SECURITIES AND EXCHANGE COMMISSION
                             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, 2006.
                                       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. [  ]

     *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 The aggregate  market value
of the  voting  stock  held by  non-affiliates  of the  registrant  based on the
average price as of February 28, 2007 - $70,515,000.

     The  number of shares  outstanding  of  registrant's  common  stock,  as of
February 28, 2007 - 14,341,381 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the  registrant's  proxy  statement in connection with its 2007
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 Registrant's Common Equity, 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 Operation
         Item 7A.       Quantitative and Qualitative Disclosures
                        About Market Risk
         Item 8.        Financial Statements and Supplementary Data
         Item 9A.       Controls and Procedures
         Item 9B.       Other Information

                                    PART III

         Item 10.       Directors, Executive Officers and Corporate Governance
         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,
                          and Director Independence
         Item 14.       Principal Accounting Fees and Services

                                     PART IV

         Item 15.       Exhibits, Financial Statement Schedules

                        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 and core business
is  ParTech,  Inc.  a  leading  provider  of  management  technology  solutions,
including  hardware,   software,   professional  and  traditional   services  to
businesses in the  hospitality  and  specialty  retail  industries.  The Company
continues  to  be a  primary  supplier  of  hospitality  technology  systems  to
quick-service  restaurants  with over 45,000 systems  installed in more than 105
countries.  PAR's hospitality  management software  applications provide for the
efficient  operation  of  hospitality  businesses  and  enterprises  by managing
transaction  and operational  data from end-to-end and maximizing  profitability
through more efficient  operations.  PAR's professional  services' mission is to
enable businesses to achieve the full potential of their hospitality  technology
investment.

     PAR is a provider  to the  hospitality  markets of  professional  services,
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,  Pizza Hut, Long John Silver's and A&W
Restaurants)  has been a loyal PAR  customer  since 1983.  Yum!  has over 33,000
units globally and PAR continues to be 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 Corporate  Restaurants.  Other  significant  hospitality
chains where PAR is the POS vendor of choice are: Boston Market, CKE Restaurants
(including Hardees and Carl's Jr.), Carnival Cruise Lines, Papa Murphy's, Corner
Bakery and large franchisees of the above mentioned brands.

     In the fourth quarter of 2006 PAR acquired  substantially all of the assets
of SIVA Corporation,  a privately held hospitality  technology  software company
and  a  provider  of  web-based  service  oriented  architected  (SOA)  software
applications to the hospitality industry. The acquisition included all of SIVA's
software and software technology as well as several existing contracts.
<PAGE>

     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  develops and markets POS,  WebPOS,  Wireless and Enterprise
software suites for the restaurant  industry.  It currently  markets software in
multiple  languages to many major economic centers  worldwide.  Their integrated
software solution includes enterprise management, a wireless application that is
seamless to their  connected  capability  and allows  remote order taking in the
dining room, on-line ordering capability for customers via the internet,  and an
in-store  and  enterprise  level  loyalty  and  gift  card  information  sharing
application.

     In the  fourth  quarter of 2004 PAR  acquired  Springer-Miller  Systems,  a
provider  of  hospitality  for  small  five  star   city-center   hotel  chains,
destination spa and golf properties,  timeshare properties and five star resorts
worldwide.  PAR's  Hospitality  Management  System is  distinguished  from other
property  management  systems with its integrated  design and unique approach to
guest service.  The product suite  includes more than 20 seamlessly  integrated,
guest-centric  application  modules  which provide  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  provides  technical
expertise in the development of 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.  Through  Government-sponsored
research  and  development,   PAR  has  developed   technologies  with  relevant
commercial uses. A prime example of this "technology transfer" was the Company's
point-of-sale  technology,  which was  derived  from  research  and  development
involving  microchip  processing  technology  sponsored  by  the  Department  of
Defense.  Our  most  recent  technology  transfer  is PAR  Logistics  Management
Systems.  This PAR  initiative  brings  tracking and  security  solutions to the
intermodal and trucking  industry.  Through an integrated  GPS, RFID,  cellular,
SATCOM, and internet PAR solution, owners and operators of refrigeration,  tank,
dry van, intermodal,  and generator containers have real time information on the
status and location of assets and cargo around the globe.
<PAGE>

     Information  concerning the Company's industry segments for the three years
ended  December 31, 2006 is set forth in Note 11 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 four  wholly-owned  subsidiaries in the  Hospitality  business
segment:  ParTech,  Inc., PAR Springer-Miller  Systems, Inc., PixelPoint ULC and
Par-Siva  Corporation.  PAR provides  Point-of-Sale (POS) restaurant  management
technology  solutions which integrate  software  applications  and the Company's
Pentium(R)-based  hardware platform. PAR's restaurant management system can host
fixed and 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.  PAR also provides
hospitality management solutions that satisfy the property management technology
needs  for an  array of  hospitality  enterprises,  including  small  five  star
city-center  hotel  chains,  destination  spa  and  golf  properties,  timeshare
properties  and five star  resorts  worldwide.  PAR  offers  extensive  service,
support,  systems  integration  and  professional  service  capabilities.  PAR's
service  professionals  design,  tailor  and  implement  solutions  that  enable
customers to manage all aspects of data  collection and processing for single or
multiple site enterprises from a central location.

Products

     The Company's integrated hospitality management software applications allow
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
based  on more  than 27 years  of  experience  and  knowledge,  and 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.

     The  SIVA  software  applications  offer  enterprise-architected  solutions
applicable to several  segments of the  restaurant  industry.  The product suite
includes iSIVA(R) Point-of-Sale, IntelliKitchen, POS(2) (handheld wireless order
taking) and Pay@Table/Pay@Curb.  The iSIVA Point-of-Sale application streamlines
the order  life-cycle for table service,  counter  service,  and bar operations,
<PAGE>

while  simplifying IT support with  centralized  application  management.  iSIVA
seamlessly integrates with POS(2) and Pay@Table/Pay@Curb,  extending traditional
POS with wireless  order-taking  and payment  capabilities.  The  IntelliKitchen
management  system  completes  the suite,  designed  to  distribute  and display
kitchen orders to maximize order accuracy and increase staff efficiency.

     For  franchisees  in Quick Service  Restaurant  (QSR) and Fast Casual,  PAR
offers the InFusion suite.  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  feature-rich  product.  InTouch  is a
multi-brand point of sale application, containing 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.
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  provides  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  utilizing the latest  technology  from
Microsoft's  .Net(R) platform.  InQuire's  Executive Dashboard provides business
intelligence  for the  entire  organization,  as well  as  automated  management
reporting and process integration.

     In  2006,  PAR  introduced   technology   that  provides   paperless  HACCP
management.  HACCP (Hazard  Analysis  Critical Control Point) is a food industry
standard  approach,  implemented  to reduce the incidence of food borne illness.
iQuality  software runs  wirelessly on a PDA in  conjunction  with a temperature
probe and iButtons used to identify HACCP  checkpoints.  iQuality is designed to
replace the paper checklist,  minimize human errors,  increase HACCP compliance,
and improve in-store efficiency.  iQuality enables exception based reporting for
corrective actions, reducing the risk of food contamination.

     PixelPoint  is  PAR's  easy-to-use  solution  for the  dealer  channel  and
independent  restaurants.  The PixelPoint  integrated software solution includes
PixelPoint(R)  POS,  HeadOffice  enterprise  management,  PocketPOS,  a wireless
application  that allows for remote order  taking in the dining room,  Web-to-Go
on-line ordering, and MemberShare,  an in-store and enterprise level Loyalty and
Gift Card information sharing application.

     PAR continues to offer GT/Exalt to QSR customers.  The software is designed
for the small franchisee that is looking for a "turnkey" solution.
<PAGE>

Hardware

     PAR continues to offer  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.  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 Installation and Professional Services

     PAR's ability to offer the full spectrum of 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
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.
<PAGE>

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 installation and training 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 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
installation  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
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 over 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  an  issue  arises  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.
<PAGE>

     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  made to  corporate
chains where PAR is an approved  vendor.  Upon achieving such status,  marketing
efforts are directed to the chain's franchisees. 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  operating more
than 75 locations.  The Domestic  Sales Group targets  franchisees  of the major
chain  customers,  as well as smaller chains  throughout the United States.  The
International  Sales Group sells to major customers with global locations and to
international  chains  that do not have a  presence  in the United  States.  The
Company's  Business  Partner  Development  Sales 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.

<PAGE>

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 world class  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 that
of the Company.  Major competitors include Panasonic,  IBM Corporation,  Radiant
Systems, NCR, SoftBrands, Agilysis and Micros Systems.

Backlog

     At December  31,  2006 the  Company's  backlog of  unfilled  orders for the
Hospitality  segment was approximately  $6,526,000 compared to $9,800,000 a year
ago.  All of the  present  orders are  expected  to be  delivered  in 2007.  The
Hospitality  segment orders are generally of a short-term nature and are usually
booked and shipped in the same fiscal year.

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
$11,802,000  in 2006,  $9,355,000 in 2005 and  $6,015,000  in 2004.  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  components are  manufactured  by third parties 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 consistently from 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
<PAGE>

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 services to the U.S.  Department of Defense (DoD)
and  other  federal  and state  government  organizations  with a wide  range of
technical  capability  and  scope.  Significant  areas  in which  the  Company's
services are involved  include:  design,  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 supports the
development  of  integrated  systems  for  geospatial   information   archiving,
processing,  exploitation, and visualization.  IS&T is the systems developer and
integrator for the Air Force Research  Laboratory-Rome  Research (AFRL) and is a
key developer on the National Geospatial-Intelligence Agency (NGA) Image Product
Library (IPL) program.  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  Coastal  Battlefield
Reconnaissance and Analysis (COBRA) program.

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,  detecting  man-made
objects in dense foliage, and performing  humanitarian efforts 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

<PAGE>

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
Dynamic  Open   Architecture   Radio  System  (DOARS)  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).    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
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 2004 and have not
resulted in any material adjustments.
<PAGE>

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, 2006, net
of  amounts  relating  to  work  performed  to  that  date,  was   approximately
$96,637,000,  of which  $28,243,000  was  funded.  At  December  31,  2005,  the
comparable  amount was  approximately  $106,614,000,  of which  $35,470,000  was
funded.  Funded  amounts  represent  those amounts  committed  under contract by
Government  agencies and prime  contractors.  The  December 31, 2006  Government
contract   backlog  of  $96,637,000   represents   firm,   existing   contracts.
Approximately $49,408,000 of this amount is expected to be completed in calendar
year 2007, as funding is committed.


<PAGE>


                                    Employees

     As of December 31, 2006, the Company had 1,700 employees, approximately 57%
of whom are engaged in the Company's Hospitality segment, 40% 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  18% 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 June 16, 2006 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, 2006, 2005 and 2004,  aggregate sales to our top
two Hospitality segment customers,  McDonald's and Yum! Brands, amounted to 40%,
41% and 51%,  respectively,  of total revenues.  Most of the Company's customers
<PAGE>

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,
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.

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,  2006,  2005 and 2004,  we derived
70%,  73% and 71%,  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
and weather conditions. Instabilities or
<PAGE>

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,  2006,  2005 and 2004,  we derived
30%, 27% and 29%, 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  65% of the revenue that we derived
from  Government  contracts  for the year  ended  December  31,  2006  came from
fixed-price or time-and-material  contracts.  The balance of the revenue that we
derived from  Government  contracts in 2006 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,  2006,  2005 and 2004,  our net
revenues   from  sales   outside  the  United  States  were  13%,  11%  and  9%,
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
$25.7  million and $10.7 million at December 31, 2006,  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  relate.  This
estimated fair value could change if we are unable to achieve  operating results


<PAGE>

at the levels that have been forecasted,  the market valuation of such companies
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  asset  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:

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

New Hartford, NY    Hospitality     Principal executive offices,        138,500
                    Government        manufacturing, research and
                                      development laboratories,
                                      computing facilities
Rome, NY            Government      Research and development             52,800
Stowe, VT           Hospitality     Sales, service and research          26,000
                                      and development
Boulder, CO         Hospitality     Service                              20,500
Delray Beach, FL    Hospitality     Sales, service and research
                                      and development                    11,000
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

     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.
<PAGE>

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.

                                     PART II


Item 5: Market for the Registrant's  Common Equity,  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,  2006,  there were
approximately  466 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, 2006 as reported by New York Stock Exchange:

                               2006                               2005
                    --------------------------         ------------------------
    Period             Low             High               Low            High
--------------      ----------      ----------         ----------     ---------

First Quarter         $17.22           $22.73            $  7.47        $10.68
Second Quarter        $10.61           $18.60             $10.28        $22.30
Third Quarter         $ 7.40           $13.01             $13.10        $25.60
Fourth Quarter        $ 7.07            $9.24             $13.26        $23.60

     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,
                                    -------------------------------------------------------------
                                        2006        2005        2004         2003         2002
                                    -------------------------------------------------------------

<S>                                 <C>          <C>          <C>          <C>          <C>
Net revenues ....................   $ 208,667    $ 205,639    $ 174,884    $ 139,770    $ 133,681

Cost of sales ...................   $ 153,158    $ 150,053    $ 137,738    $ 110,777    $ 105,225

Gross margin ....................   $  55,509    $  55,586    $  37,146    $  28,993    $  28,456

Selling, general & administrative   $  33,440    $  30,867    $  22,106    $  19,340    $  19,540

Provision for income taxes ......   $  (3,146)   $  (5,358)   $  (3,729)   $  (1,593)   $    (884)

Income from continuing operations   $   5,721    $   9,432    $   5,635    $   2,792    $   2,623

Basic earnings per share from
  continuing operations .........   $     .40    $     .68    $     .43    $     .22    $     .22

Diluted earnings per share from
 continuing operations ..........   $     .39    $     .64    $     .41    $     .21    $     .21

</TABLE>

     The selected  consolidated  financial  statement data  summarized  above is
reflective of business acquisitions in 2006, 2005 and 2004, as discussed in Note
2.

