10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2019.

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 1-09720

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 þ   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).  Yes  þ  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  ☐	Accelerated Filer  þ
Non Accelerated Filer  ☐	Smaller Reporting Company þ
	Emerging Growth Company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No  þ

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock	PAR	New York Stock Exchange

As of May 1, 2019, 16,252,648 shares of the registrant’s common stock, $0.02 par value, were outstanding.

PAR TECHNOLOGY CORPORATION

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item Number		Page
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets at March 31, 2019 and December 31, 2018 (unaudited)	1
	Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and March 31, 2018 (unaudited)	3
	Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2019 and March 31, 2018 (unaudited)	4
	Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 2019 and March 31, 2018 (unaudited)	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and March 31, 2018 (unaudited)	6
	Notes to Unaudited Interim Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	21
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use Of Proceeds	23
Item 6.	Exhibits	23
Signatures		25

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited) 

Assets	March 31, 2019			December 31, 2018
Current assets:
Cash and cash equivalents	$	4,142		$	3,485
Accounts receivable-net	29,311			26,219
Inventories-net	22,639			22,737
Other current assets	5,099			3,251
Total current assets	61,191			55,692
Property, plant and equipment – net	13,169			12,575
Goodwill	11,051			11,051
Intangible assets – net	11,176			10,859
Operating lease right-of-use assets	3,697			—
Other assets	4,764			4,504
Total Assets	$	105,048		$	94,681
Liabilities and Shareholders’ Equity
Current liabilities:
Borrowings of line of credit	$	16,139		$	7,819
Accounts payable	14,794			12,644
Accrued salaries and benefits	5,145			5,940
Accrued expenses	2,223			2,113
Operating lease liabilities - current portion	1,540			—
Customer deposits and deferred service revenue	11,540			9,851
Other current liabilities	—			2,550
Total current liabilities	51,381			40,917
Operating lease liabilities - net of current portion	2,177			—
Deferred service revenue	4,807			4,407
Other long-term liabilities	3,198			3,411
Total liabilities	61,563			48,735
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, $.02 par value, 1,000,000 shares authorized	—			—
Common stock, $.02 par value, 29,000,000 shares authorized; 17,956,318 and 17,879,761 shares issued, 16,248,209 and 16,171,652 outstanding at March 31, 2019 and December 31, 2018, respectively	357			357
Capital in excess of par value	50,529			50,251
Retained earnings	2,698			5,427
Accumulated other comprehensive loss	(4,263		)	(4,253		)
Treasury stock, at cost, 1,708,109 shares	(5,836		)	(5,836		)
Total shareholders’ equity	43,485			45,946
Total Liabilities and Shareholders’ Equity	$	105,048		$	94,681

1

See accompanying notes to unaudited interim consolidated financial statements

2

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Net revenues:
Product	$	15,517		$	26,324
Service	14,043			13,196
Contract	15,122			16,141
	44,682			55,661
Costs of sales:
Product	11,241			19,440
Service	10,027			9,547
Contract	13,650			14,827
	34,918			43,814
Gross margin	9,764			11,847
Operating expenses:
Selling, general and administrative	8,564			8,600
Research and development	3,060			2,868
Amortization of identifiable intangible assets	241			241
	11,865			11,709
Operating (loss) income	(2,101		)	138
Other (expense) income, net	(430		)	49
Interest expense, net	(146		)	(41		)
(Loss) income before provision for income taxes	(2,677		)	146
Provision for income taxes	(52		)	(78		)
Net (loss) income	$	(2,729	)	$	68
Basic Earnings per Share:
Net (loss) income	$	(0.17	)	$	—
Diluted Earnings per Share:
Net (loss) income	$	(0.17	)	$	—
Weighted average shares outstanding
Basic	16,044			15,948
Diluted	16,044			16,286

See accompanying notes to unaudited interim consolidated financial statements

3

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Net (loss) income	$	(2,729	)	$	68
Other comprehensive (loss) income, net of applicable tax:
Foreign currency translation adjustments	(10		)	423
Comprehensive (loss) income	$	(2,739	)	$	491

See accompanying notes to unaudited interim consolidated financial statements

4

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in thousands)

(Unaudited)

(in thousands)	Common Stock			Capital in excess of Par Value		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock					Total Shareholders’ Equity
	Shares	Amount										Shares		Amount
Balances at December 31, 2017	17,677	$	354	$	48,349	$	29,549		$	(3,430	)	(1,708	)	$	(5,836	)	$	68,986
Net income	—	—		—		68			—			—		—			68
Equity based compensation	—	—		181		—			—			—		—			181
Foreign currency translation adjustments	—	—		—		—			423			—		—			423
Balances at March 31, 2018	17,677	$	354	$	48,530	$	29,617		$	(3,007	)	(1,708	)	$	(5,836	)	$	69,658
Balances at December 31, 2018	17,878	$	357	$	50,251	$	5,427		$	(4,253	)	(1,708	)	$	(5,836	)	$	45,946
Net loss	—	—		—		(2,729		)	—			—		—			(2,729		)
Issuance of common stock upon the exercise of stock options	78	—		30		—			—			—		—			30
Equity based compensation	—	—		248		—			—			—		—			248
Foreign currency translation adjustments	—	—		—		—			(10		)	—		—			(10		)
Balances at March 31, 2019	17,956	$	357	$	50,529	$	2,698		$	(4,263	)	(1,708	)	$	(5,836	)	$	43,485

See accompanying notes to unaudited interim consolidated financial statements

5

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net (loss) income	$	(2,729	)	$	68
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation, amortization and accretion	1,012			1,062
Provision for bad debts	107			100
Provision for obsolete inventory	588			696
Equity based compensation	248			181
Deferred income tax	—			(78		)
Changes in operating assets and liabilities:
Accounts receivable	(3,199		)	(5,934		)
Inventories	(490		)	(1,344		)
Other current assets	(1,848		)	(1,102		)
Other assets	(240		)	(84		)
Accounts payable	2,150			3,205
Accrued salaries and benefits	(795		)	(879		)
Accrued expenses	110			(142		)
Customer deposits and deferred service revenue	2,089			2,015
Other long-term liabilities	(213		)	(307		)
Net cash used in operating activities	(3,210		)	(2,543		)
Cash flows from investing activities:
Capital expenditures	(887		)	(568		)
Capitalization of software costs	(1,036		)	(1,102		)
Net cash used in investing activities	(1,923		)	(1,670		)
Cash flows from financing activities:
Payments of long-term debt	—			(48		)
Payment of contingent consideration for Brink Earn Out	(2,550		)	—
Payments of other borrowings	(16,777		)	(2,000		)
Proceeds from other borrowings	25,097			5,000
Proceeds from stock options	30			—
Net cash provided by financing activities	5,800			2,952
Effect of exchange rate changes on cash and cash equivalents	(10		)	423
Net increase (decrease) in cash and cash equivalents	657			(838		)
Cash and cash equivalents at beginning of period	3,485			6,600
Cash and equivalents at end of period	$	4,142		$	5,762
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	115		$	75
Income taxes, net of refunds	—			—
Additions to right-of-use assets and deferred rent obtained from operating lease liabilities	3,717			—

See accompanying notes to unaudited interim consolidated financial statements

6

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of presentation

The accompanying unaudited interim consolidated financial statements of PAR Technology Corporation (the “Company” or “PAR”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Article 8 of Regulation S-X pertaining to interim financial statements.  Accordingly, they do not include all information and footnotes required by GAAP for annual financial statements.  In the opinion of management, such unaudited interim consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the results for the interim periods included in this Quarterly Report on Form 10-Q (“Quarterly Report”).  Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results of operations that may be expected for any future period. 

The preparation of the unaudited interim consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount 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 revenue recognition, stock based compensation, the recognition and measurement of assets acquired and liabilities assumed in business combinations at fair value, the carrying amount of property, plant and equipment, identifiable intangible assets and goodwill, valuation allowances for receivables, inventories and deferred income tax assets, and measurement of contingent consideration at fair value. Actual results could differ from those estimates.

The unaudited interim consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,  filed with the Securities and Exchange Commission (“SEC”) on March 18, 2019.

Note 2 - Revenue Recognition

Beginning on January 1, 2018, the Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company applies the five-step model, as described in ASU 2014-09 Revenue from Contracts with Customers, to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following steps are applied to achieve that principle:

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

The Company’s performance obligations are satisfied at the point in time when products are shipped or services are received by the customer, which is when the customer has the title and has assumed the significant risks and rewards of ownership.

Performance Obligations Outstanding

Our performance obligations outstanding represent the transaction price of firm, non-cancellable orders, with expected delivery dates to customers subsequent to March 31, 2019 and December 31, 2018, respectively, for work that has not been performed. The aggregate performance obligations attributable to our two reporting segments, Restaurant/Retail and Government, is as follows (in thousands):

	As of March 31, 2019
	Current - under one year	Non-current - over one year
Restaurant	11,198	4,807
Government	337	—
TOTAL	11,535	4,807

7

	As of December 31, 2018
	Current - under one year	Non-current - over one year
Restaurant	9,320	4,407
Government	325	—
TOTAL	9,645	4,407

Most performance obligations over one year are related to service and support contracts, approximately 70% of which we expect to fulfill within the one-year period and 100% within 60 months.

During the three months ended March 31, 2019, we recognized revenue of $5.7 million that was included in contract liabilities at the beginning of the period.

Disaggregated Revenue

We disaggregate revenue from contracts from customers by major product group for each of the reporting segments as we believe it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregation of revenue for the three months ended March 31, 2019 and March 31, 2018 is as follows (in thousands):

	Three months ended March 31, 2019
	Restaurant/Retail - Point in Time	Restaurant/Retail - Over Time	Government - Over Time
Restaurant	22,336	5,790	—
Grocery	490	944	—
Mission Systems	—	—	8,546
ISR Solutions	—	—	6,576
TOTAL	22,826	6,734	15,122

	Three months ended March 31, 2018
	Restaurant/Retail - Point in Time	Restaurant/Retail - Over Time	Government - Over Time
Restaurant	32,164	5,857	—
Grocery	753	746	—
Mission Systems	—	—	8,334
ISR Solutions	—	—	7,807
TOTAL	32,917	6,603	16,141

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period is less than one year or the total amount of commissions is immaterial. We record these costs within selling, general and administrative expenses.

We elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (for example, sales, use, value added, and some excise taxes).

Note 3 — Leases

Adoption

8

Effective January 1, 2019, the Company adopted the new lease accounting standard, ASC 842, Leases, using the modified retrospective method of applying the new standard at the adoption date. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of this standard resulted in the recording of operating lease right-of-use (ROU) assets and corresponding operating lease liabilities of approximately $4.0 million. The Company's financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance.

A significant portion of our operating and finance lease portfolio includes corporate offices, research and development facilities, information technology (IT) equipment, and automobiles. The majority of our leases have remaining lease terms of 1 year to 5 years. Substantially all lease expense is presented within selling, general and administrative expenses on the Consolidated Statements of Operations.

	Three Months Ended
	March 31, 2019		March 31, 2018
Operating lease cost	$	546	$	457
Total lease cost	$	546	$	457

Supplemental cash flow information related to leases was as follows:

	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	546

Supplemental balance sheet information related to leases was as follows:

	March 31, 2019
Operating leases
Operating lease right-of-use assets	3,697
Operating lease liabilities - current portion	1,540
Operating lease liabilities - net of current portion	2,177
Total operating lease liabilities	3,717
Weighted-average remaining lease term
Operating leases	3.4 years
Weighted-average discount rate
Operating leases	4	%

9

Future minimum lease payments are as follows:

	Operating Leases
2019	$	1,652
2020	1,006
2021	902
2022	752
2023	574
Thereafter	75
Total lease payments	4,961
Less: interest	(1,244		)
Total	$	3,717

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for operating leases having initial or remaining noncancellable lease terms in excess of one year would have been as follows:

	Total			Less Than 1 Year			1-3 Years		3 - 5 Years		More than 5 Years
Operating leases	$	4,961		$	1,652		$	1,908	$	1,326	$	75
Total	$	4,961	—	$	1,652	—	$	1,908	$	1,326	$	75

Note 4 — Accounts Receivable

The Company’s accounts receivable, net, consists of (in thousands):

	March 31, 2019			December 31, 2018
Government reporting segment:
Billed	$	10,428		$	9,100
Advanced billings	(243		)	(563		)
	10,185			8,537
Restaurant/Retail reporting segment:	19,126			17,682
Accounts receivable - net	$	29,311		$	26,219

At March 31, 2019 and December 31, 2018, the Company recorded allowances for doubtful accounts of $1.4 million and $1.3 million, respectively, against Restaurant/Retail reporting segment accounts receivable.

Note 5 — Inventories

Inventories are primarily used in the manufacture, maintenance and service of Restaurant/Retail reporting segment products.  The components of inventories, net, consist of the following (in thousands):

10

	March 31, 2019		December 31, 2018
Finished goods	$	11,312	$	12,472
Work in process	452		67
Component parts	4,522		4,716
Service parts	6,353		5,482
	$	22,639	$	22,737

At March 31, 2019 and December 31, 2018, the Company recorded inventory reserves of $10.4 million and $9.8 million, respectively, against Restaurant/Retail reporting segment inventories, which relate primarily to service parts.

Note 6 — Identifiable Intangible Assets and Goodwill

Identifiable intangible assets represent intangible assets acquired by the Company in connection with its acquisition of Brink Software Inc. in 2014 ("Brink Acquisition") and software development costs.  The Company capitalizes certain software development costs for software used in its Restaurant/Retail reporting segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs.  The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20 (Software – Costs of Software to be sold, Leased, or Marketed) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. Software development is also capitalized in accordance with ASC 350-40, “Intangibles - Goodwill and Other - Internal - Use Software,” and is amortized over the expected benefit period, which generally ranges from three to seven years. Software development costs capitalized within continuing operations during the three months ended March 31, 2019 and March 31, 2018 were $1.0 million and $1.1 million, respectively. 

Annual amortization, charged to cost of sales 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 the product bear to the total of current and anticipated future gross revenues for the product.  Amortization of capitalized software development

11

costs from continuing operations for the three months ended March 31, 2019 and 2018 were $0.5 million and $0.8 million, respectively. 

Amortization of intangible assets acquired in the Brink Acquisition amounted to $0.2 million for each of the three month periods ended March 31, 2019 and 2018.

The components of identifiable intangible assets are (in thousands):

	March 31, 2019			December 31, 2018			Estimated Useful Life
Acquired and internally developed software costs	$	23,013		$	21,977		3 - 7 years
Customer relationships	160			160			7 years
Non-competition agreements	30			30			1 year
	23,203			22,167
Less accumulated amortization	(12,427		)	(11,708		)
	$	10,776		$	10,459
Trademarks, trade names (non-amortizable)	400			400			N/A
	$	11,176		$	10,859

The expected future amortization of intangible assets, assuming straight-line amortization of capitalized software development costs and acquisition related intangibles, is as follows (in thousands):

2019	$	2,046
2020	2,653
2021	1,549
2022	649
2023	365
Thereafter	3,514
Total	$	10,776

The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment.  The Company operates in two reporting segments, Restaurant/Retail and Government.  Goodwill impairment testing is performed at the reporting unit level.  Goodwill is assigned to a specific reporting unit at the date the goodwill is initially recorded.  Once goodwill has been assigned to a specific reporting unit, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.  The amount of goodwill carried by the Restaurant/Retail and Government reporting units is $10.3 million and $0.8 million, respectively, at March 31, 2019 and December 31, 2018. No impairment charges were recorded for the periods ended March 31, 2019 and December 31, 2018.

