Washington, D. C. 20549
                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                  For the Fiscal Year Ended December 31, 2005.
                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

             For the Transition Period From __________ to __________

                          Commission File Number 1-9720

                           PAR TECHNOLOGY CORPORATION
             (Exact name of registrant as specified in its charter)

       Delaware                                                 16-1434688
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification Number)

    PAR Technology Park
    8383 Seneca Turnpike
    New Hartford, New York                                       13413-4991
(Address of principal executive offices)                         (Zip Code)

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

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

                                                    Name of Each Exchange on
          Title of Each Class                          Which Registered
      Common Stock, $.02 par value                  New York Stock Exchange

     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. Yes [ ]  No [X]

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

     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 [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes [ ] No [X]

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

Large Accelerated Filer [ ]   Accelerated Filer [X]   Non-Accelerated Filer [ ]

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

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  registrant   based  on  the  average  price  as  of  February  28,  2006  -
$133,231,356.

     The  number of shares  outstanding  of  registrant's  common  stock,  as of
February 28, 2006 - 14,154,870 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the  registrant's  proxy  statement in connection with its 2006
annual meeting of stockholders are incorporated by reference into Part III.

<PAGE>




                           PAR TECHNOLOGY CORPORATION

                                TABLE OF CONTENTS
                                    FORM 10-K

--------------------------------------------------------------------------------
     Item Number
--------------------------------------------------------------------------------

                                     PART I

         Item 1.        Business
         Item 1A.       Risk Factors
         Item 2.        Properties
         Item 3.        Legal Proceedings

                                     PART II

         Item 5.        Market for the Registrant's Common Stock, Related
                        Stockholder Matters and Issuer Purchases of
                        Equity Securities
         Item 6.        Selected Financial Data
         Item 7.        Management's Discussion and Analysis of
                        Financial Condition and Results of Operations
         Item 7A.       Quantitative and Qualitative Disclosures
                        About Market Risk
         Item 8.        Financial Statements and Supplementary Data
         Item 9A.       Controls and Procedures

                                    PART III

         Item 10.       Directors and Executive Officers of the Registrant
         Item 11.       Executive Compensation
         Item 12.       Security Ownership of Certain Beneficial Owners
                        and Management and Related Stockholder Matters
         Item 13.       Certain Relationships and Related Transactions
         Item 14.       Principal Accountant Fees and Services

                                     PART IV

         Item 15.       Exhibits, Financial Statement Schedules, and
                        Reports on Form 8-K

                        Signatures


<PAGE>

"Safe Harbor"  Statement under the Private  Securities  Litigation Reform Act of
1995


     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,   an  expected  increase  in  funding  by  the  U.S.
Government relating to the Company's logistics management contracts,  the impact
of current world events on our results of  operations,  the effects of inflation
on  our  margins,  and  the  effects  of  interest  rate  and  foreign  currency
fluctuations  on our results of operations) are made pursuant to the safe harbor
provisions of the Private Securities  Litigation Reform Act of 1995. When we use
words such as "intend," "anticipate,"  "believe," "estimate," "plan," "will," or
"expect",  we  are  making  forward-looking  statements.  We  believe  that  the
assumptions and expectations  reflected in such  forward-looking  statements are
reasonable,  based on  information  available to us on the date  hereof,  but we
cannot assure you that these  assumptions  and  expectations  will prove to have
been correct or that we will take any action that we presently  may be planning.
We have disclosed  certain  important factors that could cause our actual future
results to differ materially from our current  expectation,  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  statement if we obtain new information or
upon the occurrence of future events or otherwise.

<PAGE>
                           PAR TECHNOLOGY CORPORATION

                                     PART I

Item 1:  Business

     PAR  Technology  Corporation  (PAR or the  Company)  operates  two business
segments: Hospitality and Government. PAR's largest subsidiary, ParTech, Inc. is
a leading  provider of  management  technology  solutions,  including  hardware,
software, professional and traditional services to businesses in the hospitality
and  retail  industries.  The  Company  is a dominant  supplier  of  hospitality
technology  systems  with  over  40,000  systems  installed  in  more  than  100
countries.  PAR's hospitality  management  software  applications  assist in the
efficient  operation of hospitality  businesses and enterprises by managing data
from end-to-end and maximizing  profitability through more effective operations.
PAR's  professional  services'  mission is to assist businesses in achieving the
full maximized potential of their hospitality technology investment.

     PAR  is  a  provider  of  professional  services  and  enterprise  business
intelligence applications with solid long-term relationships with the restaurant
industry's two largest  corporations - McDonald's  Corporation  and Yum!  Brands
Inc.  McDonald's has over 31,000  restaurants in more than 120 countries and PAR
has been a selected  provider of restaurant  management  technology  systems and
lifecycle support services to McDonald's since 1980. Yum! Brands (which includes
Taco Bell, KFC and Pizza Hut, Long John Silver's and A&W Restaurants) has been a
loyal PAR customer  since the early 1980's.  Yum! has over 33,000 units globally
and PAR is the  sole  approved  supplier  of  restaurant  management  technology
systems to Taco Bell as well as the Point-of-Sale (POS) vendor of choice to KFC.
Other significant  hospitality chains where PAR is the POS vendor of choice are:
Boston Market, Chick-fil-A,  CKE Restaurants (including Hardees and Carl's Jr.),
Carnival Cruise Lines,  Loews Cineplex,  Papa Murphy's and large  franchisees of
the above mentioned brands.

     In  the  fourth  quarter  of  2005  the  Company   acquired   PixelPoint(R)
Technologies,  Inc.  a  privately  held  hospitality  technology  company  and a
provider of restaurant  management software  applications for full/table service
dining.  PixelPoint  is an innovative  leader,  developing  and  marketing  POS,
WebPOS, Wireless and Enterprise software suites for the table service restaurant
industry. It currently markets software in multiple languages to virtually every
major economic  center  worldwide.  PixelPoint has over 5,000  installations  in

<PAGE>

restaurants  around the  globe.  Their  integrated  software  solution  includes
HeadOffice(TM) enterprise management,  PocketPOS(TM) a wireless application that
is seamless to their connected  capability and allows remote order taking in the
dining room,  Web-to-Go(TM),  on-line ordering  capability for customers via the
internet,  and MemberShare(TM) an in-store and enterprise level Loyalty and Gift
Card information sharing application.

     In the fourth quarter 2004 PAR acquired Springer-Miller Systems, a provider
of hospitality management solutions that meet/exceed the technology needs of all
types of Hospitality  enterprises including city-center hotels,  destination spa
and golf properties,  timeshare properties and casino resorts worldwide, setting
the  pace  as  a  pioneer  in  the  hospitality  industry.  PAR's  SMS  |Host(R)
Hospitality  Management System is distinguished  from other property  management
systems with its integrated design and unique approach to guest service. The SMS
|Host  product  suite,  that  includes  more  than  20  seamlessly   integrated,
guest-centric  application modules,  provides  hotel/resort staff with the tools
they need to  personalize  service,  surpass  guest  expectations,  and increase
property  revenues.  PAR maintains a distinctive  customer list in this business
including Pebble Beach Resorts, The Four Seasons,  Hard Rock Hotel & Casino, the
Mandarin Oriental Hotel Group, and Destination Hotels & Resorts.

     PAR also operates two  Government  contract  subsidiaries,  PAR  Government
Systems  Corporation  and  Rome  Research  Corporation.  PAR  develops  advanced
technology  systems  for  the  Department  of  Defense  and  other  Governmental
agencies.  Additionally,  PAR provides information technology and communications
support services to the U.S. Navy, U.S. Air Force and U.S. Army. PAR focuses its
computer-based  system  design  services on  providing  high  quality  technical
products and services, ranging from experimental studies to advanced operational
systems,  within a variety  of areas of  research,  including  radar,  image and
signal processing,  logistics  management  systems,  and geospatial services and
products.  With  more  than  three  decades  experience  in this  sector,  PAR's
Government  engineering  service  business  provides  management and engineering
services that include facilities operation and management. In addition,  through
Government-sponsored  research and development,  PAR has developed  technologies
with relevant commercial uses. A prime example of this "technology  transfer" is
the  Company's  point-of-sale  technology,  which was derived from  research and
development   involving  microchip   processing   technology  sponsored  by  the
Department of Defense.
<PAGE>

     Information  concerning the Company's industry segments for the three years
ended  December 31, 2005 is set forth in Note 12 to the  Consolidated  Financial
Statements included elsewhere herein.

     The Company's  common stock is traded on the New York Stock  Exchange under
the symbol "PTC". Our corporate headquarters are located at PAR Technology Park,
8383 Seneca Turnpike, New Hartford, New York 13413-4991;  telephone number (315)
738-0600. Our website address is  http://www.partech.com.  Information contained
on our website is not part of this prospectus.

     Unless the context otherwise requires,  the term "PAR" or "Company" as used
herein, means PAR Technology Corporation and its wholly-owned subsidiaries.
<PAGE>

                               Hospitality Segment

     PAR operates three  wholly-owned  subsidiaries in the Hospitality  business
segment,  ParTech, Inc., PAR Springer-Miller  Systems, Inc., and PixelPoint ULC.
PAR  is a  provider  of  integrated  enterprise  solutions  to  the  hospitality
industry.  The Company's  Point-of-Sale (POS) restaurant  management  technology
integrates   both   cutting-edge   software   applications   and  the  Company's
Pentium(R)-based  hardware platform. PAR's restaurant management system can host
fixed as well as wireless order-entry terminals, may include kitchen printers or
video monitors and/or third-party supplied peripherals networked via an Ethernet
LAN, and is accessible to enterprise-wide network  configurations.  In addition,
PAR is a leading provider of hospitality  management  solutions that satisfy the
property  management  technology  needs of an array of hospitality  enterprises,
including  city-center  hotels,  destination spa and golf properties,  timeshare
properties and casino resorts  worldwide.  PAR also provides  extensive  systems
integration  and  professional  service  capabilities  to  design,   tailor  and
implement  solutions  that  enable its  customers  to manage all aspects of data
collection and processing for single or multiple site enterprises from a central
location.

Products

     The technology requirements of the major hospitality  organizations include
rugged,  reliable,  management  systems capable of receiving,  transmitting  and
coordinating  large  numbers of  transactions  that require a quick and accurate
response.  The Company's integrated hospitality management software applications
permit its customers to configure their hospitality  technology  systems to meet
their order entry,  menu,  food  preparation,  delivery and property  management
coordination   needs  while   capturing  all  pertinent   data   concerning  the
transactions at the specific location.  PAR's hospitality management systems are
the result of more than 25 years of experience  and  knowledge  combined with an
in-depth  understanding  of the  hospitality  marketplace.  This  knowledge  and
expertise  is  reflected  in  the  innovative  product  design,   implementation
capability and systems integration skills.

     Software.  The Company's  range of restaurant  software  products cover the
hospitality  market with offerings that meet the requirements of large and small
operators/corporations  alike.  For  InFusion,  PAR's   restaurant-to-enterprise
software suite, the focus continues to be on Quick Service Restaurants (QSR) and
Quick Casual concepts with greater than 50 sites. The Company's GT/Exalt product
has a target market of QSR and  specifically,  Taco Bell. It is designed for the
small franchisee that is looking for a "turnkey" solution.  With the acquisition
of PixelPoint  Technologies,  Inc. in 2005, PAR's sales organization  introduced

<PAGE>

software  that is expected to increase and redefine  market  share.  U.S.  sales
teams are focusing PixelPoint sales on the Quick-Casual customer with 50 or less
restaurants, Coffee/Tea, Treaterie, and Table Service concepts.

     InFusion  is  comprised  of  InTouch(TM)   POS,   InForm(TM)  Back  Office,
InSynch(TM) Enterprise Configuration and InQuire(TM) Enterprise Reporting. PAR's
InFusion  suite is a robust,  feature-rich  product.  InTouch is a  multi-brand,
multi-concept  application,  containing  rich  features  and  functions  such as
real-time  mirror  imaging  of  critical  data,   on-line   graphical  help  and
interactive diagnostics, all presented with intuitive graphical user interfaces.
In addition,  PAR's back office management software,  InForm,  allows restaurant
owners to  control  critical  food and labor  costs  using  intuitive  tools for
forecasting,  labor scheduling and inventory management.  The InSynch Enterprise
Configuration  manager allows for  business-wide  management of diverse  concept
menus,  security  settings and system  parameters all from one central location.
InQuire Enterprise  Reporting offers a web-based reporting leveraging the latest
technology  from  Microsoft's  .Net  platform.   InQuire's  Executive  Dashboard
provides proactive business intelligence for the entire organization, as well as
automated management reporting and process integration. In addition, the Company
offers streamlined POS software,  GT/Exalt.  GT/Exalt provides restaurant owners
with increased  cash security,  improved  customer  service and highly  flexible
kitchen  and  drive-thru  functionality.   The  PixelPoint  integrated  software
solution includes PixelPoint(R) POS, HeadOffice enterprise management, PocketPOS
a wireless application that is seamless to their connected capability and allows
remote order taking in the dining room,  Web-to-Go,  on-line ordering capability
for customers via the internet, and MemberShare an in-store and enterprise level
Loyalty and Gift Card information sharing application.

     PAR is also a provider  of software to the  hotel/resort  industry.  Today,
more and more  hospitality-oriented  businesses  are  managing  information  and
leveraging their  relationships  with customers  through  integrated  technology
systems. There are two key and complementary aspects to system integration.  One
is to provide a seamless  user  interface  to manage all aspects of the customer
experience. The second is to ensure all aspects of customer activity become part
of a single database. To accomplish this, every point of guest contact and every
interaction  with the customer must be managed within the same  software.  PAR's
SMS|Host  Hospitality  Management System provides the most efficient  automation
process to handle business  functions within a hotel/resort--a  check-in,  a spa
appointment,  or a retail  purchase for  instance.  PAR's  SMS|Host  Hospitality
Management System is distinguished from other property management systems by its
truly  integrated  design and unique  approach to guest  service.  The  SMS|Host
product suite, including over 20 seamlessly  integrated,  guest-centric modules,
provides  resort  staff  with  the  tools  they  need  to  personalize  service,

<PAGE>

anticipate guest needs, and consistently exceed guest expectations. PAR SMS also
offers  SpaSoft(R)  and SMS|Touch  Fine Dining,  two  stand-alone  applications.
SpaSoft is designed to meet the unique  needs of the spa  industry.  Focusing on
activity scheduling,  resource management,  inventory management,  point-of-sale
and reporting,  SpaSoft assists in the total management of hotel/resort spas and
day spas. Because SpaSoft was specifically  designed for the unique needs of the
spa  industry,  it  assists  the spa  staff  in  providing  the  individualized,
impeccable  guest service that their most  important  clients desire and expect.
The SMS|Touch  Fine Dining  product suite is a robust fine dining  point-of-sale
system designed to increase revenue in the property's food and beverage outlets.

     Hardware.  In 2005,  the Company  introduced  ViGo(TM),  its 5th generation
hardware  platform,  designed to be  durable,  scalable,  integrated  and highly
serviceable.  Both ViGo and POS4XP(TM),  PAR's 4th generation hardware platform,
are Pentium-designed  systems developed to host the most powerful  point-of-sale
software applications in the hospitality industry.  ViGo offers the hospitality,
retail and entertainment  industries an innovative design with more options than
any other  hardware  platform in the  marketplace.  Both ViGo and POS4XP designs
utilize open architecture  with industry standard  components and are compatible
with the most  popular  operating  systems.  The  hardware  platforms  support a
distributed  processing  environment  and  incorporate  an advanced  hospitality
management  technology  system,  utilizing  Intel  microprocessors,  standard PC
expansion slots,  Ethernet LAN, standard Centronics printer ports as well as USB
ports.  The hardware  systems  supply their  industry-standard  components  with
features for  hospitality  applications  such as multiple  video ports.  The POS
systems utilize distributed  processing  architecture to integrate a broad range
of PAR and  third-party  peripherals  and are  designed to  withstand  the harsh
hospitality   environments.   Both   hardware   platforms   have   a   favorable
price-to-performance  ratio  over the life of the system as a result of their PC
compatibility, ease of expansion and high reliability design.

     Systems Integration and Professional  Services.  PAR's ability to offer the
full spectrum of integration,  implementation,  installation,  maintenance,  and
support services is one of the Company's key  differentiators.  PAR continues to
work in unison with its customers to identify and address the latest hospitality
technology   requirements  by  creating   interfaces  to  equipment,   including
innovations   such  as   automated   cooking   and   drink-dispensing   devices,
customer-activated  terminals and order display units located inside and outside
of the customer's  business site. The Company  provides its systems  integration
expertise to interface  specialized  components,  such as video  monitors,  coin
dispensers and  non-volatile  memory for  journalizing  transaction  data, as is
required in some  international  applications.  PAR is comprised of  experienced

<PAGE>

individuals  with diverse  hospitality  backgrounds in both  hotels/resorts  and
restaurants.   PAR  has  the  knowledge  and  expertise  to  recommend  property
management   solutions  which  can  be  used  most  effectively  in  hotels  and
restaurants,  with emphasis on maximizing return on investment. In addition, the
Company has secured  strategic  partnerships  with third-party  organizations to
offer a variety of credit,  debit and gift card payment options that allow quick
service  restaurants,  convenience  stores,  gasoline stations and drugstores to
process  cashless  payments  quickly and  efficiently.  The Company's  Technical
Services  department  continuously  evaluates new  technologies and adopts those
that allow PAR to provide  significant  improvements  in  customer's  day-to-day
systems.  From hand-held  wireless devices to advances in internet  performance,
the technical  staff is available for  consultation  on a wide variety of topics
including  network  infrastructures,   system  functionality,  operating  system
platforms, and hardware expandability.

Installation and Training

     In the United  States,  Canada,  Europe,  South  Africa,  the Middle  East,
Australia and Asia, PAR personnel provide installation, training and integration
services  on a  fixed-fee  basis  as a  normal  part of the  equipment  purchase
agreement.  In certain areas of North and South  America,  Europe and Asia,  the
Company  provides these  integration  services  through third parties.  Prior to
system  installation  and user  training,  hotel/resort  operators  can attend a
configuration  seminar,  during which  attendees  review  internal  policies and
procedures,  establish a software  configuration  and receive an overview of the
PAR SMS|Host product suite.  PAR provides  complete  application  training for a
site's staff as well as technical instruction for Information Systems personnel.
The PAR  training  team is  composed of  experienced  individuals  with  diverse
hospitality and technical backgrounds.

Maintenance and Service

     The Company offers a wide range of maintenance and support services as part
of its total solution for its targeted  hospitality  technology  markets. In the
North  American  region,  the Company  provides  comprehensive  maintenance  and
integration  services for the Company's  equipment and systems, as well as those
of third  parties,  through a 24-hour  central  telephone  customer  support and
diagnostic service in Boulder,  Colorado,  as well as service centers in Europe,
South Africa, the Middle East, Australia and Asia. The Company believes that its
ability to address all support and  maintenance  requirements  for a  customer's
hospitality  technology network provides it with a clear competitive  advantage.
PAR also  maintains  regional  support  centers  in three  additional  locations

<PAGE>

worldwide including Las Vegas,  Nevada in the US, Kuala Lumpur in Malaysia,  and
Kettering in the UK, that focus upon  servicing and  maintaining  PAR systems to
the  hotel/resort  markets  24  hours  a day,  seven  days a week.  The  Company
maintains a field service  network  consisting of nearly 100 locations  offering
on-site service and repair, as well as depot repair, overnight unit replacements
and  spare  unit  rentals.  At  the  time a  hospitality  technology  system  is
installed,  PAR trains customer  employees and managers to ensure  efficient and
effective  use  of  the  system.  If  a  problem  occurs  within  the  Company's
manufactured  technology  system (hardware and software),  PAR's current service
management  software products allow a service technician to diagnose the problem
by telephone or by remotely  dialing-in to the system, thus greatly reducing the
need for on-site service calls.