                    SELECTED CONSOLIDATED BALANCE SHEET DATA
                                 (In thousands)

                                            December 31,
                       ----------------------------------------------------
                          2006      2005       2004      2003       2002
                       ----------------------------------------------------
Current assets .....   $ 95,991   $ 84,492   $ 77,696   $ 74,195   $ 69,070
Current liabilities    $ 46,473   $ 43,661   $ 45,159   $ 29,816   $ 31,743
Total assets .......   $142,796   $125,149   $111,752   $ 87,147   $ 85,122
Long-term debt .....   $  7,708   $  1,948   $  2,005   $  2,092   $  2,181
Shareholders' equity   $ 86,083   $ 78,492   $ 63,574   $ 55,239   $ 51,198


     The selected  consolidated  financial  statement data  summarized  above is
reflective of business acquisitions in 2006, 2005 and 2004, as discussed in Note
2.

     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 Operation

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 that include  software,  hardware and a variety of services.
The Company is also a provider to the Federal Government,  and its agencies,  of
<PAGE>

applied  technology  and  technical  services.  The  primary end markets for our
products and services are:

o    Restaurants, hotels/resorts/spas,  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  Federal/State/local  government
     agencies.

     The Company's hospitality products are used in a variety of applications by
numerous  customers.  The  Company  faces  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 can 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 significant delivery  capability,  globally to its multinational
customers like McDonald's, Yum! Brands and Mandarin Oriental Hotel Group.

     In the fourth quarter of 2006 PAR acquired  substantially all of the assets
of SIVA Corporation,  a privately held hospitality  technology  software company
and  a  provider  of  web-based  service  oriented  architected  (SOA)  software
applications to the hospitality industry. The acquisition included all of SIVA's
software and software technology as well as several existing  contracts.  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.

     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.
<PAGE>

     In 2006 the Company had  significant  new customer wins in the  hospitality
industry.  Burger King Corporation named PAR as one of four approved  technology
vendors to their more than 11,000  restaurants.  The Company rolled out hardware
and software to the Corner Bakery  organization that has nearly 100 restaurants.
The Company was selected by CKE Restaurants as their in-store  service  provider
and signed a  multi-year  contract  with them.  PAR also was named as a hardware
provider to Cardinal Health and their roster of 3,200 independent pharmacies. In
the  hotel/resort  business,  PAR installed new property  management  systems at
several leading  resorts  including  Hamilton  Island Resort in Australia,  Lake
Powell Resorts and the Sugarbush resort.

     Approximately 30% of the Company's revenues are generated in our Government
Business segment. This segment is comprised of two subsidiaries:  PAR Government
Systems Corporation and Rome Research Corporation.  Through these two government
contractors, the Company provides I/T and communications support services to the
U.S.  Navy,  Air Force and Army.  In  addition,  PAR also offers its services to
several  non-military  U.S.  federal,  state and  local  agencies.  The  Company
provides  applied   technology   services  including  radar,  image  and  signal
processing,  logistics  management systems and geospatial services and products.
The  Company's  high  Government   performance  rating  allows  the  Company  to
continually  secure repeat  business and long-term  client-vendor  relationships
with their  contract  customers.  PAR can  provide  its  clients  the  expertise
necessary  to  facilitate  and operate  complex  technical  systems  utilized by
government  agencies.  In 2006 PAR was awarded  several new  contracts  with the
Department  of Defense,  including one with the Defense  Finance and  Accounting
Service (DFAS) to provide I/T  instruction  and helpdesk  services in support of
the DFAS Wide Area Work Flow,  Receipt and  Acceptance  program.  PAR  Logistics
Management Systems signed marketing agreements with both Carrier Corporation and
ThermoKing  to  provide   tracking  and   monitoring   services  for  commercial
refrigerated containers.

     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.
<PAGE>

     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  and  Government  - 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):

                               2006       2005       2004
                             --------   --------   --------
Revenues:
     Hospitality .........   $145,216   $149,457   $124,969
     Government ..........     63,451     56,182     49,915
                             --------   --------   --------
Total consolidated revenue   $208,667   $205,639   $174,884
                             ========   ========   ========

     The following discussion and analysis highlights items having a significant
effect on operations  during the three year period ended December 31, 2006. 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  --  2006 Compared to 2005

     The Company reported revenues of $208.7 million for the year ended December
31,  2006,  an increase of 1.5% from the $205.6  million  reported  for the year
ended  December 31, 2005.  The Company's net income for the year ended  December
31, 2006 was $5.7 million, or $.39 diluted net income per share, compared to net
income of $9.4 million and $.64 per diluted share for the same period in 2005.
<PAGE>

     Product revenues from the Company's  Hospitality segment were $83.2 million
for the year ended  December 31,  2006, a decrease of 9% from the $91.1  million
recorded in 2005.  This  decrease was due to a $9.2 million  decline in domestic
product sales  primarily due to lower hardware  sales to Hospitality  customers.
This drop in domestic revenue was partially offset by a $4.9 million increase in
international  product sales. This increase was the result of growth in sales to
the Company's restaurant customers in Asia and Europe.

     Customer service  revenues are also generated by the Company's  Hospitality
segment.  The  Company's  service  offerings  include   installation,   software
maintenance,  training, twenty-four hour help desk support and various depot and
on-site service options. Customer service revenues were $62 million for the year
ended December 31, 2006, a 6% increase from $58.3 million  reported for the same
period in 2005. The Company  experienced  growth in its field service,  software
maintenance  and depot repair  revenues  for its  Hospitality  customers  due to
expansion of the Company's customer base. This was partially offset by a decline
in installation revenue due to the lower product revenue.

     Contract revenues from the Company's  Government segment were $63.5 million
for the year ended  December 31, 2006,  an increase of 13% when  compared to the
$56.2  million  recorded  in  the  same  period  in  2005.  The  primary  factor
contributing  to the growth was a $3.4  million  increase in applied  technology
contracts including the Company's work in providing technical assistance for the
development  of  battle  planning   software  used  by  the  Air  Force.   Also,
contributing was a $3 million increase in revenue from the Company's information
technology  outsourcing  contracts  for  facility  operations  at critical  U.S.
Department  of  Defense   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.

     Product  margins  for the year  ended  December  31,  2006  were 42.4 %, an
increase  of 100 basis  points  from the 41.4% for the year ended  December  31,
2005.  This  increase in margins was  primarily  attributable  to an increase in
software revenue in 2006 when compared to 2005.
<PAGE>

     Customer  Service  margins were 25.2% for the year ended  December 31, 2006
compared  to 24.2% for the same  period in 2005.  This  increase is due to lower
material costs and an increase in software maintenance revenue.

     Contract margins were 7.2% for the year ended December 31, 2006 versus 6.7%
for the same period in 2005. This increase is primarily due to higher margins on
certain fixed price  contracts and to a favorable  cost share  adjustment on the
Company's  Logistics  Management  Program.  The most  significant  components of
contract costs in 2006 and 2005 were labor and fringe benefits.  For 2006, labor
and fringe  benefits  were $45.9  million or 78% of contract  costs  compared to
$39.4 million or 75% of contract costs for the same period in 2005.

     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, 2006 were $33.4 million,  an increase of 8% from
the $30.9  million  expense  for the same  period  in 2005.  This  increase  was
primarily  due to a  rise  in  sales  and  marketing  expenses  associated  with
restaurant  products as the Company is planning for future  growth  including in
international   markets.   The   Company's   2005   acquisition   of  PixelPoint
Technologies,  Inc. also  contributed  to this  increase.  Other reasons for the
expense growth include start up costs on a new customer service contract in 2006
and stock based compensation  expense which was not required to be recognized in
2005.

     Research  and  development  expenses  relate  primarily  to  the  Company's
Hospitality  segment.  Research and development  expenses were $11.8 million for
the year ended  December  31,  2006,  an increase  of 26% from the $9.4  million
recorded in 2005.  The  increase was  primarily  attributable  to the  Company's
continued research and development in its hardware and software products for its
restaurant,  resort and spa  customers.  The increase also reflects the research
and development  expenses  related to the SIVA acquisition in the fourth quarter
of 2006 and to the PixelPoint acquisition in the fourth quarter of 2005.

     Amortization  of  identifiable  intangible  assets was $1.3 million for the
year ended  December 31, 2006  compared to $1 million for 2005.  The increase is
primarily  due  to  amortization  relating  to  the  acquisition  of  PixelPoint
Technologies,  Inc. on October 4, 2005, and to the SIVA  acquisition on November
2, 2006.
<PAGE>

     Other  income,  net,  was  $617,000  for the year ended  December  31, 2006
compared  to  $743,000  for the same  period  in 2005.  Other  income  primarily
includes  rental income and foreign  currency gains and losses.  The decrease is
primarily due to lower foreign currency gains in 2006 compared to 2005.

     Interest expense  represents  interest charged on the Company's  short-term
borrowing  requirements from banks and from long-term debt. Interest expense was
$734,000  for the year ended  December 31, 2006 as compared to $287,000 in 2005.
The Company  experienced a higher  borrowing  interest  rate and higher  average
borrowings in 2006 when compared to 2005.

     For the year ended  December 31, 2006, the Company's  effective  income tax
rate  was  35.5%,  compared  to 36.2% in 2005.  The  variance  from the  federal
statutory rate in 2006 and 2005 was primarily due to state income taxes,  offset
by benefits  related to export sales as well as tax benefits related to domestic
production activities.

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  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

<PAGE>

in  2004.  This  increase  was  due  primarily  to  installation   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
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 was 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
<PAGE>

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.

     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.
<PAGE>

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.


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 used in  continuing
operations  was $3.6 million for the year ended  December  31, 2006  compared to
cash provided of $11.7  million for 2005. In 2006,  cash was used to finance the
growth in receivables and inventory. This was partially offset by cash generated
from  operating  profits.  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 increases in accounts receivable and inventory.

     Cash used in  investing  activities  was $7.8  million  for the year  ended
December  31,  2006 versus  $9.5  million for the same period in 2005.  In 2006,
capital  expenditures  were $1.2 million and were principally for  manufacturing
and information  technology  equipment.  Capitalized  software costs relating to
software  development of Hospitality  segment products were $822,000 in 2006. In
2005,   capital   expenditures   were  $1.7  million  and  were   primarily  for
manufacturing and research and development equipment. Capitalized software costs
relating to software  development of Hospitality  segment products were $617,000
in 2005. In 2006,  the Company used $5.8 million in cash for the  acquisition of
SIVA  Corporation.   In  2005,  the  Company  used  $7.2  million  in  cash  for
acquisitions, the majority of which was for PixelPoint Technologies.

     Cash provided by financing  activities was $10.5 million for the year ended
December 31, 2006 versus $5 million of cash used in 2005.  In 2006,  the Company
increased its short-term  borrowings by $4.2 million and increased its long-term
debt by $5.9  million.  This  increase was  principally  due to debt incurred in
connection with the acquisition of SIVA Corporation.  The Company also benefited
$352,000  from the  exercise of employee  stock  options.  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.
<PAGE>

     The Company has an aggregate  availability of $20,000,000 in unsecured bank
lines of  credit.  One line  totaling  $12,500,000  bears  interest  at the bank
borrowing rate (6.3% at December 31, 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 (6.3% at
December 31, 2006). These facilities 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 3.5 to 1. These  lines  expire in April  2009.  The Company was in
compliance  with all loan  covenants on December 31, 2006.  At December 31, 2006
and 2005,  there was $7,713,000 and  $3,500,000  outstanding  under these lines,
respectively. The weighted average interest rate paid by the Company during 2006
was 6.6% and 5.6% during 2005.

     In 2006,  the Company  borrowed  $6,000,000  under an  unsecured  term loan
agreement with a bank in connection  with the  acquisition of SIVA  Corporation.
The loan provides for interest  only  payments in the first year and  escalating
principal  payments through 2012. The loan bears interest at the LIBOR rate plus
the applicable interest rate spread (6.3% at December 31, 2006).

     The  Company  has a  $1,948,000  mortgage  collateralized  by certain  real
estate.  The annual mortgage payment  including  interest totals  $226,000.  The
mortgage bears interest at a fixed rate of 7% and matures in 2010.

     The Company's  future  principal  payments under its term loan and mortgage
are as follows (in thousands):

                        2007                   $   240
                        2008                       772
                        2009                     1,079
                        2010                     2,933
                        2011                     1,575
                        2012                     1,349
                                               -------
                                               $ 7,948
                                               =======
<PAGE>
     The Company  future  minimum  obligations  under  non-cancelable  operating
leases are as follows (in thousands):

                        2007                   $ 1,852
                        2008                     1,456
                        2009                     1,195
                        2010                       537
                        2011                       223
                        Thereafter                  89
                                               -------
                                               $ 5,352
                                               =======

     During  fiscal  year  2007,  the  Company   anticipates  that  its  capital
requirements  will be  approximately  $2 to $3  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.


Critical Accounting Policies

     The  Company's   consolidated   financial   statements  are  based  on  the
application  of U.S.  generally  accepted  accounting  principles  (GAAP).  GAAP
<PAGE>


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  (SAB)  No.  104,  "Revenue
Recognition" and the AICPA Statement of Position (SOP) 97-2,  "Software  Revenue
Recognition."  Product  revenues  consist  of  sales of the  Company's  standard
point-of-sale  and  property  management  systems  of the  Hospitality  segment.
Product  revenues  include both  hardware and software  sales.  The Company also
records service  revenues  relating to its standard  point-of-sale  and property
management systems of the Hospitality segment.

     Hardware

     Revenue  recognition on hardware sales occurs upon delivery to the customer
site (or when  shipped for systems  that are not  installed  by the  Company) as
under SAB 104,  persuasive  evidence  of an  arrangement  exists,  delivery  has
occurred,  the price is fixed or determinable,  and collectibility is reasonably
assured.