Note 7 — Stock Based Compensation

The Company applies the fair value recognition provisions of ASC Topic 718. The Company recorded stock based compensation of $0.2 million for each of the three month periods ended March 31, 2019 and March 31, 2018.  The amount recorded for the three months ended March 31, 2019 was net of benefits of $27,000 and March 31, 2018 was zero which was the result of forfeitures of unvested stock awards prior to completion of the requisite service period and/or failure to achieve performance criteria. At March 31, 2019, the aggregate unrecognized compensation expense related to unvested equity awards was $1.9 million (net of estimated forfeitures), which is expected to be recognized as compensation expense in fiscal years 2019 through 2021.

For the three month periods ended March 31, 2019 and 2018, the Company recognized compensation expense related to performance awards based on its estimate of the probability of achievement in accordance with ASC Topic 718.

Note 8 — Net (loss) income per share

12

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 shares of common stock outstanding during the period.  Diluted EPS reflects the potential dilution that would occur if convertible securities or other contracts to issue common stock were exercised. For the three months endedMarch 31, 2019, there were 486,000 anti-dilutive stock options outstanding compared to none as of March 31, 2018.

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

	Three Months Ended March 31,
	2019			2018
Net (loss) income	$	(2,729	)	$	68
Basic:
Shares outstanding at beginning of period	16,041			15,949
Weighted average shares issued/(repurchased) during the period, net	3			(1		)
Weighted average common shares, basic	16,044			15,948
Net (loss) income per common share, basic	$	(0.17	)	$	—
Diluted:
Weighted average common shares, basic	16,044			15,948
Dilutive impact of stock options and restricted stock awards	—			338
Weighted average common shares, diluted	16,044			16,286
Net (loss) income per common share, diluted	$	(0.17	)	$	—

Note 9 — Contingencies

The Company is subject to legal proceedings, which arise in the ordinary course of business. Additionally, U.S. Government contract costs are subject to periodic audit and adjustment. In the third quarter of 2016, the Company's Audit Committee commenced an internal investigation into conduct at the Company's China and Singapore offices to determine whether certain import/export and sales documentation activities were improper and in violation of the U.S. Foreign Corrupt Practices Act ("FCPA") and other applicable laws and certain Company policies. In the fourth quarter of 2016, the Company voluntarily notified the SEC and the U.S. Department of Justice ("DOJ") of the internal investigation, and on May 1, 2017 the Company received a document subpoena from the SEC for documents relating to the internal investigation. Following the conclusion of the Audit Committee's internal investigation, the Company voluntarily reported the relevant findings of the investigation to the China and Singapore authorities and is fully cooperating with these authorities. During the three months ended March 31, 2019, we recorded $0.2 million of expenses relating to the internal investigation, including expenses of outside legal counsel and forensic accountants, compared to $0.3 million for the three months ended March 31, 2018.

As described in Note 13 - Subsequent Events, to the unaudited interim consolidated financial statements, in early April 2019, the SEC notified the Company that based on current information, it did not intend to recommend an enforcement action against the Company; shortly, thereafter, the DOJ advised that it did not intend to separately proceed. As stated above, we continue to cooperate with the China and Singapore authorities; we are currently not able to predict what actions these authorities might take, or what the likely outcome of any such actions might be, or estimate the range of reasonably possible fines or penalties, which may be material. The China and Singapore authorities have a broad range of civil and criminal sanctions, and the imposition of fines or penalties could have a material adverse effect on the Company’s business, prospects, reputation, financial condition, results of operations or cash flows.

Note 10 — Segment and Related Information

The Company operates in two distinct reporting segments, Restaurant/Retail and Government. The Company’s chief operating decision maker is the Company’s Chief Executive Officer. The Restaurant/Retail reporting segment offers point-of-sale ("POS") and management technology solutions to restaurants and retail, including in the fast casual, quick serve and table service restaurant categories. This segment also offers customer support including field service, installation, Advanced Exchange, and twenty-four-

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hour telephone support and depot repair. The Government reporting segment performs complex technical studies, analysis, and experiments, develops innovative solutions, and provides on-site engineering in support of advanced defense, security, and aerospace systems.  This segment also provides expert on-site services for operating and maintaining U.S. Government-owned communication assets.

Information noted as “Other” primarily relates to the Company’s corporate, home office operations.

Information as to the Company’s reporting segments is set forth below (in thousands).

	Three Months Ended March 31,
	2019			2018
Revenues:
Restaurant/Retail	$	29,560		$	39,520
Government	15,122			16,141
Total	$	44,682		$	55,661
Operating (loss) income:
Restaurant/Retail	$	(2,982	)	$	(608	)
Government	1,363			1,266
Other	(482		)	(520		)
	(2,101		)	138
Other (expense) income, net	(430		)	49
Interest expense, net	(146		)	(41		)
(Loss) income before provision for income taxes	$	(2,677	)	$	146
Depreciation, amortization and accretion:
Restaurant/Retail	$	868		$	908
Government	19			5
Other	125			149
Total	$	1,012		$	1,062
Capital expenditures including software costs:
Restaurant/Retail	$	1,063		$	1,139
Government	176			—
Other	684			531
Total	$	1,923		$	1,670
Revenues by country:
United States	$	41,925		$	52,678
Other Countries	2,757			2,983
Total	$	44,682		$	55,661

The following table represents identifiable assets by reporting segment (in thousands).

	March 31, 2019		December 31, 2018
Restaurant/Retail	$	73,255	$	68,004
Government	13,487		9,867
Other	18,306		16,810
Total	$	105,048	$	94,681

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The following table represents assets by country based on the location of the assets (in thousands).

	March 31, 2019		December 31, 2018
United States	$	95,105	$	84,652
Other Countries	9,943		10,029
Total	$	105,048	$	94,681

The following table represents goodwill by reporting unit (in thousands).

	March 31, 2019		December 31, 2018
Restaurant/Retail	$	10,315	$	10,315
Government	736		736
Total	$	11,051	$	11,051

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

	Three Months Ended March 31,
	2019		2018
Restaurant/Retail reporting segment:
McDonald’s Corporation	10	%	27	%
Yum! Brands, Inc.	13	%	11	%
Government reporting segment:
U.S. Department of Defense	34	%	29	%
All Others	43	%	33	%
	100	%	100	%

No other customer within All Others represented more than 10% of the Company’s total revenue for the three months ended March 31, 2019 and 2018.

Note 11 Fair Value of Financial Instruments

The Company’s financial instruments have been recorded at fair value using available market information and valuation techniques.  The fair value hierarchy is based upon three levels of input, which are:

Level 1 — quoted prices in active markets for identical assets or liabilities (observable)

Level 2 — inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable market data for essentially the full term of the asset or liability (observable)

Level 3 — unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable)

The Company’s financial instruments primarily consist of cash and cash equivalents, trade receivables, trade payables, debt instruments and deferred compensation assets and liabilities. The carrying amounts of cash and cash equivalents, trade receivables and trade payables as of March 31, 2019 and December 31, 2018 were considered representative of their fair values.  The estimated fair value of the Company’s long-term debt and line of credit on March 31, 2019 and December 31, 2018 was based on variable and fixed interest rates on such respective dates and approximates their respective carrying values at March 31, 2019 and December 31, 2018.

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The deferred compensation assets and liabilities primarily relate to the Company’s deferred compensation plan, which allows for pre-tax salary deferrals for certain key employees. Changes in the fair value of the deferred compensation liabilities are derived using quoted prices in active markets of the asset selections made by the participants. The deferred compensation liabilities are classified within Level 2, the fair value classification as defined under FASB ASC 820, "Fair Value Measurements", because their inputs are derived principally from observable market data by correlation to the hypothetical investments. The Company holds insurance investments to partially offset the Company’s liabilities under its deferred compensation plan, which are recorded at fair value each period using the cash surrender value of the insurance investments.

The amounts owed to employees participating in the Deferred Compensation Plan at March 31, 2019 was $3.2 million compared to $3.6 million at December 31, 2018 and is included in other long-term liabilities on the consolidated balance sheets.

Under the stock purchase agreement governing the Brink Acquisition, in the event certain defined revenues were determined to have been achieved in 2015, 2016, 2017 and 2018 ("contingent consideration period"), the Company would be obligated to pay additional purchase price consideration ("Brink Earn Out"). The fair value of the Brink Earn Out was estimated using a discounted cash flow method, with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures. The significant inputs in the Level 3 measurement not supported by market activity included the Company’s probability assessments of expected future cash flows related to the Company’s acquisition of Brink Software Inc. during the contingent consideration period, appropriately discounted considering the uncertainties associated with the obligation.  Any change in the fair value adjustment had been recorded in the earnings of that contingent consideration period. For the $2.6 million of Brink Earn Out targets achieved during the 2018 period, the Company paid the amount in full in March 2019. No Brink Earn Out targets had been achieved for the 2015, 2016, or 2017 years.

.

The following table presents a summary of changes in fair value of the Company’s Level 3 assets and liabilities that are measured at fair value on a recurring basis, and are recorded as a component of other long-term liabilities on the consolidated balance sheet (in thousands):

	Level 3 Inputs
	Liabilities
Balance at December 31, 2018	$	2,550
New level 3 liability	—
Total gains (losses) reported in earnings	—
Settlement of Level 3 liabilities	(2,550		)
Balance at March 31, 2019	$	—

Note 12 — Related Party Transactions

The Company leased its corporate wellness facility to related parties at a rate of $9,775 per month. The Company received complimentary memberships to this facility which were provided to local employees. Expenses incurred by the Company relating to the facility amounted to $0 and $55,000 during the three months ended March 31, 2019 and 2018, respectively. The Company did not recognize any rental income from the related party during the three months ended March 31, 2019 and recognized $29,325 for the three month period ended March 31, 2018. Additionally, the Company did not have any rent receivable from the related party for the periods ended March 31, 2019 or December 31, 2018.

Note 13 — Subsequent Events

Convertible Notes

On April 10, 2019, the Company entered into a Purchase Agreement with Jefferies LLC, (the “Initial Purchaser”), relating to its issuance and sale of $80.0 million in aggregate principal amount, including the simultaneous closing of the full exercise on April 11, 2019 of the Initial Purchaser’s option to purchase additional notes, of 4.5% Convertible Senior Notes due 2024 (the “notes”). The notes were issued pursuant to an indenture, dated April 15, 2019, between the Company and The Bank of New York Mellon Trust Company, N.A. (“Trustee”), referred to herein as the “Indenture.”

The Company received net proceeds from its sale of the notes, including net proceeds from the option to purchase additional notes, of approximately $75.2 million. A portion of the proceeds was used to repay in full amounts outstanding under the Credit Agreement, dated June 5, 2018, among the Company, as borrower, with certain of its U.S. subsidiaries, and Citizens Bank, N.A., as lender (as amended by the First Amendment thereto, dated March 4, 2019, the “Credit Agreement), which were approximately $16.1 million as of March 31, 2019, and terminate the Credit Agreement. the Company intends to use the remaining proceeds for general corporate purposes, including funding investment in the Company’s Brink business and for other working capital needs. The Company may also use a portion of the proceeds to acquire or invest in other assets complementary to its business. The notes are senior, unsecured obligations of the Company and bear interest at a rate equal to 4.500% per year. Interest on the notes is payable semiannually in arrears on April 15 and October 15 of each year, beginning October 15, 2019. Interest will accrue on the notes from the last date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from April 15, 2019. Unless earlier converted, redeemed or repurchased, the notes will mature on April 15, 2024.

The notes are convertible, at the option of the holder, at any time prior to the close of business on the business day immediately preceding October 15, 2023, but only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2019 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on such trading day; (2) during the five consecutive business day period immediately after any five consecutive trading day period (the five consecutive trading day period being referred to as the ‘‘measurement period’’) in which the trading price (as defined in the offering memorandum) per $1,000 principal amount of the notes, as determined following a request by a holder of the notes, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; (3) upon the occurrence of certain specified corporate events; or (4) if the Company has called the notes for redemption. In addition, regardless of the foregoing circumstances, holders may convert their notes at any time on or after October 15, 2023 until the close of business on the second business day immediately preceding the maturity date. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company common stock or a combination of cash and shares of the Company common stock, at its election.

The Indenture contains covenants that, among other things, restrict the Company’s ability to merge, consolidate or sell, or otherwise dispose of, substantially all of its assets. These limitations are subject to a number of important qualifications and exceptions. The Indenture contains customary Events of Default (as defined in the Indenture), including default for 30 days in the payment when due of interest on the notes; default in the payment when due (at maturity, upon redemption or otherwise) of the principal of the notes; failure to comply with covenants and other obligations under the Indenture, including delivery of required notices and obligations in connection with conversion, in certain cases subject to notice and grace periods; payment defaults and accelerations with respect to other indebtedness of the Company and its significant subsidiaries in the aggregate principal amount of $10.0 million or more; failure by the Company or its significant subsidiaries to pay certain final judgments aggregating in excess of $10.0 million within 60 consecutive days of such final judgment; and specified events involving bankruptcy, insolvency or reorganization of the Company or its significant subsidiaries.

Upon an Event of Default, the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding may declare all the notes to be due and payable immediately. In the case of Events of Default relating to bankruptcy, insolvency or reorganization, all outstanding notes will become due and payable immediately without further action or notice.

Termination of Citizens Bank Credit Agreement

In connection with its issuance of the notes, on April 15, 2019, the Company repaid all amounts outstanding under, and terminated, the Credit Agreement. The Credit Agreement had provided for revolving loans in an aggregate principal amount of up to $25.0 million, or, during any Borrowing Base Period (as defined in the Credit Agreement), up to the lesser of $25.0 million and the Borrowing Base (as defined in the Credit Agreement), less any principal amount outstanding. Borrowings under the Credit Agreement were scheduled to fully mature on June 5, 2021.

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Internal Investigation

On April 10, 2019, the SEC notified the Company that based on current information, it did not intend to recommend enforcement against the Company; shortly, thereafter, the DOJ advised that it did not intend to proceed.

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

When used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the terms “PAR”, “Company,” “we,” “us” and “our” mean PAR Technology Corporation and its consolidated subsidiaries, unless the context indicates otherwise. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim consolidated financial statements and the Notes thereto included under Part I, Item 1 of this Quarterly Report.  See also, “Forward-Looking Statements” below.

Forward-Looking Statements

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature, but rather are predictive of our future operations, financial condition, business strategies and prospects. Forward-looking statements are generally identified by words such as “anticipate”, “believe,” “belief,” “continue,” “could”, “expect,” “estimate,” “intend,” “may,” “opportunity,” “plan,” “should,” “will,” “would,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those expressed in, or implied by, the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K as filed on March 18, 2019. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

Overview

Our Restaurant/Retail segment provides point-of-sale (“POS”) and restaurant management technology solutions; and our Government segment provides intelligence, surveillance, and reconnaissance ("ISR") solutions and mission systems support.

