other long-term liabilities	430	262
Net cash provided by operating activities-continuing operations	(7,311)	9,995
Net cash used in operating activities-discontinued operations	0	(2,368)
Net cash provided by operating activities	(7,311)	7,627
Cash flows from investing activities:
Capital expenditures	(477)	(1,539)
Capitalization of software costs	(1,626)	(1,622)
Purchase of investments	0	(250)
Sale of investments	0	1,912
Proceeds from Divestiture of Business	0	4,000
Net cash used in investing activities-continuing operations	(2,103)	2,501
Net cash used in investing activities-discontinued operations	0	0
Net cash used in investing activities	(2,103)	2,501
Cash flows from financing activities:
Payments of long-term debt	(78)	(971)
Proceeds from the exercise of stock options	54	27
Net cash used in financing activities-continuing operations	(24)	(944)
Net cash used in financing activities-discontinued operations	0	0
Net cash used in financing activities	(24)	(944)
Effect of exchange rate changes on cash and cash equivalents	(450)	(31)
Net increase (decrease) in cash and cash equivalents	(9,888)	9,153
Cash and cash equivalents at carrying value from continuing operations	19,475	7,742
Cash and cash equivalents at end of period	9,587	16,895
Less cash and equivalents of discontinued operations at end of period	0	0
Cash and equivalents of continuing operations at end of period	9,587	16,895
Cash paid during the period for:
Interest	26	42
Income taxes, net of refunds	$ 734	$ 45

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Accounts Receivable

6 Months Ended

Jun. 30, 2013

Accounts Receivable [Abstract]

Accounts Receivable

	(in thousands)
	June 30,			December 31,
	2013			2012
Government segment:
Billed	$	10,480		$	11,226
Advanced billings		(2,049	)		(3,561	)
		8,431			7,665
Hospitality segment:
Accounts receivable - net		21,534			22,225
	$	29,965		$	29,890

At June 30, 2013 and December 31, 2012, the Company had recorded allowances for doubtful accounts of $477,000 and $541,000, respectively, against Hospitality accounts receivable.

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Stock Based Compensation

6 Months Ended

Jun. 30, 2013

Stock Based Compensation [Abstract]

Stock Based Compensation

Note 5 — Stock Based Compensation

The Company applies the fair value recognition provisions of ASC Topic 718 Stock-Based Compensation.  The Company recorded stock based compensation expense of $64,000 for the three months ended June 30, 2013 and a net benefit of $282,000 for the six months ended.  The amount recorded for the six months ended June 30, 2013 was recorded net of benefits of $538,000, as the result of forfeitures of unvested stock awards prior to the completion of the requisite service period. Total stock-based compensation expense included within operating expenses for the three and six months ended June 30, 2012 was $236,000 and $400,000, respectively.  At June 30, 2013, the unrecognized compensation expense related to non-vested equity awards was $776,000 (net of estimated forfeitures), which is expected to be recognized as compensation expense in fiscal years 2013 through 2017

During 2013, the Company has granted a total of 264,000 equity awards as approved by the Company's Compensation Committee of its Board of Directors to various employees of the Company under the 2005 Equity Incentive Plan.  All awards granted in 2013 are time vested over specific service periods as defined in the agreements.

During 2012, the Company's issued approximately 183,000 restricted stock awards to various employees at a per share price of $0.02.  The awards were approved by the Compensation Committee of its Board of Directors under the 2005 Equity Incentive Plan.  Included in the shares granted are 121,000 performance based restricted stock which vest upon the achievement of financial goals from fiscal years 2012 through 2014.  These grant agreements expire if the related performance conditions are not met by December 31, 2014.  The Company has not recognized any compensation expense associated with these performance based awards as the achievement of the performance target was not deemed probable during the current period.

.