     Software

     Revenue recognition on software sales generally occurs upon delivery to the
customer  site (or when  shipped  for  systems  that  are not  installed  by the
Company)  as under SOP  97-2,  persuasive  evidence  of an  arrangement  exists,
delivery has occurred, the price is fixed or determinable, and collectibility is
reasonably assured.  For software sales where the Company is the sole party that
has the  proprietary  knowledge to install the  software,  revenue is recognized
upon installation and when the system is ready to go live.


<PAGE>

     Service

     Service revenue  consists of installation  and training  services,  support
maintenance,  and field and depot  repair.  Installation  and  training  service
revenue are based upon standard  hourly/daily rates and revenue is recognized as
the services are performed.  Support  maintenance and field and depot repair are
provided  to  customers  either  on a  time  and  materials  basis  or  under  a
maintenance  contract.  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 underlying contract period.

     The  individual   product  and  service  offerings  that  are  included  in
arrangements  with our customers  are  identified  and priced  separately to the
customer based upon the stand alone price for each individual product or service
sold in the arrangement irrespective of the combination of products and services
which are included in a particular arrangement. As such, the units of accounting
are based on each individual  product and service sold, and revenue is allocated
to each  element  based on vendor  specific  objective  evidence  (VSOE) of fair
value.  VSOE of fair value for each  individual  product and service is based on
separate individual prices of these products and services.  The sales price used
to  establish  fair  value is the  sales  price of the  element  when it is sold
individually  in a  separate  arrangement  and not as a  separate  element  in a
multiple element arrangement.

     Contracts

     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  as labor hours are delivered  which  approximates  the
straight-line basis of the life of the 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.
<PAGE>

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.  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.

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  technological  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
<PAGE>

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.

Recent Accounting Pronouncements

     In November 2004, the Financial Accounting Standards Board (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 was 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 did not have a material
impact on the Company's consolidated financial statements.

     FASB  Interpretation 48 was issued in July 2006 to clarify the criteria for
recognizing  tax benefits  under FASB  Statement No. 109,  Accounting for Income
taxes. The Interpretation  defines the threshold for recognizing the benefits of
tax return positions in the financial statements as "more-likely-than-not" to be
sustained  by the taxing  authority  and will  affect many  companies'  reported
results and their  disclosures  of uncertain tax positions.  The  Interpretation
does  not  prescribe  the type of  evidence  required  to  support  meeting  the
more-likely-than-not  threshold, stating that it depends on the individual facts
and  circumstances.  The  benefit  recognized  for a tax  position  meeting  the
more-likely-than-not  criterion is measured based on the largest benefit that is
more than 50 percent  likely to be  realized.  The  measurement  of the  related
benefit is determined by considering the probabilities of the amounts that could
be realized upon  ultimate  settlement,  assuming the taxing  authority has full
knowledge of all relevant facts and including  expected  negotiated  settlements
with the taxing authority. Interpretation 48 is effective as of the beginning of
the first fiscal year  beginning  after  December 15, 2006 (the  Company's  2007
fiscal year).  The Company does not expect this to have a material impact on the
consolidated financial statements.
<PAGE>

     In September  2006, the Securities and Exchange  Commission  released Staff
Accounting  Bulletin  No.  108,  "Considering  the  Effects  Prior  Period  Year
Misstatements   When   Quantifying   Misstatements  in  Current  Year  Financial
Statements,"  ("SAB 108"). SAB 108 provides  interpretative  guidance on how the
effects of the  carryover  or  reversal  of prior year  misstatements  should be
considered in quantifying a current year misstatement. SAB 108 was effective for
the Company in the fiscal year ended  December 31, 2006. The adoption of SAB 108
did not impact the Company's results of operations and financial condition.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value  Measurements"
("SFAS 157"), which provides guidance for measuring the fair value of assets and
liabilities,   as  well  as  requires  expanded  disclosures  about  fair  value
measurements.  SFAS 157 indicates that fair value should be determined  based on
the  assumptions  marketplace  participants  would use in  pricing  the asset or
liability,  and provides  additional  guidelines to consider in determining  the
market-based  measurement.  The  Company  will be  required to adopt SFAS 157 on
January 1, 2008. The Company is currently evaluating the impact of adopting SFAS
157 on its consolidated financial statements.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial  Liabilities"  ("SFAS 159"). SFAS 159 permits all
entities to choose to measure eligible items at fair value at specified election
dates.  SFAS 159 is  effective as of the  beginning of an entity's  first fiscal
year that begins after November 15, 2007. The Company is currently assessing the
impact of adopting SFAS 159 on its consolidated financial statements.


Item 7A. Quantitative and Qualitative Disclosures about Market Risk

INFLATION

     Inflation  had little  effect on revenues  and related  costs  during 2006.
Management  anticipates that margins will be maintained at acceptable  levels to
minimize the affects of inflation, if any.
<PAGE>

INTEREST RATES

     As of December 31, 2006, the Company has $5.9 million in variable long-term
debt and $7.9 million in variable  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  condition,  results of  operations  or cash
flows.

FOREIGN CURRENCY

     The Company's  primary exposures relate to certain  non-dollar  denominated
sales and operating  expenses in Europe and Asia.  These primary  currencies are
the 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 2006  Consolidated  financial  statements,  together with the
reports thereon of KPMG LLP dated March 15, 2007, 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,  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.
<PAGE>

     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.

     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,  2006.  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, 2006, the Company's  internal control over financial  reporting was
effective based on those criteria. This evaluation excluded the internal control
over financial reporting of SIVA Corporation ("SIVA") which the Company acquired
on November 2, 2006.  Management did not have adequate time to gather sufficient
evidence about the design and operating  effectiveness  of internal control over
<PAGE>

financial  reporting for SIVA from the date of acquisition  through December 31,
2006;  therefore,  Management was not able to perform an evaluation with respect
to the  effectiveness of internal control over financial  reporting for SIVA. As
of  December  31,  2006,  the total  assets,  net  revenues,  and income  before
provision  for  income  taxes  of  SIVA  comprised   4.8%,   .02%,  and  (6.9%),
respectively,  of the consolidated total assets,  net revenues,  and income from
continuing operations before provision for income taxes of the Company.

     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. Attestation 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, 2006,  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
<PAGE>

reflect the  transactions  and  dispositions  of the assets of the company;  (2)
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 (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, 2006,  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,  2006,  based  on  criteria  established  in  Internal  Control  -
Integrated Framework issued by COSO.

PAR Technology  Corporation  acquired SIVA  Corporation on November 2, 2006, and
management  excluded from its assessment of the  effectiveness of PAR Technology
Corporation's internal control over financial reporting as of December 31, 2006,
SIVA  Corporation's  internal control over financial  reporting  associated with
total  assets,  net  revenues,  and income  before  provision  for income  taxes
comprising  4.8%,  .02%, and (6.9%),  respectively,  of the  consolidated  total
assets,  net  revenues,  and income  before  provision  for income  taxes of PAR
Technology  Corporation  and  subsidiaries as of and for the year ended December
31,  2006.  Our  audit of  internal  control  over  financial  reporting  of PAR
Technology  Corporation also excluded an evaluation of the internal control over
financial reporting of SIVA Corporation.

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, 2006 and 2005,
<PAGE>


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, 2006, and our report dated March 15, 2007 expressed an
unqualified opinion on those consolidated financial statements.

/s/KPMG LLP



Syracuse, New York
March 15, 2007


     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>
Item 9B: Other Information.

     Reports on Form 8-K

          On October 26, 2006, 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, 2006, as presented in a press release  October
     26, 2006 and furnished thereto as an exhibit.

          On November 2, 2006, PAR Technology  Corporation furnished a report on
     Form 8-K pursuant to Item 8.01 (Other  Events) of that Form relating to the
     acquisition of substantially all of the assets of SIVA Corporation.

          On  November  8, 2006,  PAR  Technology  Corporation  filed a Form 8-K
     pursuant to Item 2.01  (Completion of Acquisition or Disposition of Assets)
     and Item 9.01 (Financial  Statements and Exhibits) of that Form relating to
     the acquisition of SIVA Corporation.


<PAGE>
                                    PART III

Item 10: Directors, Executive Officers and Corporate Governance

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


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

Dr. John W. Sammon, Jr.     67  Chairman, President and Chief Executive Officer,
                                PAR Technology Corporation

Charles A. Constantino      67  Executive Vice President and Director,
                                PAR Technology Corporation

Sangwoo Ahn                 68  Director, PAR Technology Corporation

Kevin R. Jost               52  Director, PAR Technology Corporation

Dr. Paul D. Nielsen         55  Director, PAR Technology Corporation

James A. Simms              47  Director, PAR Technology Corporation

Gregory T. Cortese          57  Chief Executive Officer & President,
                                ParTech, Inc., General Counsel and Secretary,
                                PAR Technology Corporation

Albert Lane, Jr.            65  President, PAR Government Systems Corporation
                                and Rome Research Corporation

Ronald J. Casciano          53  Vice President, Chief Financial Officer
                                and Treasurer, PAR Technology Corporation

<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. 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.

     Dr.  Paul D.  Nielsen  was  appointed a Director of the Company in January,
2006.  Mr.  Nielsen  has  been  Director  and  CEO of the  Software  Engineering
Institute ("SEI") at Carnegie Mellon University since 2004.

     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 2007 definitive proxy statement for the annual
meeting of stockholders in May 2007 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 2007
definitive  proxy  statement for the annual meeting of  stockholders in May 2007
and is incorporated herein by reference.

Item  13:  Certain   Relationships  and  Related   Transactions,   and  Director
Independence

     The  information  required  by this item  will  appear  under  the  caption
"Executive  Compensation"  in our 2007 definitive proxy statement for the annual
meeting of stockholders in May 2007 and is incorporated herein by reference.

Item 14: Principal Accounting Fees and Services

     The  response  to this  item  will  appear  under  the  caption  "Principal
Accountant  Fees and Services" in our 2007  definitive  proxy  statement for the
annual meeting of stockholders to be held in May 2007 and is incorporated herein
by reference.
<PAGE>


                                     PART IV

Item 15: Exhibits, Financial Statement Schedules



(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, 2006 and 2005

     Consolidated  Statements  of Income for the three years
     ended  December 31, 2006

     Consolidated  Statements of Comprehensive  Income for the
     three years ended December 31, 2006

     Consolidated  Statements of Changes in  Shareholders'  Equity
     for the three years ended December 31, 2006

     Consolidated  Statements  of Cash Flows for the three years
     ended  December 31, 2006

     Notes to Consolidated Financial Statements



(b) Exhibits

     See list of exhibits.

<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, 2006 and 2005, and for each of
the years in the  three-year  period ended  December 31, 2006,  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, 2006 and 2005, and the results
of their operations and their cash flows for each of the years in the three-year
period  ended  December  31, 2006 in  conformity  with U.S.  generally  accepted
accounting principles.

As  discussed  in  notes  1  and 7 to  the  consolidated  financial  statements,
effective  January  1,  2006,  the  Company  adopted  the fair  value  method of
accounting for  stock-based  compensation  as required by Statement of Financial
Accounting Standards No. 123(R), Share-Based Payment.

We also have  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, 2006,
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 15,  2007  expressed  an  unqualified  opinion  on
management's  assessment of, and the effective  operation of,  internal  control
over financial reporting.

Our report dated March 15, 2007 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,  2006,  contains  an
explanatory  paragraph  that states PAR  Technology  Corporation  acquired  SIVA
Corporation on November 2, 2006, and management  excluded from its assessment of
the  effectiveness  of  PAR  Technology   Corporation's  internal  control  over
financial reporting as of December 31, 2006, SIVA Corporation's internal control
over financial reporting associated with total assets, net revenues,  and income
before  provision  for  income  taxes   comprising  4.8%,   0.02%,  and  (6.9%),
respectively,  of the consolidated total assets, net revenues, and income before
provision for income taxes of PAR Technology  Corporation and subsidiaries as of
and for the year ended  December  31, 2006.  Our audit of internal  control over
financial reporting of PAR Technology Corporation also excluded an evaluation of
the internal control over financial reporting of SIVA Corporation.




