10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

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

SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended June 30, 2014.  Commission File Number 1-9720

OR

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

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From __________ to __________

Commission File Number __________

PAR TECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No  o

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

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

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

(Do not check if a smaller reporting company)

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

Yes o Nox

The number of shares outstanding of registrant's common stock, as of August 1, 2014 – 15,624,109 shares.

TABLE OF CONTENTS

FORM 10-Q

PART I

FINANCIAL INFORMATION

Item Number		Page
Item 1.	Financial Statements (unaudited)
	Consolidated Statements of Operations for the three months and six months ended June 30, 2014 and June 30, 2013	1
	Consolidated Statements of Comprehensive Loss for the three months and six months ended June 30, 2014 and June 30, 2013	2
	Consolidated Balance Sheets at June 30, 2014 and December 31, 2013	3
	Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and June 30, 2013	4
	Notes to Unaudited Interim Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	22
	PART II
	OTHER INFORMATION
Item 1A.	Risk Factors	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
Signatures		25
Exhibit Index		26

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	For the three months ended June 30,			For the three months ended June 30,			For the six months ended June 30,			For the six months ended June 30,
	2014			2013			2014			2013
Net revenues:
Product	$	22,953		$	22,257		$	41,545		$	46,173
Service		14,920			15,314			29,170			31,334
Contract		19,529			21,945			43,228			48,683
		57,402			59,516			113,943			126,190
Costs of sales:
Product		15,815			14,841			28,718			31,314
Service		10,831			10,904			20,384			22,456
Contract		18,495			20,312			40,567			45,791
		45,141			46,057			89,669			99,561
Gross margin		12,261			13,459			24,274			26,629
Operating expenses:
Selling, general and administrative		9,513			9,494			18,776			19,699
Research and development		3,761			3,706			7,625			7,846
		13,274			13,200			26,401			27,545
Operating income (loss) from continuing operations		(1,013	)		259			(2,127	)		(916	)
Other income net		406			255			328			221
Interest expense		(25	)		(13	)		(42	)		(26	)
Income (loss) from continuing operations before benefit for income taxes		(632	)		501			(1,841	)		(721	)
(Provision) benefit for income taxes		113			(253	)		333			600
Income (loss) from continuing operations		(519	)		248			(1,508	)		(121	)
Discontinued operations
Loss on discontinued operations (net of tax)		-			(191	)		-			(206	)
Net Income (loss)	$	(519	)	$	57		$	(1,508	)	$	(327	)
Basic Earnings per Share:
Income (loss) from continuing operations		(0.03	)		0.02			(0.10	)		(0.01	)
Loss from discontinued operations		-			(0.01	)		-			(0.01	)
Net income (loss)	$	(0.03	)	$	0.00		$	(0.10	)	$	(0.02	)
Diluted Earnings per Share:
Income (loss) from continuing operations		(0.03	)		0.02			(0.10	)		(0.01	)
Loss from discontinued operations		-			(0.01	)		-			(0.01	)
Net income (loss)	$	(0.03	)	$	0.00		$	(0.10	)	$	(0.02	)
Weighted average shares outstanding
Basic		15,612			15,171			15,473			15,162
Diluted		15,612			15,340			15,473			15,162

See accompanying notes to consolidated financial statements

1

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(Unaudited)

	For the three months ended June 30,			For the three months ended June 30,			For the six months ended June 30,			For the six months ended June 30,
	2014			2013			2014			2013
Net income (loss)	$	(519	)	$	57		$	(1,508	)	$	(327	)
Other comprehensive loss net of tax:
Foreign currency translation adjustments		(95	)		(132	)		(85	)		(449	)
Comprehensive loss	$	(614	)	$	(75	)	$	(1,593	)	$	(776	)

See accompanying notes to consolidated financial statements

2

PAR TECHNOLOGY CORPORATIONAND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)
 

	June 30,			December 31,
Assets	2014			2013
Current assets:
Cash and cash equivalents	$	12,953		$	10,015
Accounts receivable-net		31,333			30,688
Inventories-net		22,425			24,465
Income tax refund		256			-
Deferred income taxes		4,694			3,747
Other current assets		3,249			3,418
Total current assets		74,910			72,333
Property, plant and equipment - net		5,935			5,494
Deferred income taxes		14,491			15,083
Goodwill		6,852			6,852
Intangible assets - net		15,664			15,071
Other assets		2,896			2,675
Total Assets	$	120,748		$	117,508
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt	$	169		$	166
Accounts payable		17,735			17,200
Accrued salaries and benefits		5,962			6,663
Accrued expenses		3,711			2,701
Customer deposits		751			1,071
Deferred service revenue		15,921			12,170
Income taxes payable		-			185
Total current liabilities		44,249			40,156
Long-term debt		833			918
Other long-term liabilities		3,705			3,714
Total liabilities		48,787			44,788
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; 17,332,218 and 17,301,925 shares issued; 15,624,109 and 15,593,816 outstanding		347			344
Capital in excess of par value		44,466			43,635
Retained earnings		33,608			35,116
Accumulated other comprehensive loss		(624	)		(539	)
Treasury stock, at cost, 1,708,109 shares		(5,836	)		(5,836	)
Total shareholders’ equity		71,961			72,720
Total Liabilities and Shareholders’ Equity	$	120,748		$	117,508

See accompanying notes to consolidated financial statements

3

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(In Thousands)	For the six months ended June 30,
Cash flows from operating activities:	2014			2013
Net loss	$	(1,508	)	$	(327	)
Loss from discontinued operations		-			206
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,661			1,256
Provision for bad debts		205			233
Provision for obsolete inventory		1,534			1,344
Equity based compensation		802			(282	)
Deferred income tax		(355	)		(659	)
Changes in operating assets and liabilities:
Accounts receivable		(850	)		(308	)
Inventories		506			(3,408	)
Income tax receivable/payable		(441	)		(698	)
Other current assets		169			(219	)
Other assets		(221	)		359
Accounts payable		539			(4,481	)
Accrued salaries and benefits		(701	)		(652	)
Accrued expenses		1,010			(1,725	)
Customer deposits		(320	)		(494	)
Deferred service revenue		3,751			2,114
Other long-term liabilities		(10	)		430
Net cash provided by (used in) operating activities-continuing operations		5,771			(7,311	)
Net cash used in operating activities-discontinued operations		-			-
Net cash provided by (used in) operating activities		5,771			(7,311	)
Cash flows from investing activities:
Capital expenditures		(1,171	)		(477	)
Capitalization of software costs		(1,526	)		(1,626	)
Net cash used in investing activities		(2,697	)		(2,103	)
Cash flows from financing activities:
Payments of long-term debt		(82	)		(78	)
Proceeds from the exercise of stock options		3			54
Net cash used in financing activities		(79	)		(24	)
Effect of exchange rate changes on cash and cash equivalents		(57	)		(450	)
Net increase (decrease) in cash and cash equivalents		2,938			(9,888	)
Cash and cash equivalents at beginning of period		10,015			19,475
Cash and cash equivalents at end of period		12,953			9,587
Less cash and equivalents of discontinued operations at end of period		-			-
Cash and equivalents of continuing operations at end of period	$	12,953		$	9,587
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest		42			26
Income taxes, net of (refunds)		416			734

See accompanying notes to consolidated financial statements

4

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Summary of Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements have been prepared by PAR Technology Corporation (the “Company” or “PAR”) in accordance with U.S. generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements.  Accordingly, these interim financial statements do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of the Company, such unaudited statements include all adjustments (which comprise only normal recurring accruals) necessary for a fair presentation of the results for such periods.  The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results of operations to be expected for any future period.  The consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2013 included in the Company’s December 31, 2013 Annual Report to the Securities and Exchange Commission on Form 10-K.

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

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

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

Note 2 — Accounts Receivable

	(in thousands)
	June 30,			December 31,
	2014			2013
Government segment:
Billed	$	10,159		$	16,932
Advanced billings		(2,330	)		(4,335	)
		7,829			12,597
Hospitality segment:
Accounts receivable - net		23,504			18,091
	$	31,333		$	30,688

At June 30, 2014 and December 31, 2013, the Company had recorded allowances for doubtful accounts of $553,000 and $561,000, respectively, against Hospitality accounts receivable.

5

Note 3 — Inventories

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

	(in thousands)
	June 30,		December 31,
	2014		2013
Finished Goods	$	10,274	$	12,033
Work in process		450		297
Component parts		4,316		3,558
Service parts		7,385		8,577
	$	22,425	$	24,465

Note 4 — Identifiable intangible assets

The Company capitalizes certain costs related to the development of computer software sold by its Hospitality segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs in the period the costs are incurred.  Software development costs incurred after establishing technological feasibility (as defined within ASC 985-20) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers.  Software costs capitalized during the three months and six months ended June 30, 2014 were $532,000 and $1,526,000, respectively.  Software costs capitalized during the three and six months ended June 30, 2013 were $965,000 and $1,626,000, respectively.

Annual amortization, charged to cost of sales when the product is available for general release to customers, is computed using the greater of (a) the straight-line method over the remaining estimated economic life of the product, generally three to seven years or (b) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization of capitalized software costs for the three and six months ended June 30, 2014 were $ 468,000 and $932,000, respectively.  Amortization for the three and six months ended June 30, 2013 were $400,000 and $492,000, respectively.

The components of identifiable intangible assets are:

	(in thousands)
	June 30,			December 31,
	2014			2013
Acquired and internally developed software costs	$	18,165		$	16,640
Trademarks (non-amortizable)		1,800			1,800
		19,965			18,440
Less accumulated amortization		(4,301	)		(3,369	)
	$	15,664		$	15,071

6

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

2014	$	1,061
2015		2,268
2016		2,237
2017		2,137
2018		2,034
Thereafter		4,127
Total	$	13,864

Note 5 — Stock Based Compensation

The Company applies the fair value recognition provisions of ASC Topic 718 Stock-Based Compensation.  The Company recorded stock based compensation of $278,000 and $802,000 for the three and six months ended June 30, 2014, respectively. Total stock-based compensation expense included within operating expenses for the three and six months ended June 30, 2013 was $64,000 and a net benefit of $282,000, respectively.  At June 30, 2014, the unrecognized compensation expense related to non-vested equity awards was $1.6 million (net of estimated forfeitures), which is expected to be recognized as compensation expense in fiscal years 2014 through 2017.