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Inventories

6 Months Ended

Jun. 30, 2013

Inventories [Abstract]

Inventories

Inventories are primarily used in the manufacture and service of Hospitality products.  The components of inventory consist of the following:

	(in thousands)
	June 30,		December 31,
	2013		2012
Finished Goods	$	14,458	$	13,012
Work in process		627		352
Component parts		3,817		3,673
Service parts		9,334		9,135
	$	28,236	$	26,172

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract]
Net income (loss)	$ 57	$ (521)	$ (327)	$ 1,944
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(132)	(181)	(449)	(31)
Comprehensive income (loss)	$ (75)	$ (702)	$ (776)	$ 1,913

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Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2013

Accounts Receivable [Abstract]

Accounts receivable

	(in thousands)
	June 30,			December 31,
	2013			2012
Government segment:
Billed	$	10,480		$	11,226
Advanced billings		(2,049	)		(3,561	)
		8,431			7,665
Hospitality segment:
Accounts receivable - net		21,534			22,225
	$	29,965		$	29,890

At June 30, 2013 and December 31, 2012, the Company had recorded allowances for doubtful accounts of $477,000 and $541,000, respectively, against Hospitality accounts receivable.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Shareholders Equity:
Preferred stock, authorized (in shares)	1,000,000	1,000,000
Common stock, par value (in dollars per share)	$ 0.02	$ 0.02
Common stock, authorized (in shares)	29,000,000	29,000,000
Common stock, issued (in shares)	17,229,003	17,038,405
Common stock, outstanding (in shares)	15,521,316	15,330,718
Preferred stock, par value (in dollars per share)	$ 0.02	$ 0.02

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net revenues:
Product	$ 22,257	$ 20,142	$ 46,173	$ 40,312
Service	15,314	16,014	31,334	31,393
Contract	21,945	25,929	48,683	45,973
Revenue, net	59,516	62,085	126,190	117,678
Costs of sales:
Product	14,841	14,041	31,314	25,018
Service	10,904	11,473	22,456	22,038
Contract	20,312	24,584	45,791	43,567
Cost of goods and services sold	46,057	50,098	99,561	90,623
Gross margin	13,459	11,987	26,629	27,055
Operating expenses:
Selling, general and administrative	9,494	9,291	19,699	19,434
Research and development	3,706	3,089	7,846	6,638
Amortization of identifiable intangible assets	0	150	0	303
Operating expenses	13,200	12,530	27,545	26,375
Operating income (loss) from continuing operations	259	(543)	(916)	680
Other income (expense), net	255	(366)	221	207
Interest expense	(13)	(21)	(26)	(42)
Income (loss) from continuing operations before provision for income taxes	501	(930)	(721)	845
Provision (benefit) for income taxes	253	(419)	(600)	321
Income (loss) from continuing operations	248	(511)	(121)	524
Discontinued operations -
Income (loss) on discontinued operations (net of tax)	(191)	(10)	(206)	1,420
Net income (loss)	$ 57	$ (521)	$ (327)	$ 1,944
Basic earnings (loss) per share:
Income (loss) from continuing operations (in dollars per share)	$ 0.02	$ (0.03)	$ (0.01)	$ 0.03
Income (loss) from discontinued operations (in dollars per share)	$ (0.01)	$ 0.00	$ (0.01)	$ 0.09
Net income (loss) (in dollars per share)	$ 0.00	$ (0.03)	$ (0.02)	$ 0.13
Diluted earnings (loss) per share:
Income (loss) from continuing operations (in dollars per share)	$ 0.02	$ (0.03)	$ (0.01)	$ 0.03
Income (loss) from discontinued operations (in dollars per share)	$ (0.01)	$ 0.00	$ (0.01)	$ 0.09
Net income (loss) (in dollars per share)	$ 0.00	$ (0.03)	$ (0.02)	$ 0.13
Weighted average shares outstanding
Basic (in shares)	15,171	15,098	15,162	15,091
Diluted (in shares)	15,340	15,098	15,162	15,163