/s/KPMG LLP


Syracuse, New York
March 15, 2007

<PAGE>
<TABLE>
<CAPTION>



                           PAR TECHNOLOGY CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)

                                                                     December 31,
                                                               ----------------------
Assets                                                           2006           2005
                                                               ---------    ---------
<S>                                                            <C>          <C>
Current assets:
     Cash and cash equivalents .............................   $   4,273    $   4,982
     Accounts receivable-net ...............................      46,791       40,781
     Inventories-net .......................................      35,948       29,562
     Income tax refunds ....................................       1,103          879
     Deferred income taxes .................................       5,139        5,690
     Other current assets ..................................       2,737        2,598
                                                               ---------    ---------
         Total current assets ..............................      95,991       84,492
Property, plant and equipment - net ........................       7,535        8,044
Goodwill ...................................................      25,734       20,622
Intangible assets - net ....................................      10,695        9,904
Other assets ...............................................       2,841        2,087
                                                               ---------    ---------
                                                               $ 142,796    $ 125,149
                                                               =========    =========
Liabilities and Shareholders' Equity
Current liabilities:
     Current portion of long-term debt .....................   $     240    $      76
     Borrowings under lines of credit ......................       7,713        3,500
     Accounts payable ......................................      12,470       12,703
     Accrued salaries and benefits .........................       8,279        9,725
     Accrued expenses ......................................       1,861        2,352
     Customer deposits .....................................       3,656        3,973
     Deferred service revenue ..............................      12,254       11,332
                                                               ---------    ---------
         Total current liabilities .........................      46,473       43,661
                                                               ---------    ---------
Long-term debt .............................................       7,708        1,948
                                                               ---------    ---------
Deferred income taxes ......................................         653          201
                                                               ---------    ---------
Other long-term liabilities ................................       1,879          847
                                                               ---------    ---------
Commitments and contingent liabilities
Shareholders' Equity:
     Preferred stock, $.02 par value,
       1,000,000 shares authorized .........................        --           --
     Common stock, $.02 par value,
       29,000,000 shares authorized;
       15,980,486 and 15,914,958 shares issued;
       14,327,731 and 14,136,654 outstanding ...............         320          318
     Capital in excess of par value ........................      38,602       37,271
     Retained earnings .....................................      53,159       47,442
     Accumulated other comprehensive loss ..................        (489)        (611)
     Treasury stock, at cost, 1,652,755 and 1,778,304 shares      (5,509)      (5,928)
                                                               ---------    ---------
         Total shareholders' equity ........................      86,083       78,492
                                                               ---------    ---------
                                                               $ 142,796    $ 125,149
                                                               =========    =========
</TABLE>

See accompanying notes to consolidated financial statements
<PAGE>

<TABLE>
<CAPTION>



                           PAR TECHNOLOGY CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share amounts)

                                                             Year ended December 31,
                                                      -----------------------------------
                                                         2006         2005         2004
                                                      ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>
Net revenues:
     Product ......................................   $  83,237    $  91,130    $  77,503
     Service ......................................      61,979       58,327       47,466
     Contract .....................................      63,451       56,182       49,915
                                                      ---------    ---------    ---------
                                                        208,667      205,639      174,884
                                                      ---------    ---------    ---------
Costs of sales:
     Product ......................................      47,925       53,443       51,287
     Service ......................................      46,338       44,205       39,769
     Contract .....................................      58,895       52,405       46,682
                                                      ---------    ---------    ---------
                                                        153,158      150,053      137,738
                                                      ---------    ---------    ---------

           Gross margin ...........................      55,509       55,586       37,146
                                                      ---------    ---------    ---------
Operating expenses:
     Selling, general and administrative ..........      33,440       30,867       22,106
     Research and development .....................      11,802        9,355        6,270
     Amortization of identifiable intangible assets       1,283        1,030          245
                                                      ---------    ---------    ---------
                                                         46,525       41,252       28,621
                                                      ---------    ---------    ---------
Operating income ..................................       8,984       14,334        8,525
Other income, net .................................         617          743        1,134
Interest expense ..................................        (734)        (287)        (295)
                                                      ---------    ---------    ---------

Income before provision for income taxes ..........       8,867       14,790        9,364
Provision for income taxes ........................      (3,146)      (5,358)      (3,729)
                                                      ---------    ---------    ---------
Net income ........................................   $   5,721    $   9,432    $   5,635
                                                      =========    =========    =========

Earnings per share
     Basic ........................................   $     .40    $     .68    $     .43
     Diluted ......................................   $     .39    $     .64    $     .41

Weighted average shares outstanding
     Basic ........................................      14,193       13,792       13,044
                                                      =========    =========    =========
     Diluted ......................................      14,752       14,648       13,845
                                                      =========    =========    =========
</TABLE>





See accompanying notes to consolidated financial statements
<PAGE>


                           PAR TECHNOLOGY CORPORATION
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (in thousands)

                                                     Year ended December 31,
                                                 ----------------------------
                                                   2006      2005       2004
                                                 -------   --------  --------

Net income ...................................   $ 5,721   $ 9,432    $ 5,635
Other comprehensive income (loss), net of tax:
     Foreign currency translation adjustments        122      (430)      (138)
                                                 -------   -------    -------
Comprehensive income .........................   $ 5,843   $ 9,002    $ 5,497
                                                 =======   =======    =======










See accompanying notes to consolidated financial statements


<PAGE>
<TABLE>
<CAPTION>


                           PAR TECHNOLOGY CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                                                                     Accumulated
                                                            Capital in                  Other                              Total
                                         Common Stock        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>        <C>
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 of $364             260          5            948                                                         953
Issuance of treasury stock for
  business acquisition                                             850                                   310     1,035       1,885
Translation adjustments, net of tax
  benefit of $111                                                                           (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 of $3,545           706         14          5,360                                                       5,374
Issuance of treasury stock for
  business acquisition                                             452                                    28        90         542
Translation adjustments, net of tax
  benefit of $263                                                                           (430)                             (430)
                                    --------    -------      ---------   ---------   -----------   ---------  --------   ---------
Balances at
   December 31, 2005                  15,915        318         37,271      47,442          (611)     (1,778)   (5,928)     78,492

Net income                                                                   5,721                                           5,721
Issuance of common stock upon the
  exercise of stock options,
  net of tax benefit of $173              47          2            350                                                         352
Issuance of treasury stock for
    business acquisition                                           647                                   125       419       1,066
Issuance of restricted stock awards       18
Cash in lieu of fractional shares on
  stock split                                                                   (4)                                             (4)
Equity based compensation                                          334                                                         334
Translation adjustments, net of tax
  benefit of $86                                                                             122                               122
                                    --------    -------      ---------   ---------   -----------   ---------  --------   ---------
Balances at
   December 31, 2006                  15,980    $   320      $  38,602   $  53,159   $      (489)     (1,653) $ (5,509)  $  86,083
                                    ========    =======      =========   =========   ===========   =========  ========   =========


</TABLE>






See accompanying notes to consolidated financial statements



<PAGE>
<TABLE>
<CAPTION>



                           PAR TECHNOLOGY CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                                                             Year ended December 31,
                                                                ------------------------------------------------
                                                                     2006             2005              2004
                                                                -------------     -------------    -------------
<S>                                                             <C>               <C>                   <C>
Cash flows from operating activities:
   Net income                                                   $       5,721     $       9,432         $  5,635
   Adjustments to reconcile net income to net
     cash provided by (used in) operating activities:
      Depreciation and amortization                                     3,884             3,755            2,812
      Provision for bad debts                                             849             1,063              689
      Provision for obsolete inventory                                  1,922             3,942            4,007
      Equity based compensation                                           334               --                --
      Excess tax benefit of stock option exercises                         --             3,545              364
      Deferred income tax                                                 916             1,213            3,014
      Changes in operating assets and liabilities:
        Accounts receivable                                            (6,846)           (9,101)             246
        Inventories                                                    (8,308)           (6,419)           1,046
        Income tax refunds                                               (224)             (879)              --
        Other current assets                                             (139)              132              178
        Other assets                                                     (754)             (756)            (825)
        Accounts payable                                                 (496)            2,704              571
        Accrued salaries and benefits                                  (1,446)            1,653            2,119
        Accrued expenses                                                 (491)             (831)             (43)
        Customer deposits                                                (317)             (888)            (132)
        Deferred service revenue                                          813             2,249               42
        Other long-term liabilities                                     1,032               847               --
                                                                -------------     -------------    --------------
         Net cash provided by (used in) continuing
          operating activities                                         (3,550)           11,661           19,723
         Net cash used in discontinued operations                          --              (174)            (235)
                                                                -------------     -------------    -------------
         Net cash provided by (used in)
          operating activities                                         (3,550)           11,487           19,488
                                                                -------------     -------------    -------------
Cash flows from investing activities:
   Capital expenditures                                                (1,189)           (1,682)          (1,598)
   Capitalization of software costs                                      (822)             (617)            (804)
   Business acquisitions, net of cash acquired                         (5,827)           (7,223)         (13,364)
                                                                -------------     -------------    -------------
Net cash used in investing activities                                  (7,838)           (9,522)         (15,766)
                                                                -------------     -------------    -------------
Cash flows from financing activities:
   Net borrowings (payments) under
     line-of-credit agreements                                          4,213            (6,746)           3,257
   Proceeds from long-term debt                                         6,000                --               --
   Payments of long-term debt                                             (76)              (71)             (86)
   Proceeds from the exercise of stock options                            179             1,830              585
   Excess tax benefit of stock option exercises                           173                --               --
   Cash dividend in lieu of fractional shares
     on stock split                                                        (4)               --               --
                                                                --------------    --------------   -------------
         Net cash provided by (used in)
         financing activities                                          10,485            (4,987)           3,756
                                                                -------------     -------------    -------------
</TABLE>

<PAGE>


                           PAR TECHNOLOGY CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                 (in thousands)

                                                  Year ended December 31,
                                              -----------------------------
                                                 2006      2005       2004
                                              -------    -------    -------

Effect of exchange rate changes on cash and
  cash equivalents ........................       194       (692)      (249)
                                              -------    -------    -------
Net increase (decrease) in cash
  and cash equivalents ....................      (709)    (3,714)     7,229
Cash and cash equivalents at
  beginning of year .......................     4,982      8,696      1,467
                                              -------    -------    -------
Cash and cash equivalents at
  end of year .............................   $ 4,273    $ 4,982    $ 8,696
                                              =======    =======    =======



Supplemental  disclosures  of cash flow  information:

    Cash paid during the year for:

         Interest                             $   687    $   304    $   280
         Income taxes, net of refunds           2,237      1,586        537


Supplemental disclosures of non-cash financing and investing activities:

     See non-cash  financing and investing  activities  related to the Company's
business acquisitions as summarized in Note 2.





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-Siva  Corporation,  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  (SAB)  No.  104,  "Revenue
Recognition" and the AICPA Statement of Position (SOP) 97-2,  "Software  Revenue
Recognition".  Product  revenues  consist  of  sales of the  Company's  standard
point-of-sale  and  property  management  systems  of the  Hospitality  segment.
Product  revenues  include both  hardware and software  sales.  The Company also
records service  revenues  relating to its standard  point-of-sale  and property
management systems of the Hospitality segment.

     Hardware

     Revenue  recognition on hardware sales occurs upon delivery to the customer
site (or when  shipped for systems  that are not  installed  by the  Company) as
under SAB 104,  persuasive  evidence  of an  arrangement  exists,  delivery  has
occurred,  the price is fixed or determinable,  and collectibility is reasonably
assured.

     Sofware

     Revenue recognition on software sales generally occurs upon delivery to the
customer  site (or when  shipped  for  systems  that  are not  installed  by the
Company)  as under SOP  97-2,  persuasive  evidence  of an  arrangement  exists,
delivery has occurred, the price is fixed or determinable, and collectibility is
reasonably assured.  For software sales where the Company is the sole party that
has the  proprietary  knowledge to install the  software,  revenue is recognized
upon installation and when the system is ready to go live.
<PAGE>


     Service

     Service revenue  consists of installation  and training  services,  support
maintenance,  and field and depot  repair.  Installation  and  training  service
revenue are based upon standard  hourly/daily rates and revenue is recognized as
the services are performed.  Support  maintenance and field and depot repair are
provided  to  customers  either  on a  time  and  materials  basis  or  under  a
maintenance  contract.  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 underlying contract period.

     The  individual   product  and  service  offerings  that  are  included  in
arrangements  with our customers  are  identified  and priced  separately to the
customer based upon the stand alone price for each individual product or service
sold in the arrangement irrespective of the combination of products and services
which are included in a particular arrangement. As such, the units of accounting
are based on each individual  product and service sold, and revenue is allocated
to each  element  based on vendor  specific  objective  evidence  (VSOE) of fair
value.  VSOE of fair value for each  individual  product and service is based on
separate individual prices of these products and services.  The sales price used
to  establish  fair  value is the  sales  price of the  element  when it is sold
individually  in a  separate  arrangement  and not as a  separate  element  in a
multiple element arrangement.

     Contracts

     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  for  fixed-price
contracts is  recognized  as labor hours are delivered  which  approximates  the
straight-line basis of the life of the 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.
<PAGE>

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.

 Other assets

     Other assets consist of cash surrender  value of life insurance  related to
the Company's Deferred Compensation Plan.

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.

<PAGE>

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

     Other long-term liabilities relates to the Company's deferred compensation.
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.

Other income

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

                                       Year ended December 31,
                                            (in thousands)
                                 --------------------------------------
                                    2006           2005          2004
                                 --------       --------       --------

Currency gains .............      $   76         $  186         $  502
Rental income-net ..........         320            320            349
Other ......................         221            237            283
                                  ------         ------         ------
                                  $  617         $  743         $1,134
                                  ======         ======         ======
<PAGE>

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 $ 680,000,  $834,000 and
$996,000 in 2006, 2005, and 2004, respectively.

     The Company acquired identifiable  intangible assets in connection with its
acquisitions  in 2006, 2005 and 2004.  Amortization  of identifiable  intangible
assets amounted to $1,283,000 in 2006,  $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)
                                      2006          2005
                                  ----------     ----------
Software costs ..............      $  6,363       $  5,655
Customer relationships ......         4,393          3,744
Trademarks (non-amortizable)          2,694          2,444
Other .......................           578            578
                                   --------       --------
                                     14,028         12,421
Less accumulated amortization        (3,333)        (2,517)
                                   --------       --------
                                   $ 10,695       $  9,904
                                   ========       ========


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

                  2007                 $  2,266
                  2008                    1,923
                  2009                    1,619
                  2010                      942
                  2011                      848
                  Thereafter                403
                                       --------
                                       $  8,001
                                       ========
<PAGE>

     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 2006, 2005 and 2004.

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

     Effective  January 1, 2006, the Company adopted the fair value  recognition
provisions of Statement of Financial  Accounting  Standards No. 123R Share-Based
Payment (SFAS 123R) on a modified  prospective basis. 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 is recognized
as  compensation   expense  over  the  vesting  period  of  the  awards.   Total
compensation expense included in operating expenses for 2006 was $334,000. Prior
to adopting SFAS 123R on January 1, 2006,  the Company's  equity based  employee
compensation  awards were accounted for under the  recognition  and  measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees,  and
related interpretations.