During 2014, the Company granted a total of 235,000 equity awards to various employees as approved by the Company’s Compensation Committee of its Board of Directors, under the 2005 Equity Incentive Plan.  Included within the equity grants were approximately 105,000 performance based restricted stock awards which vest upon the achievement of Business Unit and Company Wide financial goals relative to fiscal years 2014 through 2016.  These equity awards are forfeited if the performance conditions are not achieved for each fiscal year.  For the three and six month period ended June 30, 2014, the Company has assumed that the all performance conditions related to the aforementioned awards will be achieved, and therefore the related compensation expense for said awards has been recorded.

Note 6 — Earnings per share

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

For the three and six months ended June 30, 2014 there was no anti-dilutive stock options outstanding as the Company reported a net loss for both periods.  For the three months ended June 30, 2013, there were 474,000 anti-dilutive stock options outstanding and none outstanding for the six months ended June 30, 2013 as the Company reported a net loss.

7

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

	For the three months			For the three months
	ended June 30,			ended June 30,
	2014			2013
Income (loss) from continuing operations	$	(519	)	$	248
Basic:
Shares outstanding at beginning of period		15,612			15,161
Weighted average shares issued during the period, net		-			10
Weighted average common shares, basic		15,612			15,171
Earnings (loss) from continuing operations per common share, basic	$	(0.03	)	$	0.02
Diluted:
Weighted average common shares, basic		15,612			15,171
Dilutive impact of stock options and restricted stock awards		-			169
Weighted average common shares, diluted		15,612			15,340
Earnings (loss) from continuing operations per common share, diluted	$	(0.03	)	$	0.02

	For the six months			For the six months
	ended June 30,			ended June 30,
	2014			2013
Loss from continuing operations	$	(1,508	)	$	(121	)
Basic:
Shares outstanding at beginning of period		15,473			15,151
Weighted average shares issued during the period, net		-			11
Weighted average common shares, basic		15,473			15,162
Earnings (loss)  from continuing operations per common share, basic	$	(0.10	)	$	(0.01	)
Diluted:
Weighted average common shares, basic		15,473			15,162
Dilutive impact of stock options and restricted stock awards		-			-
Weighted average common shares, diluted		15,473			15,162
Earnings (loss) from continuing operations per common share, diluted	$	(0.10	)	$	(0.01	)

8

Note 7 — Segment and Related Information

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

The Company has two reportable segments, Hospitality and Government.  The Hospitality segment offers integrated solutions to the hospitality industry which include hardware platforms and software applications utilized at restaurants, resorts, hotels and spas.  In addition, the Company also provides technology to support food safety compliance and task management capabilities for retailers, grocers and restaurants.  The Company’s Hospitality segment offers customer support including field service, installation, twenty-four hour telephone support and depot repair.  The Government segment delivers technical expertise in Intelligence, Surveillance & Reconnaissance advanced systems and software solutions to the Federal Government and also provides communications and information technology support services to the United States Department of Defense.  Intersegment sales and transfers are not significant.

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

9

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

	(in thousands)
	For the three months ended June 30,			For the three months ended June 30,			For the six months ended June 30,			For the six months ended June 30,
	2014			2013			2014			2013
Revenues:
Hospitality	$	37,873		$	37,571		$	70,715		$	77,507
Government		19,529			21,945			43,228			48,683
Total	$	57,402		$	59,516		$	113,943		$	126,190
Operating income (loss) from continuing operations:
Hospitality	$	(1,765	)	$	(971	)	$	(3,826	)	$	(2,693	)
Government		962			1,475			2,449			2,697
Other		(210	)		(245	)		(750	)		(920	)
		(1,013	)		259			(2,127	)		(916	)
Other income, net		406			255			328			221
Interest expense		(25	)		(13	)		(42	)		(26	)
Income (loss) from continuing operations before provision for income taxes	$	(632	)	$	501		$	(1,841	)	$	(721	)
Depreciation and amortization:
Hospitality	$	749		$	687		$	1,494		$	1,056
Government		12			10			25			22
Other		70			15			142			178
Total	$	831		$	712		$	1,661		$	1,256
Capital expenditures:
Hospitality	$	767		$	1,258		$	2,208		$	2,030
Government		-			-			26			-
Other		349			-			463			73
Total	$	1,116		$	1,258		$	2,697		$	2,103
Revenues by geographic area:
United States	$	49,771		$	49,151		$	99,326		$	107,165
Other Countries		7,631			10,365			14,617			19,025
Total	$	57,402		$	59,516		$	113,943		$	126,190

10

The following table represents identifiable assets by business segment:

	(in thousands)
	June 30,		December 31,
	2014		2013
Identifiable assets:
Hospitality	$	85,257	$	81,386
Government		9,175		16,936
Other		26,316		19,186
Total	$	120,748	$	117,508

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

	2014		2013
United States	$	103,066	$	99,937
Other Countries		17,682		17,571
Total	$	120,748	$	117,508

The following table represents Goodwill by business segment:

	(in thousands)
	June 30,		December 31,
	2014		2013
Hospitality	$	6,116	$	6,116
Government		736		736
Total	$	6,852	$	6,852

11

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

	For the Three Months Ended June 30,			For the three Months Ended June 30,			For the six Months Ended June 30,			For the six Months Ended June 30,
	2014			2013			2014			2013
Hospitality segment:
McDonald’s Corporation		16	%		20	%		15	%		16	%
Yum! Brands, Inc.		17	%		16	%		14	%		15	%
Government segment:
U.S. Department of Defense		34	%		37	%		38	%		39	%
All Others		33	%		27	%		33	%		30	%
		100	%		100	%		100	%		100	%

12

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

Forward-Looking Statement

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

Overview

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

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

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Within the Hospitality businesses PAR continues to focus on building a diversified customer base through our investment in new hardware, software and solution offerings.  This diversification is a key component to PAR building recurring and subscription based revenue that will result in a more consistent financial performance for PAR.  One of PAR’s primary initiatives to achieve diversification is the continued penetration of the grocery and retail market through deployments of the Company’s SureCheck^® product for food safety and task management applications.  Entering these markets allows PAR to be more versatile within its customer base, which helps in mitigating revenue volatility that may be created given the timing of product deployments with major Restaurant customers.  In addition, PAR continues to expand its worldwide third-party distribution channels through the addition of new partners and leveraging current relationships.

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

The Hotel/Resort/Spa technology business within the Hospitality segment provides PAR with an opportunity to grow recurring software revenues associated with property management applications.  PAR is growing its installation base with deployments of ATRIO^®, the next generation cloud-based property management software for this market.  With ATRIO’s “purpose-built” cloud design, the Company can leverage the benefits and dramatic cost reductions that have occurred in cloud computing over the last four years.  This design provides PAR with a competitive advantage when compared to on premise, server-based, property management solutions as well as solutions that use remote data centers.  Other advantages to PAR's true cloud computing design include inherent benefits ranging from automated backup and recovery, real-time system health monitoring, and rapid global deployment options.  In addition to progress with ATRIO, PAR continues to experience success with its ^SMS|Host® and SpaSoft® software applications as new properties were added during the quarter.

Approximately 38% of the Company's revenues are generated by PAR's Government business. The focus of the Company’s Government business is to expand its technical services and ISR solutions business lines. Through outstanding performance of existing service contracts and investment in business development capabilities, the Company is able to consistently secure the renewal of expiring contracts, extend existing contracts, and secure additional new business.  With its intellectual property and investment in new technologies, the Company provides solutions to the U.S. Department of Defense and other federal agencies with systems integration, products and highly-specialized services.  The general uncertainty in U.S. defense total workforce policies (military, civilian and contract), procurement cycles and specific areas of spending levels for the next several years, may impact the performance of this business.

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Results of Operations —

Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

PAR reported revenues of $57.4 million for the quarter ended June 30, 2014, a decrease of 3.6% from the $59.5 million reported for the quarter ended June 30, 2013.  PAR reported net loss from continuing operations of $519,000 or $0.03 per share for the second quarter of 2014 versus a net income from continuing operations of $248,000 or $0.02 per share for the same period in 2013.  During the second quarter of 2013, PAR reported a net loss from discontinued operations of $191,000.

Product revenues were $23.0 million for the quarter ended June 30, 2014, an increase of 3.1% from the $22.3 million recorded in 2013.  This increase was primarily driven by an increase in sales made through our worldwide dealer network, which increased 48% on a year over year basis.  This increase was partially offset by a decrease in revenue from McDonald’s international, resulting from the completion of a large rollout in 2013.

Service revenues were $14.9 million for the quarter ended June 30, 2014, a decrease of 2.6% from the $15.3 million reported for the same period in 2013.  The decrease is mostly the result of a decline in field service revenue as certain customers transitioned to alternative service support delivery models.

Contract revenues were $19.5 million for the quarter ended June 30, 2014, compared to $21.9 million reported for the same period in 2013, a decrease of 11%.  This decrease is mostly driven by the timing of task orders on the Company's ISR systems integration contracts with the U.S. Army.

Product margins for the quarter ended June 30, 2014 were 31.3%, a decrease from 33.3% for the same period in 2013.  During the quarter, the Company experienced an unfavorable product mix in sales of our hardware offerings, offset by increased software sales.

Service margins were 27.4% for the quarter ended June 30, 2014; a decrease from the 28.8% recorded for the same period in 2013.  The decrease is a result of unfavorable service revenue mix during the quarter.