We are a leading provider of POS solutions to restaurants and retail outlets and we expect our Brink line of business, including our Brink POS SaaS software solution, inclusive of related hardware, installation and technical support and other customer services, to be the primary focus and driver of growth in the Restaurant/Retail reporting segment. Our ability to grow and expand our presence as a cloud-based, software solutions leader requires that we strategically and effectively distribute and invest our capital in areas that will drive long-term growth, including product development, consisting primarily of expenses in software engineering and related personnel costs; sales and marketing, consisting primarily of advertising, marketing, general promotional expenditures and strategic partnerships; and customer support, consisting primarily of help-desk.

Our Government reporting segment provides technical expertise under contract in development of advanced systems and software solutions for the U.S. Department of Defense and other federal agencies, as well as technology management and communications support services to the U.S. Department of Defense.

The strategy for our Government reporting segment is to build on our sustained performance on existing service contracts, coupled with investments in enhanced business development capabilities. We believe we are well positioned to realize continued renewals of expiring contracts and extensions of existing contracts, and secure service and solution contracts in expanded areas within the U.S. Department of Defense and other federal agencies. We believe our highly relevant technical competencies, intellectual property, and investments in new technologies provide opportunities to offer systems integration, products, and highly-specialized service solutions to the U.S. Department of Defense and other federal agencies.  The general uncertainty in U.S. defense total workforce policies (military, civilian, and contract), procurement cycles, and spending levels for the next several years are factors we monitor as we develop and implement our business strategy for the Government reporting segment.

Internal Investigation Update

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We recorded $0.2 million for the three months ended March 31, 2019 compared to $0.3 million for the three months ended March 31, 2018 of post-investigation expenses relating to conduct at our China and Singapore offices, including outside legal counsel and forensic accountant fees. See Note 9 - Contingencies, to the unaudited interim consolidated financial statements, for additional information concerning such expenses; see also, Note 13 - Subsequent Events, to the unaudited interim consolidated financial statements.

Results of Operations —

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

We reported revenues of $44.7 million for the quarter ended March 31, 2019, a decrease of 19.7% from $55.7 million reported for the quarter ended March 31, 2018.  Our net loss from operations was $2.7 million or $0.17 per diluted share for the first quarter of 2019 versus net income of $0.1 million or $0.00 per diluted share for the same period in 2018.

Operating segment revenues for the quarter ended March 31, 2019 were $29.6 million for Restaurant/Retail, a decrease of 25.2% from $39.5 million reported for the quarter ended March 31, 2018 and $15.1 million for Government, a decrease of 6.3% from $16.1 million reported for the quarter ended March 31, 2018. Restaurant/Retail revenue for the quarter ended March 31, 2019 by business line consisted of $18.7 million for our line of business comprised of non-Brink customers, primarily focused on hardware and respective services ("CORE"), $9.5 million for Brink, and $1.4 million for SureCheck, compared to revenue for the quarter end March 31, 2018 by business line of $32.2 million for CORE, $5.8 million for Brink, and $1.5 million for SureCheck. Government revenue for the quarter ended March 31, 2019 by business line consisted of $6.3 million for Intelligence, Surveillance, and Reconnaissance (“ISR”), $8.5 million for Mission Systems, and $0.3 million for Product Sales, compared to revenue for the quarter end March 31, 2018 by business line of $7.8 million for ISR, $8.3 million for Mission Systems, and $0.0 million for Product Sales.

Product revenues were $15.5 million for the quarter ended March 31, 2019, a decrease of 41.1% from $26.3 million recorded for the same period in 2018, primarily due to reduced hardware projects with a tier 1 customer in the first quarter of 2018. Product revenue related to Brink was $4.5 million, an increase of 71% from $2.6 million for the same period in 2018.

Service revenues were $14.0 million for the quarter ended March 31, 2019, a increase of 6.3% from $13.2 million reported for the same period in 2018, primarily due to Brink service revenue of $5.0 million, an increase of 58% from $3.1 million for the same period in 2018. Brink service revenue includes SaaS revenue of $3.1 million, an increase of 64% from $1.9 million for the same period in 2018.

Contract revenues were $15.1 million for the quarter ended March 31, 2019, a decrease of 6.2% from $16.1 million reported for the same period in 2018.  The decrease reflects a reduction in ISR due to contract funding and ceiling limitations largely attributable to one of ISR's programs that is currently undergoing an organizational funding transition.

Product margins for the quarter ended March 31, 2019 were 27.6%, compared to 26.2% for the same period in 2018. Product margins for the quarter improved slightly due to favorable sales mix.

Service margins for the quarter ended March 31, 2019 were 28.6%, compared to 27.7% recorded for the same period in 2018. Service margins for the quarter ended March 31, 2019 was primarily due to favorable product mix due with the growth of Brink SaaS.

Contract margins for the quarter ended March 31, 2019 were 9.7%, compared to 8.1% for the same period in 2018 due primarily to improved ISR profitability and high margin Product Sales revenue included in 2019 contract mix.

Selling, general and administrative (SG&A) expenses remained consistent for each of the quarters ended March 31, 2019 and 2018 at $8.6 million. The Company increased investment in Brink sales and marketing by $0.3 million while offsetting G&A and sales costs in other business lines.  SG&A expenses associated with the internal investigation for the quarter ended March 31, 2019 were $0.2 million as compared to $0.3 million for the quarter ended March 31, 2018.

Research and development (R&D) expenses were $3.1 million for the quarter ended March 31, 2019, an increase of 6.7% from $2.9 million for the same period in 2018 primarily driven by increased spending in Brink software development.

For each of the quarters ended March 31, 2019 and March 31, 2018, we recorded $0.2 million of amortization expense associated with identifiable intangible assets acquired in the Brink Acquisition.

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Other (expense) income, net, was ($430,000) for the quarter ended March 31, 2019, compared to other (expense) income, net, of$49,000 for the same period in 2018.  Other (expense), net, primarily includes, fair market value fluctuations of our deferred compensation plan, rental income, and foreign currency fair value adjustments. For the quarter ended March 31, 2019, a $0.2 million adjustment was made in connection with the conclusion of the Brink Acquisition.

Interest expense, net, of $146,000 for the quarter ended March 31, 2019 compared to $41,000 for quarter ended March 31, 2018 was due to increased borrowings on the revolving line of credit under our Credit Agreement.

Liquidity and Capital Resources

Our primary sources of liquidity have been cash from operations and borrowings on our the revolving line of credit under the Credit Agreement. Cash used in operating activities was $3.2 million for the three months endedMarch 31, 2019, compared to $2.5 million for the same period in 2018. 

Cash used in investing activities was $1.9 million for the three months endedMarch 31, 2019 versus $1.7 million for the three months endedMarch 31, 2018.  In the three months endedMarch 31, 2019, our capital expenditures of $0.9 million were primarily related to the implementation of our enterprise resource planning system compared to $0.6 million in the three months ended March 31, 2018. We capitalized $1.0 million in costs associated with investments in our Restaurant/Retail reporting segment software platforms during the three months ended March 31, 2019 compared to $1.1 million for the three months ended March 31, 2018. 

Cash provided by financing activities was $5.8 million for the three months endedMarch 31, 2019 versus cash provided by financing activities of $3.0 million for the three months endedMarch 31, 2018.  This change was a result of borrowings on our revolving line of credit under our Credit Agreement net of $2.6 million distribution related to the final payment related to the conclusion of the Brink Acquisition.

On June 5, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain of its U.S. subsidiaries and Citizens Bank, N.A. (“Citizens Bank”) providing the Company with a revolving line of credit up to an aggregate principal amount of $25.0 million (or the Borrowing Base, during any Borrowing Base Period). The Credit Agreement, was amended by an Amendment to Credit Agreement, dated March 4, 2019 (the “Amendment”). Among the relief provided by the Amendment, was a waiver of the Company's noncompliance with the financial covenants contained in the Credit Agreement and temporary relief from these financial covenants until the fiscal quarter ending September 30, 2019. There was a $16.1 million outstanding balance under the Credit Agreement as of March 31, 2019.

As described in Note 13 - Subsequent Events, to the unaudited interim consolidated financial statements, on April 15, 2019, the Company sold an aggregate principal amount of $80.0 million 4.5% Convertible Senior Notes due 2024 (“notes”) and used a portion of the proceeds to repay in full all amounts outstanding under the Credit Agreement, as amended, and, in connection therewith, terminated the Credit Agreement.

We expect our operating cash flows and net proceeds from the notes will be sufficient to meet our operating needs for the next 12 months. Our actual cash needs will depend on many factors, including our rate of revenue growth, including growth of our SaaS revenues, the timing and extent of spending to support our product development efforts, the timing of introductions of new products and enhancements to existing products, market acceptance of our products, and potential fines and penalties that, while currently inestimable, could be material.

Critical Accounting Policies and Estimates

Our unaudited interim consolidated financial statements are based on the application of U.S. generally accepted accounting principles (“GAAP”).  GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported.  We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently applied.  Valuations based on estimates are reviewed for reasonableness and adequacy on a consistent basis.  Primary areas where financial information is subject to the use of estimates, assumptions and the application of judgment include revenue recognition, accounts receivable, inventories, accounting for business combinations, contingent consideration, equity compensation, goodwill and intangible assets, and taxes.  Our critical accounting policies have not changed materially from the discussion of those policies included under “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2018 except as it relates to leases as a result of the adoption of ASC 842 as discussed in Note 3 - Leases, to the unaudited interim consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

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In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date, based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendment is effective for the Company beginning with its fiscal year ending December 31, 2019, however early application is permitted for reporting periods beginning after December 15, 2018. The Company does not anticipate ASU 2016-13 will have a material impact to the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates Step 2 from the goodwill impairment test which required entities to compute the implied fair value of goodwill. Under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 will be effective for us on January 1, 2020, with earlier adoption permitted; it is not expected to have a material impact on the Company's unaudited interim consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the fair value measurements disclosures with the primary focus to improve effectiveness of disclosures in the notes to the financial statements that is most important to the users. The new guidance modifies the required disclosures related to the valuation techniques and inputs used, uncertainty in measurement, and changes in measurements applied. ASU 2018-13 is effective for the Company beginning with and including its fiscal year ending December 31, 2019 and each quarterly period thereafter. Early adoption is permitted. The Company is currently assessing the impact this new guidance may have on the Company’s unaudited interim consolidated financial statements and footnote disclosures.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other (Topic 350) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU 2018-15 provides guidance on the measurement of costs for internal-use software during the design, development and implementation stages for customers in a cloud based hosting arrangement. AU 2018-15 also requires the capitalized costs associated with the design, development and implementation of cloud based, hosted arrangements to be amortized over the term of the hosting arrangement. ASU 2018-15 will be effective for the Company on January 1, 2020, with earlier adoption permitted; it is not expected to have a material impact on the Company's unaudited interim consolidated financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, "Leases (Topic 842)", impacting the accounting for leases intending to increase transparency and comparability of organizations by requiring balance sheet presentation of leased assets and increased financial statement disclosure of leasing arrangements. The revised standard will require entities to recognize a liability for its lease obligations and a corresponding asset representing the right to use the underlying asset over the lease term. Lease obligations are to be measured at the present value of lease payments and accounted for using the effective interest method. The accounting for the leased asset will differ slightly depending on whether the agreement is deemed to be a financing or operating lease. For finance leases, the leased asset is depreciated on a straight-line basis and recorded separately from the interest expense in the income statement resulting in higher expense in the earlier part of the lease term. For operating leases, the depreciation and interest expense components are combined, recognized evenly over the term of the lease, and presented as a reduction to operating income. The ASU requires that assets and liabilities be presented or disclosed separately and classified appropriately as current and noncurrent. The ASU further requires additional disclosure of certain qualitative and quantitative information related to lease agreements. The new standard was effective for the Company beginning January 1, 2019 (see Note 3 - Leases, to the unaudited interim consolidated financial statements).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Required.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of March 31, 2019. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2019.

Changes in Internal Controls Over Financial Reporting.

There were no changes in internal control over financial reporting during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

The information in Note 9 – Contingencies, to the unaudited interim consolidated financial statements, is responsive to this Item and is incorporated by reference herein.

Item 1A. Risk Factors

Our financial condition and results of operations are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the SEC on March 18, 2019. As disclosed above under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources”, on April 15, 2019, we sold an aggregate principal amount of $80.0 million 4.5% Convertible Senior Notes due 2024 (“notes”). In addition to the Risk Factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, consideration should be given to the following risk factors.

Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our debt.Our ability to make scheduled payments of the principal of, to pay interest on or to refinance the notes and any future indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt because of factors beyond our control. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

We may incur substantially more debt or take other actions, which would intensify the risks discussed above.We may incur substantial additional debt in the future, including secured debt. We will not be restricted under the terms of the indenture governing the notes from incurring additional debt, securing existing or future debt, recapitalizing our debt or taking a number of other actions that are not limited by the terms of the indenture governing the notes but that could diminish our ability to make payments on the notes.

We may not have the ability to raise the funds necessary to pay interest on the notes, to repurchase the notes upon a fundamental change or to settle conversions of the notes in cash. We are obligated to pay interest on the notes semi-annually in cash and, in certain circumstances, we are obligated to pay additional interest or special interest on the notes. If a fundamental change occurs, holders of the notes may require us to repurchase all or a portion of their notes in cash. Furthermore, upon conversion of any notes, unless we elect to deliver solely shares of our common stock to settle the conversion (excluding cash in lieu of delivering fractional shares of our common stock), we must make cash payments in respect of the notes. Any of the cash payments described above could be significant, and we may not have enough available cash or be able to obtain financing so that we can make such payments when due. If we fail to pay interest on the notes, repurchase the notes when required or deliver the

21

consideration due upon conversion, we will be in default under the indenture.

The conditional conversion feature of the notes, if triggered, may adversely affect our financial condition and operating results. In the event the conditional conversion feature of the notes is triggered, holders of the notes will be entitled to convert the notes at any time during specified periods at their option. Even if holders do not elect to convert their notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Certain provisions in the indenture governing the notes could delay or prevent an otherwise beneficial takeover or takeover attempt of us. Certain provisions in the notes and the indenture could make it more difficult or more expensive for a third party to acquire us. For example, if a takeover would constitute a fundamental change, holders of the notes will have the right to require us to repurchase their notes in cash. In addition, if a takeover constitutes a make-whole fundamental change, we may be required to increase the conversion rate for holders who convert their notes in connection with such takeover. In either case, and in other cases, our obligations under the notes and the indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management.

The conversion of the notes could result in dilution of ownership to existing stockholders.Holders may elect to convert their notes at any time on or after October 15, 2023 until maturity and, upon the occurrence of specified events, holders may convert their notes before October 15, 2023. We may satisfy our conversion obligation by paying or delivering cash, shares of our common stock or a combination of cash and shares. The issuance of shares of our common stock upon conversion will result in dilution of ownership to existing stockholders.

Future sales of our common stock in the public market could lower the market price for our common stock. In the future, we may sell additional shares of our common stock to raise capital. We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock. The issuance and sale of substantial amounts of common stock, or the perception that such issuances and sales may occur, could adversely affect the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

The price of our common stock may be negatively impacted by the notes. The market price of our common stock could be affected by possible sales of common stock by investors who view the notes as an attractive means of equity participation in us and by hedging or arbitrage activity involving our common stock. In addition, our credit quality may vary substantially during the term of the notes and will be influenced by a number of factors, including variations in our cash flows and the amount of indebtedness we have outstanding.