 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>

                                                      2006         2005         2004
                                                     -------     --------      -------
<S>                                                  <C>          <C>          <C>
Net income ....................................      $ 5,721      $ 9,432      $ 5,635
                                                     =======      =======      =======
Basic:
     Shares outstanding at beginning of year ..       14,137       13,403       12,833
     Weighted shares issued during the year ...           56          389          211
                                                     -------      -------      -------
     Weighted average common shares, basic ....       14,193       13,792       13,044
                                                     =======      =======      =======
          Earnings per common share, basic ....      $   .40      $   .68      $   .43
                                                     =======      =======      =======
Diluted:
     Weighted average common shares, basic ....       14,193       13,792       13,044
     Dilutive impact of stock options .........          557          856          801
     Dilutive impact of restricted stock awards            2           --           --
                                                     -------      -------      -------

     Weighted average common shares, diluted ..       14,752       14,648       13,845
                                                     =======      =======      =======
     Earnings per common share, diluted .......      $   .39      $   .64      $   .41
                                                     =======      =======      =======
</TABLE>


     At  December  31,  2006  there  were  70,500  anti-dilutive  stock  options
outstanding.  At December 31, 2005 and 2004, there were no  anti-dilutive  stock
options outstanding.


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 2006, 2005 or 2004.
<PAGE>

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


<TABLE>
<CAPTION>
                                                       Year ended December 31,
                                                       -----------------------
                                                 2006           2005            2004
                                               -------        -------         -------

<S>                                            <C>            <C>            <C>
Balance at beginning of year ............      $ 20,622       $ 15,379       $    598
Acquisition of businesses during the year         4,843          6,075         14,781
Purchase accounting adjustment related to
  prior year acquisition ................           (15)          (820)            --
Contingent purchase price earned on prior
  year acquisitions .....................           278             --             --
Change in foreign exchange rates during
  the period ............................             6            (12)            --
                                               --------       --------       --------
Balance at end of year ..................      $ 25,734       $ 20,622       $ 15,379
                                               ========       ========       ========
</TABLE>


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 2006, 2005 or 2004.

Reclassifications

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

New accounting pronouncements

     In November 2004, the Financial Accounting Standards Board (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
<PAGE>

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 was 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 did not have a material
impact on the Company's consolidated financial statements.

     FASB  Interpretation 48 was issued in July 2006 to clarify the criteria for
recognizing  tax benefits  under FASB  Statement No. 109,  Accounting for Income
taxes. The Interpretation  defines the threshold for recognizing the benefits of
tax return positions in the financial statements as "more-likely-than-not" to be
sustained  by the taxing  authority  and will  affect many  companies'  reported
results and their  disclosures  of uncertain tax positions.  The  Interpretation
does  not  prescribe  the type of  evidence  required  to  support  meeting  the
more-likely-than-not  threshold, stating that it depends on the individual facts
and  circumstances.  The  benefit  recognized  for a tax  position  meeting  the
more-likely-than-not  criterion is measured based on the largest benefit that is
more than 50 percent  likely to be  realized.  The  measurement  of the  related
benefit is determined by considering the probabilities of the amounts that could
be realized upon  ultimate  settlement,  assuming the taxing  authority has full
knowledge of all relevant facts and including  expected  negotiated  settlements
with the taxing authority. Interpretation 48 is effective as of the beginning of
the first fiscal year  beginning  after  December 15, 2006 (the  Company's  2007
fiscal year).  The Company does not expect this to have a material impact on the
consolidated financial statements.

     In September  2006, the Securities and Exchange  Commission  released Staff
Accounting  Bulletin  No.  108,  "Considering  the  Effects  Prior  Period  Year
Misstatements   When   Quantifying   Misstatements  in  Current  Year  Financial
Statements,"  ("SAB 108"). SAB 108 provides  interpretative  guidance on how the
effects of the  carryover  or  reversal  of prior year  misstatements  should be
considered in quantifying a current year misstatement. SAB 108 was effective for
the Company in the fiscal year ended  December 31, 2006. The adoption of SAB 108
did not impact the Company's results of operations and financial condition.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value  Measurements"
("SFAS 157"), which provides guidance for measuring the fair value of assets and
liabilities,   as  well  as  requires  expanded  disclosures  about  fair  value
<PAGE>

measurements.  SFAS 157 indicates that fair value should be determined  based on
the  assumptions  marketplace  participants  would use in  pricing  the asset or
liability,  and provides  additional  guidelines to consider in determining  the
market-based  measurement.  The  Company  will be  required to adopt SFAS 157 on
January 1, 2008. The Company is currently evaluating the impact of adopting SFAS
157 on its consolidated financial statements.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial  Liabilities"  ("SFAS 159"). SFAS 159 permits all
entities to choose to measure eligible items at fair value at specified election
dates.  SFAS 159 is  effective as of the  beginning of an entity's  first fiscal
year that begins after November 15, 2007. The Company is currently assessing the
impact of adopting SFAS 159 on its consolidated financial statements.

Note 2 -- Business Acquisitions


     On November 2, 2006, PAR  Technology  Corporation  (the  "Company") and its
wholly  owned  subsidiary,   Par-Siva  Corporation  (f/k/a  PAR  Vision  Systems
Corporation)  (the  "Subsidiary")  acquired  substantially all of the assets and
assumed certain liabilities of SIVA Corporation ("SIVA").  The purchase price of
the assets was approximately $6.9 million including estimated  acquisition costs
of approximately $177,000. The purchase price consisted of $1.1 million worth of
PAR common stock  (125,549  shares of PAR  Technology  Corporation  common stock
issued out of treasury)  and the remainder in cash.  The agreement  provides for
additional  contingent  purchase  price  payments  based on certain  sales based
milestones and other  conditions.  SIVA,  based in Delray Beach,  Florida,  is a
developer of software solutions for multi-unit restaurant operations.

     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
<PAGE>

performance  against certain  established  targets. In 2006, $218,000 was earned
based on  achievement of these 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.  The  purchase  price  is also  subject  to price
contingencies  based upon future revenue performance against certain established
targets. In 2006, $60,000 was earned based on achievement of these targets.

     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.

     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
<PAGE>

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:

<TABLE>
<CAPTION>

                                               2006               2005               2004
                                            ---------   ----------------------     --------
           (in thousands)                     SIVA      PixelPoint     C(3)I         PSMS
            ------------                    --------    ----------    --------     --------

<S>                                          <C>          <C>          <C>          <C>
Cash and cash equivalents .............      $    --      $    32      $    --      $ 3,227
Other current assets ..................           13          185            8        2,298
Property, plant and equipment .........          223          122           --          858
Other assets ..........................           --          671           --           --
Intangible assets .....................        1,924        1,634          290        7,900
Goodwill ..............................        4,843        5,539          536       14,781
                                             -------      -------      -------      -------
Total assets acquired .................      $ 7,003      $ 8,183          834       29,064
                                             =======      =======      =======      =======

Deferred revenues and customer deposits          110         --           --          8,087
Other current liabilities .............         --            303          245        1,681
 Long-term liabilities ................         --           --           --            820
                                             -------      -------      -------      -------
Total liabilities assumed .............          110          303          245       10,588
                                             -------      -------      -------      -------
Purchase price, including
  acquisition related costs ...........      $ 6,893      $ 7,880      $   589      $18,476
                                             =======      =======      =======      =======
</TABLE>

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

<TABLE>
<CAPTION>


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

<S>                         <C>         <C>         <C>         <C>          <C>
Software costs .......      $1,025      $  258      $   --      $ 2,800      5 Years

Customer relationships         649         774         270        2,700      5 - 8 Years

Trademarks ...........         250         344          --        2,100      Indefinite

Others ...............        --           258          20          300      3 - 7 Years
                            ------      ------      ------      -------
                            $1,924      $1,634      $  290      $ 7,900
                            ======      ======      ======      =======
</TABLE>

     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,
                         ----------------------------------------------------
                              2006                2005               2004
                         --------------      -------------      -------------

Revenues ..........      $      209,723      $      209,515      $   191,658
                         ==============      ==============      ===========
Net income ........      $        2,743      $        6,139      $     3,306
                         ==============      ==============      ===========
Earnings per share:
     Basic ........      $          .19      $          .44      $       .25
                         ==============      ==============      ===========
     Diluted ......      $          .18      $          .41      $       .23
                         ==============      ==============      ===========

<PAGE>


     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 -- Accounts Receivable

     The Company's net accounts receivable consist of:

                                                   December 31,
                                                   (in thousands)
                                           -----------------------------
                                              2006               2005
                                           ----------          ---------
Government segment:
     Billed .........................       $  9,076            $  8,222
     Advanced billings ..............         (1,465)             (2,251)
                                            --------            --------
                                               7,611               5,971
                                            --------            --------
Hospitality segment:
Accounts receivable - net ...........         39,180              34,810
                                            --------            --------
                                            $ 46,791            $ 40,781
                                            ========            ========


     At December  31, 2006 and 2005,  the Company had  recorded  allowances  for
doubtful   accounts  of  $1,850,000  and   $1,748,000,   respectively,   against
Hospitality accounts receivable. Write-offs of accounts receivable during fiscal
years 2006 and 2005 were $747,000 and $1,614,000, respectively.

Note 4 -- 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)
                                            -------------------------
                                              2006             2005
                                            --------        ---------

Finished goods ....................         $ 9,533          $ 7,217
Work in process ...................           1,667            1,874
Component parts ...................           7,119            4,693
Service parts .....................          17,629           15,778
                                            -------          -------
                                            $35,948          $29,562
                                            =======          =======

     The  Company  records  reserves  for  shrinkage  and  excess  and  obsolete
inventory.  At December 31, 2006 and 2005,  these  amounts were  $3,658,000  and
$4,189,000, respectively. Write-offs of inventories during fiscal years 2006 and
2005 were $2,453,000 and $3,735,000, respectively.

<PAGE>

Note 5 -- Property, Plant and Equipment

     The components of property, plant and equipment are:

                                          December 31,
                                         (in thousands)
                                   ------------------------
                                      2006           2005
                                   --------       ---------

Land ........................      $    253       $    253
Buildings and improvements ..         5,669          5,632
Rental property .............         5,490          5,426
Furniture and equipment .....        18,264         19,013
                                   --------       --------
                                     29,676         30,324
Less accumulated depreciation
 and amortization ...........       (22,141)       (22,280)
                                   --------       --------
                                   $  7,535       $  8,044
                                   ========       ========


     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  $1,921,000,  $1,883,000 and  $1,571,000  for 2006,  2005 and 2004,
respectively.

     The  Company  leases a portion  of its  headquarters  facility  to  various
tenants.  Rent received from these leases  totaled  $1,129,000,  $1,038,000  and
$1,104,000 for 2006, 2005 and 2004, respectively.

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


                    2007                      $     893
                    2008                            792
                    2009                            242
                    2010                            242
                    2011                            182
                    Thereafter                       --
                                              ---------
                                              $   2,351
                                              =========


     The Company  leases office space under  various  operating  leases.  Rental
expense on these operating leases was approximately  $2,559,000,  $2,138,000 and
$1,527,000 for 2006, 2005, and 2004, respectively.

<PAGE>


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

                     2007                     $   1,852
                     2008                         1,456
                     2009                         1,195
                     2010                           537
                     2011                           223
                     Thereafter                      89
                                              ---------
                                              $   5,352
                                              =========

Note 6 -- Debt

     The Company has an aggregate  availability of $20,000,000 in unsecured bank
lines of  credit.  One line  totaling  $12,500,000  bears  interest  at the bank
borrowing rate (6.3% at December 31, 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 (6.3% at
December 31, 2006). These facilities 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 3.5 to 1. These  lines  expire in April  2009.  The Company was in
compliance  with all loan  covenants on December 31, 2006.  At December 31, 2006
and 2005,  there was $7,713,000 and  $3,500,000  outstanding  under these lines,
respectively. The weighted average interest rate paid by the Company during 2006
was 6.6% and 5.6% during 2005.

     In 2006,  the Company  borrowed  $6,000,000  under an  unsecured  term loan
agreement with a bank in connection  with the  acquisition of SIVA  Corporation.
The loan provides for interest  only  payments in the first year and  escalating
principal  payments through 2012. The loan bears interest at the LIBOR rate plus
applicable interest rate spread (6.3% at December 31, 2006).

     The  Company  has a  $1,948,000  mortgage  collateralized  by certain  real
estate.  The annual mortgage payment  including  interest totals  $226,000.  The
mortgage bears interest at a fixed rate of 7% and matures in 2010. The Company's
future  principal  payments  under its term loan and mortgage are as follows (in
thousands):

                    2007                   $    240
                    2008                        772
                    2009                      1,079
                    2010                      2,933
                    2011                      1,575
                    2012                      1,349
                    Thereafter                   --
                                           --------
                                           $  7,948
                                           ========

<PAGE>

Note 7 -- Stock based compensation

     Effective  January 1, 2006, the Company adopted the fair value  recognition
provisions of Statement of Financial  Accounting  Standards No. 123R Share-Based
Payment (SFAS 123R) on a modified  prospective basis. 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 is recognized
as compensation expense over the vesting period of the awards. Total stock-based
compensation expense included in selling, general and administrative expense for
the year ended  December 31, 2006 was  $334,000.  This amount  includes  $20,000
related to restricted  stock  awards.  As a result of the adoption of SFAS 123R,
both  operating  income and income before taxes for the year ended  December 31,
2006 were reduced by  $334,000.  Net income was reduced by $310,000 or $0.02 per
basic and diluted share. No compensation expense has been capitalized during the
fiscal year 2006.