Contract margins were 5.3% for the quarter ended June 30, 2014, compared to 7.4% for the same period in 2013.  This decrease was due to favorable modifications of certain contracts during 2013 that did not recur in 2014.  The most significant components of contract costs in 2014 and 2013 were labor and fringe benefits.  For the second quarter of 2014, labor and fringe benefits were $9.4 million or 51% of contract costs compared to $9.8 million or 48.5% of contract costs for the same period in 2013.  This increase in percentage is mostly attributable to the lower amount of subcontract revenue associated with the Company's ISR systems integration contract with the U.S. Army in 2014.

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Selling, general and administrative expenses were remained flat at $9.5 million for both periods ending June 30, 2014.  While the Company has reduced its overall general and administrative expense during the quarter, this reduction was offset by an increase in sales and marketing expenses associated with its Hospitality businesses.

Research and development expenses were $3.8 million for the quarter ended June 30, 2014, relatively flat from the $3.7 million recorded for the same period in 2013.  This slight increase was primarily related to increased software development costs for products within the Hospitality segment.

Other income, net was $406,000 for the quarter ended June 30, 2014 compared to $255,000 for the same period in 2013.  Other income/expense primarily includes unrealized gains/losses on the Company's investments, market value fluctuations of the Company's deferred compensation plan, rental income, strategic product development partnerships, and foreign currency gains and losses.  The income in 2014 is primarily due to foreign currency gains and higher rental income.  The income in 2013 was primarily related to strategic product development partnerships within the Company's Hospitality businesses and a lower fair value adjustment with respect to the Company's deferred compensation plan.

Interest expense represents interest charged on the Company's short-term borrowings and from long-term debt.  Interest expense was $25,000 for the quarter ended June 30, 2014 as compared to $13,000 for the same period in 2013.  This increase is associated with higher outstanding borrowing in 2014 as compared to the same period in 2013.

For the three months ended June 30, 2014, the Company's effective income tax benefit was 17.9%, compared to 50% for the same period in 2013.  The  variances from the federal statutory rate for 2014 and 2013  were due to the mix of projected taxable income from the Company's domestic and foreign jurisdictions expected for full year fiscal 2014 and 2013.

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Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

PAR reported revenues of $113.9 million for the six months ended June 30, 2014, a decrease of 9.7% from the $126.2 million reported for the same period in 2013.  PAR reported a net loss from continuing operations of $1.5 million or $0.10 loss per share for the six months ended June 30, 2014 versus net loss of $121,000 or $0.01 loss per share for the same period in 2013.  During the six months end June 30, 2013, PAR reported a net loss from discontinued operations of $206,000 or $0.01 per share.

Product revenues were $41.5 million for the six months ended June 30, 2014, a decrease of 10% from the $46.2 million recorded in 2013.  This decrease was primarily the result of decreased sales to major accounts as large rollouts were completed in fiscal 2013.  Partially offsetting this decrease was an increase in sales of hardware and software solutions sold through our third party distribution channels, which increased by 35% as compared to 2013.

Service revenues were $29.2 million for the six months ended June 30, 2014, a decrease from the $31.3 million reported for the same period in 2013.  The primary contributor of the decrease was the decline in installation revenue due to lower volume of product deployments.

Contract revenues were $43.2 million for the six months ended June 30, 2014, a decrease of 11.2% compared to $48.7 million reported for the same period in 2013.  This decrease is mostly attributable to the Company’s Intelligence, Surveillance, and Reconnaissance (ISR) systems integration contracts with the U.S. Army.

Product margins for the six months ended June 30, 2014 were 30.9%, a decrease from 32.2% for the same period in 2013.  This decrease was driven by an unfavorable hardware mix offset by increased software sales during the year.

Service margins were 30.1% for the six months ended June 30, 2014, an increase from the 28.3% recorded for the same period in 2013.  The increase is primarily the result of improved margins within our depot repair and installation operations.

Contract margins were 6.2% for the six months ended June 30, 2014, compared to 5.9% for the same period in 2013.  This increase was due to favorable performance on fixed price contracts due to favorable modifications, partially offset by investments in the Company's ISR technologies. The most significant components of contract costs in 2014 and 2013 were labor and fringe benefits.  For the first six months ended June 2014, labor and fringe benefits were $19.3 million or 47% of contract costs compared to $20.3 million or 44% of contract costs for the same period in 2013.  This increase in percentage is mostly attributable to lower subcontract pass through revenue associated with the Company’s new ISR systems integration contract with the U.S. Army.

Selling, general and administrative expenses for the six months ended June 30, 2014 were $18.8 million, a decrease compared to $19.7 million recorded for the same period in 2013.  The decrease is attributable to costs primarily incurred from separation and litigation related matters that were resolved during 2013.

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Research and development expenses were $7.6 million for the six months ended June 30, 2014, a slight decrease from the $7.8 million recorded for the same period in 2013.  This decrease was associated with reduced software development costs associated with the Company's Hospitality software products.

Other income was $328,000 for the six months ended June 30, 2014 compared to income of $221,000 for the same period in 2013.  Other income/expense primarily includes unrealized gains/losses on the Company’s investments, market value fluctuations of the Company’s deferred compensation plan, rental income, strategic product development partnerships, and foreign currency gains and losses.  The income in 2014 is primarily due to foreign currency gains.  The income in 2013 was primarily due to income related to strategic product development partnerships within the Company’s Hospitality business and lower market volatility within the deferred compensation plan.

Interest expense primarily represents interest charged on the Company’s short-term borrowing requirements from banks and from long-term debt.  Interest expense was $42,000 for the six months ended June 30, 2014 as compared to $26,000 for the same period in 2013.  This increase is associated with higher outstanding borrowing in 2014 as compared to the same period in 2013.

For the six months ended June 30, 2014, the Company’s effective income tax benefit was 18%, compared to a benefit of 83% for the same period in 2013.  This variance from the federal statutory rate was due to the mix of projected taxable income from the Company's domestic and foreign jurisdictions expected for full year fiscal 2014.  The variance from the federal statutory rate in 2013 was due to a benefit of $410,000 received in connection with the American Taxpayer Relief Act of 2012 that was signed into law in January 2013.  The credit related to retroactive tax relief for certain tax law provisions that expired in 2012.  Because the legislation was signed into law after the end of PAR’s 2012 fiscal year, the retroactive effects of the bill will be reflected in the first quarter of 2013.  Excluding the retroactive application of this credit, the Company’s expected effective federal rate is 26%.  This remaining variance from the federal statutory rate was due to the mix of projected taxable income from the Company’s domestic and foreign jurisdictions.

Liquidity and Capital Resources

The Company's primary sources of liquidity have been cash flow from operations and its bank line of credit.  Cash generated from operating activities of continuing operations was $5.8 million for the six months ended June 30, 2014 compared to cash used in operating activities of $7.3 million for the same period in 2013.

In 2014, cash generated in operations was mostly due to the add back of non-cash charges and changes in working capital, primarily associated with increases in deferred revenue based on timing of billings for our service contracts offset by increases in accounts receivable due to the timing of product sales and contract billing.  Cash was also generated by a decrease in inventory associated with the timing of deployments to customers.  In 2013, cash was used in operations due to the Company's net loss and change in working capital requirements, primarily associated with an increase in inventory due to the Company's transition of its hardware product lines, decreases in accrued expenses and accounts payable from timing of payments made to vendors, specifically for inventory purchases and timing of payments associated with the Company's ISR contract with the U.S. Government.   This was partially offset by the add back of non-cash charges, as well as an increase in deferred service revenue due to the timing of customer service contracts.

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Cash used in investing activities from continuing operations was $2.7 million for the six months ended June 30, 2014 versus $2.1 million for the same period in 2013.  In 2014, capital expenditures of $1.2 million were primarily for capital improvements made to the Company’s leased properties as well as purchases of computer equipment associated with the Company’s software support service offerings.  Capitalized software was $1.5 million and was associated with investments for various Hospitality software platforms.  In 2013, capital expenditures of $477,000 were primarily for tooling related to the Company's hardware products, as well as for purchases of office and computer equipment.  Capitalized software was $1.6 million and was associated with investments for various Hospitality software platforms.

Cash used in financing activities from continuing operations was $79,000 for the six months ended June 30, 2014 versus $24,000 in 2013.  In 2014, the Company decreased its long-term debt by $82,000.  In 2013, the Company decreased its long-term debt by $78,000 offset by stock option proceeds of $54,000.

On June 5, 2014, the Company executed an amendment to its existing credit facility to provide for the renewal of this facility through June 2017, with terms generally consistent to those of its prior facility.  This facility provides the Company with capital of up to $20 million (with the option to increase to $30 million) in the form of a revolving line of credit.  This agreement allows the Company, at its option, to borrow funds at the LIBOR rate plus the applicable interest rate spread or at the bank's prime lending rate (3.25% at June 30, 2014).  At June 30, 2014, the Company did not have any outstanding balance on this line of credit.  The weighted average interest rate paid by the Company was approximately 2.5% during fiscal year 2014.  This agreement contains certain loan covenants including leverage and fixed charge coverage ratios.   The Company was in compliance with these covenants at June 30, 2014.  This credit facility is secured by certain assets of the Company.

In addition to the credit facility described above, the Company has a $1.0 million mortgage loan, collateralized by certain real estate.  This mortgage matures on November 1, 2019.  The Company's fixed interest rate is currently 4.05% through October 1, 2014.  Beginning on October 1, 2014 and through the maturity date of the loan, the fixed rate will be converted to a new rate equal to the then-current five year fixed advanced rate charged by the New York Federal Home Loan bank, plus 225 basis points.  The annual mortgage payment including interest through October 1, 2014 totals $207,000.