The accounting method for convertible debt securities that may be settled in cash, such as the notes, could have a material effect on our reported financial results. In May 2008, the Financial Accounting Standards Board, or FASB, issued FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement), which has subsequently been codified as Accounting Standards Codification 470-20, Debt with Conversion and Other Options, or ASC 470-20. ASC 470-20 requires an entity to separately account for the liability and equity components of convertible debt instruments whose conversion may be settled entirely or partially in cash (such as the notes) in a manner that reflects the issuer’s economic interest cost for non-convertible debt. Initially, the liability component of the notes will be valued at the fair value of a similar debt instrument that does not have an associated equity component and will be reflected as a liability in our consolidated balance sheet beginning the fiscal quarter ending June 30, 2019 ("FQE June 2019"). The equity component of the notes will be included in the additional paid-in capital section of our stockholders’ equity on our consolidated balance sheet for the FQE June 2019, and the value of the equity component will be treated as original issue discount for purposes of accounting for the debt component. This original issue discount will be amortized to non-cash interest expense over the term of the notes, and we will record a greater amount of non-cash interest expense in current periods as a result of this amortization. Accordingly, we will report lower net income in our financial results because ASC 470-20 will require the interest expense associated with the notes to include both the current period’s amortization of the debt discount and the notes’ coupon interest, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the notes. In addition, under certain circumstances, convertible debt instruments whose conversion may be settled entirely or partly in cash (such as the notes) are currently accounted for using the treasury stock method. Under this method, the shares issuable upon conversion of the notes are not included in the calculation of diluted earnings per share unless the conversion value of the notes exceeds their principal amount at the end of the relevant reporting period. If the conversion value exceeds their principal amount, then, for diluted earnings per share purposes, the notes are accounted for as if the number of shares of common stock that would be necessary to settle the excess, if we elected to settle the excess in shares, are issued. The accounting standards in the future may not continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares, if any, issuable upon conversion of the notes, then our diluted earnings per share could be adversely affected.

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We are subject to laws and regulations governing the protection of personally identifiable information; we are also subject to cyber-attacks. A failure to comply with applicable privacy or data protection laws or a cyber-attack could harm our reputation and have a material adverse effect on our business.We collect, process, transmit, and/or store (on our operating systems and those of third-party providers) customer transactional data and their customers’ and employees' personally identifiable information and/or other data and information.  Personally identifiable information is increasingly subject to legislation and regulations in numerous jurisdictions; moreover, what constitutes personally identifiable information and what other data and/or information is subject to the privacy laws continues to evolve and the laws that do reference data privacy continue to be interpreted by the courts and their applicability and reach are therefore uncertain.  Our failure and/or the failure of our customers, vendors and service providers to comply with applicable privacy and data protection laws and regulations could damage our reputation, discourage current and potential customers from using our products and services, result in fines and/or proceedings by governmental agencies, complaints by private individuals, and/or the payment of penalties to consumers, any one or all of which could adversely affect our business, financial condition and results of operations. Compliance with these laws and regulations, or changes in these laws and regulations, may be onerous and expensive and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance.  Moreover, allegations of non-compliance whether or not true could be costly, time consuming, distracting to management, and cause reputational harm. Illustrative of this risk, on March 21, 2019, Kandice Neals on behalf of herself and others similarly situated filed a complaint against us in the Circuit Court of Cook County, Illinois County Department, Chancery Division. The complaint asserts that the Company violated the Illinois Biometric Information Privacy Act in the alleged collection, use and storage of her and others’ biometric data derived from fingerprint scans taken for authentication purposes on point-of-sales systems. While we believe the lawsuit is without merit and intend to defend it vigorously, even if we are ultimately successful in our defense, we will need to spend money, time and attention to defend against the complaint. Our operating systems, and those of our third-party providers, could become subject to cyber-attacks, including using computer viruses, credential harvesting, dedicated denial of services attacks, malware, social engineering and other means for obtaining unauthorized access to or disrupting the operation of our systems and those of our third-party providers. Any failure or interruption of our operating systems or those of our third-party providers could result in operational disruptions or misappropriation of information, including interruption of systems availability or denial of access to and misuse of applications or information required by our customers to conduct their business. Any operational disruptions or misappropriation of information (including personally identifiable information or personal data) could harm our relationship with our customers and could have a material adverse effect on our business, financial condition, and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds

Under our equity incentive plans, employees may elect to have us withhold shares to satisfy minimum statutory federal, state and local tax withholding obligations arising from the vesting of their restricted stock. When we withhold these shares, we are required to remit to the appropriate taxing authorities the market price of the shares withheld, which could be deemed a purchase of shares by us on the date of withholding. For the three months ended March 31, 2019, 3,349 shares were purchased at an average price of $24.92 per share.

Item 5. Other Information

Not Applicable.

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Item 6. Exhibits

Exhibit Number		Incorporated by reference into this Quarterly Report on Form 10-Q		Date Filed or Furnished
	Exhibit Description	Form	Exhibit No.
10.1	First Amendment to Credit Agreement dated March 4, 2019 among PAR Technology Corporation, the Loan Parties and Citizens Bank, N.A.	10-K	10.36	3/18/19
10.2††	Employment Letter: Service as Chief Executive Officer, dated March 22,2019, between PAR Technology Corporation and Savneet Singh			Filed herewith
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended			Filed herewith
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended			Filed herewith
32.1	Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350			Furnished herewith
32.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350			Furnished herewith
101.INS	XBRL Instance Document			Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document			Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document			Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document			Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document			Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document			Filed herewith

†† Indicates management contract or compensatory plan or arrangement.

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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:	May 7, 2019	/s/ Bryan A. Menar
		Bryan A. Menar
		Chief Financial and Accounting Officer
		(Principal Financial Officer)

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EX-10.2

Exhibit 10.2

March 22, 2019

Mr. Savneet Singh

c/o PAR Technology Corporation

8383 Seneca Turnpike

New Hartford, NY 13413

Re:Employment Letter: Service as Chief Executive Officer (the “Letter”)

Dear Savneet:

We are pleased to extend you an offer to continue to serve as Chief Executive Officer (“CEO”) and President of PAR Technology Corporation (the “Company”). You will report to the Company’s Board of Directors (the “Board”).

As the CEO of the Company, you will continue to perform those duties and shall have such authority, duties, and responsibilities customarily consistent with and incident to the offices of Chief Executive Officer and President, and you shall perform such additional duties and shall have such additional authority and responsibilities as the Board may prescribe. Your principal office will be located in New Hartford, New York, provided that you understand and agree that you will be required to travel to properly fulfill your employment duties and responsibilities.

The term of your employment with the Company will continue until terminated by you or the Company.

You will devote all of your business time, energy, business judgment, knowledge and skill and your best efforts to the performance of your duties with the Company, provided that the foregoing shall not prevent you from (a) continuing to serve as a director of CoVenture, LLC and Blockchain Power Trust (TSXV:BPWR.UN; TEP.DB) and, with the prior written approval of the Board, serving on the boards of directors (and board committees) of non-profit organizations (including The Sikh Coalition) and other for profit companies, (b) participating in charitable, civic, educational, professional, community or industry affairs, and (c) managing your passive personal investments previously disclosed to the Company, so long as, in the reasonable discretion and good faith of the Board, such activities, individually or in the aggregate, do not interfere or conflict with your duties and responsibilities to the Company or create a potential business or fiduciary conflict.

You will also continue to serve as a Director of the Company. You understand that you are not eligible to be compensated as a non-employee director while serving as the CEO. Nothing in this Letter shall adversely affect your rights to any compensation you previously received as a non-employee director of the Company.

Your initial base salary will be $18,846.16 bi-weekly, equivalent to an annualized base salary of $490,000, paid in accordance with the Company’s regular payroll practices, for your full-time efforts, of at least 40 hours per week. Your base salary will be subject to annual review by the Board (or Committee thereof) and may be adjusted from time to time in the Board's (or Committee’s) sole discretion. In the event your employment is terminated by you for “good reason” (as described herein, including the Company’s right to cure) or the Company terminates your employment through an Involuntary Termination (as defined below), you will be paid your base salary a period of three (3) months.

You will participate in the Company’s short-term incentive plan as in effect from time to time for executive officers (“STI”) during the Company’s fiscal year ending on December 31, 2019 and in subsequent fiscal years while you continue to serve as the CEO. You will have the opportunity to earn, on an annual basis, a cash bonus

subject to the achievement of the Company’s performance goals for the applicable year, as established by the Company’s Board (or Committee thereof). Your annual STI bonus target amount for the fiscal year ending December 31, 2019 will be 90% of your base salary earned in such fiscal year. Annual STI bonus targets for subsequent fiscal years are subject to approval and adjustment by the Board (or Committee thereof). Any annual STI bonus earned for a completed fiscal year will be paid in the immediately following fiscal year at the same time annual STI bonuses are paid to other senior executives of the Company so long as your employment is not terminated by the Company (i) “for cause” (as defined herein) or (ii) on account of a breach by you of the terms and conditions of this Letter or the terms of the Non-Disclosure; Non-Solicitation Agreement you previously signed and is attached hereto (the “NDA”) prior to the STI payment date.

If, during any fiscal year in which you are serving as CEO, your employment is terminated by you for “good reason”(including the Company’s right to cure) or the Company terminates your employment for reasons other than on account of (i) “for cause” (as defined herein), (ii) your inability to substantially perform your duties on account of a physical or mental injury, illness or impairment, or (iii) on account of a breach by you of the terms and conditions of this Letter or the terms of the NDA) (which termination by the Company shall be referred to herein as an “Involuntary Termination”), you will be paid your annual STI bonus earned but unpaid for the fiscal year, pro-rata through the effective date of termination; such annual STI bonus to be paid at the same time annual bonuses are paid to other senior executives of the Company. All STI bonus payments, if any, are subject to the certification of the Board (or Committee thereof).

For purposes of this Letter, “for cause” shall mean: (i) your refusal or material failure to perform your job duties and responsibilities (other than by reason of your serious physical or mental illness, injury, or medical condition); (ii) your failure or refusal to comply in any material respect with (A) Company policies; or (B) lawful directives of the Board of Directors of the Company; (iii) your material breach of any contract or agreement between you and the Company (including but not limited to this Letter and any incentive equity or restrictive covenants agreement(s) (or similar agreement between you and the Company, including the NDA)); (iv) your material breach of any statutory duty, fiduciary duty or any other obligation that you owe to the Company; (v) your commission of an act of fraud, theft, embezzlement, or other unlawful act against the Company or involving its property or assets (including, without limitation, its products); (vi) your violation of Federal or state securities laws; (vii) your engaging in unprofessional, unethical or other acts that materially discredit the Company or are materially detrimental to the reputation, character or good standing of the Company, its property or assets (including, without limitation, its products); and (viii) your indictment or conviction or plea of nolo contendere or guilty plea with respect to any felony or crime of moral turpitude.

For purposes of this Letter, “good reason” means any of the following circumstances to which you have not consented, which is not substantially cured by the Company within 30 days following written notification from you to the Company as required below: (i) the required relocation of your primary work location from New Hartford, New York that increases your one-way commute by more than 50 miles; (ii) the diminution (other than temporarily while physically or mentally incapacitated or as required by applicable law) in your title, duties, authorities or responsibilities, excluding immaterial diminutions not taken in bad faith; (iii) a material reduction in your base salary; or (iv) the Company's breach of its material obligations to you under this Letter. You will provide the Company with a written notice detailing the specific circumstances alleged to constitute good reason within 30 days after you first know, or with the exercise of reasonable diligence would have known, of the occurrence of such circumstances, and must actually terminate employment within 30 days following the expiration of the Company's cure period as set forth above if the Company has failed to substantially cure the alleged breach. Otherwise, any claim of such circumstances as "good reason" shall be deemed irrevocably waived by you.

On the third full trading day of the Company’s common stock on the New York Stock Exchange (“NYSE”) following the Company’s filing of its current report on Form 8-K announcing your appointment as CEO, you will be granted a total of 20,000 restricted shares (“Sign-on Award”) of the Company’s common stock (“Restricted Stock”) under the PAR Technology Corporation 2015 Equity Incentive Plan, (as the same may be amended or restated from time to time, or its successor (the “Plan”)); and, not later than the third full trading day of the Company’s common stock on the NYSE following the Company’s disclosure of its quarterly financial results for

the quarter ending March 31, 2019, you will be granted 80,000 shares of Restricted Stock (“2019 Performance Award”).

The Sign-on Award shall become vested on March 31, 2020 so long as you remain continuously employed as the CEO until and including such date. The 2019 Performance Award shall become vested to the extent that the performance goals established by the Company’s Board (or Committee thereof) are satisfied on or before March 31, 2020 and then such vested shares shall be distributed to you, without restriction, in equal installments on the following dates: March 31, 2020, March 31, 2021 and March 31, 2022, so long as (1) either (a) you remain employed as CEO or are otherwise providing services to the Company continuously through and including the applicable distribution date or (b) your employment ended earlier but was not terminated by the Company “for cause”, and in both cases you have complied with the restrictive covenants set forth in the NDA and the agreement documenting the 2019 Performance Award.

Treatment of equity awards upon the occurrence of certain events on or prior to March 31, 2020

1.In the event of the occurrence of a Change of Control (as defined in the Plan) on or prior to March 31, 2020, then as of the effective date of such Change of Control:

(a)the Sign-on Award shall become fully vested;

(b)the portion of the 2019 Performance Award linked to performance goals that have been achieved, if any (“earned 2019 Performance Award”) shall vest and be fully released to you; and

(c)the Restricted Stock linked to performance goals that have not been satisfied solely due to the timing of the Change of Control (“unearned due to CIC-2019 Performance Award”) shall convert into time-vesting awards and shall (time) vest in equal installments on March 31, 2020, March 31, 2021 and March 31, 2022 (the “2019 Performance Award Schedule”);

provided, however, that if your employment is terminated by the Company or its successor through an Involuntary Termination or you resign your employment on account of a “good reason”, in either case during the one year period beginning on the effective date of the Change of Control and ending on the first anniversary of the occurrence of the Change of Control (“Change of Control Protection Period”), then the unearned due to CIC-2019 Performance Award shall become fully vested as of the effective date of your termination.

If such Change of Control results in another entity becoming a direct or indirect parent of the Company (or if the Company does not survive, of its successor) (such entity being referred to as a “Subsequent Parent Entity”), then, with respect to the unearned due to CIC-2019 Performance Award, such Subsequent Parent Entity shall substitute its shares of common stock (the “Substitute Shares”) for the Restricted Stock; and provided further, that if on the applicable vesting date (x) such Subsequent Parent Entity’s common stock is not actively traded on a public securities market or (y) the Substitute Shares are not registered for trading on such public securities exchange in compliance with governing securities laws, the portion of the award otherwise payable in Substitute Shares shall be paid in that amount of cash (in U.S. dollars) equal to the value of the vested Substitute Shares. Notwithstanding the foregoing, if the Substitute Shares are able to be sold into such public securities market immediately after their issuance without registration under the applicable governing securities laws (assuming that you are not in possession of material nonpublic information or are otherwise unable to sell the Substitute Shares in compliance with applicable law at that time), then the Substitute Shares shall be issued to you.