     Prior to adopting SFAS 123R on January 1, 2006, the Company's  equity based
employee  compensation  awards  were  accounted  for under the  recognition  and
measurement  principles  of APB Opinion No. 25,  Accounting  for Stock Issued to
Employees, and related interpretations. For the year ended December 31, 2005 and
2004,  no equity  option based  employee  compensation  cost is reflected in net
income,  as all options  granted under the  Company's  stock option plans had an
exercise price equal to the underlying  common stock price on the date of grant.
The following table  illustrates the effect on net income and earnings per share
as if the Company had applied the fair value  recognition  provisions  to equity
based employee compensation (in thousands, except per share data):


                                                    2005             2004
                                                 ---------        ---------

     Net income                                  $   9,432        $   5,635
     Compensation expense, net of tax                 (410)            (354)
                                                 ---------        ---------
     Proforma net income                         $   9,022        $   5,281
                                                 =========        =========

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

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


     In 2005,  the  Company's  1995 Stock Option plan  expired.  The 2005 Equity
Incentive  Plan was approved by the  shareholders  at the Company's  2006 Annual
Meeting.  The  Company  has  reserved  1,000,000  shares  under its 2005  Equity
Incentive Plan.  Stock options under this Plan may be incentive stock options or
nonqualified stock options.  The Plan also provides for restricted stock awards.
Stock options are nontransferable other than upon death. Option grants generally
vest over a one to five year  period  after the grant and  typically  expire ten
years after the date of the grant.
<PAGE>

     Information with respect to this plan is as follows:


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

Outstanding at December 31, 2005       1,037          $  4.03         $15,008
     Options granted                     165             9.05
     Exercised                           (47)            3.74
     Forfeited and cancelled             (16)           14.71
                                      ------          -------
Outstanding at December 31, 2006       1,139          $  4.62         $ 5,012
                                      ======          =======         =======
Vested and expected to vest
     at December 31, 2006              1,123          $  4.57         $ 4,998
                                      ======          =======         =======
Total shares exercisable
     as of December 31, 2006             763          $  3.22         $ 4,423
                                      ======          =======         =======
Shares remaining
     available for grant                 832
                                      ======


     The weighted  average grant date fair value of options  granted  during the
years 2006, 2005 and 2004 was $3.69,  $4.78 and $2.85,  respectively.  The total
intrinsic value of options  exercised  during the years ended December 31, 2006,
2005 and 2004 was $670,000,  $10,310,000 and $1,259,000,  respectively. The fair
value of options at the date of the grant was estimated using the  Black-Scholes
model with the following  assumptions for the respective  period ending December
31:

                                                   2006        2005        2004
                                                ----------   --------  ---------

Expected option life .........................   4.5 years    5 years   5 years
Weighted average risk-free interest rate .....   4.6%         3.5%      3.2%
Weighted average expected volatility .........   50%          43%       42%
Expected dividend yield ......................   0%           0%        0%


     For the years ended  December 31, 2006 and 2005,  the expected  option life
was based on the  Company's  historical  experience  with similar type  options.
Expected  volatility is based on historical  volatility  levels of the Company's
common  stock over the  preceding  period of time  consistent  with the expected
life.  The  risk-free  interest  rate is based on the  implied  yield  currently
available on U.S. Treasury zero coupon issues with a remaining term equal to the
expected life.
<PAGE>

     Stock options outstanding at December 31, 2006 are summarized as follows:

    Range of          Number Outstanding   Weighted Average    Weighted Average
 Exercise Prices        (in thousands)      Remaining Life      Exercise Price
 ---------------        ------------        --------------      --------------

$1.25    -    $3.17            578            3.9    Years          $  2.22
$3.18    -    $7.25            341            7.2    Years          $  5.59
$7.26    -   $11.40            220            9.3    Years          $  9.40
-------------------          -----            ------------          -------
$1.25    -   $11.40          1,139            5.9    Years          $  4.62
===================          =====            ============          =======

     At December 31,  2006,  the  aggregate  unrecognized  compensation  cost of
unvested  options,  as determined using a Black-Scholes  option valuation model,
was $873,000 (net of estimated  forfeitures)  which is expected to be recognized
as compensation expense in fiscal years 2007 through 2011.

     Current year activity with respect to the Company's nonvested stock options
is as follows:
                                                                        Weighted
                                                                        Average
                                                                      grant-date
Nonvested shares (in thousands)                           Shares      fair value
-------------------------------                           -------    -----------

Balance at January 1, 2006 .......................           396       $   3.19
      Granted ....................................           165           3.69
      Vested .....................................          (170)          2.52
      Forfeited and cancelled ....................           (15)          1.73
                                                            ----       --------
Balance at December 31, 3006 .....................           376       $   3.58
                                                            ====       ========

     During 2006,  the Company  issued 17,800  restricted  stock awards at a per
share price of $.02. These awards vest over various periods ranging from 6 to 60
months.

Note 8-- Income Taxes

     The provision for income taxes consists of:

                                                     Year ended December 31,
                                                          (in thousands)
                                               ---------------------------------
                                                 2006        2005          2004
                                               --------    --------      -------
Current income tax:
     Federal ............................       $1,565       $3,312       $  312
     State ..............................          346          679          164
     Foreign ............................          319          154          239
                                                ------       ------       ------
                                                 2,230        4,145          715
                                                ------       ------       ------
Deferred income tax:
     Federal ............................          802        1,196        2,259
     State ..............................          114           17          225
     Foreign ............................         --           --            530
                                                ------       ------       ------
                                                   916        1,213        3,014
                                                ------       ------       ------
Provision for income taxes ..............       $3,146       $5,358       $3,729
                                                ======       ======       ======
<PAGE>

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

                                                             December 31,
                                                             (in thousands)
                                                       -------------------------
                                                           2006            2005
                                                       -----------     ---------

Software development expense .....................       $   493        $   521
Intangible assets ................................           528            137
                                                         -------        -------
Gross deferred tax liabilities ...................         1,021            658
                                                         -------        -------
Allowances for bad debts,
  inventory and warranty .........................        (3,821)        (3,396)
Capitalized inventory costs ......................          (105)           (67)
Employee benefit accruals ........................          (555)          (504)
Federal net operating loss carryforward ..........          --             (254)
State net operating loss carryforward ............           (81)          (123)
Tax credit carryforwards .........................          (617)        (1,393)
Other ............................................          (328)          (410)
                                                         -------        -------
Gross deferred tax assets ........................        (5,507)        (6,147)
                                                         -------        -------
Net deferred tax assets ..........................       $(4,486)       $(5,489)
                                                         =======        =======


     The Company has Federal tax credit carryforwards of $498,000 that expire in
various  tax years  from 2014 to 2016.  The  Company  also has state tax  credit
carryforwards  of  $181,000  and  state  net  operating  loss  carryforwards  of
$2,337,000  which expire in various tax years  through  2026.  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,
2006 and 2005.
<PAGE>


     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,
                                                  ------------------------------
                                                    2006        2005       2004
                                                  --------    --------   -------

Federal statutory tax rate .................        34.0%      34.0%       34.0%
State taxes ................................         3.9        3.1         3.6
Extraterritorial income exclusion ..........        (2.4)      (1.4)       (1.0)
Non deductible expenses ....................         1.9         .5          .5
Tax credits ................................        (1.0)       (.6)        (.4)
Foreign income taxes .......................          --         .5         2.7
Other ......................................         (.9)        .1          .4
                                                    ----       ----        ----
                                                    35.5%      36.2%       39.8%
                                                    ====       ====        ====


Note 9 -- 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  $880,000,  $1,985,000 and $1,130,000 to
the Plan in 2006, 2005 and 2004,  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 $348,000, $297,000 and $228,000 in 2006, 2005, and 2004, respectively.

     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
$707,000, $1,258,000 and $682,000 in 2006, 2005 and 2004, 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
invests the participants deferred amounts to fund these obligations. 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
2006, 2005 and 2004.
<PAGE>

Note 10 -- 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 11 -- 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  provides
technical expertise in the development of 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.  Intersegment  sales
and transfers are not significant.
<PAGE>

     Information as to the Company's segments is set forth below:

                                                   Year ended December 31,
                                                       (in thousands)
                                           -------------------------------------
                                               2006        2005          2004
                                           ----------   -----------  -----------
Revenues:
     Hospitality ........................   $ 145,216    $ 149,457    $ 124,969
     Government .........................      63,451       56,182       49,915
                                            ---------    ---------    ---------
           Total ........................   $ 208,667    $ 205,639    $ 174,884
                                            =========    =========    =========
Operating income (loss):
     Hospitality ........................   $   5,051    $  10,864    $   5,657
     Government .........................       4,267        3,470        2,868
     Other ..............................        (334)        --           --
                                            ---------    ---------    ---------
                                                8,984       14,334        8,525
Other income, net .......................         617          743        1,134
Interest expense ........................        (734)        (287)        (295)
                                            ---------    ---------    ---------
Income before provision for income taxes    $   8,867    $  14,790    $   9,364
                                            =========    =========    =========
Identifiable assets:
     Hospitality ........................   $ 123,958    $ 106,529    $  91,432
     Government .........................      10,898        9,015        9,909
     Other ..............................       7,940        9,605       10,411
                                            ---------    ---------    ---------
           Total ........................   $ 142,796    $ 125,149    $ 111,752
                                            =========    =========    =========
Goodwill:
     Hospitality ........................   $  25,138    $  20,086    $  15,379
     Government .........................         596          536         --
                                            ---------    ---------    ---------
           Total ........................   $  25,734    $  20,622    $  15,379
                                            =========    =========    =========

Depreciation and amortization:
     Hospitality ........................   $   3,453    $   3,321    $   2,276
     Government .........................          42           80          208
     Other ..............................         389          354          328
                                            ---------    ---------    ---------
           Total ........................   $   3,884    $   3,755    $   2,812
                                            =========    =========    =========

Capital expenditures:
     Hospitality ........................   $     903    $   1,385    $   1,348
     Government .........................          14           74         --
     Other ..............................         272          223          250
                                            ---------    ---------    ---------
           Total ........................   $   1,189    $   1,682    $   1,598
                                            =========    =========    =========

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

                                        2006             2005             2004
                                     ---------        ----------      ----------

United States ...............         $181,482         $183,383         $158,407
Other Countries .............           27,185           22,256           16,477
                                      --------         --------         --------
    Total ...................         $208,667         $205,639         $174,884
                                      ========         ========         ========

<PAGE>

     The following table presents assets by country based on the location of the
asset.

                                         2006            2005             2004
                                     ----------      -----------       ---------

United States ...............         $135,337         $119,627         $105,073
Other Countries .............            7,459            5,522            6,679
                                      --------         --------         --------
    Total ...................         $142,796         $125,149         $111,752
                                      ========         ========         ========

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

                                                     2006       2005       2004
                                                   -------     ------    -------
Hospitality segment:
  McDonald's Corporation ...................         26%         28%         32%
  Yum! Brands, Inc. ........................         14%         13%         19%
Government segment:
  U.S. Department of Defense ...............         30%         27%         29%
All Others .................................         30%         32%         20%
                                                    ---         ---         ---
                                                    100%        100%        100%
                                                    ===         ===         ===

Note 12 -- 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, 2006 and 2005 is based on variable and
fixed interest rates at December 31, 2006 and 2005, respectively, for new issues
with similar remaining maturities and approximates respective carrying values at
December 31, 2006 and 2005.

     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 13 -- 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  a  complimentary

<PAGE>

membership to this  facility  which is provided to all  employees.  During 2006,
2005, and 2004 the Company  received rental income amounting to $117,300 for the
lease of the facility. All lease payments are current at December 31, 2006.

     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 2006,  2005 and 2004,  the Company paid
$360,000, $360,000 and $90,000, respectively, to the officer under this lease.

Note 14 -- Selected Quarterly Financial Data (Unaudited)

                                               Quarter ended
                                  (in thousands except per share amounts)
          2006              March 31     June 30     September 30    December 31
          ----              --------     -------     ------------    -----------

Net revenues .............   $52,597     $53,343        $48,534        $54,193
Gross margin .............    14,363      14,911         12,177         14,058
Net income ...............     2,012       2,338            550            821
Basic earnings per share .       .14         .16            .04            .06
Diluted earnings per share       .14         .16            .04            .06

                                               Quarter ended
                                  (in thousands except per share amounts)
          2005              March 31     June 30     September 30    December 31
          ----              --------     -------     ------------    -----------


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
<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 16, 2007                                /s/John W. Sammon
                                              ----------------------------------
                                              John W. Sammon
                                              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
----------------------
John W. Sammon                Chairman of Board and              March 16, 2007
                              President (Principal
                               Executive Officer)
                               and Director

/s/Charles A. Constantino
-------------------------
Charles A. Constantino        Executive Vice President            March 16, 2007
                              and Director

/s/Sangwoo Ahn
----------------------
Sangwoo Ahn                   Director                            March 16, 2007

/s/James A. Simms
----------------------
James A. Simms                Director                            March 16, 2007


/s/Paul D. Nielsen
----------------------
Paul D. Nielsen               Director                            March 16, 2007


/s/Kevin R. Jost
----------------------
Kevin R. Jost                 Director                            March 16, 2007

/s/Ronald J. Casciano
----------------------
Ronald J. Casciano           Vice President, Chief Financial      March 16, 2007
                             Officer and Treasurer


<PAGE>
<TABLE>
<CAPTION>


                                List of Exhibits

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

   <S>        <C>                                                      <C>
   3.1        Certificate of Incorporation,                            Filed as Exhibit 3(i) to the quarterly
              as amended                                               report on Form 10Q for the period ended
                                                                       June 30, 2006, of PAR Technology
                                                                       Corporation and 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 the                    Filed as Exhibit 3.1 to Registration
              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
                                                                       incorporated herein by reference.

  10.2        Asset Purchase Agreement dated October 27,               Filed as Exhibit 10.1 to the current
              2006. By and among PAR Technology                        report on Form 8K dated November 8,
              Corporation, Par-Siva Corporation and                    2006 of PAR Technology Corporation
              SIVA Corporation.                                        and incorporated herein by reference.

  10.3        JP Morgan term loan.

  10.4        2005 Equity Incentive Plan of PAR                        Filed as Exhibit 4.2 to Form S-8
              Technology Corporation                                   (Registration No. 333-137647) of
                                                                       PAR Technology Corporation and
                                                                       incorporated herein by reference.

  10.5        Form of Stock Option Award Agreement                     Filed as Exhibit 4.3 to Form S-8
                                                                       (Registration No. 333-137647) of
                                                                       PAR Technology Corporation and
                                                                       incorporated herein by reference.