     The   Company's   service   organization   utilizes  a  suite  of  software
applications from Clarify,  Inc.  (Clarify) as its Customer Resource  Management
tool. Clarify allows PAR to demonstrate  compelling value and differentiation to
its  customers  through  the  utilization  of  its  extensive  and  ever-growing
knowledge  base to  efficiently  diagnose and resolve  customer-service  issues.
Clarify also enables PAR to compile the kind of in-depth information it needs to
spot trends and identify opportunities. A second software suite is a call center
CRM solution and knowledge base known as Connect-Care by Firstwave. Connect-Care
allows PAR to maintain a profile on each customer,  their  background,  hardware
and software details, client service history, and a problem-resolution database.
Analysis  of this data  allows  the  Company  to  optimize  customer  service by
identifying  trends in calls  and to work  with  customers  to  quickly  resolve
issues.  The same system is used by the PAR SMS Research and Development team as
a  real-time   communications  tool  between  these  technical   departments  to
coordinate software change management.

Sales & Marketing

     Sales in the hospitality technology market are often generated by initially
obtaining  the  acceptance of the corporate  chain as an approved  vendor.  Upon
approval, marketing efforts are then directed to franchisees of the chain. Sales
efforts are also directed toward  franchisees of chains for which the Company is
not an approved  corporate vendor. The Company employs direct sales personnel in
several sales groups.  The Major Accounts Group works with large chain corporate
customers typically  operating more than 75 locations.  The Domestic Sales Group
targets  franchisees  of the major chain  customers,  as well as smaller  chains
within the United  States.  The  International  Sales Group seeks sales to major
customers with locations overseas and to international chains that do not have a
presence in the United States. The Company's Business Partner  Development Sales


<PAGE>

Group targets  non-foodservice  markets such as retail,  convenience,  amusement
parks, movie theaters,  cruise lines, spas and other ticketing and entertainment
venues. This group also works with third-party dealers and value-added resellers
throughout the country. In 2005 PAR acquired the dealer/distribution  channel of
PixelPoint,  that  focuses  on  the  table  service  sector  of  restaurants  in
particular.  New sales in the hotel/resort technology market are often generated
by leads,  be it by word of mouth,  internet  searches,  media coverage or trade
show  presence.  Marketing  efforts  are  conducted  in the form of direct  mail
campaigns,  advertising and targeted telesales calls. The Company employs direct
sales  personnel  in several  sales  groups.  The Domestic  Sales Group  targets
independent, business class and luxury hotels and resorts and spas in the United
States,  Canada and the Caribbean.  The International Sales Group seeks sales to
independent  hotels and  resorts  outside of the United  States.  The  Corporate
Accounts Sales Group works with high profile corporate and chain clients such as
Mandarin Oriental Hotel Group, Destination Hotels and Resorts and Intrawest. The
Company's  Installed  Accounts  Sales Group works  solely with  clients who have
already  installed the SMS|Host  product suite. The Business  Development  group
focuses on  proactive  identification  and initial  penetration  of new business
channels for the SMS|Host, SMS|Touch and SpaSoft product lines worldwide.

Competition

     The competitive  landscape in the hospitality market is driven primarily by
functionality,  reliability,  quality, pricing, service and support. The Company
believes  that its  principal  competitive  advantages  include  its focus on an
integrated  technology  solution offering,  advanced  development  capabilities,
in-depth  industry  knowledge and expertise,  excellent product  reliability,  a
direct  sales  force  organization,  and the  quality of its  support  and quick
service response. The markets in which the Company transacts business are highly
competitive.  Most of our major  customers have approved  several  suppliers who
offer some form of sophisticated  hospitality  technology  system similar to the
Company's.  Major  competitors  include  Panasonic,  IBM  Corporation,   Radiant
Systems,  NCR,  Hotel  Information  Systems,  Visual  One,  Agilysis  and Micros
Systems.

Backlog

     At December  31, 2005,  the  Company's  backlog of unfilled  orders for the
Hospitality segment was approximately  $9,800,000 compared to $18,534,000 a year
ago.  All of the  present  orders are  expected  to be  delivered  in 2006.  The
Hospitality  segment orders are generally of a short-term nature and are usually
booked and shipped in the same fiscal year.
<PAGE>

Research and Development

     The highly technical nature of the Company's  hospitality products requires
a significant and continuous  research and development  effort.  Ongoing product
research and quality  development efforts are an integral part of all activities
within the Company.  Functional  and technical  enhancements  are actively being
made to our  products to increase  customer  satisfaction  and maintain the high
caliber of our software.  Research and development  expenses were  approximately
$9,355,000  in 2005,  $6,015,000  in 2004 and  $4,779,000  in 2003.  The Company
capitalizes  certain  software  costs in accordance  with Statement of Financial
Accounting Standards No. 86, Accounting for the Costs of Computer Software to be
Sold,  Leased or Otherwise  Marketed.  See Note 1 to the Consolidated  Financial
Statements included in Item 15 for further discussion.

Manufacturing and Suppliers

     The  Company  assembles  its  products  from  standard  components  such as
integrated  circuits and fabricated parts such as printed circuit boards,  metal
parts and castings,  most of which are  manufactured  by others to the Company's
specifications.  The  Company  depends on outside  suppliers  for the  continued
availability  of its  components  and parts.  Although  most items are generally
available from a number of different  suppliers,  the Company  purchases certain
components  from only one  supplier.  Items  purchased  from  only one  supplier
include certain  printers,  base castings and electronic  components.  If such a
supplier  should cease to supply an item, the Company  believes that new sources
could be found to provide the components.  However, added cost and manufacturing
delays  could  result and  adversely  affect the  business of the  Company.  The
Company has not experienced  significant  delays of this nature in the past, but
there can be no assurance  that delays in delivery due to supply  shortages will
not occur in the future.

Intellectual Property

     The  Company  owns  or  has  rights  to  certain  patents,  copyrights  and
trademarks,  but believes none of these intellectual  property rights provides a
material   competitive   advantage.   The  Company  relies  upon  non-disclosure
agreements,  license  agreements  and  applicable  domestic and foreign  patent,
copyright and trademark laws for protection of its intellectual property. To the
extent such protective measures are unsuccessful,  or the Company needs to enter
into protracted  litigation to enforce such rights the Company's  business could
be  adversely  impacted.  Similarly  there is no  assurance  that the  Company's
products will not become the subject of a third party claim of  infringement  or
misappropriation. To the extent such claims result in costly litigation or force
the Company to enter into royalty or license agreements rather than enter into a
prolonged  dispute the  Company's  business  could be  adversely  impacted.  The
Company also licenses certain third party software with its products.  While the
Company has maintained a strong  relationship  with its  licensors,  there is no
assurance  that such  relationship  will  continue or that the licenses  will be
continued under fees and terms acceptable to the Company.
<PAGE>
                               Government Segment

     PAR operates  two  wholly-owned  subsidiaries  in the  Government  business
segment, PAR Government Systems Corporation (PGSC) and Rome Research Corporation
(RRC).  These companies  provide the U.S.  Department of Defense (DoD) and other
federal  and  state  government  organizations  with a wide  range of  technical
services  and  products.  Significant  areas in which the  Company  is  involved
include:  design,  development,  and  integration  of  state-of-the-art  imagery
intelligence  systems  for  information  archive,   retrieval,  and  processing;
advanced   research  and  development  for  imaging  sensors;   development  and
operations of logistics management systems; and engineering and support services
for Government information technology and communications facilities.

     The Company's  offerings cover the entire  development cycle for Government
systems,  including  requirements analysis,  design specification,  development,
implementation, installation, test and evaluation.

Information Systems and Technology

     The  Information  Systems and Technology  (IS&T)  business  sector develops
integrated systems for imaging information archiving, processing,  exploitation,
and   visualization.   IS&T  is  the  system  integrator  for  the  Multi-Sensor
Integration facility at the Air Force Research Laboratory-Rome Research Site and
is a key  developer of the National  Geospatial-Intelligence  Agency (NGA) Image
Product Library (IPL).  The IPL provides access to a virtual network of archives
in support of the  operational  users of imagery.  The Company has a substantial
systems  integration  contract to support  interoperability  of new and emerging
commercial  imagery  exploitation and data management systems for U.S. Air Force
(USAF)  operations.  Since 1986,  the Company has been a key  contributor to the
full-scale  engineering  development  for the Joint  Surveillance  Target Attack
Radar System (Joint STARS) and more recently,  for the Affordable Moving Surface
Target Engagement (AMSTE) program.  The Company provides systems engineering and
software development for radar technologies that detect, track and target ground
vehicles.

Signal and Image Processing

     The  Signal  and  Image  Processing  (SIP)  business  sector  supports  the
development  and   implementation   of  complex  sensor  systems  including  the
collection  and  analysis of sensor  data.  The SIP group has  developed  sensor
concepts, algorithms, and real-time systems to address the difficult problems of
finding  low-contrast  targets against clutter background (e.g.,  finding cruise
missiles,  fighter aircraft,  and personnel against heavy terrain  backgrounds),
detecting man-made objects in dense foliage, and performing humanitarian efforts


<PAGE>

in support of the  removal of land mines  with  ground  penetrating  radar.  The
Company also supports numerous technology  demonstrations for the DoD, including
a multi-national NATO exercise of wireless communications  interoperability.  As
part of this  demonstration,  the Company  designed and built the Software Radio
Development System (SoRDS) for test and evaluation of communications  waveforms.
The Company has extended this  technology into public safety and law enforcement
via  the  Software   Adaptive  Advanced   Communications   (SAAC(R))  system,  a
multi-channel  communications  gateway intended to solve the problem of wireless
communications  interoperability.   The  Company  also  supports  Navy  airborne
infrared  surveillance  systems  through the  development  of  advanced  optical
sensors.

Geospatial Software and Modeling

     The Geospatial  Software and Modeling (GS&M) business sector performs water
resources modeling;  Geographic Information Systems (GIS) based data management,
and geospatial information technology development.  In particular, the Company's
Flood*WareTM  software tool and  methodology is being employed by New York State
in support of Federal Emergency  Management Agency's Map Modernization  Program.
Similar  technologies  are  used  in  support  of  water  quality  modeling  and
assessment applications for the NYC Watershed Protection Program.

Logistics Management Systems

     The Logistics  Management  Systems  (LMS)  business  sector  focuses on the
design,     development,     deployment    and    commercialization    of    the
CargoWatch(R)Logistics   Information   Management   System.   CargoWatch   is  a
comprehensive,   end-to-end  solution  for  the  monitoring  and  management  of
transport assets and cargo throughout the intermodal (i.e., port, highway, rail,
and ocean) transportation  lifecycle. The CargoWatch system is being implemented
under  a  multi-year   Cooperative   Agreement  with  the  U.S.   Department  of
Transportation/Maritime   Administration  (DOT/MARAD)  with  funds  specifically
authorized by Congress for CargoWatch  under the  Transportation  Equity Act for
the 21st Century (TEA-21) in 1998. CargoWatch uses  state-of-the-art  technology
to acquire Global  Positioning  System (GPS) location and equipment status data.
Wireless  communication  networks then  transmit the data to the LMS  Operations
Center, and a powerful geospatial database customizes the data to meet the needs
of each  customer and provide it to the customer over the Internet or via direct
linkage to existing (back-office) information systems.
<PAGE>

Information Technology and Communications Support Services

     The Company  provides a wide range of  technical  and  support  services to
sustain  mission  critical  components  of  the  Department  of  Defense  Global
Information  Grid.  These  services  include   continuous   operations,   system
enhancements  and maintenance of very low frequency  (VLF),  high frequency (HF)
and  very  high  frequency  (VHF)  radio  transmitter/receiver  facilities,  and
extremely  high  frequency  (EHF)  and  super  high  frequency  (SHF)  satellite
communication  heavy earth terminal  facilities.  The Company supports these DoD
communications  facilities,  as well as other  telecommunications  equipment and
information  systems,  at customer  locations in and outside of the  continental
United States. The various facilities, operating 24 hours a day, are integral to
the command and control of the nation's air, land and naval forces, and those of
United States coalition allies.

Test Laboratory and Range Operations

     The Company provides management,  engineering, and technical services under
several  contracts  with the U.S. Air Force and the U.S.  Navy.  These  services
include the planning,  execution,  and evaluation of tests at government  ranges
and laboratories operated and maintained by the Company. Test activities include
unique  components,  specialized  equipment,  and  advanced  systems  for radar,
communications,  electronic counter-measures, and integrated weapon systems. The
Company also develops  complex  measurement  systems in several  defense-related
areas of technology.

Government Contracts

     The  Company  performs  work  for  U.S.   Government  agencies  under  firm
fixed-price,  cost-plus-fixed-fee and time-and-material  contracts. The majority
of its  contracts are for one-year to five-year  terms.  There are several risks
associated with Government contracts.  For example,  contracts may be terminated
for the convenience of the Government any time the Government believes that such
termination would be in its best interests. In this circumstance, the Company is
entitled  to receive  payments  for its  allowable  costs  and,  in  general,  a
proportionate  share of its fee or profit for the work actually  performed.  The
Company's  business  with the U.S.  Government  is also  subject to other  risks
unique to the defense industry,  such as reduction,  modification,  or delays of
contracts or subcontracts if the Government's requirements, budgets, or policies
or  regulations  change.  The  Company  may also  perform  work  prior to formal
authorization  or prior to adjustment of the contract  price for increased  work

<PAGE>

scope, change orders and other funding  adjustments.  Additionally,  the Defense
Contract  Audit  Agency on a regular  basis  audits the books and records of the
Company.  Such  audits can result in  adjustments  to  contract  costs and fees.
Audits have been completed  through the Company's  fiscal year 2003 and have not
resulted in any material adjustments.

Marketing and Competition

     Marketing  begins  with  collecting  information  from a variety of sources
concerning  the  present and future  requirements  of the  Government  and other
potential  customers  for the  types  of  technical  expertise  provided  by the
Company. Although the Company believes it is positioned well in its chosen areas
of  image  and  signal  processing,  information  technology/communications  and
engineering  services,  competition for Government contracts is intense. Many of
the Company's competitors are major corporations, or their subsidiaries, such as
Lockheed-Martin,  Raytheon,  Northrop-Grumman,  BAE,  Harris,  and SAIC that are
significantly larger and have substantially greater financial resources than the
Company.  The Company  also  competes  with many smaller  companies  that target
particular segments of the Government market. Contracts are obtained principally
through  competitive  proposals  in response to  solicitations  from  Government
agencies  and prime  contractors.  The  principal  competitive  factors are past
performance,   the  ability  to  perform,  price,  technological   capabilities,
management  capabilities and service. In addition, the Company sometimes obtains
contracts  by  submitting  unsolicited  proposals.  Many  of the  Company's  DoD
customers are now migrating to commercial software standards,  applications, and
solutions.  In that manner,  the Company is utilizing its Internal  Research and
Development to migrate existing  solutions into software product lines that will
support the DoD geospatial community (i.e., NGA, USAF, etc.).

Backlog

     The dollar value of existing Government contracts at December 31, 2005, net
of  amounts  relating  to  work  performed  to  that  date,  was   approximately
$106,614,000,  of which  $35,470,000  was funded.  At  December  31,  2004,  the
comparable  amount was  approximately  $111,793,000,  of which  $35,107,000  was
funded.  Funded  amounts  represent  those amounts  committed  under contract by
Government  agencies and prime  contractors.  The  December 31, 2005  Government
contract   backlog  of  $106,614,000   represents  firm,   existing   contracts.
Approximately $51,000,000 of this amount is expected to be completed in calendar
year 2006, as funding is committed.


<PAGE>

                                    Employees

     As of December 31, 2005, the Company had 1,539 employees, approximately 54%
of whom are engaged in the Company's Hospitality segment, 43% of whom are in the
Government segment, and the remainder are corporate employees.

     Due to the highly technical nature of the Company's business, the Company's
future can be significantly  influenced by its ability to attract and retain its
technical  staff.  The  Company  believes  that it will be able to  fulfill  its
near-term needs for technical staff.

     Approximately  21% of the  Company's  employees  are covered by  collective
bargaining agreements. The Company considers its employee relations to be good.

                             Exchange Certifications

     The  certification of the CEO of PAR required by Section  303A.12(a) of the
New  York  Stock  Exchange  (NYSE)  Listed  Company  Manual,  relating  to PAR's
compliance with the NYSE's corporate governance listing standards, was submitted
to the NYSE on December 19, 2005 with no qualifications.

Item 1A:  Risk Factors

     We operate in a dynamic  and rapidly  changing  environment  that  involves
numerous risks and uncertainties.  The following section describes some, but not
all, of the risks and uncertainties that could have a material adverse effect on
our business, financial condition, results of operations and the market price of
our common stock,  and could cause our actual results to differ  materially from
those expressed or implied in our forward-looking statements.

A DECLINE  IN THE VOLUME OF  PURCHASES  MADE BY ANY ONE OF THE  COMPANY'S  MAJOR
CUSTOMERS WOULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS.

     A small  number of related  customers  have  historically  accounted  for a
majority of the  Company's  net  revenues in any given  fiscal  period.  For the
fiscal years ended December 31, 2005, 2004 and 2003,  aggregate sales to our top
two Hospitality segment customers,  McDonald's and Yum! Brands, amounted to 41%,
51% and 50%,  respectively,  of total revenues.  Most of the Company's customers
are not  obligated to provide us with any minimum  level of future  purchases or
with binding  forecasts of product purchases for any future period. In addition,

<PAGE>

major customers may elect to delay or otherwise change the timing of orders in a
manner that could adversely affect the Company's quarterly and annual results of
operations.  There can be no assurance that our current  customers will continue
to place  orders  with us,  or that we will be able to  obtain  orders  from new
customers.

AN  INABILITY  TO  PRODUCE  NEW  PRODUCTS  THAT  KEEP  PACE  WITH  TECHNOLOGICAL
DEVELOPMENTS  AND CHANGING  MARKET  CONDITIONS  COULD RESULT IN A LOSS OF MARKET
SHARE.

     The  products  we sell  are  subject  to rapid  and  continual  changes  in
technology. Our competitors offer products that have an increasingly wider range
of features and capabilities. We believe that in order to compete effectively we
must provide systems incorporating new technologies at competitive prices. There
can be no  assurance  that we will be able  to  continue  funding  research  and
development at levels  sufficient to enhance our current product  offerings,  or
that the Company  will be able to develop and  introduce  on a timely  basis new
products that keep pace with  technological  developments and emerging  industry
standards  and address the  evolving  needs of  customers.  There also can be no
assurance that we will not experience  difficulties that will result in delaying
or preventing  the  successful  development,  introduction  and marketing of new
products  in our  existing  markets,  or  that  our  new  products  and  product
enhancements will adequately meet the requirements of the marketplace or achieve
any significant degree of market acceptance. Likewise, there can be no assurance
as to the  acceptance  of our  products  in new  markets,  nor can  there be any
assurance  as to the success of our  penetration  of these  markets,  nor to the
revenue  or  profit  margins  realized  by the  Company  with  respect  to these
products. If any of our competitors were to introduce superior software products
at competitive  prices,  or if our software  products no longer met the needs of
the  marketplace  due  to  technological   developments  and  emerging  industry
standards,  our software  products may no longer retain any  significant  market
share.  If this were to occur,  we could be required to record a charge  against
capitalized  software  costs,  which  amount to $3.7  million as of December 31,
2005.

WE GENERATE MUCH OF OUR REVENUE FROM THE HOSPITALITY  INDUSTRY AND THEREFORE ARE
SUBJECT TO DECREASED REVENUES IN THE EVENT OF A DOWNTURN EITHER IN THAT INDUSTRY
OR IN THE ECONOMY AS A WHOLE.

     For the fiscal years ended  December 31,  2005,  2004 and 2003,  we derived
73%,  71% and 70%,  respectively,  of our total  revenues  from the  Hospitality
industry, primarily the quick service restaurant marketplace.  Consequently, our
Hospitality  technology  product sales are dependent in large part on the health
of the  Hospitality  industry,  which in turn is  dependent  on the domestic and
international  economy,  as well as factors such as consumer buying  preferences

<PAGE>

and weather  conditions.  Instabilities  or downturns in the Hospitality  market
could  disproportionately  impact our  revenues,  as clients may either exit the
industry  or delay,  cancel or reduce  planned  expenditures  for our  products.
Although  we believe we can assist the quick  service  restaurant  sector of the
Hospitality industry in a competitive environment,  given the cyclical nature of
that industry,  there can be no assurance that our profitability and growth will
continue.

