SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


                                    FORM 10-Q

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

       For the Quarter Ended June 30, 2005. Commission File Number 1-9720

                                       OR

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

             For the Transition Period From __________ to __________

                        Commission File Number __________



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



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

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


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


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

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined  in  Rule  12b-2  of the  Securities  Exchange  Act of  1934).  Yes [  ]
No [ X ]

     The number of shares  outstanding of registrant's  common stock, as of July
31, 2005 - 9,321,329 shares.

<PAGE>

                           PAR TECHNOLOGY CORPORATION


                                TABLE OF CONTENTS
                                    FORM 10-Q


                                     PART 1
                              FINANCIAL INFORMATION


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

      Item 1.   Financial Statements (Unaudited)

                -  Consolidated Statements of Income for the three and
                   six months ended June 30, 2005 and 2004

                -  Consolidated Statements of Comprehensive Income for the
                   three and six months ended June 30, 2005 and 2004

                -  Consolidated Balance Sheets at
                   June 30, 2005 and December 31, 2004

                -  Consolidated Statements of Cash Flows
                   for the six months ended June 30, 2005 and 2004

                -  Notes to Unaudited Interim Consolidated Financial Statements

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

      Item 3.   Quantitative and Qualitative Disclosures About Market Risk

      Item 4.   Controls and Procedures

                                     PART II
                                OTHER INFORMATION


      Item 6.   Exhibits and Reports on Form 8-K

      Signatures

      Exhibit Index

<PAGE>

Item 1.  Financial Statements
<TABLE>
<CAPTION>


                   PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                     (in thousands except per share amounts)
                                   (unaudited)

                                                           For the three months                For the six months
                                                              ended June 30,                     ended June 30,
                                                     -------------------------------    -------------------------------
                                                           2005            2004               2005            2004
                                                     -------------     -------------    ---------------   -------------
<S>                                                  <C>               <C>              <C>               <C>
Net revenues:
     Product                                         $      22,930     $      19,466    $      43,931     $      35,705
     Service                                                14,416            10,570           27,818            20,877
     Contract                                               13,874            12,889           28,228            24,241
                                                     -------------     -------------    -------------     -------------
                                                            51,220            42,925           99,977            80,823
                                                     -------------     -------------    -------------     -------------
Costs of sales:
     Product                                                13,893            13,231           26,769            24,268
     Service                                                10,923             9,084           21,370            18,029
     Contract                                               12,944            12,082           26,509            22,612
                                                     -------------     -------------    -------------     -------------
                                                            37,760            34,397           74,648            64,909
                                                     -------------     -------------    -------------     -------------
           Gross margin                                     13,460             8,528           25,329            15,914
                                                     -------------     -------------    -------------     -------------
Operating expenses:
     Selling, general and administrative                     7,323             5,245           14,716            10,261
     Research and development                                2,107             1,302            4,385             2,645
     Amortization of identifiable
       intangible assets                                       244                --              490                --
                                                     -------------     -------------    -------------     -------------
                                                             9,674             6,547           19,591            12,906
                                                     -------------     -------------    -------------     -------------

Operating income                                             3,786             1,981            5,738             3,008
Other income, net                                               71               187              304               398
Interest expense                                               (65)              (46)            (143)             (119)
                                                     -------------     -------------    -------------     -------------
Income before provision for income taxes                     3,792             2,122            5,899             3,287
Provision for income taxes                                  (1,441)             (810)          (2,242)           (1,239)
                                                     -------------     -------------    -------------     -------------
Net income                                           $       2,351     $       1,312    $       3,657     $       2,048
                                                     =============     =============    =============     =============


Earnings per share:
     Basic                                           $         .26     $         .15    $         .40     $         .24
     Diluted                                         $         .24     $         .14    $         .38     $         .22

Weighted average shares outstanding
     Basic                                                   9,116             8,636            9,035             8,603
                                                     =============     =============    =============     =============
     Diluted                                                 9,761             9,192            9,673             9,156
                                                     =============     =============    =============     =============
</TABLE>




See notes to unaudited interim consolidated financial statements

<PAGE>
<TABLE>
<CAPTION>


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


                                                       For the three months                 For the six months
                                                            ended June 30,                      ended June 30,
                                                     -----------------------------      ---------------------------
                                                         2005              2004             2005           2004
                                                     -----------       -----------      -----------     -----------
<S>                                                  <C>               <C>              <C>             <C>
Net income                                           $     2,351       $     1,312      $     3,657     $     2,048
Other comprehensive loss income, net of tax:
     Foreign currency translation adjustments               (228)              (71)            (365)           (234)
                                                     -----------       -----------      -----------     -----------
Comprehensive income                                 $     2,123       $     1,241      $     3,292     $     1,814
                                                     ===========       ===========      ===========     ===========