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During fiscal year 2014, the Company anticipates that its capital requirements will not exceed approximately $3-5 million.  The Company does not usually enter into long term contracts with its major Hospitality segment customers.  The Company commits to purchasing inventory from its suppliers based on a combination of internal forecasts and actual orders from customers.  This process, along with good relations with suppliers, minimizes the working capital investment required by the Company.  Although the Company lists two major customers, McDonald's and Yum! Brands, it sells to hundreds of individual franchisees of these corporations, each of which is individually responsible for its own debts.  These broadly made sales substantially reduce the impact on the Company's liquidity if one individual franchisee reduces the volume of its purchases from the Company in a given year.  The Company, based on internal forecasts, believes its existing cash, line of credit facilities and its anticipated operating cash flow, will be sufficient to meet its cash requirements through the next twelve months.  However, the Company may be required, or could elect, to seek additional funding prior to that time.  The Company's future capital requirements will depend on many factors including its rate of revenue growth, the timing and extent of spending to support product development efforts, potential growth through strategic acquisition, expansion of sales and marketing, the timing of introductions of new products and enhancements to existing products, and market acceptance of its products.  The Company cannot assure additional equity or debt financing will be available on acceptable terms or at all.  The Company's sources of liquidity beyond twelve months, in management's opinion, will be its cash balances on hand at that time, funds provided by operations, funds available through its lines of credit and the long-term credit facilities that it can arrange.

Recently Issued Accounting Pronouncements Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (FASB) amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Adoption of the amendments is required in the first quarter of fiscal 2017. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. PAR is currently evaluating the impact of these amendments and the transition alternatives on PAR's financial statements.

In April 2014, the FASB issued guidance that raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and other disposals that do not meet the definition of a discontinued operations. The new guidance defines a discontinued operation as a disposal of a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. The new guidance is effective on January 1, 2015, with early adoption permitted. While we do not expect a material impact on PAR’s financial statements upon adoption, the effects on future periods will depend upon the nature and significance of future disposals.

Recently Adopted Accounting Pronouncements

In July 2013, the FASB issued guidance eliminating diversity in practice surrounding the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires entities to net an unrecognized tax benefit with a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if the carryforward would be used to settle additional tax due upon disallowance of a tax position. The amendment is effective for fiscal periods beginning after December 15, 2013 with early adoption permitted. The adoption of this amendment on January 1, 2014 did not have a significant impact on the Company's financial position or results of operations.

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In March 2013, the FASB clarified that, when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. The cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The FASB also clarified that if a business combination is achieved in stages related to a previously held equity method investment (step-acquisition) that is a foreign entity, the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss as of the acquisition date shall include any foreign currency translation adjustment related to that previously held investment. The amendments are effective prospectively for fiscal years beginning after December 15, 2013, with early adoption permitted. The adoption of this amendment on January 1, 2014 did not have a significant impact on the Company's financial position or results of operations.

In February 2013, the FASB issued guidance requiring an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the amount the entity agreed to pay for the arrangement between them and the other entities that are also obligated to the liability and any additional amount the entity expects to pay on behalf of the other entities. The amendments are effective for fiscal periods (and interim reporting periods within those years) beginning after December 15, 2013. The adoption of this amendment on January 1, 2014 did not have a significant impact on the Company's financial position or results of operations.

Critical Accounting Policies

In our Annual Report on Form 10-K for the year ended December 31, 2013, the Company disclosed accounting policies, referred to as critical accounting policies, that require management to use significant judgment or that require significant estimates.  Management regularly reviews the selection and application of our critical accounting policies.  There have been no updates to the critical accounting policies contained in our Annual Report on Form 10-K for the year ended December 31, 2013.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

INFLATION

Inflation had little effect on revenues and related costs during the three and six months ended June 30, 2014.  Management anticipates that margins will be maintained at acceptable levels to minimize the effects of inflation, if any.

INTEREST RATES

As of June 30, 2014, the Company does not have any variable debt.  As such, the Company believes that an adverse change in interest rates of 100 basis points would not have a material impact on our business, financial condition, results of operations or cash flows.

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FOREIGN CURRENCY

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

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

Based on an evaluation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2014, the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), conducted under the supervision of and with the participation of the Company's chief executive officer and principal financial officer, such officers have concluded that the Company's disclosure controls and procedures, which are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and designed to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is accumulated and communicated to management including the chief executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures, are effective as of the Evaluation Date.

(b) Changes in Internal Control over Financial Reporting.

There was no change in the Company's internal controls over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act during the quarter ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, such internal controls over financial reporting.

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PART II – OTHER INFORMATION

Item 1A. Risk Factors

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

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On May 29, 2014, PAR Technology Corporation furnished a report on Form 8-K pursuant to Item 3.01 (a)(b) (Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.) indicating that as of May 22, 2014 the Company did not satisfy the continued listing standards of the Exchange set forth I the NYSE Listed Company Manual (the “Manual”).

On May 29, 2014, PAR Technology Corporation furnished a report on Form 8-K pursuant to Item 5.03 (a) (Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year) indicating on March 11, 2014, the Board of Directors of PAR Technology Corporation (the “Corporation”) duly adopted resolutions setting forth a proposed amendment of the Corporation’s Certificate of Incorporation and By-Laws to de-classify the Board.

On May 29, 2014, PAR Technology Corporation furnished a report on Form 8-K pursuant to Item

5.07 (Submission of Matters to a Vote of Security Holders) of that Form relating to the annual meeting of the shareholders held on May 22, 2014 and the shareholders ratified the PAR Technology Corporation 2005 Equity Incentive Plan to reserve an additional 500,000 shares of the Company's common stock for issuance under the Plan.  Also approved the adoption of amendments to the Corporation’s Certificate of Incorporation and By-Laws to declassify the Board of Directions and approved, on an advisory base, the compensation paid to the Corporation’s Named Executive Officers.

On May 1, 2014, PAR Technology Corporation furnished a report on Form 8-K pursuant to Item 2.02 (Results of Operations and Financial Condition) of that Form relating to its financial information for the quarter ended June 30, 2014, as presented in the press release of May 1, 2013 and furnished thereto as an exhibit.

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Item 6. Exhibits

List of Exhibits

Exhibit No.	Description of Instrument
10.1	AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT
31.1	Certification of Chief Executive Officer & President Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Vice President, Controller & Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer & President and Vice President, Controller & Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PAR TECHNOLOGY CORPORATION
	(Registrant)
Date:  August 8, 2014
	/s/STEVEN M. MALONE
	Steven M. Malone
	Vice President, Controller & Chief Accounting Officer

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Exhibit Index

Exhibit No.	Description of Instrument	Sequential Page Number
10.1	AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT
31.1	Certification of Chief Executive Officer & President Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	E-1
31.2	Certification of Vice President, Controller & Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	E-2
32.1	Certification of Chief Executive Officer & President and Vice President, Controller & Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	E-3

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EX-10.1

Exhibit 10.1

AMENDMENT NO. 3

TO

AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDMENT NO. 3(the “Amendment”) dated as of June 5, 2014 is between PAR TECHNOLOGY CORPORATION, a Delaware corporation (the “Borrower”), JPMORGAN CHASE BANK, N.A., as Administrative Agent (“Administrative Agent”), and JPMORGAN CHASE BANK, N.A. and NBT BANK, N.A. (on behalf of itself and as successor by merger to Alliance Bank, N.A.) (collectively, the “Lenders”).

RECITALS:

A.The Borrower, Administrative Agent, Lenders and Alliance Bank, N.A. are parties to an Amended and Restated Credit Agreement dated as of June 6, 2011, as amended by an Amendment No. 1 dated as of July 29, 2011 and an Amendment No. 2 dated as of February 11, 2013 (the “Credit Agreement”).

B.The Borrower has requested that the Credit Agreement be extended for three years.  Borrower has also requested that certain terms in the Credit Agreement be modified.

C.The Administrative Agent and the Lenders are willing to extend and amend the Credit Agreement upon the terms and conditions set forth below.

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

1Definitions.  All capitalized terms used in this Amendment, which are not otherwise defined, shall have the meanings given to those terms in the Credit Agreement.

2Amendments to Credit Agreement.

2.1The column headings entitled “ABR Margin” and “Eurodollar Margin” in the pricing grid set forth in subparagraph (a) of the definition of “Applicable Rate” set forth in Section 1.01 of the Credit Agreement are changed to “ABR Spread” and “Eurodollar Spread”, respectively.

2.2The definition of “Banking Services” set forth in Section 1.01 of the Credit Agreement is amended to read as follows:

“Banking Services” means each and any of the following bank services provided to any Loan Party by a Lender or any of its Affiliates: (a) commercial credit cards, (b) stored value cards and (c) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

2.3The definition of  “EBITDA” set forth in Section 1.01 of the Credit Agreement is amended to read as follows:

“EBITDA” means, for any period, Net Income for such period plus (a) without duplication and to the extent deducted in determining Net Income for such period, the sum of (i) Interest Expense for such period, (ii) income tax expense for such period, (iii) all amounts attributable to depreciation and amortization expense for such period, (iv) extraordinary or non-recurring non-cash expenses, charges or losses, and (v) non-cash equity based compensation, minus (b) without duplication and to the extent included in Net Income, (i) all amounts attributable to any reappraisal, revaluation or write-up of assets, and (ii) any extraordinary or non-recurring gains or income and any non-cash items of income for such period, all calculated for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.

2.4The definition of “Fixed Charge Coverage Ratio” set forth in Section 1.01 of the Credit Agreement is amended to read as follows:

“Fixed Charge Coverage Ratio” means the ratio, determined as of the end of each fiscal quarter for the most recently ended four quarters, of (a) EBITDA minus cash taxes, unfunded capital expenditures, dividends and distributions, and capitalized software costs, to (b) scheduled principal payments on Indebtedness actually made during such period plus interest expense, all calculated for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.

2.5The definition of “Revolving Loan Maturity Date” set forth in Section 1.01 of the Credit Agreement is amended to read as follows:

“Revolving Loan Maturity Date” means June 6, 2017 or any earlier date on which the Revolving Commitments are reduced to zero or otherwise terminated pursuant to the terms hereof.

2.6The definition of “Secured Obligations” set forth in Section 1.01 of the Credit Agreement is amended to read as follows:

“Secured Obligations” means all Obligations, together with all (i) Banking Services Obligations, (ii) Existing L/C Obligations owing to one or more Lenders, and (iii) Swap Obligations owing to one or more Lenders or their respective Affiliates; provided that at or prior to the time that any transaction relating to an Existing L/C Obligation or Swap Obligation is executed, the Lender party thereto (other than Chase) shall have delivered written notice to the Administrative Agent that such a transaction has been entered into and that it constitutes a Secured Obligation entitled to the benefits of the Collateral Documents; provided further that the definition of “Secured Obligations” shall not create any guarantee by any Loan Guarantor of (or grant of security interest by any Loan Guarantor to support, as applicable) any Excluded Swap Obligations of such Loan Guarantor for purposes of determining any obligations of any Loan Guarantor.