WE DERIVE A PORTION OF OUR REVENUE  FROM  GOVERNMENT  CONTRACTS,  WHICH  CONTAIN
PROVISIONS UNIQUE TO PUBLIC SECTOR CUSTOMERS,  INCLUDING THE GOVERNMENT'S  RIGHT
TO MODIFY OR TERMINATE THESE CONTRACTS AT ANY TIME.

     For the fiscal years ended  December 31,  2005,  2004 and 2003,  we derived
27%, 29% and 30%, respectively,  of our total revenues from contracts to provide
technical  services  to  U.S.  Government  agencies  and  defense   contractors.
Contracts with U.S.  Government  agencies  typically provide that such contracts
are terminable at the convenience of the U.S. Government. If the U.S. Government
terminated a contract on this basis, we would be entitled to receive payment for
our allowable costs and, in general, a proportionate  share of our fee or profit
for work actually performed.  Most U.S. Government contracts are also subject to
modification or termination in the event of changes in funding.  As such, we may
perform  work  prior to formal  authorization,  or the  contract  prices  may be
adjusted  for  changes  in scope  of  work.  Termination  or  modification  of a
substantial  number  of our U.S.  Government  contracts  could  have a  material
adverse effect on our business, financial condition and results of operations.

     We perform  work for  various  U.S.  Government  agencies  and  departments
pursuant  to  fixed-price,  cost-plus  fixed  fee and  time-and-material,  prime
contracts  and  subcontracts.  Approximately  64% of the revenue that we derived
from  Government  contracts  for the year  ended  December  31,  2005  came from
fixed-price or time-and-material  contracts.  The balance of the revenue that we
derived from  Government  contracts in 2005 primarily came from cost-plus  fixed
fee contracts. Most of our contracts are for one-year to five-year terms.

     While  fixed-price  contracts  allow us to benefit from cost savings,  they
also expose us to the risk of cost overruns. If the initial estimates we use for
calculating  the  contract  price are  incorrect,  we can incur  losses on those
contracts.  In addition,  some of our  governmental  contracts  have  provisions
relating  to cost  controls  and audit  rights and, if we fail to meet the terms
specified in those contracts, then we may not realize their full benefits. Lower
earnings  caused by cost overruns  would have an adverse effect on our financial
results.
<PAGE>

     Under  time-and-materials  contracts,  we are paid for labor at  negotiated
hourly  billing  rates  and for  certain  expenses.  Under  cost-plus  fixed fee
contracts,  we are reimbursed for allowable costs and paid a fixed fee. However,
if our costs under either of these types of contract exceed the contract ceiling
or are  not  allowable  under  the  provisions  of the  contract  or  applicable
regulations, we may not be able to obtain reimbursement for all of our costs.

     If we are unable to control costs incurred in performing under each type of
contract,  such inability to control costs could have a material  adverse effect
on our financial  condition  and  operating  results.  Cost  over-runs  also may
adversely  affect our ability to sustain  existing  programs  and obtain  future
contract awards.

WE FACE  EXTENSIVE  COMPETITION  IN THE  MARKETS  IN WHICH WE  OPERATE,  AND OUR
FAILURE TO COMPETE EFFECTIVELY COULD RESULT IN PRICE REDUCTIONS AND/OR DECREASED
DEMAND FOR OUR PRODUCTS AND SERVICES.

     There are  several  suppliers  who  offer  Hospitality  management  systems
similar to ours.  Some of these  competitors are larger than PAR and have access
to substantially greater financial and other resources and, consequently, may be
able to obtain more favorable terms than we can for components and subassemblies
incorporated  into  these  Hospitality  technology  products.  The rapid rate of
technological  change in the  Hospitality  industry makes it likely that we will
face competition from new products designed by companies not currently competing
with us.  These new products may have  features not  currently  available on our
Hospitality  products.  We believe that our  competitive  ability depends on our
total  solution  offering,  our  product  development  and  systems  integration
capability, our direct sales force and our customer service organization.  There
is no assurance,  however,  that we will be able to compete  effectively  in the
hospitality technology market in the future.

     Our Government  contracting  business has been focused on niche  offerings,
primarily signal and image processing,  information  technology  outsourcing and
engineering  services.  Many of our  competitors  are, or are  subsidiaries  of,
companies such as Lockheed-Martin,  Raytheon, Northrop-Grumman,  BAE, Harris and
SAIC.  These  companies  are larger  and have  substantially  greater  financial
resources  than we do.  We also  compete  with  smaller  companies  that  target
particular  segments of the  Government  market.  These  companies may be better
positioned to obtain  contracts  through  competitive  proposals.  Consequently,
there are no assurances  that we will continue to win Government  contracts as a
prime contractor or subcontractor.
<PAGE>

WE MAY  NOT BE  ABLE  TO  MEET  THE  UNIQUE  OPERATIONAL,  LEGAL  AND  FINANCIAL
CHALLENGES  THAT  RELATE TO OUR  INTERNATIONAL  OPERATIONS,  WHICH MAY LIMIT THE
GROWTH OF OUR BUSINESS.

     For the fiscal  years  ended  December  31,  2005,  2004 and 2003,  our net
revenues   from  sales   outside  the  United  States  were  11%,  9%  and  11%,
respectively,  of the Company's total revenues. We anticipate that international
sales will continue to account for a significant  portion of sales. We intend to
continue  to expand  our  operations  outside  the  United  States  and to enter
additional  international  markets,  which will require  significant  management
attention and  financial  resources.  Our  operating  results are subject to the
risks inherent in international sales, including, but not limited to, regulatory
requirements,  political  and  economic  changes and  disruptions,  geopolitical
disputes and war,  transportation delays,  difficulties in staffing and managing
foreign sales operations, and potentially adverse tax consequences. In addition,
fluctuations in exchange rates may render our products less competitive relative
to local  product  offerings,  or  could  result  in  foreign  exchange  losses,
depending  upon the  currency  in which we sell our  products.  There  can be no
assurance  that these  factors  will not have a material  adverse  affect on our
future international sales and, consequently, on our operating results.

OUR  BUSINESS  DEPENDS  ON A  LARGE  NUMBER  OF  HIGHLY  QUALIFIED  PROFESSIONAL
EMPLOYEES  AND, IF WE ARE NOT ABLE TO RECRUIT AND RETAIN A SUFFICIENT  NUMBER OF
THESE  EMPLOYEES,  WE WOULD NOT BE ABLE TO PROVIDE HIGH QUALITY  SERVICES TO OUR
CURRENT AND FUTURE CUSTOMERS, WHICH WOULD HAVE AN ADVERSE EFFECT ON OUR REVENUES
AND OPERATING RESULTS.

     We actively compete for qualified  professional  staff. The availability or
lack thereof of qualified  professional  staff may affect our ability to develop
new products and to provide  services and meet the needs of our customers in the
future. An inability to fulfill customer requirements due to a lack of available
qualified  staff at agreed upon salary rates may adversely  impact our operating
results in the future.

A SIGNIFICANT  PORTION OF OUR TOTAL ASSETS CONSISTS OF GOODWILL AND IDENTIFIABLE
INTANGIBLE  ASSETS,  WHICH ARE SUBJECT TO A PERIODIC  IMPAIRMENT  ANALYSIS AND A
SIGNIFICANT IMPAIRMENT  DETERMINATION IN ANY FUTURE PERIOD COULD HAVE AN ADVERSE
EFFECT ON OUR RESULTS OF OPERATIONS  EVEN WITHOUT A SIGNIFICANT  LOSS OF REVENUE
OR INCREASE IN CASH EXPENSES ATTRIBUTABLE TO SUCH PERIOD.

     We have goodwill and identifiable  intangible assets totaling approximately
$20.6  million and $9.9 million at December 31,  2005,  respectively,  resulting
primarily from several  business  acquisitions.  At least annually,  we evaluate
goodwill and  identifiable  intangible  assets for impairment  based on the fair
value  of the  operating  business  unit to which  these  assets  relates.  This
estimated fair value could change if we are unable to achieve  operating results
at the levels that have been forecasted,  the market valuation of such companies

<PAGE>

decreases  based on  transactions  involving  similar  companies,  or there is a
permanent,  negative change in the market demand for the services offered by the
business  unit.  These  changes  could result in an  impairment  of the existing
goodwill  and  identifiable  intangible  assets  balances  that could  require a
material non-cash charge to our results of operations.

Item 2:  Properties

     The  following  are the  principal  facilities  (by square  footage) of the
Company:
<TABLE>
<CAPTION>

                           Industry                 Floor Area                 Number of
      Location             Segment             Principal Operations              Sq. Ft.
      --------             -------             --------------------            ----------

<S>                      <C>               <C>                                  <C>
New Hartford, NY         Hospitality       Principal executive offices,         138,500
                         Government          manufacturing, research and
                                             development laboratories,
                                             computing facilities
Rome, NY                 Government        Research and development              40,900
Stowe, VT                Hospitality       Sales, service and research           26,000
                                             and development
Boulder, CO              Hospitality       Service                               20,500
Sydney, Australia        Hospitality       Sales and service                      9,100
Las Vegas, NV            Hospitality       Service                                8,800
Boca Raton, FL           Hospitality       Research and development               8,700
Vaughn, Canada           Hospitality       Sales, service and research and        8,000
                                             development
Toronto, Canada          Hospitality       Sales, service and research and        7,700
                                             development
</TABLE>


     The Company's  headquarters and principal  business  facility is located in
New Hartford, New York, which is near Utica, located in Central New York State.

     The Company owns its principal facility and adjacent space in New Hartford,
N.Y. All of the other facilities are leased for varying terms. Substantially all
of the Company's  facilities are fully utilized,  well maintained,  and suitable
for use. The Company  believes its present and planned  facilities and equipment
are adequate to service its current and immediately foreseeable business needs.

Item 3:  Legal Proceedings

     The Company is subject to legal  proceedings which arise in ordinary course
of business. In the opinion of management,  the ultimate liability, if any, with
respect to these  actions will not  materially  affect the  financial  position,
results of operations or cash flows of the Company.
<PAGE>

                                     PART II


Item 5: Market for the Registrant's  Common Stock,  Related  Stockholder Matters
     and Issuer Purchases of Equity Securities

     The  Company's  Common Stock,  par value $.02 per share,  trades on the New
York Stock  Exchange  (NYSE  symbol - PTC).  At December  31,  2005,  there were
approximately  487 owners of record of the Company's  Common  Stock,  plus those
owners whose stock certificates are held by brokers.

     The  following  table shows the high and low stock prices for the two years
ended December 31, 2005 as reported by New York Stock Exchange:


                            2005                         2004
                     --------------------        -------------------
   Period              Low        High              Low        High
---------------      --------   ---------        --------    -------

First Quarter          $7.47      $10.68          $5.19       $7.47
Second Quarter        $10.28      $22.30          $6.44       $8.24
Third Quarter         $13.10      $25.60          $5.47       $7.18
Fourth Quarter        $13.26      $23.60          $5.90       $7.90


     The Company has not paid cash dividends on its Common Stock,  and its Board
of Directors  presently  intends to continue to retain earnings for reinvestment
in growth opportunities.  Accordingly,  it is anticipated that no cash dividends
will be paid in the foreseeable future.

     On November 14, 2005, the Company's  Board of Directors  declared a 3 for 2
stock split in the form of a stock  dividend that was  distributed on January 6,
2006 to  shareholders  of record on December 12,  2005.  All share and per share
data  in  these  consolidated  financial  statements  and  footnotes  have  been
retroactively  restated  as if the stock split had  occurred as of the  earliest
period presented.

<PAGE>
Item 6:  Selected Financial Data


                 SELECTED CONSOLIDATED STATEMENT OF INCOME DATA
                    (In thousands, except per share amounts)

     The following  selected  historical  consolidated  financial data should be
read in conjunction with the Consolidated  Financial  Statements and the related
notes and  "Management's  Discussion  and  Analysis of Financial  Condition  and
Results of Operations" included elsewhere in this Annual Report on Form 10-K.
<TABLE>
<CAPTION>

                                                        Year ended December 31,
                                    -------------------------------------------------------------
                                        2005        2004         2003        2002         2001
                                    -------------------------------------------------------------

<S>                                 <C>          <C>          <C>          <C>          <C>
Net revenues ....................   $ 205,639    $ 174,884    $ 139,770    $ 133,681    $ 114,354

Cost of sales ...................   $ 150,053    $ 137,738    $ 110,777    $ 105,225    $  89,001

Gross margin ....................   $  55,586    $  37,146    $  28,993    $  28,456    $  25,353

Selling, general & administrative   $  30,867    $  22,106    $  19,340    $  19,540    $  16,774

Provision for income taxes ......   $  (5,358)   $  (3,729)   $  (1,593)   $    (884)   $    (621)

Income from continuing operations   $   9,432    $   5,635    $   2,792    $   2,623    $   2,080

Basic earnings per share from
  continuing operations .........   $     .68    $     .43    $     .22    $     .22    $     .18

Diluted earnings per share from
 continuing operations ..........   $     .64    $     .41    $     .21    $     .21    $     .18
</TABLE>


                    SELECTED CONSOLIDATED BALANCE SHEET DATA
                                 (In thousands)

                                          December 31,
                       ----------------------------------------------------
                          2005      2004       2003       2002       2001
                       ----------------------------------------------------

Current assets .....   $ 84,492   $ 77,696   $ 74,195   $ 69,070   $ 67,795
Current liabilities    $ 43,661   $ 45,159   $ 29,816   $ 31,743   $ 39,118
Total assets .......   $125,149   $111,752   $ 87,147   $ 85,122   $ 88,915
Long-term debt .....   $  1,948   $  2,005   $  2,092   $  2,181   $  2,268
Shareholders' equity   $ 78,492   $ 63,574   $ 55,239   $ 51,198   $ 47,529



     On November 14, 2005, the Company's  Board of Directors  declared a 3 for 2
stock split in the form of a stock  dividend that was  distributed on January 6,
2006 to  shareholders  of record on December 12,  2005.  All share and per share
data  in  these  consolidated  financial  statements  and  footnotes  have  been
retroactively  restated  as if the stock split had  occurred as of the  earliest
period presented.

<PAGE>
Item 7: 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,   an  expected  increase  in  funding  by  the  U.S.
Government relating to the Company's logistics management contracts,  the impact
of current world events on our results of  operations,  the effects of inflation
on  our  margins,  and  the  effects  of  interest  rate  and  foreign  currency
fluctuations  on our results of operations) are made pursuant to the safe harbor
provisions of the Private Securities  Litigation Reform Act of 1995. When we use
words such as "intend," "anticipate,"  "believe," "estimate," "plan," "will," or
"expect",  we  are  making  forward-looking  statements.  We  believe  that  the
assumptions and expectations  reflected in such  forward-looking  statements are
reasonable,  based on  information  available to us on the date  hereof,  but we
cannot assure you that these  assumptions  and  expectations  will prove to have
been correct or that we will take any action that we presently  may be planning.
We have disclosed  certain  important factors that could cause our actual future
results to differ materially from our current  expectation,  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  statement if we obtain new information or
upon the occurrence of future events or otherwise.

Overview

     PAR  is  a  global  designer,  manufacturer  and  marketer  of  hospitality
technology systems.  We also are a provider to the Federal  Government,  and its
agencies,  of  engineering  services  and  applied  technology.  The primary end
markets for our products and services are:

     o    restaurant,  hotels/resorts,  entertainment, and retail industries for
          the integrated technologies of transaction processing and data capture
          for certain enterprises

     o    the U.S. military and a broad range of government agencies
<PAGE>

     The  Company's  hospitality  technology  products  are used in a variety of
applications by numerous customers. The Company encounters competition in all of
its markets (restaurants,  hotels, theaters, etc.) and competes primarily on the
basis of product design/features,  product quality/reliability,  price, customer
service and delivery capability.  There has been a trend amongst our hospitality
customers to consolidate  their lists of approved vendors to companies that have
a global  reach,  can achieve  quality and  delivery  standards,  have  multiple
product offerings,  R&D capability,  and be competitive with their pricing.  PAR
believes  that its global  presence as a hospitality  technology  provider is an
important  competitive  advantage as it allows the Company to provide innovative
products, with a significant delivery capability,  globally to its multinational
customers like McDonald's, Yum! Brands and Mandarin Oriental Hotel Group. During
2005 the Company acquired PixelPoint Technologies of Toronto,  Ontario,  Canada.
PixelPoint  designs  software  specifically for the table service segment of the
restaurant industry and the Company views this business as a natural progression
of the Company to be the  dominant  supplier of  hospitality  technology  across
several vertical industries.  In 2005 the Company had a significant win in being
selected by Papa Murphy's restaurants as their sole in-store technology provider
which  included  hardware,  software and services.  Papa Murphy's has nearly 900
restaurants  and has  aggressive  growth plans in terms of new store openings in
the next several years.

     PAR's strategy is to provide  complete  integrated  technology  systems and
services  and a high  level  of  customer  service  in the  markets  in which it
competes.  The Company focuses its research and  development  efforts to develop
cutting-edge  products that meet and exceed our  customers'  needs and also have
high  probability  for broader market appeal and success.  PAR also focuses upon
efficiency in our operations and controlling costs. This is achieved through the
investment in modern production technologies,  managing purchasing processes and
functions.

     PAR operates  two  wholly-owned  subsidiaries  in the  Government  business
segment, PAR Government Systems Corporation (PGSC) and Rome Research Corporation
(RRC).  As  a  long-standing   Government  contractor,   PAR  develops  advanced
technology   systems  for  the  U.S.   Department  of  Defense  and  other  U.S.
Governmental  agencies.  Additionally,  PAR provides information  technology and
communications  support services to the U.S. Navy, U.S. Air Force and U.S. Army.
PAR focuses its computer-based  system design services on providing high quality
technical products and services,  ranging from experimental  studies to advanced
operational  systems,  within a variety of areas of research,  including  radar,
image  and  signal  processing,  logistic  management  systems,  and  geospatial
services and products.  PAR's Government  engineering  service business provides
management  and  engineering  services  that include  facilities  operation  and
management.  In December  2005,  PAR  acquired  C(3)I  Associates,  a government

<PAGE>

technology services business and PAR will continue to seek out similar companies
for  partnership or acquisition as we expand our depth in this segment.  In 2005
PAR was awarded several new contracts with the U.S. Navy,  including one for the
operation  of a Navy I/T  facility  in Italy,  several  awards  with the General
Services Administration and the International Broadcast Bureau. The Company will
continue to execute its strategy of leveraging its core  technical  capabilities
and performance into related technical areas and an expanding customer base. The
Company will seek to accelerate  this growth through  strategic  acquisitions of
businesses that broaden the Company's technology and/or business base.

     The  Company's  intention  is to continue to expand our  customer  base and
solidify our leading position in the industries to which we market by:

     o    Developing integrated solutions

     o    Continuing to grow our global presence in growth markets

     o    Focusing on customer needs

     o    Encouraging entrepreneurial corporate attitude and spirit

     o    Fostering a mindset of controlling cost

     o    Pursuing strategic acquisitions

Summary

     We  believe  we can  continue  to be  successful  in our two core  business
segments  -Hospitality  Technology  and Government  Contracting-  because of our
focus and industry expertise.  In addition, our operations will benefit from our
efficient  supply chain and  economies of scale as we leverage our suppliers and
distribution operations.  We remain committed to streamlining our operations and
improving our return on invested capital through a variety of initiatives.

     The following table sets forth the Company's revenues by reportable segment
for the year ended December 31 (in thousands):

                                   2005               2004             2003
                              -------------     --------------    -------------
Revenues:
  Hospitality                 $     149,457     $      124,969    $      98,088
  Government                         56,182             49,915           41,682
                              -------------     --------------    -------------
Total consolidated revenue    $     205,639     $      174,884    $     139,770
                              =============     ==============    =============
<PAGE>

     The following discussion and analysis highlights items having a significant
effect on operations  during the three year period ended December 31, 2005. This
discussion may not be indicative of future operations or earnings.  It should be
read in conjunction with the audited annual  consolidated  financial  statements
and notes thereto and other  financial and statistical  information  included in
this report.