</TABLE>

See notes to unaudited interim consolidated financial statements


<PAGE>


                   PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       (in thousands except share amounts)
                                   (unaudited)

                                                         June 30,  December 31,
                                                            2005         2004
Assets                                                  ---------     ---------
Current assets:
     Cash  and cash equivalents ....................    $   3,045     $   8,696
     Accounts receivable-net .......................       36,759        32,702
     Inventories - net .............................       28,263        27,047
     Deferred income taxes .........................        8,740         6,634
     Other current assets ..........................        2,726         2,617
                                                        ---------     ---------
         Total current assets ......................       79,533        77,696
Property, plant and equipment - net ................        8,051         8,123
Goodwill ...........................................       15,379        15,379
Intangible assets-net ..............................        8,752         9,235
Other assets .......................................        1,797         1,319
                                                        ---------     ---------
                                                        $ 113,512     $ 111,752
                                                        =========     =========
Liabilities and Shareholders' Equity
Current liabilities:
     Current portion of long-term debt .............    $      58     $      90
     Borrowings under lines of credit ..............        1,900        10,246
     Accounts payable ..............................       11,315         9,486
     Accrued salaries and benefits .................        7,982         8,072
     Accrued expenses ..............................        3,535         2,998
     Customer deposits .............................        3,846         4,861
     Deferred service revenue ......................       10,109         9,083
     Net liabilities of discontinued operation .....          219           323
                                                        ---------     ---------
         Total current liabilities .................       38,964        45,159
                                                        ---------     ---------
Long-term debt .....................................        2,003         2,005
                                                        ---------     ---------
Deferred income taxes ..............................          450           194
                                                        ---------     ---------
Other long-term liabilities ........................        1,350           820
                                                        ---------     ---------
Shareholders' Equity:
     Preferred stock, $.02 par value,
       1,000,000 shares authorized .................         --            --
     Common stock, $.02 par value,
       19,000,000 shares authorized;
       10,490,147 and 10,139,132 shares issued;
       9,286,471 and 8,935,456 outstanding .........          209           203
     Capital in excess of par value ................       35,433        31,560
     Retained earnings .............................       41,667        38,010
     Accumulated other comprehensive loss ..........         (546)         (181)
     Treasury stock, at cost, 1,203,676 shares .....       (6,018)       (6,018)
                                                        ---------     ---------
         Total shareholders' equity ................       70,745        63,574
                                                        ---------     ---------
                                                        $ 113,512     $ 111,752
                                                        =========     =========

See notes to unaudited interim consolidated financial statements


<PAGE>


                   PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
                                                            For the six months
                                                                ended June 30,
                                                           --------------------
                                                              2005        2004
                                                           ---------   --------
Cash flows from operating activities:
   Net income ..........................................    $ 3,657     $ 2,048
   Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation and amortization ....................      1,834       1,388
      Provision for bad debts ..........................        515         801
      Provision for obsolete inventory .................      2,077       1,873
      Tax benefit of stock option exercises ............      2,476         --
      Deferred income tax (expense) benefit ............     (1,516)      1,365
      Changes in operating assets and liabilities:
        Accounts receivable ............................     (4,572)      1,613
        Inventories ....................................     (3,293)       (358)
        Other current assets ...........................       (109)        386
        Other assets ...................................       (478)       (749)
        Accounts payable ...............................      1,829       1,861
        Accrued salaries and benefits ..................        (90)        524
        Accrued expenses ...............................        537        (398)
        Customer deposits ..............................     (1,015)        --
        Deferred service revenue .......................      1,026        (626)
        Other long-term liabilities ....................        530         --
                                                            -------     -------
         Net cash provided by continuing
          operating activities .........................      3,408       9,728
         Net cash used in discontinued operations ......       (104)       (129)
                                                            -------     -------
         Net cash provided by operating activities .....      3,304       9,599
                                                            -------     -------
Cash flows from investing activities:
   Capital expenditures ................................       (868)       (952)
   Capitalization of software costs ....................       (411)       (378)
                                                            -------     -------
         Net cash used in investing activities .........     (1,279)     (1,330)
                                                            -------     -------
Cash flows from financing activities:
   Net payments under line-of-credit agreements ........     (8,346)     (6,989)
   Payments of long-term debt ..........................        (34)        (44)
   Proceeds from the exercise of stock options .........      1,403         313
                                                            -------     -------
         Net cash used in financing activities .........     (6,977)     (6,720)
                                                            -------     -------
Effect of exchange rate changes on cash and
  cash equivalents .....................................       (699)       (397)
                                                            -------     -------
Net increase (decrease) in cash and cash equivalents ...     (5,651)      1,152
Cash and cash equivalents at
  beginning of period ..................................      8,696       1,467
                                                            -------     -------
Cash and cash equivalents at
  end of period ........................................    $ 3,045     $ 2,619
                                                            =======     =======