  10.6        Form of Restricted Stock Award Agreement                 Filed as Exhibit 4.4 to Form S-8
                                                                       (Registration No. 333-137647) of
                                                                       PAR Technology Corporation and
                                                                       incorporated herein by reference.

  22          Subsidiaries of the registrant

  23          Consent of Independent Registered Public
              Accounting Firm

<PAGE>
<CAPTION>




                                List of Exhibits

Exhibit No.       Description of Instrument (Continued)
-----------       -------------------------------------

  <S>         <C>
  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.
</TABLE>

<PAGE>
                                  EXHIBIT 10.3

                              JP MORGAN TERM LOAN

                                 AMENDMENT NO. 1
                                       TO
                      AMENDED AND RESTATED CREDIT AGREEMENT

     This  Amendment No. 1 (the  "Amendment"),  dated as of November 2, 2006, is
between PAR TECHNOLOGY CORPORATION,  a Delaware corporation (the "Borrower") and
JPMORGAN CHASE BANK, N.A. (the "Bank").

                                 R E C I T A L S

          A. The  Borrower  and the Bank are parties to an Amended and  Restated
     Credit Agreement dated as of April 19, 2006 (the "Credit Agreement").

          B. The Borrower has requested that the Bank amend the Credit Agreement
     to provide for a $6,000,000 term loan from the Bank to the Borrower.

          C. The Bank is willing to amend the Credit  Agreement  as requested by
     the Borrower upon the terms and conditions of this Amendment.

          NOW, THEREFORE, the parties agree as follows:

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

     2. Amendment of Credit Agreement.

          2.1 The following  defined term is added to Section 1.01 of the Credit
     Agreement:

          "Acquisition" means Par-Siva  Corporation's  acquisition of the assets
     of SIVA  Corporation,  a Delaware  corporation,  pursuant  to the  Purchase
     Agreement.

          2.2 The following  defined term is added to Section 1.01 of the Credit
     Agreement:

          "Amendment  No. 1  Effective  Date"  means  the date on which  all the
     conditions  to  this  Amendment  have been satisfied.

          2.3 The definition of the term  Applicable Rate in Section 1.01 of the
     Credit  Agreement  is  amended by  deleting  the term  "Category  1" in the
     proviso at the end of the last  sentence  appearing  after the pricing grid
     and adding in its place "Category 5."
<PAGE>

          2.4 The  definition  of the term  Commitment  in  Section  1.01 of the
     Credit  Agreement is amended by deleting the word "Loans"  where it appears
     in the first sentence and adding in its place the words "Revolving Loans."

          2.5 The definition of the term Corporate  Guarantor in Section 1.01 of
     the Credit Agreement is amended by deleting the word "and" before the words
     "Rome Research Corporation" and adding the words "and Par-Siva Corporation"
     to the end of the sentence.

          2.6 The definition of the term LIBO Rate in Section 1.01 of the Credit
     Agreement is amended to read as follows:

          "LIBO  Rate"  means,  with  respect  to any  Eurodollar  Loan  for any
          Interest  Period,  the rate  appearing  on Page 3750 of the  Moneyline
          Telerate  Service  (or on any  successor  or  substitute  page of such
          Service, or any successor to or substitute for such Service, providing
          rate quotations comparable to those currently provided on such page of
          such Service, as determined by the Bank from time to time for purposes
          of  providing  quotations  of  interest  rates  applicable  to  dollar
          deposits in the London interbank market) at approximately  11:00 a.m.,
          London  time,  two  Business  Days prior to the  commencement  of such
          Interest  Period,  as the rate for  dollar  deposits  with a  maturity
          comparable to such Interest Period. In the event that such rate is not
          available  at such  time for any  reason,  then the "LIBO  Rate"  with
          respect to such  Eurodollar Loan for such Interest Period shall be the
          rate at which dollar deposits in the  approximate  amount of principal
          outstanding  on  such  date  and  for a  maturity  comparable  to such
          Interest Period are offered by the principal London office of the Bank
          in  immediately  available  funds in the  London  interbank  market at
          approximately  11:00 a.m., London time, two Business Days prior to the
          commencement of such Interest Period.

          2.7 The  definition  of the term Loans in  Section  1.01 of the Credit
     Agreement is amended to read as follows:

          "Loans" means the Term Loan and all  Revolving  Loans made by the Bank
          to the Borrower pursuant to this Agreement.

          2.8 The  definition  of the term  Prime  Rate in  Section  1.01 of the
     Credit Agreement is amended to read as follows:

          "Prime Rate" means the rate of interest per annum  announced from time
          to time by the Bank as its prime  rate.  The Prime  Rate is a variable
          rate and each change in the Prime Rate is effective from and including
          the date the change is announced as being effective. THE PRIME RATE IS
          A REFERENCE RATE AND MAY NOT BE THE BANK'S LOWEST RATE.
<PAGE>

          2.9 The following  defined term is added to Section 1.01 of the Credit
     Agreement:

          "Purchase  Agreement" means the Asset Purchase Agreement,  dated as of
          October  27,  2006,  by  and  between  SIVA  Corporation,  a  Delaware
          corporation,   Borrower,   and  Par-Siva   Corporation,   a  New  York
          corporation and a wholly-owned subsidiary of the Borrower, pursuant to
          which  Par-Siva  Corporation  shall acquire  substantially  all of the
          assets of SIVA Corporation.

          2.10 The following defined term is added to Section 1.01 of the Credit
     Agreement:

          "Revolving Loan" has the meaning set forth in Section 2.01(b).

          2.11 The following defined term is added to Section 1.01 of the Credit
     Agreement:  "Term Loan" has the meaning set forth in Section 2.01(a) of the
     Credit Agreement.

          2.12 The following defined term is added to Section 1.01 of the Credit
     Agreement:

          "Term Loan Maturity Date" means August 1, 2012.

          2.13 The following defined term is added to Section 1.01 of the Credit
     Agreement:

          "Term Note" has the meaning set forth in Section 2.07(e) of the Credit
          Agreement.

          2.14  Section  2.01 of the  Credit  Agreement  is  amended  to read as
     follows:

          SECTION 2.01. Commitment.

          (a)  Subject to the terms and  conditions  hereof,  the Bank agrees to
          make a term loan (the "Term  Loan") to the  Borrower on the  Amendment
          No. 1 Effective  Date in the amount of  $6,000,000.  The Term Loan may
          from time to time be an ABR Loan, a Eurodollar  Loan or a  combination
          thereof,  as  determined  by the  Borrower and notified to the Bank in
          accordance  with  Section  2.5.  No  portion of the Term Loan which is
          repaid or prepaid may be reborrowed.

          (b) Subject to the terms and  conditions  set forth  herein,  the Bank
          agrees to make loans (the "Revolving Loans") to the Borrower from time
          to time  during  the  Availability  Period in an  aggregate  principal
          amount  that  will not  result  in  outstanding  Loans  exceeding  the
          Commitment.  Within the foregoing  limits and subject to the terms and
          conditions  set forth  herein,  the  Borrower  may borrow,  prepay and
          reborrow Revolving Loans.
<PAGE>

          2.15  Section  2.02 of the  Credit  Agreement  is  amended  to read as
     follows:

          SECTION 2.02. Loans.

          (a) At the  commencement  of each Interest  Period for any  Eurodollar
          Loan, such Loan shall be in an amount that is an integral  multiple of
          $100,000 and not less than $500,000. At the time that each ABR Loan is
          made,  such Loan shall be in an  aggregate  amount that is an integral
          multiple  of  $50,000  and not  less  than  $50,000;  provided  that a
          Revolving Loan which is an ABR Loan may be in an aggregate amount that
          is equal to the entire unused balance of the total  Commitment.  Loans
          of more than one Type and Class may be  outstanding  at the same time;
          provided  that  there  shall  not at any time be more  than a total of
          fourteen Eurodollar Loans outstanding.

          (b)  Notwithstanding  any  other  provision  of  this  Agreement,  the
          Borrower  shall not be entitled to request,  or to elect to convert or
          continue,  any Loan if the  Interest  Period  requested  with  respect
          thereto  would end  after:  (i) the  Maturity  Date,  with  respect to
          Revolving  Loans, or (ii) the Term Loan Maturity Date, with respect to
          the Term Loan.

          2.16  Section  2.03 of the Credit  Agreement is amended by: (i) making
     the existing  language  subsection (b); (ii) deleting the word "Loan" where
     it first appears in the first sentence of such subsection (b) and adding in
     its place the words "Revolving Loan"; and (iii) adding a new subsection (a)
     to read as follows:

          (a)  The  Borrower  hereby  requests  a  Term  Loan  borrowing  on the
          Amendment  No. 1  Effective  Date in the  amount of  $6,000,000  to be
          credited to an account of the Borrower  maintained  with the Bank,  as
          designated  by the Borrower.  The Term Loan shall  initially be an ABR
          Loan. Thereafter, the Borrower may elect to convert the Term Loan into
          a different Type in accordance with Section 2.5.

          2.17  Section  2.04 of the  Credit  Agreement  is  amended  to read as
     follows:

          SECTION 2.04. Funding of Loans.

          (a) The Bank shall make the Term Loan available to the Borrower on the
          Amendment  No. 1 Effective  Date by crediting the amount of $6,000,000
          to an account of the Borrower  maintained with the Bank, as designated
          by the Borrower.

          (b) The Bank shall make each  Revolving Loan available to the Borrower
          by promptly crediting the amount requested in the Borrower's Borrowing
          Request  to an account of the  Borrower  maintained  with the Bank and
          designated by the Borrower in such Borrowing Request.
<PAGE>

          2.18  Section  2.07 of the  Credit  Agreement  is  amended  to read as
     follows:

          SECTION 2.07. Repayment of Loans; Evidence of Debt.

          (a) The Borrower hereby unconditionally promises to pay to the Bank in
          repayment  of the  principal  amount of the Term Loan the  amounts set
          forth below on the dates set forth below without setoff,  deduction or
          counterclaim;   provided  that,  notwithstanding  the  foregoing,  the
          aggregate  then  unpaid  principal  amount of the Term  Loan  shall be
          payable on the Term Loan  Maturity Date (or such earlier date on which
          the Term Loan becomes due and payable pursuant to Article VII):

                         Schedule of Principal Payments

Principal Payment Date                                      Principal Amount Due

November 1, 2007 .......................................                $150,000
February 1, 2008 .......................................                $150,000
May 1, 2008 ............................................                $150,000
August 1, 2008 .........................................                $150,000
November 1, 2008 .......................................                $225,000
February 1, 2009 .......................................                $225,000
May 1, 2009 ............................................                $225,000
August 1, 2009 .........................................                $225,000
November 1, 2009 .......................................                $300,000
February 1, 2010 .......................................                $300,000
May 1, 2010 ............................................                $300,000
August 1, 2010 .........................................                $300,000
November 1, 2010 .......................................                $375,000
February 1, 2011 .......................................                $375,000
May 1, 2011 ............................................                $375,000
August 1, 2011 .........................................                $375,000
November 1, 2011 .......................................                $450,000
February 1, 2012 .......................................                $450,000
May 1, 2012 ............................................                $450,000
August 1, 2012 .........................................                $450,000

          In the event that any  payment  date set forth above is not a Business
          Day,  the  Borrower  shall  pay the Bank the  corresponding  principal
          payment on the next  succeeding  Business  Day.  The  Borrower  hereby
          further agrees to pay interest on the unpaid  principal  amount of the
          Term Loan from time to time  outstanding  from the date  hereof  until
          payment in full thereof at the rates per annum,  and on the dates, set
          forth in Section 2.10.

          (b) The Borrower  hereby  unconditionally  promises to pay to the Bank
          the  then  unpaid  principal  amount  of  each  Revolving  Loan on the
          Maturity Date without setoff, deduction or counterclaim.

          (c) The Bank shall  maintain in accordance  with its usual practice an
          account or accounts evidencing (i) the indebtedness of the Borrower to
          the Bank  resulting  from each Loan  made by the Bank,  including  the
          amounts of principal  and  interest  payable and paid to the Bank from
          time to time  hereunder,  (ii) the amount of each Loan made hereunder,
          the Type thereof and the Interest Period applicable thereto, and (iii)
          the amount of any  principal  or interest due and payable or to become
          due and payable from the Borrower to the Bank hereunder.
<PAGE>

          (d) The entries made in the accounts  maintained pursuant to paragraph
          (c) of this Section shall be prima facie evidence of the existence and
          amounts of the obligations recorded therein; provided that the failure
          of the Bank to maintain  such  accounts or any error therein shall not
          in any manner affect the obligation of the Borrower to repay the Loans
          in accordance with the terms of this Agreement.

          (e) The Borrower agrees that on the Amendment No. 1 Effective Date the
          Borrower will execute and deliver to the Bank a promissory note of the
          Borrower  evidencing  the  Term  Loan,  substantially  in the  form of
          Exhibit A (the "Term  Note"),  payable to the order of the Bank and in
          the principal amount of $6,000,000.

          (f) The Bank may  request  that  Revolving  Loans  be  evidenced  by a
          promissory  note. In such event,  the Borrower shall prepare,  execute
          and deliver to the Bank a promissory  note payable to the order of the
          Bank (or, if  requested  by the Bank,  to the Bank and its  registered
          assigns).  Thereafter, the Loans evidenced by such promissory note and
          interest  thereon  shall  at all  times  (including  after  assignment
          pursuant to Section  8.04) be  represented  by one or more  promissory
          notes in such form  payable  to the order of the payee  named  therein
          (or, if such promissory  note is a registered  note, to such payee and
          its registered assigns).