Results of Operations  --  2005 Compared to 2004

     The Company reported revenues of $205.6 million for the year ended December
31, 2005, an increase of 18% from the $174.9 million reported for the year ended
December 31, 2004. The Company's net income for the year ended December 31, 2005
was $9.4 million,  or $.64 diluted net income per share,  compared to net income
of $5.6 million and $.41 per diluted share for the same period in 2004.

     Product revenues from the Company's  Hospitality segment were $91.1 million
for the year ended  December 31, 2005, an increase of 18% from the $77.5 million
recorded  in 2004.  This  increase  of $13.6  million is due to an $8.5  million
increase in sales to domestic customers.  Key restaurant customers  contributing
to this increase were Chick-fil-A, CKE and Papa Murphy's. Also contributing were
sales to numerous resort and spa customers.  In the international  market place,
sales of the Company's products  increased $5.1 million.  The primary reason for
this growth was sales to McDonald's  restaurants.  Sales to the Company's resort
and spa customers also contributed to the international growth.

     Customer Service  revenues are also generated by the Company's  Hospitality
segment.   The  Company's   service   offerings   include  system   integration,
installation, training, twenty-four hour help desk support and various depot and
on-site service  options.  Customer  Service revenues were $58.3 million for the
year ended  December 31, 2005, an increase of 23% from the $47.5 million for the
same period in 2004. This increase was due primarily to systems  integration and
software  maintenance  revenues  associated  with the  Company's  resort and spa
customers.  Additionally,  the Company  increased  its field service and support
center  revenue  for its  restaurant  customers  by 14% or $2.8  million  due to
expansion of the Company's customer base. This was partially offset by a decline
in  installation  revenue  due to a  greater  number  of  customer's  performing
self-installation.

     Contract revenues from the Company's  Government segment were $56.2 million
for the year ended  December 31, 2005,  an increase of 13% when  compared to the
$49.9 million  recorded in the same period in 2004.  Contributing to this growth
was a $2.1 million increase in information  technology  outsourcing revenue from
contracts  for  facility  operations  at  critical  U.S.  Department  of Defense
telecommunication sites across the globe. These outsourcing operations provided

<PAGE>

by the Company directly support U.S. Navy, Air Force and Army operations as they
seek to convert their military information technology  communications facilities
into  contractor-run  operations and to meet new  requirements  with  contractor
support.  Also  contributing  to this  increase was a $1.8  million  increase in
revenue under the Company's  Logistics  Management  Program.  The balance of the
increase was due to several contracts in applied technology.

     Product  margins  for the year  ended  December  31,  2005 were  41.4%,  an
increase  of 760 basis  points  from the 33.8% for the year ended  December  31,
2004.  This increase in margins was primarily  attributable  to higher  software
revenue.  This software revenue was generated from the Company's resort, spa and
restaurant  customers.  The increase was also due to a large integration project
for a major  customer in 2004 that  involved  lower margin  peripheral  hardware
products. This project has been substantially completed in 2005.

     Customer  Service  margins were 24.2% for the year ended  December 31, 2005
compared to 16.2% for the same period in 2004,  an increase of 800 basis points.
This increase was due to service integration and software maintenance revenue at
higher  margins  associated  with the  Company's  resort and spa  products.  The
increase was also due to additional service contracts from restaurant  customers
and the Company's ability to leverage its service infrastructure.

     Contract margins were 6.7% for the year ended December 31, 2005 versus 6.5%
for the same period in 2004. In 2005, the margin  increase  resulted from higher
margins  on  certain  fixed  price  contracts  partially  offset by higher  than
anticipated  award  fees  in  2004  on  certain  image  and  digital  processing
contracts.  The most  significant  components of contract costs in 2005 and 2004
were labor and fringe  benefits.  For the year ended December 31, 2005 labor and
fringe  benefits were $39.4 million or 75% of contract  costs  compared to $35.9
million or 77% of contract costs for the same period in 2004.

     Selling,  general and administrative  expenses are virtually all related to
the Company's Hospitality segment.  Selling, general and administrative expenses
for the year ended December 31, 2005 were $30.9 million, an increase of 40% from
the $22.1  million  expended  for the same  period  in 2004.  The  increase  was
primarily  attributable to a rise in selling and marketing expenses due to sales
of the  Company's  new  resort  and spa  software  products  and  the  Company's
traditional  hardware  products.  Also  contributing  to  the  increase  was  an
investment  in the Company's  restaurant  sales force and the cost of compliance
with the Sarbanes-Oxley regulations.
<PAGE>

     Research  and  development  expenses  relate  primarily  to  the  Company's
Hospitality  segment.  However,  in 2004,  approximately  4% of  these  expenses
related to the Company's Logistics Management Program.  Research and development
expenses were $9.4 million for the year ended  December 31, 2005, an increase of
49%  from  the  $6.3  million  recorded  in 2004.  The  increase  was  primarily
attributable to the Company's investment in its recently acquired resort and spa
products.  The Company also continues to invest in its  restaurant  hardware and
software  products.  Partially  offsetting  this  increase  was a decline in the
investment in the Company's Logistic  Management Program as new U.S.  Government
funding is in place.

     Amortization of identifiable  intangible assets was $1 million for the year
ended December 31, 2005 compared to $245,000 for 2004. The increase is primarily
due  to  a  full  year  of   amortization   relating  to  the   acquisition   of
Springer-Miller Systems, Inc. on October 1, 2004.

     Other  income,  net,  was  $743,000  for the year ended  December  31, 2005
compared to $1.1  million for the same period in 2004.  Other  income  primarily
includes  rental income and foreign  currency gains and losses.  The decrease in
2005 resulted  primarily from a decline in foreign  currency gains when compared
to 2004.

     Interest expense  represents  interest charged on the Company's  short-term
borrowing  requirements from banks and from long-term debt. Interest expense was
$287,000  for the year ended  December 31, 2005 as compared to $295,000 in 2004.
The  Company  experienced  a higher  borrowing  interest  rate in 2005 which was
offset by a lower average borrowings outstanding in 2005 when compared to 2004.

     For the year ended  December 31, 2005, the Company's  effective  income tax
rate  was  36.2%,  compared  to 39.8% in 2004.  The  variance  from the  federal
statutory  rate in 2005 was primarily  due to state income  taxes.  The variance
from the federal  statutory  rate in 2004 was primarily due to state and foreign
income taxes.

<PAGE>

Results of Operations  --  2004 Compared to 2003

     The Company reported revenues of $174.9 million for the year ended December
31, 2004, an increase of 25% from the $139.8 million reported for the year ended
December 31, 2003. The Company's net income for the year ended December 31, 2004
was $5.6 million,  or $.41 net income per diluted share,  compared to net income
of $2.4 million and $.18 per diluted share for the same period in 2003.

     Product revenues from the Company's  Hospitality segment were $77.5 million
for the year ended  December 31, 2004, an increase of 29% from the $60.2 million
recorded in 2003. The primary factor  contributing  to the increase was sales to
McDonald's  which  increased 75% or $14.9  million over 2003.  Due to its recent
strong financial  performance,  McDonald's was investing in capital equipment to
upgrade its restaurants,  triggering  increased sales of the Company's products.
An additional factor contributing to the increase in product revenues was a $4.2
million  increase  in  sales  to CKE  Restaurants.  Software  revenue  from  the
Company's  new resort and spa  customers  also  contributed  to this  growth.  A
partially offsetting factor was a $2.3 million decline in sales to Loews Complex
due to the timing of customer requirements.

     Customer Service  revenues are also generated by the Company's  Hospitality
segment.   The  Company's   service   offerings   include  system   integration,
installation, training, twenty-four hour help desk support and various depot and
on-site service  options.  Customer  Service revenues were $47.5 million for the
year ended  December 31, 2004, an increase of 25% from the $37.9 million for the
same period in 2003.  This  increase was due  primarily to a 52% or $3.9 million
increase in installation  revenue that is directly  related to the growth in the
Company's product revenue.  Additionally,  service revenues  associated with the
Company's new resort and spa customers  accounted for 8% of this  increase.  All
other  service area  revenues  increased 7% primarily  due to increased  support
contracts and maintenance  service activity relating to the continued  expansion
of the Company's customer base.

     Contract revenues from the Company's  Government segment were $49.9 million
for the year ended  December 31, 2004,  an increase of 20% when  compared to the
$41.7 million  recorded in the same period in 2003.  Contributing to this growth
was a $5.5 million or 24% increase in information technology outsourcing revenue
from  contracts for facility  operations at critical U.S.  Department of Defense

<PAGE>

telecommunication  sites across the globe. These outsourcing operations provided
by the Company directly support U.S. Navy, Air Force and Army operations as they
seek to convert their military information technology  communications facilities
into  contractor-run  operations and to meet new  requirements  with  contractor
support.  Also  contributing to this increase was a $2.6 million or 48% increase
in revenue from research contracts involving Imagery Information Technology.

     Product  margins for the year ended December 31, 2004 were 33.8%, a decline
from 35.2% for the year ended December 31, 2003. This decrease was the result of
a large integration project for a major customer during 2004 that involved lower
margin  peripheral  hardware  products.  This  decline was  partially  offset by
increased   absorption  of  fixed   manufacturing  costs  as  production  volume
increased.  Also  partially  offsetting  this  decline was an increase in higher
margin software revenue from the Company's resort and spa customers.

     Customer  Service  margins were 16.2% for the year ended  December 31, 2004
compared to 15.1% for the same period in 2003.  This increase was due to service
integration  and software  maintenance  revenue  associated  with the  Company's
resort and spa  products.  This was  partially  offset by increased use of third
parties (which results in lower margins than installations performed by internal
personnel) to assist the Company with the major  integration  project  discussed
above.

     Contract  margins were 6.5% for the year ended December 31, 2004 versus 5.0
% for the same period in 2003.  The  increase in contract  margins is  primarily
attributable  to a higher  than  anticipated  performance-based  award fee on an
imagery information  technology contract.  Additionally,  the Company received a
favorable  contract   modification  on  a  particular   information   technology
outsourcing  contract.  This was partially  offset by start up costs and certain
new awards in 2004.  The most  significant  components of contract costs in 2004
and 2003 were labor and fringe  benefits.  For the year ended  December 31, 2004
labor and fringe  benefits were $35.9 million or 77% of contract  costs compared
to $30.5 million or 77% of contract costs for the same period in 2003.

     Selling,  general and administrative  expenses are virtually all related to
the Company's Hospitality segment.  Selling, general and administrative expenses
for the year ended December 31, 2004 were $22.1 million, an increase of 14% from
the $19.3  million  expended  for the same  period  in 2003.  The  increase  was
primarily  attributable to a rise in selling and marketing expenses due to sales
of the  Company's  new  resort  and spa  software  products  and  the  Company's
traditional hardware products.
<PAGE>

     Research  and  development  expenses  relate  primarily  to  the  Company's
Hospitality  segment.  However  in 2004  and  2003,  approximately  4% and  10%,
respectively,  of these expenses related to the Company's  Logistics  Management
Program.  Research and development expenses were $6.3 million for the year ended
December  31, 2004,  an increase of 18% from the $5.3 million  recorded in 2003.
The increase was primarily attributable to the Company's investment in its newly
acquired  resort and spa products.  The Company also increased its investment in
its hardware products.

     Other  income,  net, was $1.1 million for the year ended  December 31, 2004
compared  to  $582,000  for the same  period  in 2003.  Other  income  primarily
includes  rental income and foreign  currency gains and losses.  The increase in
2004 resulted  primarily from a rise in foreign  currency gains when compared to
2003.

     Interest expense  represents  interest charged on the Company's  short-term
borrowing  requirements  from banks and from long-term  debt.  Interest  expense
declined  45% to $295,000  for the year ended  December  31, 2004 as compared to
$540,000 in 2003 primarily due to a lower average amount  outstanding in 2004 as
compared to 2003.

     For the year ended  December 31, 2004, the Company's  effective  income tax
rate  was  39.8%,  compared  to 36.3% in 2003.  The  variance  from the  federal
statutory rate in 2004 was primarily due to state and foreign income taxes.  The
variance  from the federal  statutory  rate in 2003 was  primarily  due to state
income  taxes  partially  offset by a decrease in the  valuation  allowance  for
certain tax credits.

Liquidity and Capital Resources

     The  Company's  primary  sources  of  liquidity  have  been  cash flow from
operations and lines of credit with various  banks.  Cash provided by continuing
operations  was $11.7  million for the year ended  December 31, 2005 compared to
$19.7  million  for  2004.  In 2005,  cash  flow was  generated  primarily  from
operating profits,  the tax benefit generated from the exercise of stock options
and the timing of vendor  payments for material  purchases.  This was  partially
offset by an increase in accounts  receivable and inventory.  In 2004, cash flow
benefited from operating  profits for the period, a reduction in inventory,  and
timing of salary and benefit payments.

     Cash used in  investing  activities  was $9.5  million  for the year  ended
December  31, 2005 versus  $15.8  million for the same period in 2004.  In 2005,
capital  expenditures  were $1.7 million and were principally for  manufacturing
and research and development  equipment.  Capitalized software costs relating to

<PAGE>

software  development of Hospitality  segment products were $617,000 in 2005. In
2004,   capital   expenditures   were  $1.6  million  and  were   primarily  for
manufacturing  equipment and information  technology  equipment and software for
internal use.  Capitalized  software costs  relating to software  development of
Hospitality  segment  products were $804,000 in 2004. In 2005,  the Company used
$7.2 million in cash for acquisitions,  the majority of which was for PixelPoint
Technologies. In 2004, cash used for the acquisition of Springer-Miller Systems,
Inc. was $13.4 million.

     Cash  used by  financing  activities  was $5  million  for the  year  ended
December 31, 2005 versus $3.8 million of cash  provided for 2004.  In 2005,  the
Company reduced its short-term bank borrowings by $6.7 million and received $1.8
million from the exercise of employee  stock  options.  During 2004, the Company
increased its short-term bank  borrowings by $3.3 million and received  $585,000
from the exercise of employee stock options.

     The Company has an aggregate  availability  of $20,000,000 in bank lines of
credit. One line totaling  $12,500,000 bears interest at the bank borrowing rate
(6.6% at December 31, 2005) and is subject to loan covenants including a debt to
tangible net worth ratio of 1.4 to 1; a minimum working  capital  requirement of
at least  $25,000,000;  and a debt coverage ratio of 4 to 1. The total amount of
credit  available under this facility at a given time is based on (a) 80% of the
Company's  accounts  receivable  under 91 days  outstanding  attributable to the
Company's Hospitality segment and (b) 40% of the Company's inventory,  excluding
work in process. The total amount of this facility was available at December 31,
2005. This line expires on April 30, 2006. The second line of $7,500,000  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 (7.25% at
December 31, 2005).  This facility  contains certain loan covenants  including a
leverage  ratio of not greater than 4 to 1 and a fixed charge  coverage ratio of
not less than 4 to 1. This line  expires on  October  30,  2006.  Both lines are
collateralized by certain accounts receivable and inventory.  The Company was in
compliance  with all loan  covenants on December 31, 2005.  At December 31, 2005
and 2004,  there was $3,500,000 and $10,246,000  outstanding  under these lines,
respectively. The weighted average interest rate paid by the Company during 2005
was 5.6% and 4.2% during 2004. The Company  anticipates that it will renew these
lines for a three-year period at similar terms.
<PAGE>

     The Company has a $2 million  mortgage  loan on certain  real  estate.  The
Company's  future  principal  payments  under this  mortgage  are as follows (in
thousands):

                   2006                        $     76
                   2007                              81
                   2008                              88
                   2009                              95
                   2010                           1,684
                                               --------
                                               $  2,024
                                               ========


     The Company  future  minimum  obligations  under  non-cancelable  operating
leases are as follows (in thousands):

                   2006                        $  2,180
                   2007                           1,382
                   2008                           1,256
                   2009                             984
                   2010                             461
                   Thereafter                       167
                                               --------
                                               $  6,430
                                               ========

     During  fiscal  year  2006,  the  Company   anticipates  that  its  capital
requirements  will be  approximately  $2 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 the 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 at least 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,  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 that  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.
<PAGE>

Critical Accounting Policies

     The  Company's   consolidated   financial   statements  are  based  on  the
application of accounting  principles generally accepted in the United States of
America (GAAP). GAAP requires the use of estimates,  assumptions,  judgments and
subjective  interpretations of accounting  principles that have an impact on the
assets, liabilities,  revenue and expense amounts reported. The Company believes
its use of estimates and underlying  accounting  assumptions  adhere to GAAP and
are  consistently  applied.  Valuations  based on  estimates  are  reviewed  for
reasonableness  and  adequacy on a  consistent  basis  throughout  the  Company.
Primary areas where  financial  information of the Company is subject to the use
of  estimates,  assumptions  and the  application  of judgment  include  revenue
recognition, accounts receivable, inventories, intangible assets and taxes.

Revenue Recognition Policy

     The Company recognizes  revenue generated by the Hospitality  segment using
the guidance from SEC Staff Accounting  Bulletin No. 104, "Revenue  Recognition"
and the AICPA Statement of Position (SOP) 97-2, "Software Revenue  Recognition,"
and other applicable revenue recognition guidance and  interpretations.  Product
revenue consists of sales of the Company's  standard  point-of-sale and property
management  systems of the Hospitality  segment.  The Company recognizes revenue
from the sale of complete  restaurant systems (which primarily includes hardware
or  hardware  and  software)   upon  delivery  to  the  customer  site  or  upon
installation  for certain  software  products.  For restaurant  systems that are
self-installed  by the  customer or an unrelated  third party and for  component
sales or supplies,  the Company recognizes  revenue at the time of shipment.  In
addition to product  sales,  the Company may provide  installation  and training
services,  and also offers maintenance contracts to its customers.  Installation
and training service revenues are recognized as the services are performed.  The
Company's other service revenues, consisting of support, field and depot repair,
are  provided to  customers  either on a time and  materials  basis or under its
maintenance  contracts.  Services  provided  on a time and  materials  basis are
recognized as the services are  performed.  Service  revenues  from  maintenance
contracts are recognized ratably over the related contract period.
<PAGE>

     The Company recognizes revenue in its Government segment using the guidance
from SEC Staff Accounting Bulletin No. 104, "Revenue Recognition." The Company's
contract  revenues  generated by the Government  segment  result  primarily from
contract services performed for the U.S. Government under a variety of cost-plus
fixed fee,  time-and-material  and fixed-price  contracts.  Revenue on cost-plus
fixed fee  contracts  is  recognized  based on  allowable  costs for labor hours
delivered,  as well as other allowable costs plus the applicable fee. Revenue on
time and material  contracts is recognized by  multiplying  the number of direct
labor-hours delivered in the performance of the contract by the contract billing
rates and adding  other  direct  costs as  incurred.  Revenue  from  fixed-price
contracts is recognized  primarily on a straight-line basis over the life of the
fixed-price  contract.  The  Company's  obligation  under these  contracts is to
provide  labor hours to conduct  research or to staff  facilities  with no other
deliverables or performance obligations. Anticipated losses on all contracts are
recorded in full when identified. Unbilled accounts receivable are stated in the
Company's consolidated financial statements at their estimated realizable value.
Contract costs, including indirect expenses, are subject to audit and adjustment
through negotiations between the Company and U.S. Government representatives.

Accounts Receivable

     Allowances for doubtful  accounts are based on estimates of probable losses
related  to  accounts  receivable  balances.  The  establishment  of  allowances
requires  the use of  judgment  and  assumptions  regarding  probable  losses on
receivable  balances.  We continuously monitor collections and payments from our
customers  and maintain a provision  for  estimated  credit  losses based on our
historical  experience and any specific customer  collection issues that we have
identified.   While  such  credit  losses  have  historically  been  within  our
expectations and appropriate reserves have been established, we cannot guarantee
that we will  continue  to  experience  the same  credit loss rates that we have
experienced in the past. Thus, if the financial  condition of our customers were
to  deteriorate,  our actual  losses may exceed our  estimates,  and  additional
allowances would be required.

Inventories

     The Company's  inventories are valued at the lower of cost or market,  with
cost determined using the first-in,  first-out  (FIFO) method.  The Company uses
certain  estimates and judgments and considers several factors including product
demand and changes in technology to provide for excess and obsolescence reserves
to properly value inventory.
<PAGE>
Capitalized Software Development Costs

     The  Company  capitalizes  certain  costs  related  to the  development  of
computer  software used in its  Hospitality  segment under the  requirements  of
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer  Software  to  be  Sold,  Leased,  or  Otherwise  Marketed".   Software
development costs incurred prior to establishing  technological  feasibility are
charged to operations and included in research and development  costs.  Software
development  costs incurred after  establishing  feasibility are capitalized and
amortized  over the  estimated  economic  life when the product is available for
general release to customers.