Supplemental disclosures of cash flow information: Cash paid during the period
for:

Interest .........................................           $171           $142
Income taxes, net of refunds .....................            672            228

See notes to unaudited interim consolidated financial statements
<PAGE>

                   PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
          NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS


1.   The accompanying  unaudited interim consolidated  financial statements have
     been prepared by PAR  Technology  Corporation  (the  "Company" or "PAR") in
     accordance  with  accounting  principles  generally  accepted in the United
     States  of  America  for  interim   financial   statements   and  with  the
     instructions  to  Form  10-Q  and  Regulation  S-X  pertaining  to  interim
     financial  statements.  Accordingly,  these interim financial statements do
     not include all information and footnotes required by accounting principles
     generally  accepted in the United States of America for complete  financial
     statements. In the opinion of the Company such unaudited statements include
     all adjustments (which comprise only normal recurring  accruals)  necessary
     for a fair  presentation  of the results for such  periods.  The results of
     operations  for the six  months  ended  June 30,  2005 are not  necessarily
     indicative  of the  results of  operations  to be  expected  for any future
     period. The consolidated  financial  statements and notes thereto should be
     read in conjunction with the audited consolidated  financial statements and
     notes for the year  ended  December  31,  2004  included  in the  Company's
     December 31, 2004 Annual Report to the Securities  and Exchange  Commission
     on Form 10-K.

2.   On October 1, 2004,  PAR  Technology  Corporation  (the  "Company") and its
     wholly-owned   subsidiary,   PAR   Springer-Miller   Systems,   Inc.   (the
     "Subsidiary"),  completed their transaction with  Springer-Miller  Systems,
     Inc.  ("Springer-Miller")  and John  Springer-Miller  pursuant to which the
     Subsidiary  acquired  substantially all of the assets (including the 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.

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

                                              For the three       For the six
                                               months ended       months ended
                                              June 30, 2004       June 30, 2004
                                              -------------      --------------

Net revenues ...........................      $    47,477         $    89,179
Net income .............................      $     1,552         $     2,355

Earnings per share:
   Basic ...............................      $       .18         $       .27
   Diluted .............................      $       .17         $       .25


     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 period presented.


3.   Inventories   are  primarily  used  in  the   manufacture  and  service  of
     Hospitality products. The components of inventory, net of related reserves,
     consist of the following:

                                                          (In Thousands)
                                                     June 30,       December 31,
                                                       2005              2004
                                                     --------         ---------

Finished goods .........................             $ 5,140           $ 4,745
Work in process ........................               1,719             1,296
Component parts ........................               4,722             4,568
Service parts ..........................              16,682            16,438
                                                     -------           -------
                                                     $28,263           $27,047
                                                     =======           =======

     At June 30, 2005 and December 31, 2004,  the Company had recorded  reserves
     for shrinkage,  excess and obsolete inventory of $4,518,000 and $3,982,000,
     respectively.