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Earnings per share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Reconciliation of the weighted average shares outstanding for the basic and diluted EPS computations [Abstract]
Income from continuing operations	$ 248	$ (511)	$ (121)	$ 524
Basic:
Shares outstanding at beginning of period (in shares)	15,161,000	15,088,000	15,151,000	15,051,000
Weighted average shares issued during the period, net (in shares)	10,000	10	11	40
Weighted average common shares, basic (in shares)	15,171,000	15,098,000	15,162,000	15,091,000
Earnings from continuing operations per common share, basic (in dollars per share)	$ 0.02	$ (0.03)	$ (0.01)	$ 0.03
Diluted:
Weighted average common shares, basic (in shares)	15,171,000	15,098,000	15,162,000	15,091,000
Dilutive impact of stock options and restricted stock awards (in shares)	169,000	0	0	72
Weighted average common shares, diluted (in shares)	15,340,000	15,098,000	15,162,000	15,163,000
Earnings from continuing operations per common share, diluted (in dollars per share)	$ 0.02	$ (0.03)	$ (0.01)	$ 0.03
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive stock options outstanding (in shares)	474,000	652,000	579,000	647,000

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Segment and Related Information

6 Months Ended

Jun. 30, 2013

Segment and Related Information [Abstract]

Segment and Related Information

Note 7 — Segment and Related Information

The Company's reportable segments are strategic business units that have separate management teams and infrastructures that offer different products and services.

The Company has two reportable segments, Hospitality and Government.  The Hospitality segment offers integrated solutions to the hospitality industry.  These offerings include industry leading hardware and software applications utilized at restaurants, resorts, hotels and spas.  In addition, the Company also provides technology in support of food safety and task management.  This segment offers customer support including field service, installation, twenty-four hour telephone support and depot repair.  The Government segment develops and delivers geospatial and full motion video solutions to federal/state governments and industry; and provides communications and information technology support services to the United States Department of Defense.  Intersegment sales and transfers are not significant.

Information noted as "Other" primarily relates to the Company's corporate, home office operations.

Information as to the Company's segments is set forth below.  Amounts below exclude discontinued operations.

	(In thousands)
	For the three months ended June 30,						For the six months ended June 30,
	2013			2012			2013			2012
Revenues:
Hospitality	$	37,571			36,156		$	77,507		$	71,705
Government		21,945			25,929			48,683			45,973
Total	$	59,516		$	62,085		$	126,190		$	117,678
Operating income (loss) from continuing operations:
Hospitality	$	(971	)	$	(1,558	)	$	(2,693	)	$	(1,192	)
Government		1,475			1,251			2,697			2,272
Other		(245	)		(236	)		(920	)		(400	)
		259			(543	)		(916	)		680
Other income, net		255			(366	)		221			207
Interest expense		(13	)		(21	)		(26	)		(42	)
Income (loss) from continuing operations before provision for income taxes	$	501		$	(930	)	$	(721	)	$	845
Depreciation and amortization:
Hospitality	$	687		$	782		$	1,056		$	1,525
Government		10			19			22			38
Other		15			118			178			181
Total	$	712		$	919		$	1,256		$	1,744
Capital expenditures:
Hospitality	$	1,258		$	1,885		$	2,030		$	3,016
Government		-			-			-			-
Other		-			103			73			145
Total	$	1,258		$	1,988		$	2,103		$	3,161
Revenues by geographic area:
United States	$	49,151		$	54,205		$	107,165		$	102,570
Other Countries		10,365			7,880			19,025			15,108
Total	$	59,516		$	62,085		$	126,190		$	117,678

The following table represents identifiable assets by business segment:

	(in thousands)
	June 30,		December 31,
	2013		2012
Identifiable assets:
Hospitality	$	85,844	$	88,298
Government		10,220		9,012
Other		21,518		26,455
Total	$	117,582	$	123,765

The following table represents identifiable assets by geographic area based on the location of the assets:

	(in thousands)
	June 30,		December 31,
	2013		2012
United States	$	99,034	$	107,149
Other Countries		18,548		16,616
Total	$	117,582	$	123,765

The following table represents Goodwill by business segment:

	(in thousands)
	June 30,		December 31,
	2013		2012
Hospitality	$	6,116	$	6,116
Government		736		736
Total	$	6,852	$	6,852

Customers comprising 10% or more of the Company's total revenues are summarized as follows:

	For the Three Months Ended June 30,						For the six Months Ended June 30,
	2013			2012			2013			2012
Hospitality segment:
McDonald's Corporation		20	%		19	%		16	%		18	%
Yum! Brands, Inc.		16	%		14	%		15	%		14	%
Government segment:
U.S. Department of Defense		37	%		42	%		39	%		39	%
All Others		27	%		25	%		30	%		29	%
		100	%		100	%		100	%		100	%