Goodwill

     Following  Financial  Accounting  Standards  Board issuance of Statement of
Financial  Accounting  Standards No. 142 "Goodwill and Other Intangible Assets",
(SFAS 142),  the Company  tests all goodwill for  impairment  annually,  or more
frequently  if  circumstances  indicate  potential  impairment.  The Company has
elected to  annually  test for  impairment  in the fourth  quarter of its fiscal
year.

Taxes

     The  Company  has  significant  amounts of  deferred  tax  assets  that are
reviewed for recoverability and valued  accordingly.  These assets are evaluated
by using  estimates  of future  taxable  income and the  impact of tax  planning
strategies.  Valuations  related to tax  accruals  and assets can be impacted by
changes to tax codes, changes in statutory tax rates and the Company's estimates
of its future taxable income levels.

Item 7A: Quantitative and Qualitative Disclosures about Market Risk

INFLATION

     Inflation  had little  effect on revenues  and related  costs  during 2005.
Management  anticipates that margins will be maintained at acceptable  levels to
minimize the effects of inflation, if any.

INTEREST RATES

     As of December  31,  2005,  the  Company  has $2 million in  variable  rate
long-term  debt and $3.5 million in variable rate  short-term  debt. The Company
believes that an adverse  change in interest rates of 100 basis points would not
have a  material  impact  on our  business,  financial  conditions,  results  of
operations or cash flows.
<PAGE>

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 Euro, the Australian  dollar and the Singapore dollar.  Management  believes
that foreign currency  fluctuations  should not have a significant impact on our
business,  financial conditions,  results of operations or cash flows due to the
low volume of business affected by foreign currencies.

Item 8: Financial Statements and Supplementary Data

     The Company's 2005  Consolidated  financial  statements,  together with the
report thereon of KPMG LLP dated March 10, 2006, are included  elsewhere herein.
See Item 15 for a list of Financial Statements.

Item 9A: Controls and Procedures

     1.   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) and 15d - 15(e) under the Securities  Exchange Act
of 1934) as of the end of the period covered by this Annual Report on Form 10-K,
conducted under the supervision of and with the  participation  of the Company's
chief  executive  officer and chief  financial  officer and such  officers  have
concluded that the Company's  disclosure controls and procedures 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 are operating in an effective manner.

     2.   Management's Report on Internal Control over Financial Reporting.

     PAR's management is responsible for  establishing and maintaining  adequate
internal control over financial reporting. The Company's internal control system
was  designed to provide  reasonable  assurance to  management  and the Board of
Directors regarding the preparation and fair presentation of published financial
statements in accordance with U.S. generally accepted accounting principles. For
the year ended  December 31, 2005, the Company  engaged the  accounting  firm of
Bowers & Company CPAs, PLLC to assist the Company document its internal controls
over financial reporting.
<PAGE>

     A company's  internal  control  over  financial  reporting  includes  those
policies and procedures  that (a) pertain to the maintenance of records that, in
reasonable   detail,   accurately  and  fairly  reflect  the   transactions  and
dispositions of the assets of the company; (b) provide reasonable assurance that
transactions  are  recorded as  necessary  to permit  preparation  of  financial
statements in accordance with generally accepted accounting principles, and that
receipts and  expenditures of the company are being made only in accordance with
authorizations  of  management  and  directors of the  company;  and (c) provide
reasonable  assurance  regarding  prevention or timely detection of unauthorized
acquisition,  use or  disposition  of the  company's  assets  that  could have a
material effect on the financial statements.

     All internal  control systems,  no matter how well designed,  have inherent
limitations.  Therefore,  even those  systems  determined  to be  effective  can
provide  only   reasonable   assurance  with  respect  to  financial   statement
preparation  and  presentation.  Because  of  inherent  limitations  due to, for
example,  the potential for human error or circumvention  of controls,  internal
controls over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of  effectiveness to future periods are subject to
the risk that controls may become  inadequate  because of changes in conditions,
or  that  the  degree  of  compliance   with  the  policies  or  procedures  may
deteriorate.

     PAR's  management  assessed the  effectiveness  of the  Company's  internal
control  over  financial  reporting  as of  December  31,  2005.  In making this
assessment,  management  used  the  criteria  set  forth  by  the  Committee  of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated framework.  Based on its assessment,  management believes that, as of
December 31, 2005, the Company's  internal  control over financial  reporting is
effective based on those criteria. This evaluation excluded the internal control
over  financial  reporting of  PixelPoint  Technologies  (PixelPoint)  which the
Company  acquired on October 4, 2005.  Management  did not have adequate time to
gather  sufficient  evidence  about the design and  operating  effectiveness  of
internal  control  over  financial  reporting  for  PixelPoint  from the date of
acquisition  through  December 31, 2005,  therefore,  Management was not able to
perform an evaluation with respect to the effectiveness of internal control over
financial  reporting for PixelPoint.  As of December 31, 2005, the total assets,
net revenues,  and income from continuing operations before provision for income
taxes of PixelPoint  comprised 6.1%,  0.4%, and 1.7% of the  consolidated  total
assets, net revenues, and income from continuing operations before provision for
income taxes of the Company.
<PAGE>

     PAR's independent registered public accounting firm, KPMG LLP, has issued a
report on the  Company's  assessment  of its  internal  control  over  financial
reporting. This report appears below.

     3.   Report of Independent Registered Public Accounting Firm.


     The Board of Directors and Shareholders
     PAR Technology Corporation:


     We have  audited  management's  assessment,  included  in the  accompanying
Management's  Report on Internal  Control  over  Financial  Reporting,  that PAR
Technology  Corporation  and  subsidiaries  (the Company)  maintained  effective
internal  control over  financial  reporting  as of December 31, 2005,  based on
criteria  established in Internal  Control - Integrated  Framework issued by the
Committee of Sponsoring  Organizations of the Treadway  Commission  (COSO).  PAR
Technology  Corporation's  management is responsible for  maintaining  effective
internal  control  over  financial  reporting  and  for  its  assessment  of the
effectiveness of internal control over financial  reporting.  Our responsibility
is to  express  an  opinion  on  management's  assessment  and an opinion on the
effectiveness of the Company's  internal control over financial  reporting based
on our audit.

     We  conducted  our audit in  accordance  with the  standards  of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and  perform  the audit to obtain  reasonable  assurance  about  whether
effective  internal  control over  financial  reporting  was  maintained  in all
material  respects.  Our audit included  obtaining an  understanding of internal
control over financial reporting,  evaluating  management's assessment , testing
and evaluating the design and operating  effectiveness of internal control,  and
performing   such  other   procedures   as  we   considered   necessary  in  the
circumstances.  We believe that our audit  provides a  reasonable  basis for our
opinion.

     A company's internal control over financial reporting is a process designed
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. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to

<PAGE>

permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

     Because  of its  inherent  limitations,  internal  control  over  financial
reporting  may not prevent or detect  misstatements.  Also,  projections  of any
evaluation  of  effectiveness  to future  periods  are  subject to the risk that
controls may become  inadequate  because of changes in  conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.

     In our opinion, management's assessment that PAR Technology Corporation and
subsidiaries  maintained  effective internal control over financial reporting as
of December 31, 2005,  is fairly  stated,  in all  material  respects,  based on
criteria  established in Internal Control - Integrated Framework issued by COSO.
Also, in our opinion, PAR Technology Corporation and subsidiaries maintained, in
all material respects, effective internal control over financial reporting as of
December  31,  2005,  based  on  criteria  established  in  Internal  Control  -
Integrated Framework issued by COSO.

     PAR  Technology  Corporation  acquired  PixelPoint  Technologies,  Inc.  on
October  4,  2005,   and   management   excluded  from  its  assessment  of  the
effectiveness  of PAR Technology  Corporation's  internal control over financial
reporting as of December  31, 2005,  PixelPoint  Technologies,  Inc.'s  internal
control over financial reporting associated with total assets, net revenues, and
income from continuing  operations  before provision for income taxes comprising
6.1%, 0.4 %, and 1.7% of the consolidated total assets, net revenues, and income
from continuing  operations  before provision for income taxes of PAR Technology
Corporation and subsidiaries as of and for the year ended December 31, 2005. Our
audit of internal control over financial reporting of PAR Technology Corporation
also excluded an evaluation of the internal control over financial  reporting of
PixelPoint Technologies, Inc.

     We also have  audited,  in  accordance  with the  standards  of the  Public
Company  Accounting  Oversight Board (United States),  the consolidated  balance
sheets of PAR Technology  Corporation  and  subsidiaries as of December 31, 2005

<PAGE>

and 2004,  and the  related  consolidated  statements  of income,  comprehensive
income, changes in shareholders' equity, and cash flows for each of the years in
the  three-year  period ended  December 31, 2005, and our report dated March 10,
2006  expressed  an  unqualified   opinion  on  those   consolidated   financial
statements.


                                            /s/ KPMG LLP


Syracuse, New York
March 10, 2006



     4.   Changes in internal controls. During the period covered by this Annual
          Report on Form 10-K,  there were no changes in the Company's  internal
          control over financial  reporting (as defined in Rule 13 a-15(f)) that
          have  materially  affected,  or are  reasonably  likely to  materially
          affect, the Company's internal control over financial reporting.



<PAGE>


                                    PART III

Item 10: Directors and Executive Officers of the Registrant

     The directors and  executive  officers of the Company and their  respective
ages and positions are:

<TABLE>
<CAPTION>


            Name               Age                       Position
------------------------       ---       ------------------------------------------------

<S>                             <C>      <C>
Dr. John W. Sammon, Jr.         66       Chairman, President and Chief Executive Officer,
                                         PAR Technology Corporation

Charles A. Constantino          66       Executive Vice President and Director,
                                         PAR Technology Corporation

Sangwoo Ahn                     67       Director, PAR Technology Corporation

J. Whitney Haney                71       Director, PAR Technology Corporation

Kevin R. Jost                   51       Director, PAR Technology Corporation

James A. Simms                  46       Director, PAR Technology Corporation

Gregory T. Cortese              56       Chief Executive Officer & President ParTech, Inc.,
                                         General Counsel and Secretary,
                                         PAR Technology Corporation

Albert Lane, Jr.                64       President, PAR Government Systems Corporation
                                         and Rome Research Corporation

Ronald J. Casciano              52       Vice President, Chief Financial Officer
                                         and Treasurer, PAR Technology Corporation
</TABLE>

<PAGE>

     The Company's  directors are elected in classes with  staggered  three-year
terms with one class being elected at each annual meeting of  shareholders.  The
directors  serve  until  the  next  election  of their  class  and  until  their
successors are duly elected and qualified.  The Company's officers are appointed
by the Board of Directors and hold office at the will of the Board of Directors.

     The  principal  occupations  for the last five years of the  directors  and
executive officers of the Company are as follows:

     Dr.  John W.  Sammon,  Jr. is the  founder of the  Company and has been the
Chairman, President and Chief Executive Officer since its incorporation in 1968.

     Mr.  Charles A.  Constantino  has been a director of the Company since 1971
and Executive Vice President since 1974.

     Mr. Sangwoo Ahn was appointed a director of the Company in March, 1986. Mr.
Ahn is the Chairman of the Board,  Quaker Fabric Corp. since 1993 and previously
was the partner of Morgan, Lewis, Githens & Ahn.

     Mr. J. Whitney Haney retired as President of ParTech,  Inc. in 1998. He has
been a director of the Company since 1988.

     Mr. Kevin R. Jost was appointed a director of the Company in May, 2004. Mr.
Jost has been the President and Chief  Executive  Officer of Hand Held Products,
Inc. since 1999.

     Mr.  James A. Simms was  appointed  a director  of the  Company in October,
2001. Mr. Simms is currently a senior investment banker with Janney, Montgomery,
Scott.

     Mr. Albert Lane, Jr. was appointed to President,  Rome Research Corporation
in 1988. Mr. Lane was additionally appointed President of PAR Government Systems
Corporation in 1997.

     Mr. Gregory T. Cortese was named President,  ParTech,  Inc. in June 2000 in
addition  to  General  Counsel  and  Secretary  of PAR  Technology  Corporation.
Previously,  Mr. Cortese was the Vice President,  Law and Strategic  Development
since 1998.

     Mr.  Ronald  J.  Casciano,  CPA,  was  promoted  to Vice  President,  Chief
Financial Officer, Treasurer of PAR Technology Corporation in June, 1995.


<PAGE>
Item 11: Executive Compensation

     The  information  required  by this item  will  appear  under  the  caption
"Executive  Compensation"  in our 2006 definitive proxy statement for the annual
meeting of stockholders in May 2006 and is incorporated herein by reference.

Item 12:  Security  Ownership of Certain  Beneficial  Owners and  Management and
     Related Stockholder Matters

     The  information  required  by this item  will  appear  under  the  caption
"Security  Ownership Of Management  And Certain  Beneficial  Owners" in our 2006
definitive  proxy  statement for the annual meeting of  stockholders in May 2006
and is incorporated herein by reference.

Item 13: Certain Relationships and Related Transactions

     The  information  required  by this item  will  appear  under  the  caption
"Executive  Compensation"  in our 2006 definitive proxy statement for the annual
meeting of stockholders in May 2006 and is incorporated herein by reference.

Item 14: Principal Accountant Fees and Services

     The  response  to this  item  will  appear  under  the  caption  "Principal
Accountant  Fees and Services" in our 2006  definitive  proxy  statement for the
annual meeting of stockholders to be held in May 2006 and is incorporated herein
by reference.

<PAGE>
                                     PART IV

Item 15:  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

 (a)   Documents filed as a part of the Form 10-K

              Financial Statements:
              ---------------------

              Report of Independent Registered Public Accounting Firm

              Consolidated Balance Sheets at December 31, 2005 and 2004

              Consolidated Statements of Income for the three
              years ended December 31, 2005

              Consolidated Statements of Comprehensive Income
              for the three years ended December 31, 2005

              Consolidated Statements of Changes in Shareholders' Equity for
              the three years ended December 31, 2005

              Consolidated Statements of Cash Flows for the three years
              ended December 31, 2005

              Notes to Consolidated Financial Statements


<PAGE>

                                     PART IV

Item 15:  Exhibits,  Financial  Statement  Schedules,  and  Reports  on Form 8-K
     (Continued)

(b)  Reports on Form 8-K

          On October 27, 2005, 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  September 30, 2005, as presented in a press release  October
     27, 2005 and furnished thereto as an exhibit.

          On November 15, 2005, PAR Technology Corporation furnished a report on
     Form 8-K pursuant to Item 5.02  (Appointment of New Director) and Item 8.01
     (Other Events) of that Form relating to the approved increase in the number
     of Board seats from 6 to 7 and Dr. Paul Nielsen  being  elected to fill the
     newly created seat.

          On November 15, 2005, PAR Technology Corporation furnished a report on
     Form 8-K  pursuant  to Item 8.01 (Other  Events)  and Item 9.01  (Financial
     Statements and Exhibits) of that Form relating to the Company approving a 3
     for 2 split as presented  in a press  release  dated  November 15, 2005 and
     furnished thereto as an exhibit.

          On December 19, 2005, PAR Technology Corporation furnished a report on
     Form 8-K pursuant to Item 8.01 (Other  Events) of that Form  pertaining  to
     the availability of certain Corporate Governance documents.

(c)    Exhibits

          See list of exhibits on page 79



<PAGE>
             Report of Independent Registered Public Accounting Firm


The Board of Directors and Shareholders
PAR Technology Corporation:

We  have  audited  the  consolidated  financial  statements  of  PAR  Technology
Corporation  and  subsidiaries as of December 31, 2005 and 2004, and for each of
the years in the  three-year  period ended  December 31, 2005,  as listed in the
accompanying   index.   These   consolidated   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of PAR  Technology
Corporation  and  subsidiaries as of December 31, 2005 and 2004, and the results
of their operations and their cash flows for each of the years in the three-year
period  ended  December  31, 2005 in  conformity  with U.S.  generally  accepted
accounting principles.

We have also  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States), the effectiveness of PAR Technology
Corporation's internal control over financial reporting as of December 31, 2005,
based on criteria  established in Internal Control - Integrated Framework issued
by the Committee of Sponsoring  Organizations of the Treadway Commission (COSO),
and our  report  dated  March 10,  2006  expressed  an  unqualified  opinion  on
management's  assessment of, and the effective  operation of,  internal  control
over financial reporting.

Our report dated March 10, 2006 on management's  assessment of the effectiveness
of internal control over financial  reporting and the  effectiveness of internal
control  over  financial   reporting  as  of  December  31,  2005,  contains  an
explanatory paragraph that states PAR Technology Corporation acquired PixelPoint
Technologies,  Inc.  on  October  4,  2005,  and  management  excluded  from its
assessment of the effectiveness of PAR Technology Corporation's internal control
over  financial  reporting  as of December 31,  2005,  PixelPoint  Technologies,
Inc.'s internal control over financial  reporting  associated with total assets,
net revenues,  and income from continuing operations before provision for income
taxes  comprising 6.1%, 0.4 %, and 1.7% of the  consolidated  total assets,  net
revenues,  and income from  continuing  operations  before  provision for income
taxes of PAR  Technology  Corporation  and  subsidiaries  as of and for the year
ended December 31, 2005. Our audit of internal control over financial  reporting
of PAR  Technology  Corporation  also  excluded an  evaluation  of the  internal
control over financial reporting of PixelPoint Technologies, Inc.