4.   In December 2004, the Financial  Accounting Standards Board ("FASB") issued
     SFAS No. 123 (revised 2004),  "Share-Based  Payment"  ("SFAS 123R"),  which
     replaces SFAS No. 123,  "Accounting  for Stock-Based  Compensation"  ("SFAS
     123") and  supercedes APB Opinion No. 25,  "Accounting  for Stock Issued to
     Employees." In April 2005, the Securities and Exchange  Commission released
     a final rule  "Amendment  to Rule 4-01(a) of  Regulation  S-X Regarding the
     Compliance  Date for  Statement of Financial  Accounting  Standards No. 123
     (Revised 2004),  Share-Based Payment".  This rule defers the date for which
     we will be  required  to adopt SFAS 123R until  January 1, 2006.  SFAS 123R
     requires that all share-based  payments to employees,  including  grants of
     employee stock options, be recognized in the financial  statements based on
     their fair values.  The pro forma  disclosures  previously  permitted under
     SFAS  123  no  longer  will  be  an  alternative  to  financial   statement
     recognition.  We are currently evaluating the requirements of SFAS 123R and
     its impact on our  consolidated  results of  operations  and  earnings  per
     share.  We have not yet determined the effect of adopting SFAS 123R, and it
     has not been determined whether the adoption will result in amounts similar
     to the current pro forma disclosures under SFAS 123.

     Had compensation cost for the Company's stock-based compensation plans been
     recorded based on the fair values of the respective  options on their grant
     dates for those awards,  consistent with the  requirements of SFAS No. 123,
     the Company's net income and earnings per share would have been adjusted to
     the proforma amounts indicated below (in thousands, except per share data):

<TABLE>
<CAPTION>

                                                                 (in thousands, except per share data)
                                                    For the three months                For the six months
                                                        ended June 30,                     ended June 30,
                                                --------------------------------    ----------------------------
                                                    2005               2004             2005             2004
                                                -------------     --------------    -------------   --------------

     <S>                                        <C>               <C>               <C>              <C>
       Net income                               $        2,351    $        1,312    $       3,657    $        2,048
       Compensation expense                              (103)               (49)            (179)              (96)
                                                -------------     --------------    -------------    --------------
       Proforma net income                      $       2,248     $        1,263    $       3,478    $        1,952
                                                =============     ==============    =============    ==============

     Earnings per share:
       As reported    --   Basic                $         .26     $         .15     $         .40    $         .24
                      --   Diluted              $         .24     $         .14     $         .38    $         .22

       Proforma       --   Basic                $         .25     $         .15     $         .38    $         .23
                      --   Diluted              $         .23     $         .14     $         .36    $         .21
</TABLE>
<PAGE>


5.   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.

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


                                                       For the three months
                                                          ended June 30,
                                                       ------------------
                                                         2005      2004
                                                       -------   ------

Net income ..........................................   $2,351   $1,312
                                                        ======   ======
Basic:
     Shares outstanding at beginning of period ......    8,985    8,615
     Weighted average shares issued during the period      131       21
     Weighted average common shares, basic ..........    9,116    8,636
                                                        ======   ======
     Earnings per common share, basic ...............   $  .26   $ 0.15
                                                        ======   ======
Diluted:
     Weighted average common shares, basic ..........    9,116    8,636
     Dilutive impact of stock options ...............      645      556
                                                        ------   ------
     Weighted average common shares, diluted ........    9,761    9,192
                                                        ======   ======
     Earnings per common share, diluted .............   $  .24   $ 0.14
                                                        ======   ======


                                                       For the six months
                                                         ended June 30,
                                                       ------------------
                                                         2005      2004
                                                       -------   ------

Net income ..........................................   $3,657   $2,048
                                                        ======   ======
Basic:
     Shares outstanding at beginning of period ......    8,935    8,555
     Weighted average shares issued during the period      100       48
                                                        ------   ------
     Weighted average common shares, basic ..........    9,035    8,603
                                                        ======   ======
     Earnings per common share, basic ...............   $  .40   $ 0.24
                                                        ======   ======
Diluted:
     Weighted average common shares, basic ..........    9,035    8,603
     Dilutive impact of stock options ...............      638      553
                                                        ------   ------
     Weighted average common shares, diluted ........    9,673    9,156
                                                        ======   ======
     Earnings per common share, diluted .............   $  .38   $ 0.22
                                                        ======   ======


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

     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 in point-of-sale,  back of store and corporate office
     applications as well as in the hotel/resort/spa  marketplace.  This segment
     also  offers  customer  support  including  field  service,   installation,
     twenty-four hour telephone support and depot repair. The Government segment
     develops advanced technology prototype systems primarily for the Department
     of Defense  and other  Governmental  agencies.  It  provides  services  for
     operating and maintaining certain U.S. Government-owned  communi-cation 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.