2.7The definition of “Swap Obligations” set forth in Section 1.01 of the Credit Agreement is amended to read as follows:

“Swap Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, (b) any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act, and (c) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction.

2.8The following additional defined terms are added to Section 1.01 of the Credit Agreement in alphabetical order:

"Commodity Exchange Act" means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

"Excluded Swap Obligation" means, with respect to any Loan Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Loan Guarantor of, or the grant by such Loan Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) (a) by virtue of such Loan Guarantor's failure for any reason to constitute an "eligible contract participant" as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Loan Guarantor or the grant of such security interest becomes or would become effective with respect to such Swap Obligation or (b) in the case of a Swap Obligation subject to a clearing requirement pursuant to Section 2(h) of the Commodity Exchange Act (or any successor provision thereto), because such Loan Guarantor is a "financial entity," as defined in Section 2(h)(7)(C)(i) the Commodity Exchange Act (or any successor provision thereto), at the time the  Guarantee of such Loan Guarantor becomes or would become effective with respect to such related Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

2.9Section 5.01(f) of the Credit Agreement is amended to read as follows:

(f)  as soon as available but in any event within 15 days of the end of each calendar month, and at such other times as may be requested by the Administrative Agent, as of the period then ended, a Borrowing Base Certificate and supporting information in connection therewith, an account receivable aging report and inventory listing, and any additional reports with respect to the Borrowing Base as the Administrative Agent may reasonably request;

2.10Section 5.06 of the Credit Agreement is amended by adding the following sentence at the end thereof:

The Administrative Agent shall have the right to conduct or to have its representatives conduct, at Borrower’s expense, one or more field examinations of Borrower’s accounts receivable and inventory at a time or times to be scheduled by the Administrative Agent, provided that no more than two field examinations may be conducted during any twelve-month period unless an Event of Default shall have occurred and be continuing.

2.11Section 5.08 of the Credit Agreement is amended to read as follows:

Use of Proceeds and Letters of Credit.  The proceeds of the Loans will be used only for general corporate purposes and Permitted Acquisitions.  No part of the proceeds of any Loan will be used, whether directly or indirectly, to finance an acquisition other than a Permitted Acquisition or for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.  Letters of Credit will be issued only for general corporate purposes.

2.12Section 6.13 of the Credit Agreement is amended to read as follows:

Fixed Charge Coverage Ratio.  At the end of any fiscal quarter in which Borrower’s consolidated total Indebtedness is $5,000,000 or greater, the Borrower will not permit the Fixed Charge Coverage Ratio, determined for the period of four consecutive fiscal quarters ending at the end of such fiscal quarter, to be less than 1.25 to 1.0.

2.13The following sentence is added to the end of Section 10.01 of the Credit Agreement:

Notwithstanding the foregoing, amounts received from any Loan Guarantor that is not a Qualified ECP Guarantor shall not be applied to Guaranteed Obligations that are Excluded Swap Obligations.

2.14The following new Section 10.13 is added to the Credit Agreement immediately after Section 10.12:

SECTION 10.13  Keepwell.  Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Guarantor to honor all of its obligations under this Article X in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Article X for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Article X or otherwise under this Agreement voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Article X shall remain in full force and effect until the Guaranteed Obligations are indefeasibly paid in full.  Each Qualified ECP Guarantor intends that this Section 10.13 constitute, and this Section 10.13 shall be deemed to constitute, a "keepwell, support, or other agreement" for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.  As used herein, “Qualified ECP Guarantor" means, in respect of any Swap Obligation, each Loan Guarantor that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes or would become effective with respect to such Swap Obligation or such other person as constitutes an "eligible contract participant" under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an "eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

2.15All references in the Credit Agreement to the Term Loan, which has been paid in full, are deleted.

2.16Schedules 3.05, 3.14, 3.15, 3.18, 6.01 and 6.02 to the Credit Agreement are hereby replaced by the amended and restated Schedules 3.05, 3.14, 3.15, 3.18, 6.01 and 6.02  attached to this Amendment.

2.17Exhibits A, B, D and E to the Pledge and Security Agreement, are hereby replaced by the amended and restated Exhibits A, B, D and E attached to this Amendment.

3Representations and Warranties.  The Borrower represents and warrants to the Lenders that the following statements are true, correct and complete:

3.1Each of the representations and warranties made by the Loan Parties in the Credit Agreement is true and correct on and as of the date of this Amendment.

3.2No Default or Event of Default has occurred and is continuing.

3.3This Amendment has been duly and validly authorized, executed and delivered by the Borrower.

3.4This Amendment constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior oral and written communications, memoranda, proposals, negotiations, discussions, term sheets and commitments with respect to the subject matter hereof, except as expressly provided herein, no other changes or modifications to the Credit Agreement are intended or implied by this Amendment and in all other respects the Credit Agreement is hereby specifically ratified, restated and confirmed as of the date of this Amendment.  To the extent that any provision of the Credit Agreement conflicts with a provision of this Amendment, the provision of this Amendment shall control.

4Conditions to Effectiveness of Amendment.  This Amendment shall become effective only when and if each of the following conditions is satisfied:

4.1The Administrative Agent shall have received a counterpart of this Amendment duly executed and delivered by the Borrower, the Loan Guarantors, the Administrative Agent, and the Lenders.

4.2The Lenders and the Administrative Agent shall have received payment of all fees required to be paid by the Borrower under the terms of the Credit Agreement or any separate fee letter.

4.3The Administrative Agent shall have received a certificate of each Loan Party executed by its Secretary or Assistant Secretary, which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of this Amendment and the other Loan Documents to which it is a party, (B) identify by name and title and bear the signatures of the Financial Officers and any other officers of such Loan Party authorized to sign this Amendment and the other Loan Documents to which it is a party, and (C) contain appropriate attachments, including the certificate or articles of incorporation or organization of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its by laws or operating, management or partnership agreement or, in the alternative, contain an appropriate certification that there have been no amendments to such Loan Party’s organizational documents since copies thereof were last furnished to the Administrative Agent, and (ii) a long form good standing certificate for each Loan Party from its jurisdiction of organization.

4.4The Administrative Agent shall have received the results of recent lien searches in the jurisdictions where each of the Loan Parties is organized, and such searches shall reveal no liens on any of the assets of the Loan Parties except for liens permitted by Section 6.02 of the Credit Agreement.

4.5The Borrower shall have delivered or caused to be delivered (a) a duly executed Patent Security Agreement, Trademark Security Agreement and Copyright Security Agreement with respect to any patent, trademark or copyright maintained by any Loan Party in which the Administrative Agent does not have a first priority perfected security interest for the benefit of the Lenders, (b) a Collateral Access Agreement signed by the owner of any warehouse of leased facility in which Collateral is located if a signed Collateral Access Agreement for such location is not currently in effect, (c) a deposit account control agreement signed by each depositary institution holding a deposit account maintained by any of the Loan Parties if a signed deposit account control agreement is not currently in effect, and (d) such other documents as the Administrative Agent may reasonably request in order to perfect (or maintain the perfection of) its first priority security interest in the Collateral for the benefit of the Lenders.

4.6The Borrower shall have paid all invoices presented to the Borrower for expense reimbursements due to the Administrative Agent or any Lender pursuant to Section 9.03 of the Credit Agreement in connection with the preparation and negotiation of this Amendment.

5Confirmation.  Borrower and Loan Guarantors hereby agree that (a) all obligations secured by the Collateral Documents shall continue to be secured thereby and all security interests and liens created by the Collateral Documents remain in effect and (b) the obligations guaranteed of the Loan Guarantors under the Loan Guaranty shall continue to be guaranteed thereby and the Loan Guaranty remains in effect.

6Further Assurances.  At Borrower’s sole cost and expense, Borrower and Loan Guarantors agree to execute and deliver to the Administrative Agent any and all agreements and other documentation and to take any and all actions reasonably requested by the Administrative Agent at any time to assure the perfection, protection, and enforcement of Lenders’ rights under the Loan Documents as amended hereby.

7Reaffirmation.  Except as modified hereby, all of the terms, covenants, and conditions of the Loan Documents are ratified, reaffirmed, and confirmed and shall continue in full force and effect.  Should any term or provision of the Loan Documents conflict with the terms or provisions contained in this Amendment, the terms and provisions of this Amendment  shall be controlling.

8Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.  Delivery of an executed signature page to this Amendment by facsimile transmission or scanned and electronically mailed shall be effective as delivery of a manually executed counterpart.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties have caused this Amendment No. 3 to be duly executed as of the day and year first above written.

PAR TECHNOLOGY CORPORATION
By:
	Name:  Ronald J. Casciano
	Title:    President and CEO
JPMORGAN CHASE BANK, N.A., as
Administrative Agent and as Lender
By:
	Name:  Jean M. Lamardo
	Title:    Underwriter III
NBT BANK, N.A., as Lender
By:
	Name:
	Title:

The following Persons, in their capacities as Loan Guarantors under the Credit Agreement, hereby consent to the foregoing Amendment No. 3.