Table of Contents

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Identifiable intangible assets (Tables)

6 Months Ended

Jun. 30, 2013

Identifiable intangible assets [Abstract]

Components of identifiable intangible assets

The components of identifiable intangible assets are:

	(in thousands)
	June 30,			December 31,
	2013			2012
Acquired and internally developed software costs	$	13,614		$	11,988
Trademarks (non-amortizable)		1,800			1,800
		15,414			13,788
Less accumulated amortization		(2,533	)		(2,041	)
	$	12,881		$	11,747

Future amortization of intangible assets

The future amortization of these intangible assets assuming straight-line amortization of capitalized software costs is as follows (in thousands):

2013	$	783
2014		1,626
2015		1,547
2016		1,518
2017		1,493
2018		1,419
Thereafter		2,695
Total	$	11,081

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Earnings per share

6 Months Ended

Jun. 30, 2013

Earnings per share [Abstract]

Earnings per share

Note 6 — Earnings per share

Earnings per share are calculated in accordance with ASC Topic 260, which specifies the computation, presentation and disclosure requirements for earnings per share (EPS).  It requires the presentation of basic and diluted EPS.  Basic EPS excludes all dilution and is based upon the weighted average number of common shares outstanding during the period.  Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

For the three and six months ended June 30, 2013 there was 474,000 and 579,000 respective, anti-dilutive stock options outstanding.  For the three and six months ended June 30, 2012, there were 652,000 and 647,000, respectively, anti-dilutive stock options outstanding.

The following is a reconciliation of the weighted average shares outstanding for the basic and diluted EPS computations (in thousands, except per share data):

	For the three months
	ended June 30,
	2013		2012
Income (loss) from continuing operations	$	248	$	(511	)
Basic:
Shares outstanding at beginning of period		15,161		15,088
Weighted average shares issued during the period, net		10		10
Weighted average common shares, basic		15,171		15,098
Earnings (loss) from continuing operations per common share, basic	$	0.02	$	(0.03	)
Diluted:
Weighted average common shares, basic		15,171		15,098
Dilutive impact of stock options and restricted stock awards		169		-
Weighted average common shares, diluted		15,340		15,098
Earnings (loss) from continuing operations per common share, diluted	$	0.02	$	(0.03	)

	For the six months
	ended June 30,
	2013			2012
Income (loss) from continuing operations	$	(121	)	$	524
Basic:
Shares outstanding at beginning of period		15,151			15,051
Weighted average shares issued during the period, net		11			40
Weighted average common shares, basic		15,162			15,091
Earnings (loss) from continuing operations per common share, basic	$	(0.01	)	$	0.03
Diluted:
Weighted average common shares, basic		15,162			15,091
Dilutive impact of stock options and restricted stock awards		-			72
Weighted average common shares, diluted		15,162			15,163
Earnings (loss) from continuing operations per common share, diluted	$	(0.01	)	$	0.03

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 — Summary of Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements have been prepared by PAR Technology Corporation (the "Company" or "PAR") in accordance with U.S. generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements.  Accordingly, these interim financial statements do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of the Company, such unaudited statements include all adjustments (which comprise only normal recurring accruals) necessary for a fair presentation of the results for such periods.  The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results of operations to be expected for any future period.  The consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2012 included in the Company's December 31, 2012 Annual Report to the Securities and Exchange Commission on Form 10-K.

The preparation of consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period.  Significant items subject to such estimates and assumptions include:  the carrying amount of property, plant and equipment, identifiable intangible assets and goodwill, equity based compensation, and valuation allowances for receivables, inventories and deferred income taxes.  Actual results could differ from those estimates.

The current economic conditions and the continued financial volatility in the U.S. and in many other countries in which the Company operates could contribute to decreased consumer confidence and continued economic uncertainty which may adversely impact the Company's operating performance.  Although the Company has seen an improvement in the markets which it serves, the continued instability in these markets could have an impact on purchases of the Company's products, which could result in a reduction of sales, operating income and cash flows.  A decline in these results could have a material adverse impact on the underlying estimates used in deriving the fair value of the Company's reporting units used in support of its annual goodwill impairment test.  These conditions may result in an impairment charge in future periods.