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


                                                 (in thousands)
                                  For the three months    For the six months
                                     ended June 30,          ended June 30,
                                 --------------------    ---------------------
                                    2005        2004        2005        2004
                                 --------    --------    --------    ---------
Revenues:
     Hospitality .............   $ 37,346    $ 30,036    $ 71,749    $ 56,582
     Government ..............     13,874      12,889      28,228      24,241
                                 --------    --------    --------    --------
           Total .............   $ 51,220    $ 42,925    $ 99,977    $ 80,823
                                 ========    ========    ========    ========
Operating income:
     Hospitality .............   $  2,899    $  1,152    $  4,085    $  1,493
     Government ..............        887         829       1,653       1,515
                                 --------    --------    --------    --------
                                    3,786       1,981       5,738       3,008
Other income, net ............         71         187         304         398
Interest expense .............        (65)        (46)       (143)       (119)
                                 --------    --------    --------    --------
Income before provision
  for income taxes ...........   $  3,792    $  2,122    $  5,899    $  3,287
                                 ========    ========    ========    ========
Depreciation and amortization:
     Hospitality .............   $    796    $    519    $  1,601    $  1,084
     Government ..............         22          41          42         165
     Other ...................         96         110         191         139
                                 --------    --------    --------    --------
           Total .............   $    914    $    670    $  1,834    $  1,388
                                 ========    ========    ========    ========
Capital expenditures:
     Hospitality .............   $    485    $    538    $    721    $    841
     Government ..............         30        --            30        --
     Other ...................         41          20         117         111
                                 --------    --------    --------    --------
           Total .............   $    556    $    558    $    868    $    952
                                 ========    ========    ========    ========

     The  following  table  presents  revenues by  geographic  area based on the
location of the use of the product or service:

                                             (in thousands)
                             For the three months        For the six months
                               ended June 30,              ended June 30,
                            --------------------      ---------------------
                              2005         2004         2005         2004
                            -------      -------      -------     ---------

United States ........      $45,864      $39,261      $89,969      $73,998
Other Countries ......        5,356        3,664       10,008        6,825
                            -------      -------      -------      -------
      Total ..........      $51,220      $42,925      $99,977      $80,823
                            =======      =======      =======      =======


<PAGE>

     The following table represents identifiable assets by business segment:

                                                (in thousands)
                                        June 30,            December 31,
                                          2005                  2004
                                       ---------             ---------
Identifiable assets:
    Hospitality ..............         $ 96,228              $ 91,432
    Government ...............            9,708                 9,909
    Other ....................            7,576                10,411
                                       --------              --------
Total ........................         $113,512              $111,752
                                       ========              ========



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


                                              (in thousands)
                                       June 30,           December 31,
                                        2005                  2004
                                      -----------         -----------

United States ................         $106,966             $105,073
Other Countries ..............            6,546                6,679
                                       --------             --------
       Total .................         $113,512             $111,752
                                       ========             ========



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


                                        For the three months  For the six months
                                            ended June 30,      ended June 30,
                                        --------------------  ------------------
                                            2005        2004      2005      2004
                                           ------      ------    ------    -----

Restaurant Segment:
     McDonald's Corporation ......           29%        34%       29%       30%
     YUM! Brands, Inc. ...........           13%        17%       12%       21%
Government Segment:
     Department of Defense .......           27%        30%       28%       30%
All Others .......................           31%        19%       31%       19%
                                            ---        ---       ---       ---
                                            100%       100%      100%      100%
                                            ===        ===       ===       ===



<PAGE>


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

Forward-Looking Statement

     This document contains  "forward-looking  statements" within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange Act of 1934.  Any  statements  in this document that do not
describe  historical  facts  are  forward-looking  statements.   Forward-looking
statements in this document (including  forward-looking statements regarding the
continued  health of the Hospitality  industry,  future  information  technology
outsourcing  opportunities,   an  expected  increase  in  funding  by  the  U.S.
Govern-ment relating to the Company's logistics management contracts, the impact
of current world events on our results of  operations,  the affects of inflation
on  our  margins,  and  the  affects  of  interest  rate  and  foreign  currency
fluc-tuations 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 expecta-tions  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  restaurant  sector  of  the
hospitality  technology  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

     We are the  parent  company  of four  wholly-owned  subsidiary  businesses:
ParTech,  Inc.,  PAR  Springer-Miller  Systems,  Inc.,  PAR  Government  Systems
Corporation and Rome Research Corporation.