                                   /s/KPMG LLP

Syracuse, New York
March 10, 2006


<PAGE>
                           CONSOLIDATED BALANCE SHEETS
                       (in thousands except share amounts)

                                                        December 31,
                                                  ----------------------
                                                     2005         2004
Assets                                            ----------   ---------
Current assets:
     Cash and cash equivalents ................   $   4,982    $   8,696
     Accounts receivable-net ..................      40,781       32,702
     Inventories-net ..........................      29,562       27,047
     Income tax refunds .......................         879         --
     Deferred income taxes ....................       5,690        6,634
     Other current assets .....................       2,598        2,617
                                                  ---------    ---------
         Total current assets .................      84,492       77,696

Property, plant and equipment - net ...........       8,044        8,123
Goodwill ......................................      20,622       15,379
Intangible assets - net .......................       9,904        9,235
Other assets ..................................       2,087        1,319
                                                  ---------    ---------
                                                  $ 125,149    $ 111,752
                                                  =========    =========
Liabilities and Shareholders' Equity
Current liabilities:
     Current portion of long-term debt ........   $      76    $      90
     Borrowings under lines of credit .........       3,500       10,246
     Accounts payable .........................      12,703        9,486
     Accrued salaries and benefits ............       9,725        8,072
     Accrued expenses .........................       2,203        2,998
     Customer deposits ........................       3,973        4,861
     Deferred service revenue .................      11,332        9,083
     Net liabilities of discontinued operation          149          323
                                                  ---------    ---------
         Total current liabilities ............      43,661       45,159
                                                  ---------    ---------
Long-term debt ................................       1,948        2,005
                                                  ---------    ---------
Deferred income taxes .........................         201          194
                                                  ---------    ---------
Other long-term liabilities ...................         847          820
                                                  ---------    ---------
Commitments and contingent liabilities
Shareholders' Equity:
     Preferred stock, $.02 par value,
       1,000,000 shares authorized ............        --           --
     Common stock, $.02 par value,
       19,000,000 shares authorized;
       15,914,958 and 15,208,698 shares issued;
       14,136,654 and 13,403,184 outstanding ..         318          304
     Capital in excess of par value ...........      37,271       31,459
     Retained earnings ........................      47,442       38,010
     Accumulated other comprehensive loss .....        (611)        (181)
     Treasury stock, at cost,
       1,778,304 and 1,805,514 shares .........      (5,928)      (6,018)
                                                  ---------    ---------
         Total shareholders' equity ...........      78,492       63,574
                                                  ---------    ---------
                                                  $ 125,149    $ 111,752
                                                  =========    =========

See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>

                        CONSOLIDATED STATEMENTS OF INCOME
                     (in thousands except per share amounts)

                                                            Year ended December 31,
                                                      -----------------------------------
                                                         2005         2004        2003
                                                      ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>
Net revenues:
     Product ......................................   $  91,130    $  77,503    $  60,223
     Service ......................................      58,327       47,466       37,865
     Contract .....................................      56,182       49,915       41,682
                                                      ---------    ---------    ---------
                                                        205,639      174,884      139,770
                                                      ---------    ---------    ---------
Costs of sales:
     Product ......................................      53,443       51,287       39,024
     Service ......................................      44,205       39,769       32,140
     Contract .....................................      52,405       46,682       39,613
                                                      ---------    ---------    ---------
                                                        150,053      137,738      110,777
                                                      ---------    ---------    ---------

           Gross margin ...........................      55,586       37,146       28,993
                                                      ---------    ---------    ---------
Operating expenses:
     Selling, general and administrative ..........      30,867       22,106       19,340
     Research and development .....................       9,355        6,270        5,310
     Amortization of identifiable intangible assets       1,030          245           --
                                                      ---------    ---------    ---------
                                                         41,252       28,621       24,650
                                                      ---------    ---------    ---------
Operating income ..................................      14,334        8,525        4,343
Other income, net .................................         743        1,134          582
Interest expense ..................................        (287)        (295)        (540)
                                                      ---------    ---------    ---------

Income from continuing operations
  before provision for income taxes ...............      14,790        9,364        4,385
Provision for income taxes ........................      (5,358)      (3,729)      (1,593)
                                                      ---------    ---------    ---------
Income from continuing operations .................       9,432        5,635        2,792
                                                      ---------    ---------    ---------
Discontinued operations:
     Loss from operations of
        discontinued component ....................        --           --           (570)
     Income tax benefit ...........................        --           --            207
                                                      ---------    ---------    ---------
     Loss from discontinued operations ............        --           --           (363)
                                                      ---------    ---------    ---------
Net income ........................................   $   9,432    $   5,635    $   2,429
                                                      =========    =========    =========



                                    Continued
</TABLE>

<PAGE>


                  CONSOLIDATED STATEMENTS OF INCOME (Continued)
                     (in thousands except per share amounts)


                                                  Year ended December 31,
                                         ------------------------------------
                                            2005         2004          2003
                                         ----------   ----------   ----------
Earnings per share:
Basic:
     Income from continuing operations   $      .68   $      .43   $      .22
     Loss from discontinued operations   $       --   $       --   $     (.03)
           Net income ................   $      .68   $      .43   $      .19
Diluted:
     Income from continuing operations   $      .64   $      .41   $      .21
     Loss from discontinued operations   $       --   $       --   $     (.03)
           Net income ................   $      .64   $      .41   $      .18
Weighted average shares outstanding
     Basic ...........................       13,792       13,044       12,657
                                         ==========   ==========   ==========
     Diluted .........................       14,648       13,845       13,291
                                         ==========   ==========   ==========



See accompanying notes to consolidated financial statements

<TABLE>
<CAPTION>


                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (in thousands)

                                                          Year ended December 31,
                                                    --------------------------------
                                                       2005       2004         2003
                                                    --------    --------    --------

<S>                                                 <C>         <C>         <C>
Net income                                          $  9,432    $  5,635    $  2,429
Other comprehensive income (loss), net of tax:
     Foreign currency translation adjustments           (430)       (138)        773
                                                    --------    --------    --------
Comprehensive income                                $  9,002    $  5,497    $  3,202
                                                    ========    ========    ========
</TABLE>



See accompanying notes to consolidated financial statements


<PAGE>
<TABLE>
<CAPTION>

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY


                                                                            Accumulated
                                       Common Stock     Capital in              Other                         Total
                                       ------------     excess of  Retained  Comprehensive  Treasury Stock   Shareholders'
(in thousands)                      Shares     Amount   Par Value  Earnings  Income (Loss) Shares    Amount     Equity
                                    ------     ------   ---------  --------   --------     ------    ------     ------
<S>                                  <C>        <C>        <C>       <C>       <C>         <C>       <C>        <C>
Balances at
    December 31, 2002 ............   14,655     $   293    $28,828   $29,946   $  (816)    (2,116)   $(7,053)   $ 51,198

Net income ......................                                      2,429                                       2,429
Issuance of common stock upon the
  exercise of stock options,
  net of tax benefit ............       294           6        833                                                   839
Translation adjustments .........                                                  773                               773
                                     ------      ------     ------    ------    ------     ------     ------     -------
Balances at
   December 31, 2003 ............    14,949         299     29,661    32,375       (43)    (2,116)    (7,053)     55,239

Net income ......................                                      5,635                                       5,635
Issuance of common stock upon the
  exercise of stock options,
  net of tax benefit ............       260           5        948                                                   953
Issuance of treasury stock for
  business acquisition ..........                              850                            310      1,035       1,885
Translation adjustments .........                                                 (138)                             (138)
                                     ------      ------     ------    ------    ------     ------     ------     -------
Balances at
   December 31, 2004 ............    15,209         304     31,459    38,010      (181)    (1,806)    (6,018)     63,574

Net income ......................                                      9,432                                       9,432
Issuance of common stock upon the
  exercise of stock options,
  net of tax benefit ............       706          14      5,360                                                 5,374
Issuance of treasury stock for
  business acquisition ..........                              452                             28         90         542
Translation adjustments .........                                                 (430)                             (430)
                                     ------     -------     ------    ------    ------     ------     ------     -------
Balances at
   December 31, 2005 ............    15,915    $    318    $37,271   $47,442   $  (611)    (1,778)   $(5,928)   $ 78,492
                                     ======    ========    =======   =======   =======    =======    =======    ========
</TABLE>



See accompanying notes to consolidated financial statements

<PAGE>


<TABLE>
<CAPTION>


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

                                                                 Year ended December 31,
                                                           --------------------------------
                                                             2005        2004        2003
                                                           --------    --------    --------
<S>                                                        <C>         <C>         <C>
Cash flows from operating activities:
 Net income ............................................   $  9,432    $  5,635    $  2,429
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Net loss from discontinued operations ................         --          --          363
Depreciation and amortization ..........................      3,755       2,812       2,815
Provision for bad debts ................................      1,063         689         968
Provision for obsolete inventory .......................      3,942       4,007       2,957
Tax benefit of stock option exercises ..................      3,544         368         161
Deferred income tax ....................................      1,213       3,014         809
  Changes in operating assets and liabilities:
   Accounts receivable .................................     (9,101)        246      (7,001)
   Inventories .........................................     (6,419)      1,046        (577)
   Income tax refunds ..................................       (879)         --          --
   Other current assets ................................        132         178         166
   Other assets ........................................       (756)       (825)        (20)
   Accounts payable ....................................      2,705         567         (70)
   Accrued salaries and benefits .......................      1,653       2,119         846
   Accrued expenses ....................................       (831)        (43)        394
   Customer deposits ...................................       (888)       (132)         --
   Deferred service revenue ............................      2,249          42        (757)
   Other long-term liabilities .........................        847          --          --
                                                           --------    --------    --------
    Net cash provided by continuing
     operating activities ..............................     11,661      19,723       3,483
    Net cash used in discontinued operations ...........       (174)       (235)        (88)
                                                           --------    --------    --------
    Net cash provided by operating activities ..........     11,487      19,488       3,395
                                                           --------    --------    --------
Cash flows from investing activities:
 Capital expenditures ..................................     (1,682)     (1,598)       (415)
 apitalization of software costs .......................       (617)       (804)       (809)
 Business acquisitions, net of cash acquired ...........     (7,223)    (13,364)         --
                                                           --------    --------    --------
Net cash used in investing activities ..................     (9,522)    (15,766)     (1,224)
                                                           --------    --------    --------
Cash flows from financing activities:
   Net borrowings (payments) under
    line-of-credit agreements ..........................     (6,746)      3,257      (2,560)
   Payments of long-term debt ..........................        (71)        (86)        (85)
   Proceeds from the exercise of stock options .........      1,830         585         678
                                                           --------    --------    --------
        Net cash provided (used) by financing activities     (4,987)      3,756      (1,967)
                                                           --------    --------    --------
</TABLE>



                                    Continued
<PAGE>

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                 (in thousands)

                                                  Year ended December 31,
                                               ----------------------------
                                                 2005       2004      2003
                                              --------   --------   -------

Effect of exchange rate changes on cash and
  cash equivalents ........................      (692)      (249)       773
                                              -------    -------    -------
Net increase (decrease) in cash
  and cash equivalents ....................    (3,714)     7,229        977
Cash and cash equivalents at
  beginning of year .......................     8,696      1,467        490
                                              -------    -------    -------
Cash and cash equivalents at
  end of year .............................   $ 4,982    $ 8,696    $ 1,467
                                              =======    =======    =======



Supplemental  disclosures  of cash flow  information:

     Cash paid during the year for:

     Interest ...................             $   304    $   280    $   553
     Income taxes, net of refunds               1,586        537        291




See accompanying notes to consolidated financial statements


<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -- Summary of Significant Accounting Policies

Basis of consolidation

     The  consolidated   financial   statements  include  the  accounts  of  PAR
Technology Corporation and its subsidiaries (ParTech,  Inc., PAR Springer-Miller
Systems, Inc., PixelPoint ULC, PAR Government Systems Corporation, Rome Research
Corporation  and  Ausable  Solutions,  Inc.),  collectively  referred  to as the
"Company." All  significant  intercompany  transactions  have been eliminated in
consolidation.

Revenue recognition

     The Company recognizes  revenue generated by the Hospitality  segment using
the guidance from SEC Staff Accounting  Bulletin No. 104, "Revenue  Recognition"
and the AICPA Statement of Position (SOP) 97-2, "Software Revenue  Recognition,"
and other applicable revenue recognition guidance and  interpretations.  Product
revenue consists of sales of the Company's  standard  point-of-sale and property
management  systems of the Hospitality  segment.  The Company recognizes revenue
from the sale of complete  restaurant systems (which primarily includes hardware
or  hardware  and  software)   upon  delivery  to  the  customer  site  or  upon
installation  for certain  software  products.  For restaurant  systems that are
self-installed  by the  customer or an unrelated  third party and for  component
sales or supplies,  the Company recognizes  revenue at the time of shipment.  In
addition to product  sales,  the Company may provide  installation  and training
services,  and also offers maintenance contracts to its customers.  Installation
and training service revenues are recognized as the services are performed.  The
Company's other service revenues, consisting of support, field and depot repair,
are  provided to  customers  either on a time and  materials  basis or under its
maintenance  contracts.  Services  provided  on a time and  materials  basis are
recognized as the services are  performed.  Service  revenues  from  maintenance
contracts are recognized ratably over the related contract period.

     The Company recognizes revenue in its Government segment using the guidance
from SEC Staff Accounting Bulletin No. 104, "Revenue Recognition." The Company's
contract  revenues  generated by the Government  segment  result  primarily from
contract services performed for the U.S. Government under a variety of cost-plus
fixed fee,  time-and-material  and fixed-price  contracts.  Revenue on cost-plus
fixed fee  contracts  is  recognized  based on  allowable  costs for labor hours
delivered,  as well as other allowable costs plus the applicable fee. Revenue on
time and material  contracts is recognized by  multiplying  the number of direct
labor-hours delivered in the performance of the contract by the contract billing
rates and adding  other  direct  costs as  incurred.  Revenue  from fixed  price
contracts is recognized  primarily on a straight-line basis over the life of the
fixed-price  contract.  The Company's obligation under these contracts is simply
<PAGE>
to provide labor hours to conduct  research or to staff facilities with no other
deliverables or performance obligations. Anticipated losses on all contracts are
recorded in full when identified. Unbilled accounts receivable are stated in the
Company's consolidated financial statements at their estimated realizable value.
Contract costs, including indirect expenses, are subject to audit and adjustment
through negotiations between the Company and U.S. Government representatives.

Statement of cash flows

     For  purposes of reporting  cash flows,  the Company  considers  all highly
liquid investments, purchased with a remaining maturity of three months or less,
to be cash equivalents.

 Accounts receivable - Allowance for doubtful accounts

     Allowances for doubtful  accounts are based on estimates of probable losses
related  to  accounts  receivable  balances.  The  establishment  of  allowances
requires  the use of  judgment  and  assumptions  regarding  probable  losses on
receivable balances.

 Inventories

     The Company's  inventories are valued at the lower of cost or market,  with
cost determined using the first-in,  first-out  (FIFO) method.  The Company uses
certain  estimates and judgments and considers several factors including product
demand and changes in technology to provide for excess and obsolescence reserves
to properly value inventory.

 Property, plant and equipment

     Property,  plant and equipment are recorded at cost and  depreciated  using
the  straight-line  method over the estimated useful lives of the assets,  which
range from three to twenty-five years.  Expenditures for maintenance and repairs
are expensed as incurred.
<PAGE>

 Warranties

     The  Company's  products  are sold with a standard  warranty for defects in
material and  workmanship.  The standard  warranty offered by the Company is for
one year,  although  certain sales have shorter  warranty  periods.  The Company
establishes  an accrual  for  estimated  warranty  costs at the time  revenue is
recognized on the sale. This estimate is based on projected product  reliability
using historical performance data.

Income taxes

         The provision for income taxes is based upon pretax earnings with
deferred income taxes provided for the temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities. The Company records a valuation allowance when necessary to reduce
deferred tax assets to their net realizable amounts. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

Other long-term liabilities

     In 2005,  other  long-term  liabilities  relates to the Company's  deferred
compensation plan (see Note 10). In 2004, other long-term  liabilities consisted
of an  obligation  owed to a third  party  as a  result  of the  acquisition  of
Springer-Miller Systems, Inc. Based on the provisions of the purchase agreement,
this $820,000  liability did not come to fruition and was properly adjusted as a
reduction to goodwill in 2005.

 Foreign currency

     The assets and liabilities for the Company's  international  operations are
translated into U.S.  dollars using year-end  exchange rates.  Income  statement
items are translated at average exchange rates  prevailing  during the year. The
resulting  translation  adjustments  are  recorded  as a separate  component  of
shareholders'  equity under the heading  Accumulated Other  Comprehensive  Loss.
Exchange  gains and losses on  intercompany  balances of a long-term  investment
nature  are also  recorded  as a  translation  adjustment  and are  included  in
Accumulated  Other  Comprehensive  Income (Loss).  Foreign currency  transaction
gains and losses, are included in net income.


<PAGE>

Other income

     The components of other income for the three years ending  December 31, are
as follows:

                                            Year ended December 31
                                               (in thousands)
                                    ----------------------------------
                                      2005         2004         2003
                                    -------      --------     --------
Currency gains ...............      $  186        $  502       $   95
Rental income-net ............         320           349          441
Other ........................         237           283           46
                                    ------        ------       ------
                                    $  743        $1,134       $  582
                                    ======        ======       ======

Identifiable intangible assets

     The  Company  capitalizes  certain  costs  related  to the  development  of
computer   software  used  in  its  Hospitality   products   segment  under  the
requirements  of  Statement  of Financial  Accounting  Standards  (SFAS) No. 86,
"Accounting for the Costs of Computer Software to be Sold,  Leased, or Otherwise
Marketed".   Software   development   costs  incurred   prior  to   establishing
technological feasibility are charged to operations and included in research and
development  costs.  Software  development  costs  incurred  after  establishing
feasibility are capitalized and amortized on a product-by-product basis when the
product is available  for general  release to  customers.  Annual  amortization,
charged to cost of sales,  is computed using the  straight-line  method over the
remaining  estimated  economic  life  of the  product,  generally  three  years.
Amortization  of capitalized  software costs amounted to $834,000,  $996,000 and
$1,185,000 in 2005, 2004, and 2003, respectively.

     The Company acquired identifiable  intangible assets in connection with its
acquisitions in 2005 and 2004.  Amortization of identifiable  intangible  assets
amounted to $1,030,000 in 2005 and $245,000 in 2004.  See Note 2 for  additional
details.

     The components of identifiable intangible assets are:

                                            Year ended December 31
                                                (in thousands)
                                          -------------------------
                                             2005            2004
                                          --------        --------
    Software costs                        $  5,655        $  5,599
    Customer relationships                   3,744           2,700
    Trademarks (non-amortizable)             2,444           2,100
    Other                                      578             300
                                          --------         -------
                                            12,421          10,699
    Less accumulated amortization           (2,517)         (1,464)
                                          --------         -------
                                          $  9,904         $ 9,235
                                          ========         =======

<PAGE>

     The  future  amortization  of these  intangible  assets is as  follows  (in
thousands):


                  2006                     1,855
                  2007                     1,598
                  2008                     1,529
                  2009                       995
                  2010                       562
                  Thereafter                 921
                                        --------
                                        $  7,460
                                        ========


     The Company has elected to test for impairment of  identifiable  intangible
assets during the fourth quarter of its fiscal year.  There was no impairment of
identifiable intangible assets in 2005, 2004 and 2003.

Stock split

     On November 14, 2005, the Company's  Board of Directors  declared a 3 for 2
stock split in the form of a stock  dividend that was  distributed on January 6,
2006 to  shareholders  of record on December 12,  2005.  All share and per share
data  in  these  consolidated  financial  statements  and  footnotes  have  been
retroactively  restated  as if the stock split had  occurred as of the  earliest
period presented.

Stock-based compensation

     In December 2004, the Financial  Accounting  Standards  Board (FASB) issued
SFAS No. 123 (revised 2004),  "Share-Based  Payment" (SFAS 123R), which replaces
SFAS  No.  123,  "Accounting  for  Stock-Based   Compensation"  (SFAS  123)  and
supersedes  APB Opinion No. 25,  "Accounting  for Stock Issued to Employees." In
April  2005,  the  Securities  and  Exchange  Commission  released  a final rule
"Amendment to Rule 4-01(a) of Regulation S-X Regarding the  Compliance  Date for
Statement of Financial Accounting Standards No. 123 (Revised 2004),  Share-Based
Payment."  This rule  defers the date the Company is required to adopt SFAS 123R
until  January 1, 2006.  SFAS 123R  requires  that all  share-based  payments to
employees,  including  grants of employee  stock  options,  be recognized in the
financial statements based on their fair values.

     Had compensation cost for the Company's stock-based compensation plans been
determined based on the fair values at the fiscal year 2005, 2004 and 2003 grant
dates  for  those  awards,   consistent  with  the  requirements  of  SFAS  123,
"Accounting for Stock-Based Compensation," the Company's net income and earnings
<PAGE>

per share would have been adjusted to the proforma  amounts  indicated below (in
thousands, except per share data):

                                            2005          2004           2003
                                          ---------    ---------      --------

     Net income                           $  9,432     $   5,635      $  2,429
     Proforma compensation expense,
       net of tax                             (410)         (354)         (118)
                                          --------     ---------      --------
     Proforma net income                  $  9,022         5,281      $  2,311
                                          ========     =========      ========

Earnings per share:
     As reported --   Basic               $    .68     $     .43      $    .19
                   -- Diluted             $    .64     $     .41      $    .18

     Proforma      -- Basic               $    .65     $     .40      $    .18
                   -- Diluted             $    .62     $     .38      $    .17


     The  estimated  weighted  average  fair value of options  granted is $4.78,
$1.90 and $1.01 for 2005, 2004 and 2003, respectively.

     The fair value of these  options was estimated at the date of grant using a
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions for 2005, 2004 and 2003:

                                       2005           2004          2003
                                       ----           ----          ----
    Risk-free interest rate            3.5%           3.2%            2.0%
    Dividend yield                     N/A            N/A             N/A
    Volatility factor                  43%            42%             44%
    Expected option life             5 Years       5 Years         5 Years


     In management's  opinion the existing  models do not necessarily  provide a
reliable  measure of the fair value of its stock  options  because the Company's
stock options have characteristics  significantly different from those of traded
options for which the Black-Scholes model was developed,  and because changes in
the subjective assumptions can materially affect fair value estimates.