PARTECH, INC.
By:
	Name:  Ronald J. Casciano
	Title:    Treasurer
PAR SPRINGER-MILLER SYSTEMS, INC.
By:
	Name:  Ronald J. Casciano
	Title:    Treasurer
PAR GOVERNMENT SYSTEMS
CORPORATION
By:
	Name:  Ronald J. Casciano
	Title:    Treasurer
ROME RESEARCH CORPORATION
By:
	Name:  Ronald J. Casciano
	Title:    Treasurer
PAR-SIVA CORPORATION
By:
	Name:  Ronald J. Casciano
	Title:    Treasurer
AUSABLE SOLUTIONS, INC.
By:
	Name:  Ronald J. Casciano
	Title:    Treasurer
SPRINGER-MILLER INTERNATIONAL, LLC
By:
	Name:  Ronald J. Casciano
	Title:    Treasurer

Amended Schedules 3.05, 3.14, 3.15, 3.18, 6.01 and 6.02 to the Credit Agreement

See Attached

Amended Exhibits A, B, D and E to the Pledge and Security Agreement

See Attached

EX-31.1

Exhibit 31.1

PAR TECHNOLOGY CORPORATION

STATEMENT OF EXECUTIVE OFFICER

I, Ronald J. Casciano certify that:

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

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

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

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

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

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

August 8, 2014	/s/Ronald J. Casciano
	Ronald J. Casciano
	Chief Executive Officer & President

E-1

EX-31.2

Exhibit 31.2

PAR TECHNOLOGY CORPORATION

STATEMENT OF EXECUTIVE OFFICER

I, Steven M. Malone, certify that:

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

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

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

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

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

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

August 8, 2014	/s/Steven M. Malone
	Steven M. Malone
	Vice President, Controller & Chief
	Accounting Officer

E-2

EX-32.1

Exhibit 32.1

PAR TECHNOLOGY CORPORATION

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

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PAR Technology Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Ronald J. Casciano, President & Chief Executive Officer and Steven M. Malone, Vice President, Controller & Chief Accounting Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

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

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

/s/Ronald J. Casciano

Ronald J. Casciano

Chief Executive Officer & President

August 8, 2014

/s/Steven M. Malone

Steven M. Malone

Vice President, Controller & Chief Accounting Officer

August 8, 2014

E-3

XML

Segment and Related Information, Reconciliation of Segment Assets (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Identifiable assets by geographic area [Abstract]
Identifiable assets	$ 120,748	$ 117,508
Goodwill by business segment [Abstract]
Goodwill	6,852	6,852
United States [Member]
Identifiable assets by geographic area [Abstract]
Identifiable assets	103,066	99,937
Other Countries [Member]
Identifiable assets by geographic area [Abstract]
Identifiable assets	17,682	17,571
Hospitality [Member] | Operating Segments [Member]
Identifiable assets by geographic area [Abstract]
Identifiable assets	85,257	81,386
Goodwill by business segment [Abstract]
Goodwill	6,116	6,116
Government [Member] | Operating Segments [Member]
Identifiable assets by geographic area [Abstract]
Identifiable assets	9,175	16,936
Goodwill by business segment [Abstract]
Goodwill	736	736
Other [Member]
Identifiable assets by geographic area [Abstract]
Identifiable assets	$ 26,316	$ 19,186

XML

Inventories

6 Months Ended

Jun. 30, 2014

Inventories [Abstract]

Inventories

Note 3 — Inventories

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

	(in thousands)
	June 30,		December 31,
	2014		2013
Finished Goods	$	10,274	$	12,033
Work in process		450		297
Component parts		4,316		3,558
Service parts		7,385		8,577
	$	22,425	$	24,465

XML

Accounts Receivable

6 Months Ended

Jun. 30, 2014

Accounts Receivable [Abstract]

Accounts Receivable

Note 2 — Accounts Receivable

	(in thousands)
	June 30,			December 31,
	2014			2013
Government segment:
Billed	$	10,159		$	16,932
Advanced billings		(2,330	)		(4,335	)
		7,829			12,597
Hospitality segment:
Accounts receivable - net		23,504			18,091
	$	31,333		$	30,688

At June 30, 2014 and December 31, 2013, the Company had recorded allowances for doubtful accounts of $553,000 and $561,000, respectively, against Hospitality accounts receivable.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net revenues:
Product	$ 22,953	$ 22,257	$ 41,545	$ 46,173
Service	14,920	15,314	29,170	31,334
Contract	19,529	21,945	43,228	48,683
Revenue, net	57,402	59,516	113,943	126,190
Costs of sales:
Product	15,815	14,841	28,718	31,314
Service	10,831	10,904	20,384	22,456
Contract	18,495	20,312	40,567	45,791
Cost of goods and services sold	45,141	46,057	89,669	99,561
Gross margin	12,261	13,459	24,274	26,629
Operating expenses:
Selling, general and administrative	9,513	9,494	18,776	19,699
Research and development	3,761	3,706	7,625	7,846
Operating expenses	13,274	13,200	26,401	27,545
Operating loss (loss) from continuing operations	(1,013)	259	(2,127)	(916)
Other income net	406	255	328	221
Interest expense	(25)	(13)	(42)	(26)
Income (loss) from continuing operations before benefit for income taxes	(632)	501	(1,841)	(721)
(Provision) benefit for income taxes	113	(253)	333	600
Income (loss) from continuing operations	(519)	248	(1,508)	(121)
Discontinued operations -
Loss on discontinued operations (net of tax)	0	(191)	0	(206)
Net Income (loss)	$ (519)	$ 57	$ (1,508)	$ (327)
Basic Earnings per Share:
Income (loss) from continuing operations (in dollars per share)	$ (0.03)	$ 0.02	$ (0.10)	$ (0.01)
Loss from discontinued operations (in dollars per share)	$ 0	$ (0.01)	$ 0	$ (0.01)
Net income (loss) (in dollars per share)	$ (0.03)	$ 0	$ (0.10)	$ (0.02)
Diluted Earnings per Share:
Income (loss) from continuing operations (in dollars per share)	$ (0.03)	$ 0.02	$ (0.10)	$ (0.01)
Loss from discontinued operations (in dollars per share)	$ 0	$ (0.01)	$ 0	$ (0.01)
Net income (loss) (in dollars per share)	$ (0.03)	$ 0	$ (0.10)	$ (0.02)
Weighted average shares outstanding
Basic (in shares)	15,612	15,171	15,473	15,162
Diluted (in shares)	15,612	15,340	15,473	15,162

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net loss	$ (1,508,000)	$ (327,000)
Loss from discontinued operations	0	206,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,661,000	1,256,000
Provision for bad debts	205,000	233,000
Provision for obsolete inventory	1,534,000	1,344,000
Equity based compensation	802,000	(282,000)
Deferred income tax	(355,000)	(659,000)
Changes in operating assets and liabilities:
Accounts receivable	(850,000)	(308,000)
Inventories	506,000	(3,408,000)
Income tax receivable/payable	(441,000)	(698,000)
Other current assets	169,000	(219,000)
Other assets	(221,000)	359,000
Accounts payable	539,000	(4,481,000)
Accrued salaries and benefits	(701,000)	(652,000)
Accrued expenses	1,010,000	(1,725,000)
Customer deposits	(320,000)	(494,000)
Deferred service revenue	3,751,000	2,114,000
Other long-term liabilities	(10,000)	430,000
Net cash provided by (used in) operating activities-continuing operations	5,771,000	(7,311,000)
Net cash used in operating activities-discontinued operations	0	0
Net cash provided by (used in) operating activities	5,771,000	(7,311,000)
Cash flows from investing activities:
Capital expenditures	(1,171,000)	(477,000)
Capitalization of software costs	(1,526,000)	(1,626,000)
Net cash used in investing activities	(2,697,000)	(2,103,000)
Cash flows from financing activities:
Payments of long-term debt	(82,000)	(78,000)
Proceeds from the exercise of stock options	3,000	54,000
Net cash used in financing activities	(79,000)	(24,000)
Effect of exchange rate changes on cash and cash equivalents	(57,000)	(450,000)
Net increase (decrease) in cash and cash equivalents	2,938,000	(9,888,000)
Cash and cash equivalents at beginning of period	10,015,000	19,475,000
Cash and cash equivalents at end of period	12,953,000	9,587,000
Cash and equivalents of continuing operations at end of period	12,953,000	9,587,000
Cash paid during the period for:
Interest	42,000	26,000
Income taxes, net of (refunds)	$ 416,000	$ 734,000

XML

Stock Based Compensation (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 278,000	$ 64,000	$ 802,000	$ (282,000)
Unrecognized compensation expense	$ 1,600,000		$ 1,600,000
2005 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under plan approved by directors (in shares)	235,000		235,000
2005 Equity Incentive Plan [Member] | Performance Based Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under plan approved by directors (in shares)	105,000		105,000

XML

Segment and Related Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014 H Segment	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Segment and Related Information [Abstract]
Number of reportable segments	2
Number of hours of telephone support for hospitality segment (in hours)	24
Information as to the Company's segments [Abstract]
Revenues	$ 57,402	$ 59,516	$ 113,943	$ 126,190
Operating income (loss) from continuing operations	(1,013)	259	(2,127)	(916)
Other income, net	406	255	328	221
Interest expense	(25)	(13)	(42)	(26)
Income (loss) from continuing operations before benefit for income taxes	(632)	501	(1,841)	(721)
Depreciation and amortization	831	712	1,661	1,256
Capital expenditures	1,116	1,258	2,697	2,103
United States [Member]
Information as to the Company's segments [Abstract]
Revenues	49,771	49,151	99,326	107,165
Other Countries [Member]
Information as to the Company's segments [Abstract]
Revenues	7,631	10,365	14,617	19,025
Hospitality [Member] | Operating Segments [Member]
Information as to the Company's segments [Abstract]
Revenues	37,873	37,571	70,715	77,507
Operating income (loss) from continuing operations	(1,765)	(971)	(3,826)	(2,693)
Depreciation and amortization	749	687	1,494	1,056
Capital expenditures	767	1,258	2,208	2,030
Government [Member] | Operating Segments [Member]
Information as to the Company's segments [Abstract]
Revenues	19,529	21,945	43,228	48,683
Operating income (loss) from continuing operations	962	1,475	2,449	2,697
Depreciation and amortization	12	10	25	22
Capital expenditures	0	0	26	0
Other [Member]
Information as to the Company's segments [Abstract]
Operating income (loss) from continuing operations	(210)	(245)	(750)	(920)
Depreciation and amortization	70	15	142	178
Capital expenditures	$ 349	$ 0	$ 463	$ 73

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2014

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 — Summary of Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements have been prepared by PAR Technology Corporation (the “Company” or “PAR”) in accordance with U.S. generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements.  Accordingly, these interim financial statements do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of the Company, such unaudited statements include all adjustments (which comprise only normal recurring accruals) necessary for a fair presentation of the results for such periods.  The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results of operations to be expected for any future period.  The consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2013 included in the Company’s December 31, 2013 Annual Report to the Securities and Exchange Commission on Form 10-K.