2.If, other than during the Change of Control Protection Period,

(a)your employment is terminated by the Company on or prior to March 31, 2020 through an Involuntary Termination, then

(i)the Sign-on Award shall become fully vested as of the effective date of your termination; and

(ii)subject to both (1) your continued compliance with the restrictive covenants set forth in the NDA and the agreement documenting the 2019 Performance Award, and (2) your delivery to the Company of an effective general release of all claims in favor of the Company in substantially the same form then used by the Company in connection with the termination of an employee’s employment (“Release”),

A.the earned 2019 Performance Award shall vest and be fully released to you; and

B.the Restricted Stock linked to performance goals that have not been satisfied solely due to the timing of Involuntary Termination of your employment shall convert into time-vesting awards and shall (time) vest in accordance with the 2019 Performance Award Schedule as if you had remained employed with the Company;

or

(b)you resign your employment on account of a “good reason” on or prior to March 31, 2020, then

(i)the Sign-on Award shall become fully vested as of the effective date of your termination; and

(ii)subject to both (1) your continued compliance with the restrictive covenants set forth in the NDA and the agreement documenting the 2019 Performance Award, and (2) your delivery to the Company of an effective Release,

A.the earned 2019 Performance Award shall vest and be fully released to you; and

B.the Restricted Stock linked to performance goals that have not been satisfied solely due to the timing of the termination of your employment by you on account of good reason shall convert into time-vesting awards and shall (time) vest in accordance with the 2019 Performance Award Schedule as if you had remained employed with the Company.

In the event that you notify the Board no later than December 1, 2019 of your intention to remain as CEO through December 31, 2020, you will be granted an award of 90,000 shares of Restricted Stock (“2020 Performance Award”), which shall become provisionally vested to the extent that the performance goals established by the Company’s Board (or Committee thereof) are satisfied on or before the established achievement date(s), and then, so long as you remain continuously employed as CEO, such provisionally vested shares shall become fully vested in three (3) equal installments on the first, second and third anniversary date of the achievement of the performance goals as determined by the Company’s Board (or Committee thereof) (the “Three Year Performance Award Vesting Schedule”).

In the event that you notify the Board no later than December 1, 2020 of your intention to remain as CEO through December 31, 2021, you will be granted an award of 90,000 shares of Restricted Stock (“2021 Performance Award”) which shall become provisionally vested to the extent that the performance goals established by the Company’s Board (or Committee thereof) are satisfied on or before the established achievement date(s), and then, so long as you remain continuously employed as CEO, such provisionally vested shares shall become fully vested in accordance with the Three-Year Performance Award Vesting Schedule.

Treatment of the 2020 Performance Award and 2021 Performance Award upon the occurrence of certain events after March 31, 2020

1.In the event of the occurrence of a Change of Control after March 31, 2020, then as of the effective date of such Change of Control,

(a)any undistributed portion of the earned 2019 Performance Award shall be distributed to you immediately prior to such Change of Control

; and

(b)the provisionally vested portion of the 2020 Performance Award, if any (“earned 2020 Performance Award”) and of the 2021 Performance Award, if any (“earned 2021 Performance Award” and, together with the earned 2019 Performance Award and the earned 2020 Performance Award, the “earned Performance Awards”) shall continue to vest in accordance with the Three-Year Performance Award Schedule; and

(c)with respect to the 2020 Performance Award and 2021 Performance Award, the Restricted Stock linked to performance goals (as applicable to each of the 2020 Performance Award and the 2021 Performance Award) that have not been satisfied solely due to the timing of the Change of Control (“unearned due to CIC Performance Awards”) shall remain unchanged and subject to their applicable performance goals;

provided, however, that if your employment is terminated by the Company or its successor through an Involuntary Termination or you resign your employment on account of a “good reason”, in either case during the one year period beginning on the effective date of the Change of Control and ending on the first anniversary of the occurrence of the Change of Control (“Change of Control Protection Period”), in which case, the earned Performance Awards and the unearned due to CIC Performance Awards shall become fully vested as of the effective date of your termination.

If such Change of Control results in another entity becoming a direct or indirect parent of the Company (or if the Company does not survive, of its successor) (such entity being referred to as a “Subsequent Parent Entity”), then, with respect to any as yet unpaid portion of the 2020 Performance Award or the 2021 Performance Award, Substitute Shares shall replace the Restricted Stock; and provided further, that if on the applicable vesting date (x) the Substitute Shares are not actively traded on a public securities market or (y) the Substitute Shares are not registered for trading on such public securities exchange in compliance with governing securities laws, the portion of the award otherwise payable in Substitute Shares shall be paid in that amount of cash (in U.S. dollars) equal to the value of the vested Substitute Shares. Notwithstanding the foregoing, if the Substitute Shares are able to be sold into such public securities market immediately after their issuance without registration under the applicable governing securities laws (assuming that you are not in possession of material nonpublic information or are otherwise unable to sell the Substitute Shares in compliance with applicable law at that time), then the Substitute Shares shall be issued to you.

2. If, other than during the Change of Control Protection Period,

(a)your employment is terminated by the Company after March 31, 2020 through an Involuntary Termination, then

(i)subject to both (1) your continued compliance with the restrictive covenants set forth in the NDA and the agreement(s) documenting the applicable restricted stock grant(s)s, and (2) your delivery to the Company of an effective Release,

A.any undistributed portion of the earned 2019 Performance Award shall be distributed to you;

B.you will continue to vest in any earned Performance Awards in accordance with the Three-Year Performance Award Schedule as if you had remained employed with the Company; and

C.with respect to the 2020 Performance Award and 2021 Performance Award, the Restricted Stock linked to performance goals (as applicable to each of the 2020 Performance Award and the 2021 Performance Award) that have not been satisfied solely due to the timing of the Involuntary Termination of your employment, shall convert into time-vesting awards and shall vest in accordance with the Three-Year Performance Award Schedule as if you had remained employed with the Company;

or

(b)you resign your employment on account of a “good reason” after to March 31, 2020, then

(i)subject to your continued compliance with the restrictive covenants set forth in the NDA and the agreement(s) documenting the applicable restricted stock grant(s), and (2) your delivery to the Company of an effective Release,

A.any undistributed portion of the earned 2019 Performance Award shall be distributed to you;

B.you will continue to vest in any earned Performance Awards in accordance with the Three-Year Performance Award Schedule as if you had remained employed with the Company; and

C.with respect to the 2020 Performance Award and 2021 Performance Award, the Restricted Stock linked to performance goals (as applicable to each of the 2020 Performance Award and the 2021 Performance Award) that have not been satisfied solely due to the timing of the termination of your employment by you on account of good reason shall convert into time-vesting awards and shall (time) vest in accordance with the Three-Year Performance Award Schedule, as if you had remained employed with the Company.

The Sign-on Award, 2019 Performance Award, the 2020 Performance Award and the 2021 Performance Award shall be granted to you under the Company’s Equity Incentive Plan (“LTI Plan”). With respect to each Company fiscal year ending after December 31, 2021, so long as you remain continuously employed as CEO of the Company, you shall continue to have the opportunity to participate in the Company’s LTI Plan; and any such awards subsequently granted to you thereunder shall be subject to the Board’s (or Committee’s) determination and approval.

Subject to satisfaction of any applicable eligibility requirements, you will be eligible to participate in any employee benefit plan that the Company has adopted or may adopt, maintain, or contribute to for the benefit of its executive officers, which includes health insurance, LTD/ADD/life insurance, and 401(k). You will earn one week of paid vacation for each three months of employment that you complete (for a total of four weeks for each twelve months of completed employment) and you will also receive five (5) days of personal time off for each twelve months of completed employment.

You will be reimbursed for travel and other expenses in accordance with the Company’s reimbursement policy, including up to $35,000 in reimbursement for the rent of an apartment or house and other related living expenses in or near New Hartford, New York. The Company reserves the right to amend, modify or terminate any of its benefit plans, policies, or programs at any time and for any reason.

All forms of compensation paid to you as an employee shall be less all withholdings and deductions as required by law. All awards of equity shall be subject to the approval of the Board (or Committee thereof). The payment or provision of any severance benefits in connection with the termination of your employment shall be subject to your continued compliance with the restrictive covenants set forth in the NDA (and in the case of equity awards, those set forth in the agreements documenting such awards) and your delivery to the Company of an effective Release.

This Letter does not represent any guarantee of employment for any period, subject to the terms of this Letter, the Company may terminate your employment at any time, with or without notice, for any reason or no reason. If you wish to resign from your employment with the Company, we request not less than 60 days’ advance written notice.

The validity, interpretation, construction and performance of this Letter, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed, and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law.

This Letter and those documents expressly referred to herein (including the NDA) embody the complete agreement and understanding between you and the Company with respect to the subject matter herein and supersede and preempt any prior understandings, agreements (including your offer letter dated December 4, 2018), or representations by and between you and the Company, written or oral, which may have related to the subject matter hereof in any way. The 5,000 restricted shares of the Company’s common stock granted when you became the interim CEO and President on December 2018 will be cancelled.

This Letter shall be binding upon and inure to the benefit of and be enforceable by the Company’s successors and permitted assigns and, except as expressly provided in this Letter, no term or provision of this Letter is intended to be, or shall be, for the benefit of any person other than the Company and you. The provisions of this Letter shall be deemed severable. The invalidity or unenforceability of any provision of this Letter in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Letter in such jurisdiction or the validity, legality or enforceability of any provision of this Letter in any other jurisdiction, it being intended that all rights and obligations of the Company and you hereunder shall be enforceable to the fullest extent permitted by applicable law. For purposes of this Letter, the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”.

If you agree with the terms and conditions of this Letter, please evidence your agreement by signing the enclosed copy of this Letter in the space indicated and return it to me. Your signature will acknowledge that you have read and understand and agree to the terms and conditions of this Letter. This Letter may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature were an original thereof.

Your service as CEO and President of the Company under the terms of this Letter shall commence upon your execution of the Letter.

Feel free to contact me if you have questions or if you need any additional information.

[Signature Page Immediately Follows]

Sincerely,

By:/s/ Bryan A. Menar_

Title: Chief Financial Officer

Accepted and Agreed to:

/s/ Savneet Singh

Savneet Singh

Dated:3/22/19

EX-31.1

EXHIBIT 31.1

I, Savneet Singh, 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(s) 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 evaluation; 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(s) 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 the 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.

May 7, 2019	/s/ Savneet Singh
	Savneet Singh
	Chief Executive Officer & President
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

I, Bryan A. Menar, 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(s) 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 evaluation; 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(s) 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 the 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.

May 7, 2019	/s/ Bryan A. Menar
	Bryan A. Menar
	Chief Financial and Accounting Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

Certification of Principal Executive Officer

pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended,

and 18 U.S.C. Section 1350

In connection with the Quarterly Report of PAR Technology Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Savneet Singh, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350, that, to my knowledge:

(i) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

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

May 7, 2019

/s/ Savneet Singh

Savneet Singh

Chief Executive Officer & President

(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

Certification of Principal Financial Officer

pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended,

and 18 U.S.C. Section 1350

In connection with the Quarterly Report of PAR Technology Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bryan A. Menar, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, that, to my knowledge:

(i) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

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

May 7, 2019

/s/ Bryan A. Menar

Bryan A. Menar

Chief Financial and Accounting Officer

(Principal Financial Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 01, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	PAR TECHNOLOGY CORP
Entity Central Index Key	0000708821
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		16,252,648
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 4,142	$ 3,485
Accounts receivable-net	29,311	26,219
Inventories-net	22,639	22,737
Other current assets	5,099	3,251
Total current assets	61,191	55,692
Property, plant and equipment – net	13,169	12,575
Goodwill	11,051	11,051
Intangible assets – net	11,176	10,859
Operating lease right-of-use assets	3,697
Other assets	4,764	4,504
Total Assets	105,048	94,681
Current liabilities:
Borrowings of line of credit	16,139	7,819
Accounts payable	14,794	12,644
Accrued salaries and benefits	5,145	5,940
Accrued expenses	2,223	2,113
Operating lease liabilities - current portion	1,540
Customer deposits and deferred service revenue	11,540	9,851
Other current liabilities	0	2,550
Total current liabilities	51,381	40,917
Operating lease liabilities - net of current portion	2,177
Deferred service revenue	4,807	4,407
Other long-term liabilities	3,198	3,411
Total liabilities	61,563	48,735
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, $.02 par value, 1,000,000 shares authorized	0	0
Common stock, $.02 par value, 29,000,000 shares authorized; 17,956,318 and 17,879,761 shares issued, 16,248,209 and 16,171,652 outstanding at March 31, 2019 and December 31, 2018, respectively	357	357
Capital in excess of par value	50,529	50,251
Retained earnings	2,698	5,427
Accumulated other comprehensive loss	(4,263)	(4,253)
Treasury stock, at cost, 1,708,109 shares	(5,836)	(5,836)
Total shareholders’ equity	43,485	45,946
Total Liabilities and Shareholders’ Equity	$ 105,048	$ 94,681

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Shareholders’ Equity:
Preferred stock, par value (in dollars per share)	$ 0.02	$ 0.02
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)	17,956,318	17,879,761
Common stock, outstanding (in shares)	16,248,209	16,171,652
Treasury stock, at cost (in shares)	1,708,109	1,708,109

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue	$ 44,682	$ 55,661
Costs of sales:
Contract	34,918	43,814
Cost of sales	34,918	43,814
Gross margin	9,764	11,847
Operating expenses:
Selling, general and administrative	8,564	8,600
Research and development	3,060	2,868
Amortization of identifiable intangible assets	241	241
Operating expenses	11,865	11,709
Operating (loss) income	(2,101)	138
Other (expense) income, net	(430)	49
Interest expense, net	(146)	(41)
(Loss) income before provision for income taxes	(2,677)	146
Provision for income taxes	(52)	(78)
Net (loss) income	$ (2,729)	$ 68
Basic Earnings per Share:
Net (loss) income (in dollars per share)	$ (0.17)	$ 0.00
Diluted Earnings per Share:
Net (loss) income (in dollars per share)	$ (0.17)	$ 0.00
Weighted average shares outstanding
Basic (in shares)	16,044	15,948
Diluted (in shares)	16,044	16,286
Product [Member]
Revenue	$ 15,517	$ 26,324
Costs of sales:
Contract	11,241	19,440
Cost of sales	11,241	19,440
Service [Member]
Revenue	14,043	13,196
Costs of sales:
Contract	10,027	9,547
Cost of sales	10,027	9,547
Contract [Member]
Revenue	15,122	16,141
Costs of sales:
Contract	13,650	14,827
Cost of sales	$ 13,650	$ 14,827

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (2,729)	$ 68
Other comprehensive (loss) income, net of applicable tax:
Foreign currency translation adjustments	(10)	423
Comprehensive (loss) income	$ (2,739)	$ 491