          2.19 Section 2.10 (d) of the Credit  Agreement  are amended to read as
     follows:

          (d) Accrued  interest on each Loan shall be payable in arrears on each
          Interest  Payment Date for such Loan and upon: (x)  termination of the
          Commitment,  with  respect  to  Revolving  Loans and (y) the Term Loan
          Maturity  Date,  with  respect  to the Term  Loan;  provided  that (i)
          interest  accrued  pursuant to paragraph  (c) of this Section shall be
          payable on demand, (ii) in the event of any repayment or prepayment of
          any Loan (other than a  prepayment  of an ABR Loan prior to the end of
          the  Availability  Period),  accrued  interest on the principal amount
          repaid or prepaid  shall be payable on the date of such  repayment  or
          prepayment  and (iii) in the event of any conversion of any Eurodollar
          Loan prior to the end of the current Interest Period therefor, accrued
          interest on such Loan shall be payable on the  effective  date of such
          conversion.
<PAGE>

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

          SECTION 5.08. Use of Proceeds.

          (a) The proceeds of the Term Loan shall be used by the Borrower solely
          to finance a portion of the Acquisition and/or to pay related fees and
          expenses.

          (b) The proceeds of the Revolving  Loans will be used only for working
          capital.  No part of the  proceeds  of any Loan will be used,  whether
          directly or  indirectly,  for any purpose  that entails a violation of
          any of the Regulations of the Board, including Regulations G, U and X.

          2.21 The following  new Section 6.12 is added to the Credit  Agreement
     immediately following Section 6.11:

          Section 6.12 Government  Regulation.  The Borrower shall not (1) be or
          become  subject  at any  time to any law,  regulation,  or list of any
          government agency (including,  without limitation,  the U.S. Office of
          Foreign  Asset  Control  list) that  prohibits or limits the Bank from
          making  any  Loan or  extension  of  credit  to the  Borrower  or from
          otherwise  conducting  business  with  the  Borrower,  or (2)  fail to
          provide  documentary or other  evidence of the Borrower's  identity as
          may be  requested by the bank at any time to enable the Bank to verify
          the  Borrower's  identity  or to  comply  with any  applicable  law or
          regulation,  including,  without  limitation,  Section  326 of the USA
          Patriot Act of 2001, 31 U.S.C. Section 5318.

          2.22  Section  8.13 of the  Credit  Agreement  is  amended  to read as
     follows:

          Section 8.13 USA PATRIOT ACT NOTIFICATION.  The following notification
          is provided to the Borrower pursuant to Section 326 of the USA Patriot
          Act of 2001,  31 U.S.C.  Section  5318:  IMPORTANT  INFORMATION  ABOUT
          PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the
          funding of  terrorism  and money  laundering  activities,  Federal law
          requires all  financial  institutions  to obtain,  verify,  and record
          information  that  identifies  each  Person  that  opens  an  account,
          including any deposit  account,  treasury  management  account,  loan,
          other extension of credit, or other financial  services product.  What
          this means for the Borrower:  When the Borrower opens an account,  the
          Bank will ask for the Borrower's name, taxpayer identification number,
          business  address,  and other  information that will allow the Bank to
          identify  the  Borrower.  The Bank may also ask to see the  Borrower's
          legal organizational documents or other identifying documents.

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

          3.1 Each of the representations and warranties made by the Borrower in
     the  Credit  Agreement  is true and  correct  on and as of the date of this
     Amendment and after giving effect to the transactions  contemplated by this
     Amendment.

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

          3.3 This Amendment has been duly and validly executed and delivered by
     the  Borrower  and  constitutes  its legal,  valid and binding  obligation,
     enforceable against the Borrower in accordance with its terms.

     4.  Conditions to  Effectiveness  of  Amendment.  This  Amendment  shall be
effective  only when and if each of the  following  conditions  is satisfied (or
waived in accordance with Section 8.02 of the Credit Agreement):

          4.1 The Bank (or its counsel)  shall have  received  from the Borrower
     either (i) a counterpart of this Amendment signed on behalf of the Borrower
     or (ii)  written  evidence  satisfactory  to the Bank  (which  may  include
     telecopy or  electronic  transmission  of a signed  signature  page of this
     Amendment) that the Borrower has signed a counterpart of this Amendment.

          4.2  The  Bank  shall  have  received  a  favorable   written  opinion
     (addressed  to the Bank and dated the  Amendment  No. 1 Effective  Date) of
     Hiscock  &  Barclay,  LLP,  counsel  for the  Borrower  and  the  Corporate
     Guarantors,  substantially in the form of Exhibit B and covering such other
     matters relating to the Borrower, this Amendment or the Transactions as the
     Bank shall reasonably request. The Borrower hereby requests such counsel to
     deliver such opinion.

          4.3 The Bank shall have received such  documents and  certificates  as
     the  Bank  or  its  counsel  may   reasonably   request   relating  to  the
     organization,  existence  and  good  standing  of  the  Borrower  and  each
     Corporate  Guarantor,  the  authorization of the Transactions and any other
     legal matters relating to the Borrower, this Amendment or the Transactions,
     all in form and substance satisfactory to the Bank and its counsel.

          4.4 The Bank shall have received pro forma financial  statements as of
     the Fiscal Quarter ending June 30, 2006, in form and substance satisfactory
     to the Bank,  reflecting the financial  condition and results of operations
     of the Borrower  after  giving  effect to the Term Loan  borrowing  and the
     Acquisition and reflecting  compliance  with Sections 6.04,  6.09, 6.10 and
     6.11 of the Credit Agreement as of such date on a pro forma basis.

          4.5 The Bank shall have  received a certificate  substantially  in the
     form of Exhibit C, dated the Amendment  No. 1 Effective  Date and signed by
     the  President,  a Vice  President or a Financial  Officer of the Borrower,
     certifying:  (i) compliance with the conditions set forth in paragraphs (a)
     and (b) of Section 4.02 of the Credit Agreement;  (ii) that the Acquisition
     is  a  Permitted  Acquisition;  (iii)  that  after  giving  effect  to  the
     completion of the  Acquisition the Leverage Ratio on a pro forma basis will
     be less than or equal to 3.25 to 1; and (iv) that,  after giving  effect to
     the completion of the  Acquisition,  the then total  aggregate  outstanding
     principal balance of Indebtedness incurred in connection with all Permitted
     Acquisitions  occurring in the immediately  preceding four fiscal quarters,
     including the current fiscal quarter, does not exceed $15,000,000.
<PAGE>

          4.6 The Bank shall have received true and correct copies, certified as
     to authenticity by the Borrower,  of the Purchase Agreement,  the terms and
     conditions  of which  shall be in form and  substance  satisfactory  to the
     Bank.

          4.7 The Bank shall have received a copy of the written  consent of NBT
     Bank, National Association to the Borrowers incurrence of the Term Loan and
     consummation of the Acquisition.

          4.8 The Borrower  shall have paid the Bank an  amendment  fee equal to
     $15,000.

          4.9 The Bank shall have  received a  Confirmation  and  Acknowledgment
     from each Corporate  Guarantor other than Par-Siva  Corporation in the form
     attached as Exhibit D.

          4.10 The Bank shall have  received a Guarantee of the  Liabilities  of
     the Borrower from Par-Siva Corporation,  in form and substance satisfactory
     to the Bank.

          4.11 The  Borrower  shall  have  paid or  agreed  to pay all  invoices
     presented  to  Borrower  for  expense  reimbursements  due to the  Bank  in
     connection with the preparation of this Amendment.

          4.12 The Bank  shall  have  received  the Term Note duly  executed  by
     Borrower.

     5.  Effect  of  this  Amendment.  This  Amendment  constitutes  the  entire
agreement  of the  parties  with  respect  to the  subject  matter  hereof,  and
supersedes  all prior  oral or  written  communications,  memoranda,  proposals,
negotiations,  discussions,  term  sheets and  commitments  with  respect to the
subject matter hereof.  Except as expressly provided herein, no other changes or
modifications to the Credit Agreement are intended or implied by this Amendment,
and in all other respects the Credit Agreement is hereby specifically  ratified,
restated  and  confirmed by as of the  Amendment  No. 1 Effective  Date.  To the
extent that any provision of the Credit  Agreement  conflicts with any provision
of this Amendment, the provision of this Amendment shall control.

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

                  [Remainder of page intentionally left blank]



<PAGE>


     IN WITNESS  WHEREOF,  the parties  have caused  this  Amendment  to be duly
executed as of the day and year first above written.


                                 PAR TECHNOLOGY CORPORATION



                                 By: /s/Ronald J. Casciano
                                     -------------------------
                                     Name:  Ronald J. Casciano
                                     Title:    Treasurer


                                 JPMORGAN CHASE BANK, N.A.



                                 By: /s/Frederick K. Miller
                                     --------------------------
                                     Name:  Frederick K. Miller
                                     Title: Vice President



<PAGE>
                                    EXHIBIT A
                                Form of Term Note

                                    TERM NOTE

$6,000,000.00                                                   November 2, 2006


     FOR VALUE RECEIVED, PAR TECHNOLOGY CORPORATION ("Borrower") hereby promises
to pay to the order of JPMORGAN CHASE BANK,  N.A.  ("Bank") at its office at 500
Plum Street,  Syracuse,  New York 13204,  the  principal  sum of Six Million and
00/100  Dollars  ($6,000,000.00),  in the  amounts and at the times set forth in
Schedule A attached  hereto,  with a final  payment on August 1, 2012,  at which
time any remaining  principal  balance and all accrued and unpaid interest shall
be paid in full.

     Unpaid principal shall bear interest, until paid in full, at the rate(s) of
interest set forth in the Credit Agreement  referred to below.  Accrued interest
shall be  payable  on the  date(s)  and in the  manner  provided  in the  Credit
Agreement.  All payments of principal and interest shall be made without setoff,
deduction or counterclaim of any kind.

     Bank shall maintain on its books and records kept in the ordinary course of
its  business  an account in the name of  Borrower  showing  all  payments,  the
current  principal  balance,  the rate of interest and each Interest Period,  if
applicable.  Borrower  agrees that such books and records of Bank shall be prima
facie evidence of the interest rate and Interest Period applicable hereunder. At
Bank's  option,  prior to any transfer of this Note (or at Bank's  option at any
other time), a schedule may be attached to this Note and endorsed by Bank with a
record of all payments, the current principal balance, the then current interest
rate  and  Interest  Period,  if  applicable.  Any  such  endorsement  shall  be
conclusive, absent manifest error.

     This Term Note is the Term Note referred to in, is entitled to the benefits
of, and is subject to, the Amended and Restated  Credit  Agreement,  dated as of
April 19,  2006,  between  Borrower  and Bank,  as has been or may  hereafter be
amended, modified or restated (the "Credit Agreement"). Reference is made to the
Credit  Agreement for a statement of the terms and conditions of this Term Note,
including,  without  limitation,  terms  providing for the  acceleration  of the
maturity of the  outstanding  principal  balance upon the  occurrence of certain
Events of  Default.  Capitalized  terms  used in this  Term  Note  which are not
otherwise defined shall have the meanings given thereto in the Credit Agreement.

     This Term Note is governed by and construed in accordance  with the laws of
the State of New York.

                                         PAR TECHNOLOGY CORPORATION


                                         By:/s/Ronald J. Casciano
                                            ------------------------
                                            Name:  Ronald J. Casciano
                                            Title: Treasurer


<PAGE>


                         Schedule of Principal Payments



Principal Payment Date                                      Principal Amount Due

November 1, 2007 .......................................                $150,000
February 1, 2008 .......................................                $150,000
May 1, 2008 ............................................                $150,000
August 1, 2008 .........................................                $150,000
November 1, 2008 .......................................                $225,000
February 1, 2009 .......................................                $225,000
May 1, 2009 ............................................                $225,000
August 1, 2009 .........................................                $225,000
November 1, 2009 .......................................                $300,000
February 1, 2010 .......................................                $300,000
May 1, 2010 ............................................                $300,000
August 1, 2010 .........................................                $300,000
November 1, 2010 .......................................                $375,000
February 1, 2011 .......................................                $375,000
May 1, 2011 ............................................                $375,000
August 1, 2011 .........................................                $375,000
November 1, 2011 .......................................                $450,000
February 1, 2012 .......................................                $450,000
May 1, 2012 ............................................                $450,000
August 1, 2012 .........................................                $450,000

<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 Siva 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, 33-63095 and 333-137647) on Form S-8
and the  registration  statement (No.  333-102197) on Form S-3 of PAR Technology
Corporation  of  our  reports  dated  March  15,  2007,   with  respect  to  the
consolidated balance sheets of PAR Technology Corporation and subsidiaries as of
December 31, 2006 and 2005, 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, 2006, and management's
assessment of the effectiveness of internal control over financial  reporting as
of December 31, 2006 and the  effectiveness  of internal  control over financial
reporting as of December 31, 2006, which reports appear in the December 31, 2006
annual report on Form 10-K of PAR Technology Corporation.

Our report dated March 15, 2007 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,  2006,  contains  an
explanatory  paragraph  that states PAR  Technology  Corporation  acquired  SIVA
Corporation on November 2, 2006, and management  excluded from its assessment of
the  effectiveness  of  PAR  Technology   Corporation's  internal  control  over
financial reporting as of December 31, 2006, SIVA Corporation's internal control
over financial reporting associated with total assets, net revenues,  and income
before  provision  for  income  taxes   comprising  4.8%,   0.02%,  and  (6.9%),
respectively,  of the consolidated total assets, net revenues, and income before
provision for income taxes of PAR Technology  Corporation and subsidiaries as of
and for the year ended  December  31, 2006.  Our audit of internal  control over
financial reporting of PAR Technology Corporation also excluded an evaluation of
the internal control over financial reporting of SIVA Corporation.

As  discussed  in  notes  1  and 7 to  the  consolidated  financial  statements,
effective  January  1,  2006,  the  Company  adopted  the fair  value  method of
accounting for  stock-based  compensation  as required by Statement of Financial
Accounting Standards No. 123(R), Share-Based Payment.


/s/KPMG LLP


Syracuse, New York
March 15, 2007
<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 16, 2007                           /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 16, 2007                         /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,  2006 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 & Chief
Executive Officer
March 16, 2007

/s/Ronald J. Casciano
Ronald J. Casciano
Vice President, Chief Financial
Officer & Treasurer
March 16, 2007