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

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

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

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract]
Net income (loss)	$ (519)	$ 57	$ (1,508)	$ (327)
Other comprehensive loss net of tax:
Foreign currency translation adjustments	(95)	(132)	(85)	(449)
Comprehensive loss	$ (614)	$ (75)	$ (1,593)	$ (776)

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Earnings per share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings per share [Abstract]

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

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

	For the three months ended June 30,			For the three months ended June 30,
	2014			2013
Income (loss) from continuing operations	$	(519	)	$	248
Basic:
Shares outstanding at beginning of period		15,612			15,161
Weighted average shares issued during the period, net		-			10
Weighted average common shares, basic		15,612			15,171
Earnings (loss) from continuing operations per common share, basic	$	(0.03	)	$	0.02
Diluted:
Weighted average common shares, basic		15,612			15,171
Dilutive impact of stock options and restricted stock awards		-			169
Weighted average common shares, diluted		15,612			15,340
Earnings (loss) from continuing operations per common share, diluted	$	(0.03	)	$	0.02

	For the six months ended June 30,			For the six months ended June 30,
	2014			2013
Loss from continuing operations	$	(1,508	)	$	(121	)
Basic:
Shares outstanding at beginning of period		15,473			15,151
Weighted average shares issued during the period, net		-			11
Weighted average common shares, basic		15,473			15,162
Earnings (loss) from continuing operations per common share, basic	$	(0.10	)	$	(0.01	)
Diluted:
Weighted average common shares, basic		15,473			15,162
Dilutive impact of stock options and restricted stock awards		-			-
Weighted average common shares, diluted		15,473			15,162
Earnings (loss) from continuing operations per common share, diluted	$	(0.10	)	$	(0.01	)

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 01, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	PAR TECHNOLOGY CORP
Entity Central Index Key	0000708821
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		15,624,109
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014

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Segment and Related Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment and Related Information [Abstract]

Information of the Company's segments

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

	(in thousands)
	For the three months ended June 30,			For the three months ended June 30,			For the six months ended June 30,			For the six months ended June 30,
	2014			2013			2014			2013
Revenues:
Hospitality	$	37,873		$	37,571		$	70,715		$	77,507
Government		19,529			21,945			43,228			48,683
Total	$	57,402		$	59,516		$	113,943		$	126,190
Operating income (loss) from continuing operations:
Hospitality	$	(1,765	)	$	(971	)	$	(3,826	)	$	(2,693	)
Government		962			1,475			2,449			2,697
Other		(210	)		(245	)		(750	)		(920	)
		(1,013	)		259			(2,127	)		(916	)
Other income, net		406			255			328			221
Interest expense		(25	)		(13	)		(42	)		(26	)
Income (loss) from continuing operations before provision for income taxes	$	(632	)	$	501		$	(1,841	)	$	(721	)
Depreciation and amortization:
Hospitality	$	749		$	687		$	1,494		$	1,056
Government		12			10			25			22
Other		70			15			142			178
Total	$	831		$	712		$	1,661		$	1,256
Capital expenditures:
Hospitality	$	767		$	1,258		$	2,208		$	2,030
Government		-			-			26			-
Other		349			-			463			73
Total	$	1,116		$	1,258		$	2,697		$	2,103
Revenues by geographic area:
United States	$	49,771		$	49,151		$	99,326		$	107,165
Other Countries		7,631			10,365			14,617			19,025
Total	$	57,402		$	59,516		$	113,943		$	126,190

Identifiable assets by business segment

The following table represents identifiable assets by business segment:

	(in thousands)
	June 30,		December 31,
	2014		2013
Identifiable assets:
Hospitality	$	85,257	$	81,386
Government		9,175		16,936
Other		26,316		19,186
Total	$	120,748	$	117,508

Identifiable assets by geographic area

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

	2014		2013
United States	$	103,066	$	99,937
Other Countries		17,682		17,571
Total	$	120,748	$	117,508

Goodwill by business segment

The following table represents Goodwill by business segment:

	(in thousands)
	June 30,		December 31,
	2014		2013
Hospitality	$	6,116	$	6,116
Government		736		736
Total	$	6,852	$	6,852

Revenue percentage by customer/segment

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

	For the Three Months Ended June 30,			For the three Months Ended June 30,			For the six Months Ended June 30,			For the six Months Ended June 30,
	2014			2013			2014			2013
Hospitality segment:
McDonald’s Corporation		16	%		20	%		15	%		16	%
Yum! Brands, Inc.		17	%		16	%		14	%		15	%
Government segment:
U.S. Department of Defense		34	%		37	%		38	%		39	%
All Others		33	%		27	%		33	%		30	%
		100	%		100	%		100	%		100	%

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 12,953	$ 10,015
Accounts receivable-net	31,333	30,688
Inventories-net	22,425	24,465
Income tax refund	256	0
Deferred income taxes	4,694	3,747
Other current assets	3,249	3,418
Total current assets	74,910	72,333
Property, plant and equipment - net	5,935	5,494
Deferred income taxes	14,491	15,083
Goodwill	6,852	6,852
Intangible assets - net	15,664	15,071
Other assets	2,896	2,675
Total Assets	120,748	117,508
Current liabilities:
Current portion of long-term debt	169	166
Accounts payable	17,735	17,200
Accrued salaries and benefits	5,962	6,663
Accrued expenses	3,711	2,701
Customer deposits	751	1,071
Deferred service revenue	15,921	12,170
Income taxes payable	0	185
Total current liabilities	44,249	40,156
Long-term debt	833	918
Other long-term liabilities	3,705	3,714
Liabilities Total	48,787	44,788
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; 17,332,218 and 17,301,925 shares issued; 15,624,109 and 15,593,816 outstanding	347	344
Capital in excess of par value	44,466	43,635
Retained earnings	33,608	35,116
Accumulated other comprehensive loss	(624)	(539)
Treasury stock, at cost, 1,708,109 shares	(5,836)	(5,836)
Total shareholders' equity	71,961	72,720
Total Liabilities and Shareholders' Equity'	$ 120,748	$ 117,508

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Earnings per share

6 Months Ended

Jun. 30, 2014

Earnings per share [Abstract]

Earnings per share

Note 6 — Earnings per share

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

For the three and six months ended June 30, 2014 there was no anti-dilutive stock options outstanding as the Company reported a net loss for both periods.  For the three months ended June 30, 2013, there were 474,000 anti-dilutive stock options outstanding and none outstanding for the six months ended June 30, 2013 as the Company reported a net loss.

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

	For the three months ended June 30,			For the three months ended June 30,
	2014			2013
Income (loss) from continuing operations	$	(519	)	$	248
Basic:
Shares outstanding at beginning of period		15,612			15,161
Weighted average shares issued during the period, net		-			10
Weighted average common shares, basic		15,612			15,171
Earnings (loss) from continuing operations per common share, basic	$	(0.03	)	$	0.02
Diluted:
Weighted average common shares, basic		15,612			15,171
Dilutive impact of stock options and restricted stock awards		-			169
Weighted average common shares, diluted		15,612			15,340
Earnings (loss) from continuing operations per common share, diluted	$	(0.03	)	$	0.02

	For the six months ended June 30,			For the six months ended June 30,
	2014			2013
Loss from continuing operations	$	(1,508	)	$	(121	)
Basic:
Shares outstanding at beginning of period		15,473			15,151
Weighted average shares issued during the period, net		-			11
Weighted average common shares, basic		15,473			15,162
Earnings (loss) from continuing operations per common share, basic	$	(0.10	)	$	(0.01	)
Diluted:
Weighted average common shares, basic		15,473			15,162
Dilutive impact of stock options and restricted stock awards		-			-
Weighted average common shares, diluted		15,473			15,162
Earnings (loss) from continuing operations per common share, diluted	$	(0.10	)	$	(0.01	)

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Stock Based Compensation

6 Months Ended

Jun. 30, 2014

Stock Based Compensation [Abstract]

Stock Based Compensation

Note 5 — Stock Based Compensation

The Company applies the fair value recognition provisions of ASC Topic 718 Stock-Based Compensation.  The Company recorded stock based compensation of $278,000 and $802,000 for the three and six months ended June 30, 2014, respectively.  Total stock-based compensation expense included within operating expenses for the three and six months ended June 30, 2013 was $64,000 and a net benefit of $282,000, respectively.  At June 30, 2014, the unrecognized compensation expense related to non-vested equity awards was $1.6 million (net of estimated forfeitures), which is expected to be recognized as compensation expense in fiscal years 2014 through 2017.

During 2014, the Company granted a total of 235,000 equity awards to various employees as approved by the Company’s Compensation Committee of its Board of Directors, under the 2005 Equity Incentive Plan.  Included within the equity grants were approximately 105,000 performance based restricted stock awards which vest upon the achievement of Business Unit and Company Wide financial goals relative to fiscal years 2014 through 2016.  These equity awards are forfeited if the performance conditions are not achieved for each fiscal year.  For the three and six month period ended June 30, 2014, the Company has assumed that the all performance conditions related to the aforementioned awards will be achieved, and therefore the related compensation expense for said awards has been recorded.