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Capital in excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock
Balance (in shares) at Dec. 31, 2017		17,677,000				(1,708,000)
Balance at Dec. 31, 2017	$ 68,986	$ 354	$ 48,349	$ 29,549	$ (3,430)	$ (5,836)
Net (loss) income	68			68
Equity based compensation	181		181
Foreign currency translation adjustments	423				423
Balance (in shares) at Mar. 31, 2018		17,677,000				(1,708,000)
Balance at Mar. 31, 2018	$ 69,658	$ 354	48,530	29,617	(3,007)	$ (5,836)
Balance (in shares) at Dec. 31, 2018	16,171,652	17,878,000				(1,708,000)
Balance at Dec. 31, 2018	$ 45,946	$ 357	50,251	5,427	(4,253)	$ (5,836)
Net (loss) income	(2,729)			(2,729)
Issuance of common stock upon the exercise of stock options (in shares)		78,000
Issuance of common stock upon the exercise of stock options	30	$ 0	30
Equity based compensation	248		248
Foreign currency translation adjustments	$ (10)				(10)
Balance (in shares) at Mar. 31, 2019	16,248,209	17,956,000				(1,708,000)
Balance at Mar. 31, 2019	$ 43,485	$ 357	$ 50,529	$ 2,698	$ (4,263)	$ (5,836)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Cash flows from operating activities:
Net (loss) income	$ (2,729)	$ 68
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation, amortization and accretion	1,012	1,062
Provision for bad debts	107	100
Provision for obsolete inventory	588	696
Equity based compensation	248	181
Deferred income tax	0	(78)
Changes in operating assets and liabilities:
Accounts receivable	(3,199)	(5,934)
Inventories	(490)	(1,344)
Other current assets	(1,848)	(1,102)
Other assets	(240)	(84)
Accounts payable	2,150	3,205
Accrued salaries and benefits	(795)	(879)
Accrued expenses	110	(142)
Customer deposits and deferred service revenue	2,089	2,015
Other long-term liabilities	(213)	(307)
Net cash used in operating activities	(3,210)	(2,543)
Cash flows from investing activities:
Capital expenditures	(887)	(568)
Capitalization of software costs	(1,036)	(1,102)
Net cash used in investing activities	(1,923)	(1,670)
Cash flows from financing activities:
Payments of long-term debt	0	(48)
Payment of contingent consideration for Brink Earn Out	(2,550)	0	$ (3,000)
Payments of other borrowings	(16,777)	(2,000)
Proceeds from other borrowings	25,097	5,000
Proceeds from stock options	30	0
Net cash provided by financing activities	5,800	2,952
Effect of exchange rate changes on cash and cash equivalents	(10)	423
Net increase (decrease) in cash and cash equivalents	657	(838)
Cash and cash equivalents at beginning of period	3,485	6,600	6,600
Cash and equivalents at end of period	4,142	5,762	$ 3,485
Cash paid during the period for:
Interest	115	75
Income taxes, net of refunds	0	$ 0
Additions to right-of-use assets and deferred rent obtained from operating lease liabilities	$ 3,717

XML

Basis of presentation

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The accompanying unaudited interim consolidated financial statements of PAR Technology Corporation (the “Company” or “PAR”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Article 8 of Regulation S-X pertaining to interim financial statements.  Accordingly, they do not include all information and footnotes required by GAAP for annual financial statements.  In the opinion of management, such unaudited interim consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the results for the interim periods included in this Quarterly Report on Form 10-Q (“Quarterly Report”).  Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results of operations that may be expected for any future period. 

The preparation of the unaudited interim consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount 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 revenue recognition, stock based compensation, the recognition and measurement of assets acquired and liabilities assumed in business combinations at fair value, the carrying amount of property, plant and equipment, identifiable intangible assets and goodwill, valuation allowances for receivables, inventories and deferred income tax assets, and measurement of contingent consideration at fair value. Actual results could differ from those estimates.

The unaudited interim consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,  filed with the Securities and Exchange Commission (“SEC”) on March 18, 2019.

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Revenue Recognition

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Beginning on January 1, 2018, the Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company applies the five-step model, as described in ASU 2014-09 Revenue from Contracts with Customers, to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following steps are applied to achieve that principle:

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

The Company’s performance obligations are satisfied at the point in time when products are shipped or services are received by the customer, which is when the customer has the title and has assumed the significant risks and rewards of ownership.

Performance Obligations Outstanding

Our performance obligations outstanding represent the transaction price of firm, non-cancellable orders, with expected delivery dates to customers subsequent to March 31, 2019 and December 31, 2018, respectively, for work that has not been performed. The aggregate performance obligations attributable to our two reporting segments, Restaurant/Retail and Government, is as follows (in thousands):

	As of March 31, 2019
	Current - under one year	Non-current - over one year
Restaurant	11,198	4,807
Government	337	—
TOTAL	11,535	4,807

	As of December 31, 2018
	Current - under one year	Non-current - over one year
Restaurant	9,320	4,407
Government	325	—
TOTAL	9,645	4,407

Most performance obligations over one year are related to service and support contracts, approximately 70% of which we expect to fulfill within the one-year period and 100% within 60 months.

During the three months ended March 31, 2019, we recognized revenue of $5.7 million that was included in contract liabilities at the beginning of the period.

Disaggregated Revenue

We disaggregate revenue from contracts from customers by major product group for each of the reporting segments as we believe it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregation of revenue for the three months ended March 31, 2019 and March 31, 2018 is as follows (in thousands):

	Three months ended March 31, 2019
	Restaurant/Retail - Point in Time	Restaurant/Retail - Over Time	Government - Over Time
Restaurant	22,336	5,790	—
Grocery	490	944	—
Mission Systems	—	—	8,546
ISR Solutions	—	—	6,576
TOTAL	22,826	6,734	15,122

	Three months ended March 31, 2018
	Restaurant/Retail - Point in Time	Restaurant/Retail - Over Time	Government - Over Time
Restaurant	32,164	5,857	—
Grocery	753	746	—
Mission Systems	—	—	8,334
ISR Solutions	—	—	7,807
TOTAL	32,917	6,603	16,141

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period is less than one year or the total amount of commissions is immaterial. We record these costs within selling, general and administrative expenses.

We elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (for example, sales, use, value added, and some excise taxes).

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

Leases

Adoption

Effective January 1, 2019, the Company adopted the new lease accounting standard, ASC 842, Leases, using the modified retrospective method of applying the new standard at the adoption date. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of this standard resulted in the recording of operating lease right-of-use (ROU) assets and corresponding operating lease liabilities of approximately $4.0 million. The Company's financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance.

A significant portion of our operating and finance lease portfolio includes corporate offices, research and development facilities, information technology (IT) equipment, and automobiles. The majority of our leases have remaining lease terms of 1 year to 5 years. Substantially all lease expense is presented within selling, general and administrative expenses on the Consolidated Statements of Operations.

	Three Months Ended
	March 31, 2019		March 31, 2018
Operating lease cost	$	546	$	457
Total lease cost	$	546	$	457

Supplemental cash flow information related to leases was as follows:

	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	546

Supplemental balance sheet information related to leases was as follows:

	March 31, 2019
Operating leases
Operating lease right-of-use assets	3,697
Operating lease liabilities - current portion	1,540
Operating lease liabilities - net of current portion	2,177
Total operating lease liabilities	3,717
Weighted-average remaining lease term
Operating leases	3.4 years
Weighted-average discount rate
Operating leases	4	%

Future minimum lease payments are as follows:

	Operating Leases
2019	$	1,652
2020	1,006
2021	902
2022	752
2023	574
Thereafter	75
Total lease payments	4,961
Less: interest	(1,244		)
Total	$	3,717

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for operating leases having initial or remaining noncancellable lease terms in excess of one year would have been as follows:

	Total			Less Than 1 Year			1-3 Years		3 - 5 Years		More than 5 Years
Operating leases	$	4,961		$	1,652		$	1,908	$	1,326	$	75
Total	$	4,961	—	$	1,652	—	$	1,908	$	1,326	$	75

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Accounts Receivable

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Accounts Receivable

Accounts Receivable

The Company’s accounts receivable, net, consists of (in thousands):

	March 31, 2019			December 31, 2018
Government reporting segment:
Billed	$	10,428		$	9,100
Advanced billings	(243		)	(563		)
	10,185			8,537
Restaurant/Retail reporting segment:	19,126			17,682
Accounts receivable - net	$	29,311		$	26,219

At March 31, 2019 and December 31, 2018, the Company recorded allowances for doubtful accounts of $1.4 million and $1.3 million, respectively, against Restaurant/Retail reporting segment accounts receivable.

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Inventories

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are primarily used in the manufacture, maintenance and service of Restaurant/Retail reporting segment products.  The components of inventories, net, consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Finished goods	$	11,312	$	12,472
Work in process	452		67
Component parts	4,522		4,716
Service parts	6,353		5,482
	$	22,639	$	22,737

At March 31, 2019 and December 31, 2018, the Company recorded inventory reserves of $10.4 million and $9.8 million, respectively, against Restaurant/Retail reporting segment inventories, which relate primarily to service parts.

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Identifiable Intangible Assets and Goodwill

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Identifiable Intangible Assets and Goodwill

Identifiable Intangible Assets and Goodwill

Identifiable intangible assets represent intangible assets acquired by the Company in connection with its acquisition of Brink Software Inc. in 2014 ("Brink Acquisition") and software development costs.  The Company capitalizes certain software development costs for software used in its Restaurant/Retail reporting segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs.  The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20 (Software – Costs of Software to be sold, Leased, or Marketed) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. Software development is also capitalized in accordance with ASC 350-40, “Intangibles - Goodwill and Other - Internal - Use Software,” and is amortized over the expected benefit period, which generally ranges from three to seven years. Software development costs capitalized within continuing operations during the three months ended March 31, 2019 and March 31, 2018 were $1.0 million and $1.1 million, respectively. 

Annual amortization, charged to cost of sales 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 the product bear to the total of current and anticipated future gross revenues for the product.  Amortization of capitalized software development costs from continuing operations for the three months ended March 31, 2019 and 2018 were $0.5 million and $0.8 million, respectively. 

Amortization of intangible assets acquired in the Brink Acquisition amounted to $0.2 million for each of the three month periods ended March 31, 2019 and 2018.

The components of identifiable intangible assets are (in thousands):

	March 31, 2019			December 31, 2018			Estimated Useful Life
Acquired and internally developed software costs	$	23,013		$	21,977		3 - 7 years
Customer relationships	160			160			7 years
Non-competition agreements	30			30			1 year
	23,203			22,167
Less accumulated amortization	(12,427		)	(11,708		)
	$	10,776		$	10,459
Trademarks, trade names (non-amortizable)	400			400			N/A
	$	11,176		$	10,859

The expected future amortization of intangible assets, assuming straight-line amortization of capitalized software development costs and acquisition related intangibles, is as follows (in thousands):

2019	$	2,046
2020	2,653
2021	1,549
2022	649
2023	365
Thereafter	3,514
Total	$	10,776

The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment.  The Company operates in two reporting segments, Restaurant/Retail and Government.  Goodwill impairment testing is performed at the reporting unit level.  Goodwill is assigned to a specific reporting unit at the date the goodwill is initially recorded.  Once goodwill has been assigned to a specific reporting unit, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.  The amount of goodwill carried by the Restaurant/Retail and Government reporting units is $10.3 million and $0.8 million, respectively, at March 31, 2019 and December 31, 2018. No impairment charges were recorded for the periods ended March 31, 2019 and December 31, 2018.

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Stock Based Compensation

3 Months Ended

Mar. 31, 2019

Share-based Compensation [Abstract]

Stock Based Compensation

Stock Based Compensation

The Company applies the fair value recognition provisions of ASC Topic 718. The Company recorded stock based compensation of $0.2 million for each of the three month periods ended March 31, 2019 and March 31, 2018.  The amount recorded for the three months ended March 31, 2019 was net of benefits of $27,000 and March 31, 2018 was zero which was the result of forfeitures of unvested stock awards prior to completion of the requisite service period and/or failure to achieve performance criteria. At March 31, 2019, the aggregate unrecognized compensation expense related to unvested equity awards was $1.9 million (net of estimated forfeitures), which is expected to be recognized as compensation expense in fiscal years 2019 through 2021.

For the three month periods ended March 31, 2019 and 2018, the Company recognized compensation expense related to performance awards based on its estimate of the probability of achievement in accordance with ASC Topic 718.

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Net (loss) income per share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Net (loss) income per share

Net (loss) income 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 shares of common stock outstanding during the period.  Diluted EPS reflects the potential dilution that would occur if convertible securities or other contracts to issue common stock were exercised. For the three months endedMarch 31, 2019, there were 486,000 anti-dilutive stock options outstanding compared to none as of March 31, 2018.

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

	Three Months Ended March 31,
	2019			2018
Net (loss) income	$	(2,729	)	$	68
Basic:
Shares outstanding at beginning of period	16,041			15,949
Weighted average shares issued/(repurchased) during the period, net	3			(1		)
Weighted average common shares, basic	16,044			15,948
Net (loss) income per common share, basic	$	(0.17	)	$	—
Diluted:
Weighted average common shares, basic	16,044			15,948
Dilutive impact of stock options and restricted stock awards	—			338
Weighted average common shares, diluted	16,044			16,286
Net (loss) income per common share, diluted	$	(0.17	)	$	—

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Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

The Company is subject to legal proceedings, which arise in the ordinary course of business. Additionally, U.S. Government contract costs are subject to periodic audit and adjustment. In the third quarter of 2016, the Company's Audit Committee commenced an internal investigation into conduct at the Company's China and Singapore offices to determine whether certain import/export and sales documentation activities were improper and in violation of the U.S. Foreign Corrupt Practices Act ("FCPA") and other applicable laws and certain Company policies. In the fourth quarter of 2016, the Company voluntarily notified the SEC and the U.S. Department of Justice ("DOJ") of the internal investigation, and on May 1, 2017 the Company received a document subpoena from the SEC for documents relating to the internal investigation. Following the conclusion of the Audit Committee's internal investigation, the Company voluntarily reported the relevant findings of the investigation to the China and Singapore authorities and is fully cooperating with these authorities. During the three months ended March 31, 2019, we recorded $0.2 million of expenses relating to the internal investigation, including expenses of outside legal counsel and forensic accountants, compared to $0.3 million for the three months ended March 31, 2018.

As described in Note 13 - Subsequent Events, to the unaudited interim consolidated financial statements, in early April 2019, the SEC notified the Company that based on current information, it did not intend to recommend an enforcement action against the Company; shortly, thereafter, the DOJ advised that it did not intend to separately proceed. As stated above, we continue to cooperate with the China and Singapore authorities; we are currently not able to predict what actions these authorities might take, or what the likely outcome of any such actions might be, or estimate the range of reasonably possible fines or penalties, which may be material. The China and Singapore authorities have a broad range of civil and criminal sanctions, and the imposition of fines or penalties could have a material adverse effect on the Company’s business, prospects, reputation, financial condition, results of operations or cash flows.