Hospitality Segment

     PAR's  largest  subsidiary,   ParTech,  Inc.  is  a  recognized  leader  in
hospitality  technology  solutions,   delivering  products  and  solutions  that
capture,  move and  manage  information  in real  time to and from the  point of
business  activity.  PAR solutions include  hardware,  software and professional
services to the hospitality industry including restaurants, hotels/resorts/spas,
and retail  businesses.  The Company's  hospitality  technology  systems  number
40,000 systems  installed in over 100 countries.  PAR's  hospitality  management

<PAGE>

software  technology  assists in the  operation  of  hospitality  businesses  by
managing data from end-to-end and improving profitability through more efficient
operations.  The Company's professional services mission is to assist businesses
in achieving the full potential of their hospitality technology investments.

     PAR  manufactures  products and  provides  services  that  capture  mission
critical data, with long-term  relationships with the hospitality industry's two
largest restaurant  corporations - McDonald's  Corporation and Yum! Brands, Inc.
McDonald's  has over  32,000  restaurants  in 121  countries  and PAR has been a
preferred  provider of hospitality  management  technology systems and lifecycle
support  services to McDonald's  since 1980. Yum!  Brands,  Inc. (which includes
Taco Bell,  KFC, Pizza Hut, Long John Silvers and A & W Restaurants)  has been a
PAR customer  since 1983.  Yum! has nearly 33,000 units  globally and PAR is the
sole approved  supplier of hospitality  management  technology  systems to Yum's
Taco Bell restaurants as well as the  point-of-sale  ("POS") vendor of choice to
KFC.  Other  significant  hospitality  concepts  where PAR is the POS  vendor of
choice are:  Boston Market,  Chick-fil-A,  CKE Restaurants  (including  Hardees,
Carl's Jr.), Carnival Cruise Lines, Loews Cineplex and large franchisees of each
of the foregoing brands.

     In the fourth quarter 2004 PAR acquired  Springer-Miller  Systems, a global
leader in hospitality management solutions that meet/exceed the technology needs
of a wide variety of hotel/resort/spa  enterprises including city-center hotels,
destination  spa and golf  properties,  timeshare  properties and casino resorts
worldwide. PAR's SMS|Host(R) Hospitality Management System is distinguished from
other property management systems with its truly integrated guest-centric design
and unique approach to guest service.  The SMS|Host product suite, that includes
more than 20 seamlessly  integrated  application  modules,  provides  respective
hotel/resort/spa  staff with the tools they need to personalize service,  exceed
guest  expectations,  and increase revenue.  We are focused on delivering to our
customers our enterprise management products,  solutions and services, which are
designed  to  increase  efficiencies,  increase  cost-effectiveness  and promote
faster execution of critical business  processes.  PAR maintains a distinguished
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.

Government Segment

     PAR is also the  parent  of PAR  Government  Systems  Corporation  and Rome
Research  Corporation,   both  of  which  are  Government   contractors.   As  a
long-standing  Government  contractor  PAR provides  information  technology and
communications   support  services  to  the  U.S.  Navy,  Air  Force  and  Army.
Additionally,  PAR serves clients in several other U.S. federal, state and local
government  agencies.  PAR focuses  its applied  technology  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. In addition,  through  Government-sponsored  research and

<PAGE>

development,  PAR has developed  technologies  with relevant  commercial uses. A
prime  example of this  "technology  transfer"  is the  Company's  point-of-sale
technology,  which was derived from research and development involving microchip
processing technology sponsored by the Department of Defense. The Company's high
quality  services  enable PAR to sustain  winning repeat  business and long-term
client  relationships  and also to compete  effectively  for new clients and new
contracts.  The demand for PAR's services is created by the increasingly complex
systems and technology environments in which government agencies operate, and by
the need to stay current with emerging technology while increasing  productivity
and performance.

Summary
-------

     During the first six months of 2005, the quick-service  restaurant  segment
of the hospitality  technology  market continued the positive trend set in 2004.
In 2004, the Company acquired  Springer-Miller Systems which significantly added
to the  Company's  software  product  offerings  in the  hospitality  technology
market.

     The  Company's  Government  business  continues  to win  contracts  in 2005
associated  with I/T  outsourcing for the U.S.  Military.  The Company  performs
outsourcing  for the  three  main  branches  of the  military,  as well as other
Federal Agencies including the International Broadcasting Bureau (IBB).