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Earnings per share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings per share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	474,000	0	0
Reconciliation of the weighted average shares outstanding for the basic and diluted EPS computations [Abstract]
Income (loss) from continuing operations	$ (519)	$ 248	$ (1,508)	$ (121)
Basic:
Shares outstanding at beginning of period (in shares)	15,612,000	15,161,000	15,473,000	15,151,000
Weighted average shares issued during the period, net (in shares)	0	10,000	0	11,000
Weighted average common shares, basic (in shares)	15,612,000	15,171,000	15,473,000	15,162,000
Earnings (loss) from continuing operations per common share, basic (in dollars per share)	$ (0.03)	$ 0.02	$ (0.10)	$ (0.01)
Diluted:
Weighted average common shares, basic (in shares)	15,612,000	15,171,000	15,473,000	15,162,000
Dilutive impact of stock options and restricted stock awards (in shares)	0	169,000	0	0
Weighted average common shares, diluted (in shares)	15,612,000	15,340,000	15,473,000	15,162,000
Earnings (loss) from continuing operations per common share, diluted (in dollars per share)	$ (0.03)	$ 0.02	$ (0.10)	$ (0.01)

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Accounts Receivable (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Accounts Receivable [Abstract]
Accounts receivable-net	$ 31,333,000	$ 30,688,000
Allowances for doubtful accounts	553,000	561,000
Government segment [Member]
Accounts Receivable [Abstract]
Accounts receivable-net	7,829,000	12,597,000
Government segment [Member] | Billed [Member]
Accounts Receivable [Abstract]
Accounts receivable-net	10,159,000	16,932,000
Government segment [Member] | Advance billings [Member]
Accounts Receivable [Abstract]
Accounts receivable-net	(2,330,000)	(4,335,000)
Hospitality segment [Member]
Accounts Receivable [Abstract]
Accounts receivable-net	$ 23,504,000	$ 18,091,000

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Inventories (Tables)

6 Months Ended

Jun. 30, 2014

Inventories [Abstract]

Components of inventory

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

	(in thousands)
	June 30,		December 31,
	2014		2013
Finished Goods	$	10,274	$	12,033
Work in process		450		297
Component parts		4,316		3,558
Service parts		7,385		8,577
	$	22,425	$	24,465

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Segment and Related Information

6 Months Ended

Jun. 30, 2014

Segment and Related Information [Abstract]

Segment and Related Information

Note 7 — Segment and Related Information

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

The Company has two reportable segments, Hospitality and Government.  The Hospitality segment offers integrated solutions to the hospitality industry which include hardware platforms and software applications utilized at restaurants, resorts, hotels and spas.  In addition, the Company also provides technology to support food safety compliance and task management capabilities for retailers, grocers and restaurants.  The Company’s Hospitality segment offers customer support including field service, installation, twenty-four hour telephone support and depot repair.  The Government segment delivers technical expertise in Intelligence, Surveillance & Reconnaissance advanced systems and software solutions to the Federal Government and also provides communications and information technology support services to the United States Department of Defense.  Intersegment sales and transfers are not significant.

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

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

	(in thousands)
	For the three months ended June 30,			For the three months ended June 30,			For the six months ended June 30,			For the six months ended June 30,
	2014			2013			2014			2013
Revenues:
Hospitality	$	37,873		$	37,571		$	70,715		$	77,507
Government		19,529			21,945			43,228			48,683
Total	$	57,402		$	59,516		$	113,943		$	126,190
Operating income (loss) from continuing operations:
Hospitality	$	(1,765	)	$	(971	)	$	(3,826	)	$	(2,693	)
Government		962			1,475			2,449			2,697
Other		(210	)		(245	)		(750	)		(920	)
		(1,013	)		259			(2,127	)		(916	)
Other income, net		406			255			328			221
Interest expense		(25	)		(13	)		(42	)		(26	)
Income (loss) from continuing operations before provision for income taxes	$	(632	)	$	501		$	(1,841	)	$	(721	)
Depreciation and amortization:
Hospitality	$	749		$	687		$	1,494		$	1,056
Government		12			10			25			22
Other		70			15			142			178
Total	$	831		$	712		$	1,661		$	1,256
Capital expenditures:
Hospitality	$	767		$	1,258		$	2,208		$	2,030
Government		-			-			26			-
Other		349			-			463			73
Total	$	1,116		$	1,258		$	2,697		$	2,103
Revenues by geographic area:
United States	$	49,771		$	49,151		$	99,326		$	107,165
Other Countries		7,631			10,365			14,617			19,025
Total	$	57,402		$	59,516		$	113,943		$	126,190

The following table represents identifiable assets by business segment:

	(in thousands)
	June 30,		December 31,
	2014		2013
Identifiable assets:
Hospitality	$	85,257	$	81,386
Government		9,175		16,936
Other		26,316		19,186
Total	$	120,748	$	117,508

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

	2014		2013
United States	$	103,066	$	99,937
Other Countries		17,682		17,571
Total	$	120,748	$	117,508

The following table represents Goodwill by business segment:

	(in thousands)
	June 30,		December 31,
	2014		2013
Hospitality	$	6,116	$	6,116
Government		736		736
Total	$	6,852	$	6,852

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

	For the Three Months Ended June 30,			For the three Months Ended June 30,			For the six Months Ended June 30,			For the six Months Ended June 30,
	2014			2013			2014			2013
Hospitality segment:
McDonald’s Corporation		16	%		20	%		15	%		16	%
Yum! Brands, Inc.		17	%		16	%		14	%		15	%
Government segment:
U.S. Department of Defense		34	%		37	%		38	%		39	%
All Others		33	%		27	%		33	%		30	%
		100	%		100	%		100	%		100	%

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Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2014

Accounts Receivable [Abstract]

Accounts receivable

Accounts Receivable

	(in thousands)
	June 30,			December 31,
	2014			2013
Government segment:
Billed	$	10,159		$	16,932
Advanced billings		(2,330	)		(4,335	)
		7,829			12,597
Hospitality segment:
Accounts receivable - net		23,504			18,091
	$	31,333		$	30,688

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Identifiable intangible assets (Tables)

6 Months Ended

Jun. 30, 2014

Identifiable intangible assets [Abstract]

Components of identifiable intangible assets

The components of identifiable intangible assets are:

	(in thousands)
	June 30,			December 31,
	2014			2013
Acquired and internally developed software costs	$	18,165		$	16,640
Trademarks (non-amortizable)		1,800			1,800
		19,965			18,440
Less accumulated amortization		(4,301	)		(3,369	)
	$	15,664		$	15,071

Future amortization of intangible assets

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

2014	$	1,061
2015		2,268
2016		2,237
2017		2,137
2018		2,034
Thereafter		4,127
Total	$	13,864

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Identifiable intangible assets (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Software costs capitalized	$ 532,000	$ 965,000	$ 1,526,000	$ 1,626,000
Amortization of capitalized software costs	468,000	400,000	932,000	492,000
Components of identifiable intangible assets [Abstract]
Intangible assets - gross	19,965,000		19,965,000		18,440,000
Less accumulated amortization	(4,301,000)		(4,301,000)		(3,369,000)
Intangible assets - net	15,664,000		15,664,000		15,071,000
Future amortization of intangible assets assuming straight-line amortization of capitalized software costs [Abstract]
2014	1,061,000		1,061,000
2015	2,268,000		2,268,000
2016	2,237,000		2,237,000
2017	2,137,000		2,137,000
2018	2,034,000		2,034,000
Thereafter	4,127,000		4,127,000
Total	13,864,000		13,864,000
Acquired and internally developed software costs [Member]
Components of identifiable intangible assets [Abstract]
Intangible assets - gross	18,165,000		18,165,000		16,640,000
Trademarks (non-amortizable) [Member]
Components of identifiable intangible assets [Abstract]
Intangible assets - gross	$ 1,800,000		$ 1,800,000		$ 1,800,000
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Remaining estimated economic life of the product			3 years
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Remaining estimated economic life of the product			7 years

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Segment and Related Information, Revenue By Major Customer (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	100.00%	100.00%	100.00%	100.00%
Hospitality segment [Member] | McDonald's Corporation [Member] | Operating Segments [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	16.00%	20.00%	15.00%	16.00%
Hospitality segment [Member] | Yum! Brands, Inc. [Member] | Operating Segments [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	17.00%	16.00%	14.00%	15.00%
Government segment [Member] | U.S. Department of Defense [Member] | Operating Segments [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	34.00%	37.00%	38.00%	39.00%
All Others [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by customer (in hundredths)	33.00%	27.00%	33.00%	30.00%

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2014	Dec. 31, 2013
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)	17,332,218	17,301,925
Common stock, outstanding (in shares)	15,624,109	15,593,816
Treasury stock, at cost (in shares)	1,708,109	1,708,109

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Identifiable intangible assets

6 Months Ended

Jun. 30, 2014

Identifiable intangible assets [Abstract]

Identifiable intangible assets

Note 4 — Identifiable intangible assets

The Company capitalizes certain costs related to the development of computer software sold by its Hospitality segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs in the period the costs are incurred.  Software development costs incurred after establishing technological feasibility (as defined within ASC 985-20) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers.  Software costs capitalized during the three months and six months ended June 30, 2014 were $532,000 and $1,526,000, respectively.  Software costs capitalized during the three and six months ended June 30, 2013 were $965,000 and $1,626,000, respectively.

Annual amortization, charged to cost of sales when the product is available for general release to customers, is computed using the greater of (a) the straight-line method over the remaining estimated economic life of the product, generally three to seven years or (b) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization of capitalized software costs for the three and six months ended June 30, 2014 were $ 468,000 and $932,000, respectively.  Amortization for the three and six months ended June 30, 2013 were $400,000 and $492,000, respectively.

The components of identifiable intangible assets are:

	(in thousands)
	June 30,			December 31,
	2014			2013
Acquired and internally developed software costs	$	18,165		$	16,640
Trademarks (non-amortizable)		1,800			1,800
		19,965			18,440
Less accumulated amortization		(4,301	)		(3,369	)
	$	15,664		$	15,071

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

2014	$	1,061
2015		2,268
2016		2,237
2017		2,137
2018		2,034
Thereafter		4,127
Total	$	13,864

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Component of inventory use in hospitality product [Abstract]
Finished goods	$ 10,274	$ 12,033
Work in process	450	297
Component parts	4,316	3,558
Service parts	7,385	8,577
Inventory net	$ 22,425	$ 24,465