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Segment and Related Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment and Related Information

Segment and Related Information

The Company operates in two distinct reporting segments, Restaurant/Retail and Government. The Company’s chief operating decision maker is the Company’s Chief Executive Officer. The Restaurant/Retail reporting segment offers point-of-sale ("POS") and management technology solutions to restaurants and retail, including in the fast casual, quick serve and table service restaurant categories. This segment also offers customer support including field service, installation, Advanced Exchange, and twenty-four-hour telephone support and depot repair. The Government reporting segment performs complex technical studies, analysis, and experiments, develops innovative solutions, and provides on-site engineering in support of advanced defense, security, and aerospace systems.  This segment also provides expert on-site services for operating and maintaining U.S. Government-owned communication assets.

Information noted as “Other” primarily relates to the Company’s corporate, home office operations.

Information as to the Company’s reporting segments is set forth below (in thousands).

	Three Months Ended March 31,
	2019			2018
Revenues:
Restaurant/Retail	$	29,560		$	39,520
Government	15,122			16,141
Total	$	44,682		$	55,661
Operating (loss) income:
Restaurant/Retail	$	(2,982	)	$	(608	)
Government	1,363			1,266
Other	(482		)	(520		)
	(2,101		)	138
Other (expense) income, net	(430		)	49
Interest expense, net	(146		)	(41		)
(Loss) income before provision for income taxes	$	(2,677	)	$	146
Depreciation, amortization and accretion:
Restaurant/Retail	$	868		$	908
Government	19			5
Other	125			149
Total	$	1,012		$	1,062
Capital expenditures including software costs:
Restaurant/Retail	$	1,063		$	1,139
Government	176			—
Other	684			531
Total	$	1,923		$	1,670
Revenues by country:
United States	$	41,925		$	52,678
Other Countries	2,757			2,983
Total	$	44,682		$	55,661

The following table represents identifiable assets by reporting segment (in thousands).

	March 31, 2019		December 31, 2018
Restaurant/Retail	$	73,255	$	68,004
Government	13,487		9,867
Other	18,306		16,810
Total	$	105,048	$	94,681

The following table represents assets by country based on the location of the assets (in thousands).

	March 31, 2019		December 31, 2018
United States	$	95,105	$	84,652
Other Countries	9,943		10,029
Total	$	105,048	$	94,681

The following table represents goodwill by reporting unit (in thousands).

	March 31, 2019		December 31, 2018
Restaurant/Retail	$	10,315	$	10,315
Government	736		736
Total	$	11,051	$	11,051

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

	Three Months Ended March 31,
	2019		2018
Restaurant/Retail reporting segment:
McDonald’s Corporation	10	%	27	%
Yum! Brands, Inc.	13	%	11	%
Government reporting segment:
U.S. Department of Defense	34	%	29	%
All Others	43	%	33	%
	100	%	100	%

No other customer within All Others represented more than 10% of the Company’s total revenue for the three months ended March 31, 2019 and 2018.

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments have been recorded at fair value using available market information and valuation techniques.  The fair value hierarchy is based upon three levels of input, which are:

Level 1 — quoted prices in active markets for identical assets or liabilities (observable)

Level 2 — inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable market data for essentially the full term of the asset or liability (observable)

Level 3 — unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable)

The Company’s financial instruments primarily consist of cash and cash equivalents, trade receivables, trade payables, debt instruments and deferred compensation assets and liabilities. The carrying amounts of cash and cash equivalents, trade receivables and trade payables as of March 31, 2019 and December 31, 2018 were considered representative of their fair values.  The estimated fair value of the Company’s long-term debt and line of credit on March 31, 2019 and December 31, 2018 was based on variable and fixed interest rates on such respective dates and approximates their respective carrying values at March 31, 2019 and December 31, 2018.

The deferred compensation assets and liabilities primarily relate to the Company’s deferred compensation plan, which allows for pre-tax salary deferrals for certain key employees. Changes in the fair value of the deferred compensation liabilities are derived using quoted prices in active markets of the asset selections made by the participants. The deferred compensation liabilities are classified within Level 2, the fair value classification as defined under FASB ASC 820, "Fair Value Measurements", because their inputs are derived principally from observable market data by correlation to the hypothetical investments. The Company holds insurance investments to partially offset the Company’s liabilities under its deferred compensation plan, which are recorded at fair value each period using the cash surrender value of the insurance investments.

The amounts owed to employees participating in the Deferred Compensation Plan at March 31, 2019 was $3.2 million compared to $3.6 million at December 31, 2018 and is included in other long-term liabilities on the consolidated balance sheets.

Under the stock purchase agreement governing the Brink Acquisition, in the event certain defined revenues were determined to have been achieved in 2015, 2016, 2017 and 2018 ("contingent consideration period"), the Company would be obligated to pay additional purchase price consideration ("Brink Earn Out"). The fair value of the Brink Earn Out was estimated using a discounted cash flow method, with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures. The significant inputs in the Level 3 measurement not supported by market activity included the Company’s probability assessments of expected future cash flows related to the Company’s acquisition of Brink Software Inc. during the contingent consideration period, appropriately discounted considering the uncertainties associated with the obligation.  Any change in the fair value adjustment had been recorded in the earnings of that contingent consideration period. For the $2.6 million of Brink Earn Out targets achieved during the 2018 period, the Company paid the amount in full in March 2019. No Brink Earn Out targets had been achieved for the 2015, 2016, or 2017 years.

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The following table presents a summary of changes in fair value of the Company’s Level 3 assets and liabilities that are measured at fair value on a recurring basis, and are recorded as a component of other long-term liabilities on the consolidated balance sheet (in thousands):

	Level 3 Inputs
	Liabilities
Balance at December 31, 2018	$	2,550
New level 3 liability	—
Total gains (losses) reported in earnings	—
Settlement of Level 3 liabilities	(2,550		)
Balance at March 31, 2019	$	—

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Related Party Transactions

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company leased its corporate wellness facility to related parties at a rate of $9,775 per month. The Company received complimentary memberships to this facility which were provided to local employees. Expenses incurred by the Company relating to the facility amounted to $0 and $55,000 during the three months ended March 31, 2019 and 2018, respectively. The Company did not recognize any rental income from the related party during the three months ended March 31, 2019 and recognized $29,325 for the three month period ended March 31, 2018. Additionally, the Company did not have any rent receivable from the related party for the periods ended March 31, 2019 or December 31, 2018.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Convertible Notes

On April 10, 2019, the Company entered into a Purchase Agreement with Jefferies LLC, (the “Initial Purchaser”), relating to its issuance and sale of $80.0 million in aggregate principal amount, including the simultaneous closing of the full exercise on April 11, 2019 of the Initial Purchaser’s option to purchase additional notes, of 4.5% Convertible Senior Notes due 2024 (the “notes”). The notes were issued pursuant to an indenture, dated April 15, 2019, between the Company and The Bank of New York Mellon Trust Company, N.A. (“Trustee”), referred to herein as the “Indenture.”

The Company received net proceeds from its sale of the notes, including net proceeds from the option to purchase additional notes, of approximately $75.2 million. A portion of the proceeds was used to repay in full amounts outstanding under the Credit Agreement, dated June 5, 2018, among the Company, as borrower, with certain of its U.S. subsidiaries, and Citizens Bank, N.A., as lender (as amended by the First Amendment thereto, dated March 4, 2019, the “Credit Agreement), which were approximately $16.1 million as of March 31, 2019, and terminate the Credit Agreement. the Company intends to use the remaining proceeds for general corporate purposes, including funding investment in the Company’s Brink business and for other working capital needs. The Company may also use a portion of the proceeds to acquire or invest in other assets complementary to its business. The notes are senior, unsecured obligations of the Company and bear interest at a rate equal to 4.500% per year. Interest on the notes is payable semiannually in arrears on April 15 and October 15 of each year, beginning October 15, 2019. Interest will accrue on the notes from the last date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from April 15, 2019. Unless earlier converted, redeemed or repurchased, the notes will mature on April 15, 2024.

The notes are convertible, at the option of the holder, at any time prior to the close of business on the business day immediately preceding October 15, 2023, but only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2019 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on such trading day; (2) during the five consecutive business day period immediately after any five consecutive trading day period (the five consecutive trading day period being referred to as the ‘‘measurement period’’) in which the trading price (as defined in the offering memorandum) per $1,000 principal amount of the notes, as determined following a request by a holder of the notes, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; (3) upon the occurrence of certain specified corporate events; or (4) if the Company has called the notes for redemption. In addition, regardless of the foregoing circumstances, holders may convert their notes at any time on or after October 15, 2023 until the close of business on the second business day immediately preceding the maturity date. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company common stock or a combination of cash and shares of the Company common stock, at its election.

The Indenture contains covenants that, among other things, restrict the Company’s ability to merge, consolidate or sell, or otherwise dispose of, substantially all of its assets. These limitations are subject to a number of important qualifications and exceptions. The Indenture contains customary Events of Default (as defined in the Indenture), including default for 30 days in the payment when due of interest on the notes; default in the payment when due (at maturity, upon redemption or otherwise) of the principal of the notes; failure to comply with covenants and other obligations under the Indenture, including delivery of required notices and obligations in connection with conversion, in certain cases subject to notice and grace periods; payment defaults and accelerations with respect to other indebtedness of the Company and its significant subsidiaries in the aggregate principal amount of $10.0 million or more; failure by the Company or its significant subsidiaries to pay certain final judgments aggregating in excess of $10.0 million within 60 consecutive days of such final judgment; and specified events involving bankruptcy, insolvency or reorganization of the Company or its significant subsidiaries.

Upon an Event of Default, the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding may declare all the notes to be due and payable immediately. In the case of Events of Default relating to bankruptcy, insolvency or reorganization, all outstanding notes will become due and payable immediately without further action or notice.

Termination of Citizens Bank Credit Agreement

In connection with its issuance of the notes, on April 15, 2019, the Company repaid all amounts outstanding under, and terminated, the Credit Agreement. The Credit Agreement had provided for revolving loans in an aggregate principal amount of up to $25.0 million, or, during any Borrowing Base Period (as defined in the Credit Agreement), up to the lesser of $25.0 million and the Borrowing Base (as defined in the Credit Agreement), less any principal amount outstanding. Borrowings under the Credit Agreement were scheduled to fully mature on June 5, 2021.

Internal Investigation

On April 10, 2019, the SEC notified the Company that based on current information, it did not intend to recommend enforcement against the Company; shortly, thereafter, the DOJ advised that it did not intend to proceed.

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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Performance Obligations

The aggregate performance obligations attributable to our two reporting segments, Restaurant/Retail and Government, is as follows (in thousands):

	As of March 31, 2019
	Current - under one year	Non-current - over one year
Restaurant	11,198	4,807
Government	337	—
TOTAL	11,535	4,807

	As of December 31, 2018
	Current - under one year	Non-current - over one year
Restaurant	9,320	4,407
Government	325	—
TOTAL	9,645	4,407

Schedule of Disaggregated Revenue

Disaggregation of revenue for the three months ended March 31, 2019 and March 31, 2018 is as follows (in thousands):

	Three months ended March 31, 2019
	Restaurant/Retail - Point in Time	Restaurant/Retail - Over Time	Government - Over Time
Restaurant	22,336	5,790	—
Grocery	490	944	—
Mission Systems	—	—	8,546
ISR Solutions	—	—	6,576
TOTAL	22,826	6,734	15,122

	Three months ended March 31, 2018
	Restaurant/Retail - Point in Time	Restaurant/Retail - Over Time	Government - Over Time
Restaurant	32,164	5,857	—
Grocery	753	746	—
Mission Systems	—	—	8,334
ISR Solutions	—	—	7,807
TOTAL	32,917	6,603	16,141

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Lease Cost and Supplemental Cash Flow Information Related to Leases

	Three Months Ended
	March 31, 2019		March 31, 2018
Operating lease cost	$	546	$	457
Total lease cost	$	546	$	457

Supplemental cash flow information related to leases was as follows:

	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	546

Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows:

	March 31, 2019
Operating leases
Operating lease right-of-use assets	3,697
Operating lease liabilities - current portion	1,540
Operating lease liabilities - net of current portion	2,177
Total operating lease liabilities	3,717
Weighted-average remaining lease term
Operating leases	3.4 years
Weighted-average discount rate
Operating leases	4	%

Future Minimum Lease Payments

Future minimum lease payments are as follows:

	Operating Leases
2019	$	1,652
2020	1,006
2021	902
2022	752
2023	574
Thereafter	75
Total lease payments	4,961
Less: interest	(1,244		)
Total	$	3,717

Future Minimum Lease Payments for Operating Leases

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for operating leases having initial or remaining noncancellable lease terms in excess of one year would have been as follows:

	Total			Less Than 1 Year			1-3 Years		3 - 5 Years		More than 5 Years
Operating leases	$	4,961		$	1,652		$	1,908	$	1,326	$	75
Total	$	4,961	—	$	1,652	—	$	1,908	$	1,326	$	75

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Accounts Receivable (Tables)

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Schedule of Accounts Receivable, Net

The Company’s accounts receivable, net, consists of (in thousands):

	March 31, 2019			December 31, 2018
Government reporting segment:
Billed	$	10,428		$	9,100
Advanced billings	(243		)	(563		)
	10,185			8,537
Restaurant/Retail reporting segment:	19,126			17,682
Accounts receivable - net	$	29,311		$	26,219

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Inventories (Tables)

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories are primarily used in the manufacture, maintenance and service of Restaurant/Retail reporting segment products.  The components of inventories, net, consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Finished goods	$	11,312	$	12,472
Work in process	452		67
Component parts	4,522		4,716
Service parts	6,353		5,482
	$	22,639	$	22,737

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Identifiable Intangible Assets and Goodwill (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Components of identifiable intangible assets, excluding discontinued operations

The components of identifiable intangible assets are (in thousands):

	March 31, 2019			December 31, 2018			Estimated Useful Life
Acquired and internally developed software costs	$	23,013		$	21,977		3 - 7 years
Customer relationships	160			160			7 years
Non-competition agreements	30			30			1 year
	23,203			22,167
Less accumulated amortization	(12,427		)	(11,708		)
	$	10,776		$	10,459
Trademarks, trade names (non-amortizable)	400			400			N/A
	$	11,176		$	10,859

Schedule of future amortization of intangible assets

The expected future amortization of intangible assets, assuming straight-line amortization of capitalized software development costs and acquisition related intangibles, is as follows (in thousands):

2019	$	2,046
2020	2,653
2021	1,549
2022	649
2023	365
Thereafter	3,514
Total	$	10,776

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Net (loss) income per share (Tables)

3 Months Ended

Mar. 31, 2019

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 of shares of common stock outstanding for the basic and diluted EPS computations (in thousands, except per share data):

	Three Months Ended March 31,
	2019			2018
Net (loss) income	$	(2,729	)	$	68
Basic:
Shares outstanding at beginning of period	16,041			15,949
Weighted average shares issued/(repurchased) during the period, net	3			(1		)
Weighted average common shares, basic	16,044			15,948
Net (loss) income per common share, basic	$	(0.17	)	$	—
Diluted:
Weighted average common shares, basic	16,044			15,948
Dilutive impact of stock options and restricted stock awards	—			338
Weighted average common shares, diluted	16,044			16,286
Net (loss) income per common share, diluted	$	(0.17	)	$	—

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Segment and Related Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Schedule of information of the company's segments

Information as to the Company’s reporting segments is set forth below (in thousands).