 Earnings per share

     Earnings per share are calculated in accordance with Statement of Financial
Accounting   Standards  No.  128  "Earnings  per  Share,"  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.
<PAGE>

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

                                                     2005               2004              2003
                                               ---------------     -------------      ------------

<S>                                            <C>                 <C>                <C>
Net income                                     $         9,432     $      5,635       $      2,429
                                               ===============     ============       ============
Basic:
  Shares outstanding at beginning of year               13,403            12,833            12,539
  Weighted shares issued during the year                   389               211               118
                                               ---------------     -------------      ------------
  Weighted average common shares, basic                 13,792            13,044            12,657
                                               ===============     =============      ============
  Earnings per common share, basic             $           .68     $         .43      $        .19
                                               ===============     =============      ============
Diluted:
  Weighted average common shares, basic                 13,792            13,044            12,657
  Dilutive impact of stock options                         856               801               634
                                               ---------------     -------------      ------------
  Weighted average common shares, diluted               14,648            13,845            13,291
                                               ===============     =============      ============
  Earnings per common share, diluted           $           .64     $         .41      $        .18
                                               ===============     =============      ============
</TABLE>


Use of Estimates

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

Goodwill

     Goodwill  represents the excess of the cost of an acquired  entity over the
net  of the  amounts  assigned  to  assets  acquired  and  liabilities  assumed.
Following  Financial   Accounting  Standards  Board  issuance  of  Statement  of
Financial  Accounting  Standards No. 142 "Goodwill and Other Intangible Assets",
(SFAS 142),  the Company  tests all goodwill for  impairment  annually,  or more
frequently if circumstances indicate potential impairment,  through a comparison
of fair value to its carrying  amount.  The Company has elected to annually test
for impairment in the fourth quarter of its fiscal year. There was no impairment
of goodwill in 2005, 2004 or 2003.
<PAGE>

     The following  table  reflects the changes in goodwill  during the year (in
thousands):

                                                        Year ended December 31,
                                                          2005         2004
                                                       ---------    ---------

     Balance at beginning of year                      $  15,379    $      598
     Acquisition of businesses during the year             6,075        14,781
     Purchase accounting adjustment related to
       prior year acquisition                               (820)           --
     Change in foreign exchange rates during
       the period                                            (12)           --
                                                       ---------     ---------
     Balance at end of year                            $  20,622     $  15,379
                                                       =========     =========


Accounting for Impairment or Disposal of Long-Lived Assets

     In accordance with SFAS 144,  "Accounting for the Impairment or Disposal of
Long-Lived  Assets," we evaluate the accounting and reporting for the impairment
of  long-lived  assets and for  long-lived  assets to be  disposed  of. SFAS 144
requires  recognition of impairment of long-lived  assets or asset groups if the
net book value of such assets  exceeds the estimated  future  undiscounted  cash
flows  attributable to such assets.  If the carrying value of a long-lived asset
or asset group is considered  impaired, a loss is recognized based on the amount
by which the  carrying  value  exceeds the fair market  value of the  long-lived
asset or asset group for assets to be held and used,  or the amount by which the
carrying  value exceeds the fair market value less cost to dispose for assets to
be disposed.  Fair market value is determined  primarily  using the  anticipated
cash  flows  discounted  at a rate  commensurate  with  the  risk  involved.  No
impairment was identified during 2005, 2004 or 2003.

     As  further  described  in Note 3, the  Company  decided  to dispose of its
Industrial  segment  in  August  2002 and  adopted  the  provisions  of SFAS 144
regarding the  measurement,  recognition  and  disclosure  of this  discontinued
operation.

Reclassifications

     Amounts in prior years' consolidated  financial statements are reclassified
whenever necessary to conform with the current year's presentation.
<PAGE>

New Accounting Pronouncements

     In December 2004,  Financial  Accounting Standards Board (FASB) issued SFAS
No.  123R,  a  revision  of  Statement  No.  123,   Accounting  for  Stock-Based
Compensation. This standard requires the Company to measure the cost of employee
services  received in exchange  for equity  awards  based on the grant date fair
value of the awards.  The cost will be recognized as  compensation  expense over
the vesting period of the awards.  The Company is required to adopt SFAS 123R at
the beginning of the first quarter of fiscal 2006.  The standard  provides for a
prospective  application.  Under this method, the Company will begin recognizing
compensation cost for equity-based  compensation for all new and modified grants
after  January 1, 2006.  In addition,  the Company will  recognize  the unvested
portion of the grant date fair value of awards issued prior to adoption based on
the fair values previously  calculated for disclosure  purposes under SFAS 123R.
At December 31, 2005,  the aggregate  value of unvested  options,  as determined
using a Black-Scholes  option valuation  model,  was $534,000.  Upon adoption of
SFAS 123R, a majority of this amount will be recognized  over the remaining four
year vesting period of these options.

     In November  2004, the FASB published  SFAS No. 151,  Inventory  Costs,  an
amendment of ARB No. 43, Chapter 4. Statement 151 amends the guidance in Chapter
4,  "Inventory  Pricing" of ARB No. 43 and clarifies the accounting for abnormal
amounts of idle facility expense,  freight,  handling costs, and wasted material
(spoilage).  SFAS 151 requires that those items be recognized as  current-period
charges. SFAS 151 also requires that allocation of fixed production overheads to
the  costs of  conversion  be based on the  normal  capacity  of the  production
facilities.  SFAS 151 is effective for inventory  costs  incurred  during fiscal
years  beginning  after June 15, 2005.  SFAS 151 is effective  for the Company's
2006 fiscal year and is not expected to have a material  impact on the Company's
consolidated financial statements.

     In May 2005, the FASB published SFAS No. 154,  Accounting Changes and Error
Corrections.  Statement 154 replaces APB Opinion No. 20, Accounting Changes, and
SFAS No. 3, Reporting  Changes in Interim  Financial  Statements.  The Statement
changes the accounting for, and reporting of, a change in accounting  principle.
SFAS  154  requires  retrospective   application  to  prior  period's  financial
statements of voluntary changes in accounting  principle and changes required by
new accounting  standards when the standard does not include specific transition
provisions,  unless it is  impracticable  to do so.  SFAS 154 is  effective  for
accounting  changes and  corrections of errors in fiscal years  beginning  after
December 15, 2005 and is not expected to have a material impact on the Company's
consolidated financial statements. Early application is permitted for accounting
changes and  corrections of errors during fiscal years  beginning  after June 1,
2005.
<PAGE>

Note 2 -- Business Acquisitions

     On October 4, 2005, the Company and its newly formed, wholly-owned Canadian
subsidiary,   PixelPoint,   ULC  (the  Canadian  Subsidiary),   completed  their
acquisition of PixelPoint Technologies,  Inc. (PixelPoint) pursuant to which the
Canadian Subsidiary acquired all of the stock of PixelPoint.  The purchase price
was $7.5  million and  consisted  of $542,000 in Company  common  stock  (27,210
shares of PAR  Technology  Corporation  common  stock  issued out of treasury) a
promissory  note for  $671,000  and the  remainder  in cash.  The  Company  also
incurred  $344,000 in direct  acquisition  costs relating to this purchase.  The
purchase price is also subject to price  contingencies based upon future revenue
performance  against certain established  targets.  Located in suburban Toronto,
Ontario, PixelPoint Technologies, Inc. is a supplier of hospitality solutions to
full-service restaurants around the globe.

     On December 6, 2005, the Company also acquired C(3)I Associates  (C(3)I), a
Government  technology services business.  The Company paid $589,000 in cash and
assumed certain liabilities.

     On  October 1, 2004,  PAR  Technology  Corporation  (the  Company)  and its
wholly-owned  subsidiary,  PAR Springer-Miller  Systems, Inc. (PSMS),  completed
their  previously-announced   transaction  with  Springer-Miller  Systems,  Inc.
(Springer-Miller)  and John  Springer-Miller  pursuant  to which  PSMS  acquired
substantially  all of the assets (including the 100% equity interests in each of
Springer-Miller International, LLC and Springer-Miller Canada, ULC), and assumed
certain  liabilities,  of  Springer-Miller.  Springer-Miller,  based  in  Stowe,
Vermont,  is a provider of  hospitality  management  solutions  for all types of
hospitality  enterprises  including  resort  hotels,  destination  spa and  golf
properties, timeshare properties and casino resorts worldwide.

     The  purchase  price  of the  net  assets  acquired  was  $14,985,000  plus
approximately  $3,227,000 (an amount equal to the cash and cash equivalents held
by Springer-Miller  and its subsidiaries at the closing date of the acquisition,
October 1, 2004). The Company also incurred $264,000 in direct acquisition costs
relating to this purchase. The purchase price consisted of $1,885,000 in Company
common stock (310,516 shares of PAR Technology  Corporation  common stock issued
out of treasury) and the remainder in cash.
<PAGE>

     The total  purchase price for each of these  acquisitions  was allocated to
the tangible and identifiable intangible assets acquired and liabilities assumed
by the Company based on their estimated fair values as of the respective closing
date  of  the  acquisitions.  Identifiable  intangible  assets  recorded  in the
acquisitions are tested for impairment in accordance with the provisions of SFAS
142.  The  following  table  presents  the  estimated  fair  value of the assets
acquired and liabilities assumed:

                                                     2005            2004
                                            ---------------------  --------
                 (in thousands)             PixelPoint     C(3)I     PSMS
                  ------------               --------    --------  --------

   Cash and cash equivalents .............   $     32    $    --   $  3,227
   Other current assets ..................        185          8      2,298
   Property, plant and equipment .........        122         --        858
   Other assets ..........................        671         --         --
   Intangible assets .....................      1,634        290      7,900
   Goodwill ..............................      5,539        536     14,781
                                               ------     ------     ------
   Total assets acquired .................      8,183        834     29,064
                                               ======     ======     ======

   Deferred revenues and customer deposits         --         --      8,087
   Other current liabilities .............        303        245      1,681
     Long-term liabilities ...............         --         --        820
                                               ------     ------     ------
   Total liabilities assumed .............        303        245     10,588
                                               ------     ------     ------
   Purchase price, including
    acquisition related costs ............   $  7,880    $   589   $ 18,476
                                               ======     ======     ======


     The  identifiable  intangible  assets acquired and their  estimated  useful
lives (based on third party valuation) are as follows:


     (in thousands)              PixelPoint    C(3)I        PSMS    Useful Life
     --------------              ----------    -----        ----    -----------

      Software costs             $    258    $     --    $  2,800      5  Years

      Customer relationships          774         270       2,700   7 - 8 Years

      Trademarks                      344          --       2,100   Indefinite

      Others                          258          20         300   3 - 7 Years
                                  -------     -------     -------
                                  $ 1,634     $   290     $ 7,900
                                  =======     =======     =======


<PAGE>

     On an unaudited  proforma basis,  assuming the completed  acquisitions  had
occurred as of the beginning of the periods presented,  the consolidated results
of the  Company  would  have been as  follows  (in  thousands,  except per share
amounts):


                                          Year ended December 31,
                           -------------------------------------------------
                                2005               2004             2003
                           --------------     --------------   -------------

   Revenues ..........     $      207,552     $      189,266     $   153,733
                           ==============     ==============     ===========
   Net income ........     $        9,550     $        5,570     $     1,143
                           ==============     ==============     ===========
   Earnings per share:
        Basic ........     $          .69     $          .42     $       .09
                           ==============     ==============     ===========
        Diluted ......     $          .65     $          .39     $       .09
                           ==============     ==============     ===========

     The unaudited proforma financial  information  presented above gives effect
to purchase accounting adjustments which have resulted or are expected to result
from the acquisition. This proforma information is not necessarily indicative of
the results  that would  actually  have been  obtained  had the  companies  been
combined for the periods presented.

Note 3 -- Business Operations

     During the third  quarter of 2002,  the  Company  decided to close down its
unprofitable Industrial segment,  Ausable Solutions,  Inc., following a trend of
continuous  losses.  The overall downturn in the global economy and specifically
the  manufacturing  and  warehousing  industries,  coupled with the  diminishing
capital  expenditures  of the  Company's  industrial  customers,  prevented  the
Company from being profitable in this particular business segment.  The decision
to shut  down  this  unit  has  allowed  the  Company  to  focus on its two core
businesses,  Hospitality and Government.  The Company believes that the decision
to exit the Industrial  segment will not have a negative impact on the Company's
continuing  operations.  The Company's  Industrial  business did not have common
customers with its Hospitality and Government contract  businesses.  The Company
recorded a net loss from operations of the discontinued component of $363,000 in
2003.  Liabilities  of  discontinued  operations  were  $149,000 and $323,000 at
December 31, 2005 and 2004, respectively.

<PAGE>

Note 4 -- Accounts Receivable

     The Company's net accounts receivable consist of:

                                        December 31,
                                       (in thousands)
                                 -----------------------
                                    2005          2004
                                 ---------     --------
   Government segment:
        Billed .............     $  8,222      $  8,376
        Advanced billings...       (2,251)       (1,729)
                                 --------      --------
                                    5,971         6,647
                                 --------      --------
   Hospitality segment:
   Accounts receivable - net       34,810        26,055
                                 --------      --------
                                 $ 40,781      $ 32,702
                                 ========      ========


     At December  31, 2005 and 2004,  the Company had  recorded  allowances  for
doubtful   accounts  of  $1,748,000  and   $2,299,000,   respectively,   against
Hospitality accounts receivable.

Note 5 -- Inventories

     Inventories are used primarily in the manufacture, maintenance, and service
of Hospitality systems.  Inventories are net of related reserves. The components
of inventories-net are:


                                         December 31,
                                        (in thousands)
                                  -------------------------
                                     2005             2004
                                  --------         --------

   Finished goods.......          $ 7,217          $ 6,415
   Work in process .....            1,874            1,296
   Component parts .....            4,693            2,898
   Service parts .......           15,778           16,438
                                  -------          -------
                                  $29,562          $27,047
                                  =======          =======

     The  Company  records  reserves  for  shrinkage  and  excess  and  obsolete
inventory.  At December 31, 2005 and 2004,  these  amounts were  $4,189,000  and
$3,982,000, respectively.

<PAGE>

Note 6 -- Property, Plant and Equipment

         The components of property, plant and equipment are:

                                          December 31,
                                         (in thousands)
                                     ---------------------
                                       2005        2004
                                     --------    --------

   Land ........................     $   253     $   253
   Buildings and improvements ..       5,632       5,687
   Rental property .............       5,426       5,304
   Furniture and equipment .....      19,013      26,860
                                     -------     -------
                                      30,324      38,104
   Less accumulated depreciation
    and amortization ...........      22,280      29,981
                                     -------     -------
                                     $ 8,044     $ 8,123
                                     =======     =======


     The  estimated  useful  lives of  buildings  and  improvements  and  rental
property  are  twenty  to  twenty-five  years.  The  estimated  useful  lives of
furniture and equipment ranges from three to eight years.  Depreciation  expense
recorded was  $1,883,000,  $1,571,000 and  $1,630,000  for 2005,  2004 and 2003,
respectively.

     The  Company  subleases a portion of its  headquarters  facility to various
tenants.  Rent received from these leases  totaled  $1,038,000,  $1,104,000  and
$1,114,000 for 2005, 2004 and 2003, respectively.

     Future  minimum rent  payments due to the Company under these leases are as
follows (in thousands):


                   2006              $     858
                   2007                    101
                                     ---------
                                     $     959
                                     =========

     The Company  leases office space under  various  operating  leases.  Rental
expense on these operating leases was approximately  $2,138,000,  $1,527,000 and
$1,200,000 for 2005, 2004, and 2003, respectively.

<PAGE>

     Future minimum lease payments under all noncancelable  operating leases are
(in thousands):


                     2006                        $     2,180
                     2007                              1,382
                     2008                              1,256
                     2009                                984
                     2010                                461
                     Thereafter                          167
                                                 -----------
                                                 $     6,430
                                                 ===========


Note 7 -- Debt

     The Company has an aggregate  availability  of $20,000,000 in bank lines of
credit. One line totaling  $12,500,000 bears interest at the bank borrowing rate
(6.6% at December 31, 2005) and is subject to loan covenants including a debt to
tangible net worth ratio of 1.4 to 1; a minimum working  capital  requirement of
at least  $25,000,000;  and a debt coverage ratio of 4 to 1. The total amount of
credit  available under this facility at a given time is based on (a) 80% of the
Company's  accounts  receivable  under 91 days  outstanding  attributable to the
Company's Hospitality segment and (b) 40% of the Company's inventory,  excluding
work in process. The total amount of this facility was available at December 31,
2005. This line expires on April 30, 2006. The second line of $7,500,000  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 (7.25% at
December 31, 2005).  This facility  contains certain loan covenants  including a
leverage  ratio of not greater than 4 to 1 and a fixed charge  coverage ratio of
not less than 4 to 1. This line  expires on  October  30,  2006.  Both lines are
collateralized by certain accounts receivable and inventory.  The Company was in
compliance  with all loan  covenants on December 31, 2005.  At December 31, 2005
and 2004,  there was $3,500,000 and $10,246,000  outstanding  under these lines,
respectively. The weighted average interest rate paid by the Company during 2005
was 5.6% and 4.2% during 2004. The Company  anticipates that it will renew these
lines for a three-year period at similar terms.

     The  Company  has a  $2,024,000  mortgage  collateralized  by certain  real
estate.  The annual mortgage payment  including  interest totals  $231,600.  The
mortgage bears interest at a variable rate based on the lending bank's Corporate

<PAGE>

Base Lending Rate plus 1/2%. At December 31, 2005,  the interest rate was 7.75%.
The  remaining  balance is due on May 1, 2010.  The Company's  future  principal
payments under this mortgage are as follows (in thousands):

                   2006                   $       76
                   2007                           81
                   2008                           88
                   2009                           95
                   2010                        1,684
                                           ---------
                                          $    2,024
                                          ==========


Note 8 -- Stock based compensation

     The Company's 1995 Stock Option Plan expired in 2005. In 2005, the Board of
the Directors of the Company approved the 2005 Equity  Investment Plan,  subject
to shareholder approval at the 2006 Annual Meeting. Under this Plan, the Company
has reserved  200,000  shares.  Stock  options  under this Plan may be incentive
stock  options  or  nonqualified  stock  options.  The Plan  also  provides  for
restricted  stock  grants.  There were no grants under this Plan in 2005.  Stock
options are nontransferable  other than upon death. Option grants generally vest
over a three to five year period after the grant and typically  expire ten years
after the date of the grant.