Certain amounts for prior periods have been reclassified to conform to the current period classification.

During the first quarter of fiscal year 2012, the Company sold substantially all of the assets of its Logistics Management business, PAR Logistics Management Systems Corporation (LMS) to ORBCOMM Inc., including but not limited to accounts receivable, inventory, equipment, intellectual property, and customer contracts.  The transaction closed on January 12, 2012.   The results of operations of LMS for three and six months ended June 2013 and 2012 have been recorded as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20, Presentation of Financial Statements – Discontinued Operations.

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Accounts Receivable (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Accounts Receivable [Abstract]
Accounts receivable-net	$ 29,965,000	$ 29,890,000
Allowances for doubtful accounts	477,000	541,000
Government segment [Member]
Accounts Receivable [Abstract]
Accounts receivable-net	8,431,000	7,665,000
Government segment [Member] | Billed [Member]
Accounts Receivable [Abstract]
Accounts receivable-net	10,480,000	11,226,000
Government segment [Member] | Advance billings [Member]
Accounts Receivable [Abstract]
Accounts receivable-net	(2,049,000)	(3,561,000)
Hospitality segment [Member]
Accounts Receivable [Abstract]
Accounts receivable-net	$ 21,534,000	$ 22,225,000

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Inventories (Tables)

6 Months Ended

Jun. 30, 2013

Inventories [Abstract]

Components of inventory

Inventories are primarily used in the manufacture and service of Hospitality products.  The components of inventory consist of the following:

	(in thousands)
	June 30,		December 31,
	2013		2012
Finished Goods	$	14,458	$	13,012
Work in process		627		352
Component parts		3,817		3,673
Service parts		9,334		9,135
	$	28,236	$	26,172

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Stock Based Compensation (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 64,000	$ 236,000	$ (282,000)	$ 400,000
Stock-based compensation expense, tax benefit	0		538,000
Unrecognized compensation expense	$ 776,000		$ 776,000
2005 Equity Incentive Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under plan approved by directors (in shares)	264,000		264,000

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Component of inventory use in hospitality product [Abstract]
Finished Goods	$ 14,458	$ 13,012
Work in process	627	352
Component parts	3,817	3,673
Service parts	9,334	9,135
Inventory net	$ 28,236	$ 26,172

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Document and Entity Information (USD $)	6 Months Ended
	Jun. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	PAR TECHNOLOGY CORP
Entity Central Index Key	0000708821
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float	$ 47,989,714
Entity Common Stock, Shares Outstanding	15,521,316
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013

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Identifiable intangible assets (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Software costs capitalized	$ 965,000	$ 942,000	$ 1,626,000	$ 1,622,000
Remaining estimated economic life of the product	3 years	7 years	3 years	7 years
Amortization of capitalized software costs	400,000	398,000	492,000	764,000
Amortization of identifiable intangible assets		150,000		303,000
Components of identifiable intangible assets [Abstract]
Intangible assets - gross	15,414,000		15,414,000		13,788,000
Less accumulated amortization	(2,533,000)		(2,533,000)		(2,041,000)
Intangible assets - net	12,881,000		12,881,000		11,747,000
Future amortization of intangible assets assuming straight-line amortization of capitalized software costs [Abstract]
2013	783,000		783,000
2014	1,626,000		1,626,000
2015	1,547,000		1,547,000
2016	1,518,000		1,518,000
2017	1,493,000		1,493,000
2018	1,419,000		1,419,000
Thereafter	2,695,000		2,695,000
Total	11,081,000		11,081,000
Acquired and internally developed software costs [Member]
Components of identifiable intangible assets [Abstract]
Intangible assets - gross	13,614,000		13,614,000		11,988,000
Trademarks (non-amortizable) [Member]
Components of identifiable intangible assets [Abstract]
Intangible assets - gross	$ 1,800,000		$ 1,800,000		$ 1,800,000