	Three Months Ended March 31,
	2019			2018
Revenues:
Restaurant/Retail	$	29,560		$	39,520
Government	15,122			16,141
Total	$	44,682		$	55,661
Operating (loss) income:
Restaurant/Retail	$	(2,982	)	$	(608	)
Government	1,363			1,266
Other	(482		)	(520		)
	(2,101		)	138
Other (expense) income, net	(430		)	49
Interest expense, net	(146		)	(41		)
(Loss) income before provision for income taxes	$	(2,677	)	$	146
Depreciation, amortization and accretion:
Restaurant/Retail	$	868		$	908
Government	19			5
Other	125			149
Total	$	1,012		$	1,062
Capital expenditures including software costs:
Restaurant/Retail	$	1,063		$	1,139
Government	176			—
Other	684			531
Total	$	1,923		$	1,670
Revenues by country:
United States	$	41,925		$	52,678
Other Countries	2,757			2,983
Total	$	44,682		$	55,661

Schedule of identifiable assets by reporting segment

The following table represents identifiable assets by reporting segment (in thousands).

	March 31, 2019		December 31, 2018
Restaurant/Retail	$	73,255	$	68,004
Government	13,487		9,867
Other	18,306		16,810
Total	$	105,048	$	94,681

Schedule of revenue by geographic area

The following table represents assets by country based on the location of the assets (in thousands).

	March 31, 2019		December 31, 2018
United States	$	95,105	$	84,652
Other Countries	9,943		10,029
Total	$	105,048	$	94,681

Schedule of goodwill by reporting segment

The following table represents goodwill by reporting unit (in thousands).

	March 31, 2019		December 31, 2018
Restaurant/Retail	$	10,315	$	10,315
Government	736		736
Total	$	11,051	$	11,051

Schedule of revenue by major customers

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

	Three Months Ended March 31,
	2019		2018
Restaurant/Retail reporting segment:
McDonald’s Corporation	10	%	27	%
Yum! Brands, Inc.	13	%	11	%
Government reporting segment:
U.S. Department of Defense	34	%	29	%
All Others	43	%	33	%
	100	%	100	%

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Summary of changes in fair value of the company's Level 3 assets and liabilities that are measured at fair value on a recurring basis

The following table presents a summary of changes in fair value of the Company’s Level 3 assets and liabilities that are measured at fair value on a recurring basis, and are recorded as a component of other long-term liabilities on the consolidated balance sheet (in thousands):

	Level 3 Inputs
	Liabilities
Balance at December 31, 2018	$	2,550
New level 3 liability	—
Total gains (losses) reported in earnings	—
Settlement of Level 3 liabilities	(2,550		)
Balance at March 31, 2019	$	—

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Revenue Recognition - Schedule of Performance Obligations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue recognized included in contract liabilities at beginning of period	$ 5,700
Current - under one year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	$ 11,535	$ 9,645
Performance obligation, percentage	70.00%
Current - under one year | Restaurant
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	$ 11,198	9,320
Current - under one year | Government
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	337	325
Non-current - over one year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	$ 4,807	4,407
Performance obligations, period	60 months
Non-current - over one year | Restaurant
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	$ 4,807	4,407
Non-current - over one year | Government
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligations	$ 0	$ 0

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Revenue Recognition - Schedule of Disaggregated Revenue (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 44,682,000	$ 55,661,000
Point in Time | Restaurant/Retail
Disaggregation of Revenue [Line Items]
Revenue	22,826,000	32,917,000
Point in Time | Restaurant/Retail | Restaurant
Disaggregation of Revenue [Line Items]
Revenue	22,336,000	32,164,000
Point in Time | Restaurant/Retail | Grocery
Disaggregation of Revenue [Line Items]
Revenue	490,000	753,000
Point in Time | Restaurant/Retail | Mission Systems
Disaggregation of Revenue [Line Items]
Revenue	0	0
Point in Time | Restaurant/Retail | ISR Solutions
Disaggregation of Revenue [Line Items]
Revenue	0	0
Over Time | Restaurant/Retail
Disaggregation of Revenue [Line Items]
Revenue	6,734,000	6,603,000
Over Time | Restaurant/Retail | Restaurant
Disaggregation of Revenue [Line Items]
Revenue	5,790,000	5,857,000
Over Time | Restaurant/Retail | Grocery
Disaggregation of Revenue [Line Items]
Revenue	944,000	746,000
Over Time | Restaurant/Retail | Mission Systems
Disaggregation of Revenue [Line Items]
Revenue	0	0
Over Time | Restaurant/Retail | ISR Solutions
Disaggregation of Revenue [Line Items]
Revenue	0	0
Over Time | Government
Disaggregation of Revenue [Line Items]
Revenue	15,122,000	16,141,000
Over Time | Government | Restaurant
Disaggregation of Revenue [Line Items]
Revenue	0	0
Over Time | Government | Grocery
Disaggregation of Revenue [Line Items]
Revenue	0	0
Over Time | Government | Mission Systems
Disaggregation of Revenue [Line Items]
Revenue	8,546,000	8,334,000
Over Time | Government | ISR Solutions
Disaggregation of Revenue [Line Items]
Revenue	$ 6,576,000	$ 7,807,000

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Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Jan. 01, 2019
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets	$ 3,697
Total	$ 3,717
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms	5 years
Accounting Standards Update 2016-02
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets		$ 4,000
Total		$ 4,000

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Leases - Lease Cost and Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Leases [Abstract]
Operating lease cost	$ 546
Operating lease cost		$ 457
Total lease cost	546
Total lease cost		$ 457
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$ 546

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Leases - Supplemental Balance Sheet Information Related to Leases (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating lease right-of-use assets	$ 3,697
Operating lease liabilities - current portion	1,540
Operating lease liabilities - net of current portion	2,177
Total operating lease liabilities	$ 3,717
Weighted-average remaining lease term, operating leases	3 years 5 months
Weighted-average discount rate, operating leases	4.00%

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Leases Leases - Future Minimum Lease Payments for Operating Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Operating Leases, After Adoption of 842:
2019	$ 1,652
2020	1,006
2021	902
2022	752
2023	574
Thereafter	75
Total lease payments	4,961
Less: interest	(1,244)
Total	$ 3,717
Operating Leases, Before Adoption of 842:
Total		$ 4,961
Less Than 1 Year		1,652
1-3 Years		1,908
3 - 5 Years		1,326
More than 5 Years		$ 75

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Accounts Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accounts Receivable [Abstract]
Accounts receivable - net	$ 29,311	$ 26,219
Government
Accounts Receivable [Abstract]
Accounts receivable - net	10,185	8,537
Government | Billed
Accounts Receivable [Abstract]
Accounts receivable - net	10,428	9,100
Government | Advanced billings
Accounts Receivable [Abstract]
Accounts receivable - net	(243)	(563)
Restaurant/Retail
Accounts Receivable [Abstract]
Accounts receivable - net	19,126	17,682
Allowance for doubtful accounts	$ 1,400	$ 1,300

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Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Inventory, Net, Items Net of Reserve Alternative [Abstract]
Finished goods	$ 11,312	$ 12,472
Work in process	452	67
Component parts	4,522	4,716
Service parts	6,353	5,482
Inventories-net	22,639	22,737
Inventory reserves	$ 10,400	$ 9,800

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Identifiable Intangible Assets and Goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) segment	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Finite-Lived Intangible Assets [Line Items]
Capitalized software development costs	$ 1,000	$ 1,100
Amortization of capitalized software development costs	500	800
Amortization of intangible assets	$ 241	241
Number of operating segments | segment	2
Goodwill	$ 11,051		$ 11,051
Finite-Lived Intangible Assets, Net [Abstract]
Finite-lived intangible assets, gross	23,203		22,167
Less accumulated amortization	(12,427)		(11,708)
Total	10,776		10,459
Total intangible assets, net	11,176		10,859
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2019	2,046
2020	2,653
2021	1,549
2022	649
2023	365
Thereafter	3,514
Total	$ 10,776		10,459
Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life	3 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life	7 years
Brink Acquisition
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 200	$ 200
Internal use software | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life	3 years
Internal use software | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life	7 years
Acquired and internally developed software costs
Finite-Lived Intangible Assets, Net [Abstract]
Finite-lived intangible assets, gross	$ 23,013		21,977
Acquired and internally developed software costs | Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life	3 years
Acquired and internally developed software costs | Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life	7 years
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Useful life	7 years
Finite-Lived Intangible Assets, Net [Abstract]
Finite-lived intangible assets, gross	$ 160		160
Non-competition agreements
Finite-Lived Intangible Assets [Line Items]
Useful life	1 year
Finite-Lived Intangible Assets, Net [Abstract]
Finite-lived intangible assets, gross	$ 30		30
Restaurant/Retail
Finite-Lived Intangible Assets [Line Items]
Goodwill	10,300		10,300
Government
Finite-Lived Intangible Assets [Line Items]
Goodwill	800		800
Trademarks, trade names (non-amortizable)
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 400		$ 400

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Stock Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based Compensation [Abstract]
Equity based compensation	$ 248	$ 181
Stock-based compensation expense, tax benefit	27	$ 0
Unrecognized compensation expense	$ 1,900

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Net (loss) income per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share Reconciliation [Abstract]
Net (loss) income	$ (2,729)	$ 68
Basic:
Shares outstanding at beginning of period (in shares)			16,041,000	15,949,000
Weighted average shares issued during the period, net (in shares)	3,000
Weighted average shares (repurchased) during the period, net (in shares)		(1,000)
Weighted average common shares, basic (in shares)	16,044,000	15,948,000
Net (loss) income from continuing operations per common share, basic (in dollars per shares)	$ (0.17)	$ 0.00
Diluted:
Weighted average common shares, basic (in shares)	16,044,000	15,948,000
Dilutive impact of stock options and restricted stock awards (in shares)	0	338,000
Weighted average common shares, diluted (in shares)	16,044,000	16,286,000
Net (loss) income from continuing operations per common share, diluted (in dollars per share)	$ (0.17)	$ 0.00
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive stock options outstanding (in shares)	486,000	0

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Contingencies (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Expenses relating to investigation	$ 0.2	$ 0.3

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Segment and Related Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) h segment	Mar. 31, 2018 USD ($)
Segment and Related Information [Abstract]
Number of reportable segments | segment	2
Number of hours of telephone support for restaurant and retail segment | h	24
Information as to the Company's segments [Abstract]
Revenue	$ 44,682	$ 55,661
Operating (loss) income	(2,101)	138
Other (expense) income, net	(430)	49
Interest expense, net	(146)	(41)
(Loss) income before provision for income taxes	(2,677)	146
Depreciation, amortization and accretion	1,012	1,062
Capital expenditures including software costs	1,923	1,670
Operating segments | Restaurant/Retail
Information as to the Company's segments [Abstract]
Revenue	29,560	39,520
Operating (loss) income	(2,982)	(608)
Depreciation, amortization and accretion	868	908
Capital expenditures including software costs	1,063	1,139
Operating segments | Government
Information as to the Company's segments [Abstract]
Revenue	15,122	16,141
Operating (loss) income	1,363	1,266
Depreciation, amortization and accretion	19	5
Capital expenditures including software costs	176	0
Other
Information as to the Company's segments [Abstract]
Operating (loss) income	(482)	(520)
Depreciation, amortization and accretion	125	149
Capital expenditures including software costs	684	531
Reportable geographical components | United States
Information as to the Company's segments [Abstract]
Revenue	41,925	52,678
Reportable geographical components | Other Countries
Information as to the Company's segments [Abstract]
Revenue	$ 2,757	$ 2,983

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Segment and Related Information, Reconciliation of Segment Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Identifiable assets by geographic area [Abstract]
Identifiable assets	$ 105,048	$ 94,681
Goodwill by business segment [Abstract]
Goodwill	11,051	11,051
Restaurant/Retail
Goodwill by business segment [Abstract]
Goodwill	10,300	10,300
Government
Goodwill by business segment [Abstract]
Goodwill	800	800
Operating segments | Restaurant/Retail
Identifiable assets by geographic area [Abstract]
Identifiable assets	73,255	68,004
Goodwill by business segment [Abstract]
Goodwill	10,315	10,315
Operating segments | Government
Identifiable assets by geographic area [Abstract]
Identifiable assets	13,487	9,867
Goodwill by business segment [Abstract]
Goodwill	736	736
Reportable geographical components | United States
Identifiable assets by geographic area [Abstract]
Identifiable assets	95,105	84,652
Reportable geographical components | Other Countries
Identifiable assets by geographic area [Abstract]
Identifiable assets	9,943	10,029
Other
Identifiable assets by geographic area [Abstract]
Identifiable assets	$ 18,306	$ 16,810

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Segment and Related Information, Revenue by Major Customers (Details)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue, Major Customer [Line Items]
Concentration risk, percentage	100.00%	100.00%
Operating segments | Restaurant/Retail | McDonald’s Corporation
Revenue, Major Customer [Line Items]
Concentration risk, percentage	10.00%	27.00%
Operating segments | Restaurant/Retail | Yum! Brands, Inc.
Revenue, Major Customer [Line Items]
Concentration risk, percentage	13.00%	11.00%
Operating segments | Government | U.S. Department of Defense
Revenue, Major Customer [Line Items]
Concentration risk, percentage	34.00%	29.00%
Other
Revenue, Major Customer [Line Items]
Concentration risk, percentage	43.00%	33.00%

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Amounts owed to employees participating in the Deferred Compensation Plan	$ 3,200		$ 3,600
Payment for contingent consideration associated with Brink Earn Out	2,550	$ 0	3,000
Obligations
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of period	2,550
New level 3 liability	0
Total gains (losses) reported in earnings	0
Settlement of Level 3 liabilities	(2,550)
Balance at end of period	$ 0		$ 2,550

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Related Party Transactions (Details) - Corporate Wellness Facility - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Related Party Transaction [Line Items]
Monthly rental income from related parties	$ 9,775
Expenses incurred	0	$ 55,000
Rental income
Related Party Transaction [Line Items]
Rental income received	$ 0	$ 29,325

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Subsequent Events (Details) $ in Thousands		3 Months Ended
	Apr. 15, 2019 USD ($) trading_day	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Apr. 14, 2019 USD ($)	Apr. 10, 2019 USD ($)
Subsequent Event [Line Items]
Repayment of amounts outstanding under Credit Agreement		$ 0	$ 48
Subsequent Event
Subsequent Event [Line Items]
Net proceeds from sale of notes	$ 75,200
Convertible debt, threshold, trading days | trading_day	20
Convertible debt, threshold, consecutive trading days | trading_day	30
Convertible debt, threshold percentage	130.00%
Convertible debt, measurement period	5 days
Convertible debt, measurement period percentage	98.00%
Description of event of default, default on payment of interest period	30 days
Description of event of default, aggregate principal amount of final judgments	$ 10,000
Description of event of default, final judgment payment period	60 days
Percentage of principal amount due if event of default occurs (at least)	25.00%
Subsequent Event | Revolving Loans | Citizens Bank, N.A.
Subsequent Event [Line Items]
Repayment of amounts outstanding under Credit Agreement	$ 16,100
Revolving loans, aggregate principal amount				$ 25,000
Subsequent Event | Convertible Senior Notes due 2024 | Convertible Notes
Subsequent Event [Line Items]
Issuance and sale of notes					$ 80,000
Stated interest rate					4.50%