                                         No. of Shares Weighted Average
                                        (in thousands) Exercise Price
                                        -------------  --------------

   Outstanding at December 31, 2002 ..      1,947      $    2.29
        Granted ......................        132           3.32
        Exercised ....................       (294)          2.31
        Forfeited ....................       (206)          2.70
                                           ------      ---------

   Outstanding at December 31, 2003 ..      1,579           2.33
        Granted ......................        381           5.90
        Exercised ....................       (260)          2.27
        Forfeited ....................        (16)          4.22
                                           ------      ---------

   Outstanding at December 31, 2004 ..      1,684           3.13
        Granted ......................         70          11.40
        Exercised ....................       (706)          2.59
        Forfeited ....................        (11)          5.75
                                           ------      ---------

   Outstanding at December 31, 2005 ..      1,037      $    4.03
                                           ======      =========
   Shares remaining
        available for grant ..........        200
                                           ======
   Total shares vested and exercisable
   as of December 31, 2005 ...........        641      $    2.71
                                           ======      =========

<PAGE>

     Stock options outstanding at December 31, 2005 are summarized as follows:


     Range of                 Number         Weighted Average   Weighted Average
  Exercise Prices           Outstanding       Remaining Life      Exercise Price
  ---------------           -----------       --------------      --------------

$1.25    -     $4.00             654           5.0   Years           $    2.32
$4.01    -     $7.25             313           8.6   Years           $    5.91
              $11.40              70           9.3   Years           $   11.40
--------------------          ------           -----------           ---------
$1.25    -    $11.40           1,037           6.4   Years           $    4.03
====================          ======           ===========           =========


Note 9-- Income Taxes

     The provision (benefit) for income taxes consists of:

                                               Year ended December 31,
                                                  (in thousands)
                                       ----------------------------------
                                         2005          2004         2003
                                       --------     --------     --------
   Current income tax:
        Federal .............          $  3,312     $   312      $   177
        State ...............               679         164          112
        Foreign .............               154         239          288
                                       --------     -------      -------
                                          4,145         715          577
                                       --------     -------      -------
   Deferred income tax:
        Federal .............             1,196       2,259          605
        State ...............                17         225          251
        Foreign .............                --         530          (47)
                                       --------     -------      -------
                                          1,213       3,014          809
                                       --------     -------      -------
   Provision for income taxes          $  5,358     $ 3,729      $ 1,386
                                       ========     =======      =======


     Deferred tax liabilities (assets) are comprised of the following at:

                                                    December 31,
                                                    (in thousands)
                                               ----------------------
                                                  2005         2004
                                               --------     ---------

   Software development expense ..........     $   521      $   606
   Depreciation ..........................         137          331
                                               -------      -------
   Gross deferred tax liabilities ........         658          937
                                               -------      -------
   Allowances for bad debts,
     inventory and warranty ..............      (3,396)      (3,506)
   Capitalized inventory costs ...........         (67)        (103)
   Employee benefit accruals .............        (504)        (369)
   Federal net operating loss carryforward        (254)      (1,906)
   State net operating loss carryforward .        (123)        (181)
   Tax credit carryforwards ..............      (1,393)      (1,165)
   Other .................................        (410)        (147)
                                               -------      -------
   Gross deferred tax assets .............      (6,147)      (7,377)
                                               -------      -------
   Net deferred tax assets ................    $(5,489)     $(6,440)
                                               =======      =======

<PAGE>

     The Company has a Federal net  operating  loss  carryforward  of  $747,000,
which  expires in various  tax years from 2021 to 2024.  The Company has Federal
tax credit carryforwards of $1,250,000,  of which $334,000 has no expiration and
the balance  expires in various tax years from 2008 - 2025. The Company also has
state  tax  credit  carryforwards  of  $143,000  and state  net  operating  loss
carryforwards  of $3,500,000  which expire in various tax years through 2024. In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some  portion or all of the  deferred tax assets
will not be  realized.  The  ultimate  realization  of  deferred  tax  assets is
dependent  upon the  generation of future  taxable  income during the periods in
which the temporary  differences  become  deductible.  Management  considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon the historical
level of taxable income and projections  for future taxable  income,  management
believes it is more likely than not the Company  will realize the benefit of the
deferred  tax assets.  Accordingly,  no deferred  tax  valuation  allowance  was
recorded at December 31, 2005 and 2004.

     The  provision for income taxes  differed  from the  provision  computed by
applying the Federal statutory rate to income before taxes due to the following:


                                               Year ended December 31,
                                          -----------------------------
                                            2005      2004        2003
                                          ------     ------     -------

   Federal statutory tax rate ......       34.0%      34.0%      34.0%
   State taxes .....................        3.1        3.6        8.5
   Extraterritorial income exclusion       (1.4)      (1.0)      (2.0)
   Valuation allowance .............         --         --       (8.6)
   Non deductible expenses .........         .5         .5        3.2
   Tax credits .....................        (.6)       (.4)      (1.3)
   Foreign income taxes ............         .5        2.7        2.1
   Other ...........................         .1         .4         .4
                                         ------     ------     ------
                                           36.2%      39.8%      36.3%
                                         ======     ======     ======

Note 10 -- Employee Benefit Plans

     The  Company  has a deferred  profit-sharing  retirement  plan that  covers
substantially  all employees.  The Company's annual  contribution to the plan is
discretionary.  The Company contributed  $1,985,000,  $1,130,000 and $819,000 to
the Plan in 2005, 2004 and 2003,  respectively.  The plan also contains a 401(k)
provision that allows employees to contribute a percentage of their salary up to
the statutory limitation.  These contributions are matched at the rate of 10% by
the Company.  The Company's  matching  contributions  under the 401(k) component
were $297,000, $228,000 and $205,000 in 2005, 2004, and 2003, respectively.
<PAGE>

     The Company also maintains an incentive-compensation  plan. Participants in
the plan are key employees as determined by the Board of Directors and executive
management.  Compensation  under  the  plan  is  based  on  the  achievement  of
predetermined  financial  performance goals of the Company and its subsidiaries.
Awards  under  the plan are  payable  in cash.  Awards  under  the plan  totaled
$1,258,000, $682,000 and $559,000 in 2005, 2004 and 2003, respectively.

     The Company  also  sponsors an unfunded  Deferred  Compensation  Plan for a
select  group of  highly  compensated  employees  that  includes  the  Executive
Officers.  The Deferred  Compensation  Plan was adopted effective March 4, 2004.
Participants  may make elective  deferrals of their salary to the plan in excess
of tax code limitations that apply to the Company's  qualified plan. The Company
also has the sole discretion to make employer  contributions  to the plan on the
behalf of the participants, though it did not make any employer contributions in
2005 and 2004.

Note 11 -- Contingencies

     The Company is subject to legal  proceedings,  which arise in the  ordinary
course of business.  Additionally, U.S. Government contract costs are subject to
periodic  audit and  adjustment.  In the  opinion of  management,  the  ultimate
liability,  if any, with respect to these actions will not materially affect the
financial position, results of operations, or cash flows of the Company.

Note 12 -- Segment and Related Information

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

     The Company has two reportable  segments,  Hospitality and Government.  The
Hospitality  segment offers  integrated  solutions to the hospitality  industry.
These offerings  include  industry  leading  hardware and software  applications
utilized at the point-of-sale,  back of store and corporate office. This segment
also offers customer support including field service, installation,  twenty-four
hour  telephone  support  and depot  repair.  The  Government  segment  develops
advanced  technology  prototype  systems  primarily  for the U.S.  Department of
Defense and other U.S. Governmental agencies. It provides services for operating
and maintaining certain U.S. Government-owned  communication and test sites, and
for planning,  executing and  evaluating  experiments  involving new or advanced
radar  systems.  It is also  involved in  developing  technology to track mobile
chassis. As discussed in Note 3, the Company discontinued its Industrial segment
in the third quarter of 2002. Accordingly, the results of this segment have been
reported as discontinued  operations.  Intersegment  sales and transfers are not
significant.
<PAGE>

     Information as to the Company's segments is set forth below:
<TABLE>
<CAPTION>

                                                                         Year ended December 31,
                                                                             (in thousands)
                                                       ---------------------------------------------------------
                                                             2005                 2004                  2003
                                                       ----------------     ----------------      --------------
<S>                                                    <C>                  <C>                  <C>
Revenues:
     Hospitality                                       $        149,457     $       124,969      $        98,088
     Government                                                  56,182              49,915               41,682
                                                       ----------------     ---------------      ---------------
           Total                                       $        205,639     $       174,884      $       139,770
                                                       ================     ===============      ===============
Operating income (loss):
     Hospitality                                       $         10,864     $         5,657      $         2,977
     Government                                                   3,470               2,868                1,928
     Other                                                           --                  --                 (562)
                                                       ----------------      ---------------     ---------------
                                                                 14,334               8,525                4,343
Other income, net                                                   743               1,134                  582
Interest expense                                                   (287)               (295)                (540)
                                                       ----------------     ---------------      ---------------
Income from continuing operations
     before provision for income taxes                 $         14,790     $         9,364      $         4,385
                                                       ================     ===============      ===============
Identifiable assets:
     Hospitality                                       $        106,529     $        91,432      $        70,550
     Government                                                   9,015               9,909               10,475
     Other                                                        9,605              10,411                6,122
                                                       ----------------     ---------------      ---------------
           Total                                       $        125,149     $       111,752      $        87,147
                                                       ================     ===============      ===============
Goodwill:
     Hospitality                                       $         20,086     $        15,379      $           598
     Government                                                     536                  --                   --
                                                       ----------------     ---------------      ---------------
           Total                                       $         20,622     $        15,379      $           598
                                                       ================     ===============      ===============

Depreciation and amortization:
     Hospitality                                       $          3,321     $         2,276      $         2,212
     Government                                                      80                 208                  201
     Other                                                          354                 328                  402
                                                       ----------------     ---------------      ---------------
           Total                                       $          3,755     $         2,812      $         2,815
                                                       ================     ===============      ===============

Capital expenditures:
     Hospitality                                       $          1,385     $         1,348      $           236
     Government                                                      74                  --                   50
     Other                                                          223                 250                  129
                                                       ----------------     ---------------      ---------------
           Total                                       $          1,682     $         1,598      $           415
                                                       ================     ===============      ===============
</TABLE>
<PAGE>


     The following  table presents  revenues by country based on the location of
the use of the product or services.
<TABLE>
<CAPTION>

                                                              2005                2004                  2003
                                                       ----------------     ----------------      --------------

         <S>                                           <C>                  <C>                  <C>
         United States                                 $        183,383     $       158,407      $       124,556
         Other Countries                                         22,256              16,477               15,214
                                                       ----------------     ---------------      ---------------
             Total                                     $        205,639     $       174,884      $       139,770
                                                       ================     ===============      ===============
</TABLE>


     The following table presents assets by country based on the location of the
asset.
<TABLE>
<CAPTION>

                                                              2005                2004                  2003
                                                       ----------------     ----------------      --------------

         <S>                                           <C>                  <C>                  <C>
         United States                                 $        119,627     $       105,073      $        79,811
         Other Countries                                          5,522               6,679                7,336
                                                       ----------------     ---------------      ---------------
             Total                                     $        125,149     $       111,752      $        87,147
                                                       ================     ===============      ===============
</TABLE>


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

                                    2005     2004     2003
                                   -----    ------   ------
   Hospitality segment:
     McDonald's Corporation ...      28%      32%      25%
     Yum! Brands, Inc. ........      13%      19%      25%
   Government segment:
     U.S. Department of Defense      27%      29%      30%
   All Others .................      32%      20%      20%
                                    ---      ---      ---
                                    100%     100%     100%
                                    ===      ===      ===

Note 13 -- Fair Value of Financial Instruments

     Estimated fair values of financial instruments classified as current assets
or liabilities  approximate  carrying values due to the short-term nature of the
instruments.   Such  current  assets  and  liabilities  include  cash  and  cash
equivalents,  accounts  receivable,  borrowings  under lines of credit,  current
portion of long-term debt and accounts payable. The estimated fair values of the
Company's  long-term  debt at  December  31,  2005 and 2004 is based on variable
interest rates at December 31, 2005 and 2004, respectively,  for new issues with
similar  remaining  maturities and  approximates  respective  carrying values at
December 31, 2005 and 2004.
<PAGE>

     Fair  value  estimates  are made at a  specific  point  in  time,  based on
relevant  market  information and  information  about the financial  instrument.
These estimates are subjective in nature and involve  uncertainties  and matters
of significant  judgment and,  therefore,  cannot be determined  with precision.
Changes in assumptions could significantly affect the estimates.

Note 14 -- Related Party Transactions

     The Company leases its corporate  wellness facility to related parties at a
current  rate of $9,775 per  month.  The  Company  receives  membership  to this
facility for all employees.  During 2005,  2004,  and 2003 the Company  received
rental income amounting to $117,300.  All lease payments are current at December
31, 2005.

     The  Company  also  leases  office  space  from  an  officer  of one of its
subsidiaries.  The lease is for a period of five years  beginning  on October 1,
2004 at an annual rate of $360,000.  In 2005 and 2004, the Company paid $360,000
and $90,000, respectively, to the officer under this lease.

     At December 31, 2004 the Company had outstanding an  interest-bearing  loan
totaling  $250,000 to an executive  officer.  This loan was originated  prior to
June 2002.  The  interest  rate is variable  and was 4.67% at December 31, 2004.
During 2005,  this loan was paid in full.  During 2005,  2004 and 2003  interest
income  recorded  by the Company  related to this loan was  $4,300,  $12,700 and
$20,300, respectively.

Note 15 -- Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>

                                  Quarter ended
                     (in thousands except per share amounts)

          2005                           March 31             June 30          September 30        December 31
          ----                           --------             -------          ------------        -----------

<S>                                     <C>                 <C>                 <C>                <C>
Net revenues                            $    48,757         $    51,220         $   52,197         $    53,465
Gross margin                                 11,869              13,460             14,157              16,100
Net income                                    1,306               2,351              2,543               3,232
Basic earnings per share                        .10                 .17                .18                 .23
Diluted earnings per share                      .09                 .16                .17                 .22

<CAPTION>

                                  Quarter ended
                     (in thousands except per share amounts)

          2004                           March 31             June 30          September 30        December 31
          ----                           --------             -------          ------------        -----------

<S>                                     <C>                 <C>                 <C>                <C>
Net revenues                            $    37,898         $    42,925         $   42,635         $    51,426
Gross margin                                  7,386               8,528              8,807              12,425
Net income                                      736               1,312              1,734               1,853
Basic earnings per share                        .06                .10                 .13                 .14
Diluted earnings per share                      .05                .10                 .13                 .13
</TABLE>

<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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

March 15, 2006                            /s/John W. Sammon, Jr.
                                          --------------------------------
                                          John W. Sammon, Jr.
                                          Chairman of Board and President


                            -------------------------

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

--------------------------------------------------------------------------------
  Signatures                          Title                         Date
--------------------------------------------------------------------------------

/s/John W. Sammon, Jr.
----------------------
John W. Sammon, Jr.           Chairman of the Board and           March 15, 2006
                              President (Principal
                               Executive Officer)
                               and Director

/s/Charles A. Constantino
-------------------------
Charles A. Constantino        Executive Vice President            March 15, 2006
                              and Director

/s/Sangwoo Ahn
----------------------
Sangwoo Ahn                   Director                            March 15, 2006

/s/J. Whitney Haney
----------------------
J. Whitney Haney              Director                            March 15, 2006

/s/James A. Simms
----------------------
James A. Simms                Director                            March 15, 2006

/s/Kevin R. Jost
----------------------
Kevin R. Jost                 Director                            March 15, 2006

/s/Ronald J. Casciano
----------------------
Ronald J. Casciano           Vice President, Chief Financial      March 15, 2006
                             Officer and Treasurer


<PAGE>



                                List of Exhibits

Exhibit
   No.        Description of Instrument
--------------------------------------------------------------------------------

   3.1   Certificate of Incorporation,      Filed as Exhibit 3.1 to Registration
         as amended                         Statement on Form S-2 (Registration
                                            No. 333-04077)of PAR Technology
                                            Corporation incorporated herein by
                                            reference.

   3.2   Certificate of Amendment to the    Filed as Exhibit 3.1 to Registration
         Certificate of Incorporation       Statement on Form S-2 (Registration
                                            No. 333-04077)of PAR Technology
                                            Corporation incorporated herein by
                                            reference.

   3.3   By-laws, as amended.               Filed as Exhibit 3.1 to Registration
                                            Statement on Form S-2 (Registration
                                            No. 333-04077) of PAR Technology
                                            Corporation incorporated herein by
                                            reference.

   4     Specimen Certificate representing  Filed as Exhibit 3.1 to Registration
         the Common Stock.                  Statement on Form S-2 (Registration
                                            No. 333-04077)of PAR Technology
                                            Corporation incorporated herein by
                                            reference.


  10.1   Letter of Agreement with Sandman   Filed as Exhibit 10.1 to Form S-3/A
         - SCI Corporation                  (Registration No. 333-102197) of
                                            PAR Technology Corporation incor-
                                            porated herein by reference.

  10.2   NBT, N.A. Line of Credit Agreement

  10.3   JPMorgan Chase Agreement


    22   Subsidiaries of the registrant


    23   Consent of Independent Registered
         Public Accounting Firm

  31.1   Certification of Chairman of the
         Board and Chief Executive Officer
         Pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

  31.2   Certification of Vice President,
         Chief Financial Officer and Treasurer
         Pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

  32.1   Certification of Chairman of the Board
         and Chief Executive Officer and Vice
         President, Chief Financial Officer and
         Treasurer Pursuant to 18 U.S.C.
         Section 1350, as Adopted Pursuant
         to Section 906 of the Sarbanes-Oxley
         Act of 2002.

<PAGE>

                                   EXHIBIT 22

                   Subsidiaries of PAR Technology Corporation



--------------------------------------------------------------------------------
       Name                                              State of Incorporation
--------------------------------------------------------------------------------

ParTech, Inc.                                                      New York

PAR Springer-Miller Systems, Inc.                                  Delaware

PAR Government Systems Corporation                                 New York

Rome Research Corporation                                          New York

PAR Vision Systems Corporation                                     New York

Ausable Solutions, Inc.                                            Delaware

PixelPoint ULC                                                     Canada



<PAGE>



                                   EXHIBIT 23


            Consent of Independent Registered Public Accounting Firm




The Board of Directors
PAR Technology Corporation:

We consent to the incorporation by reference in the registration statements (No.
33-119828,  33-04968,  33-39784,  33-58110,  and  33-63095)  on Form S-8 and the
registration   statement  (No.   333-102197)  on  Form  S-3  of  PAR  Technology
Corporation  of  our  reports  dated  March  10,  2006,   with  respect  to  the
consolidated balance sheets of PAR Technology Corporation and subsidiaries as of
December 31, 2005 and 2004, and the related  consolidated  statements of income,
comprehensive  income,  changes in shareholders' equity, and cash flows for each
of the years in the three-year  period ended December 31, 2005, and management's
assessment of the effectiveness of internal control over financial  reporting as
of December 31, 2005 and the  effectiveness  of internal  control over financial
reporting as of December 31, 2005, which reports appear in the December 31, 2005
annual report on Form 10-K of PAR Technology Corporation.

Our report dated March 10, 2006 on management's  assessment of the effectiveness
of internal control over financial  reporting and the  effectiveness of internal
control  over  financial   reporting  as  of  December  31,  2005,  contains  an
explanatory paragraph that states PAR Technology Corporation acquired PixelPoint
Technologies,  Inc.  on  October  4,  2005,  and  management  excluded  from its
assessment of the effectiveness of PAR Technology Corporation's internal control
over  financial  reporting  as of December 31,  2005,  PixelPoint  Technologies,
Inc.'s internal control over financial  reporting  associated with total assets,
net revenues,  and income from continuing operations before provision for income
taxes  comprising 6.1%,  0.4%, and 1.7% of the  consolidated  total assets,  net
revenues,  and income from  continuing  operations  before  provision for income
taxes of PAR  Technology  Corporation  and  subsidiaries  as of and for the year
ended December 31, 2005. Our audit of internal control over financial  reporting
of PAR  Technology  Corporation  also  excluded an  evaluation  of the  internal
control over financial reporting of PixelPoint Technologies, Inc.


                                   /s/KPMG LLP


Syracuse, New York
March 15, 2006
<PAGE>

                                  Exhibit 31.1

                           PAR TECHNOLOGY CORPORATION
                         STATEMENT OF EXECUTIVE OFFICER

I, John W. Sammon, Jr., certify that:

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

2.   Based on my  knowledge,  this  annual  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 annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual 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 annual 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  registrants  fourth fiscal quarter in
          the case of an annual report) and 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:

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

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


Date: March 15, 2006                            /s/John W. Sammon, Jr.
                                                --------------------------------
                                                John W. Sammon, Jr.
                                                Chairman of the Board and
                                                Chief Executive Officer
<PAGE>

                                  Exhibit 31.2

                           PAR TECHNOLOGY CORPORATION
                         STATEMENT OF EXECUTIVE OFFICER

I, Ronald J. Casciano, certify that:

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

2.   Based on my  knowledge,  this  annual  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 annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual 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 annual 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  registrants  fourth fiscal quarter in
          the case of an annual report) and 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:

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

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


Date: March 15, 2006                            /s/Ronald J. Casciano
                                                --------------------------------
                                                Ronald J. Casciano
                                                Vice President, Chief Financial
                                                Officer & Treasurer
<PAGE>

                                  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 Annual Report of PAR  Technology  Corporation  (the
Company)  on Form 10-K for the year ended  December  31,  2005 as filed with the
Securities and Exchange Commission on the date hereof (the Report),  we, John W.
Sammon,  Jr. and Ronald J.  Casciano,  Chairman  of the Board & Chief  Executive
Officer and Vice President,  Chief Financial Officer & Treasurer of the Company,
certify,  pursuant to 18 U.S.C.  ss. 1350, as adopted pursuant to ss. 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/John W. Sammon, Jr.
-------------------------------
John W. Sammon, Jr.
Chairman of the Board and
Chief Executive Officer
March 15, 2006

/s/Ronald J. Casciano
-------------------------------
Ronald J. Casciano
Vice President, Chief Financial
Officer & Treasurer
March 15, 2006