     For the remainder of 2005,  the Company  anticipates  the continued  strong
business trends of the hospitality  technology market and additional  Government
I/T outsourcing opportunities.  Over the years, PAR has sought to be a leader in
its  two  businesses  through  the  utilization  of  several  Company  strengths
including market leadership,  technological  innovation,  customer focus, global
reach and employee  initiative.  By focusing on these strengths,  PAR is able to
help shape the marketplace, increase the Company's customer base and continue to
expand worldwide.

     The  following  table  sets  forth the  Company's  revenues  by  reportable
segment:

                             For the three months  For the six months
                                ended June 30,      ended June 30,
                             ------------------  ------------------
                               2005      2004      2005      2004
                             -------   -------   -------   --------
Revenues:
     Hospitality .........   $37,346   $30,036   $71,749   $56,582
     Government ..........    13,874    12,889    28,228    24,241
                             -------   -------   -------   -------
Total consolidated revenue   $51,220   $42,925   $99,977   $80,823
                             =======   =======   =======   =======


     The following discussion and analysis highlights items having a significant
affect on operations  during the three and six months ended June 30, 2005.  This
discussion may not be indicative of future operations or earnings.  It should be
read in conjunction with the audited annual  consolidated  financial  statements
and notes thereto and other  financial and statistical  information  included in
this report.

Results of Operations --

Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004

     The Company  reported  revenues of $51.2 million for the three months ended
June 30, 2005, an increase of 19% from the $42.9 million  reported for the three
months ended June 30, 2004.  The Company's net income for the three months ended
June 30, 2005 was $2.4 million,  or $.24 diluted net income per share,  compared
to net income of $1.3 million and $.14 per diluted  share for the same period in
2004.
<PAGE>

     Product revenues from the Company's  Hospitality segment were $22.9 million
for the three  months  ended June 30,  2005,  an  increase of 18% from the $19.5
million  recorded in 2004.  The principal  reason for this increase was software
revenue from the Company's  resort and spa customers.  Also  contributing  was a
$1.5 million increase in sales to Chick-fil-A. In addition, the Company recorded
a 39% or $861,000 increase in restaurant product sales to several  international
customers located in Asia, the Middle East and Latin America.

     Customer service  revenues are also generated by the Company's  Hospitality
segment.   The  Company's   service   offerings   include  system   integration,
installation, training, twenty-four hour help desk support, software maintenance
and various depot and on-site service  options.  Customer  service revenues were
$14.4 million for the three months ended June 30, 2005, an increase of 36 % from
the $10.6  million for the same period in 2004.  This increase was due primarily
to systems  integration and software  maintenance  revenues  associated with the
Company's  resort and spa  customers.  Additionally,  the Company  increased its
field service and support center revenue for its restaurant  customers by 15% or
$790,000.

     Contract revenues from the Company's  Government segment were $13.9 million
for the three months ended June 30, 2005, an increase of 8% when compared to the
$12.9 million  recorded in the same period in 2004.  The primary reason for this
growth  was  several  contracts   involving  the  Company's  image  and  digital
processing capabilities.

     Product  margins for the three  months  ended June 30, 2005 were 39.4%,  an
increase  from 32% for the three months ended June 30,  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.

     Customer  Service  margins  were 24.2% for the three  months ended June 30,
2005 compared to 14.1% for the same period in 2004.  This increase was primarily
due to service integration and software  maintenance revenue associated with the
Company's resort and spa products.

     Contract  margins were 6.7% for the three months ended June 30, 2005 versus
6.3% for the same  period in 2004.  This slight  improvement  was due to certain
favorable contract  modifications.  The most significant  components of contract
costs in 2005 and 2004 were labor and fringe  benefits.  For the  quarter  ended
June 30,  2005 labor and fringe  benefits  were $9.5  million or 74% of contract
costs  compared to $8.5 million or 70% of contract  costs for the same period in
2004.
<PAGE>

     Selling,  general and administrative  expenses are virtually all related to
the Company's Hospitality segment.  Selling, general and administrative expenses
for the three months ended June 30, 2005 were $7.3  million,  an increase of 40%
from the $5.2  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 resort and spa software products.

     Research  and  development  expenses  relate  primarily  to  the  Company's
Hospitality segment. Research and development expenses were $2.1 million for the
three  months  ended June 30,  2005,  an increase  of 62% from the $1.3  million
recorded in 2004.  The  increase was  primarily  attributable  to the  Company's
development  efforts in its resort and spa products.  The Company also increased
its investment in its traditional hardware and software restaurant products.

     Amortization of identifiable intangible assets was $244,000 for the quarter
ended June 30, 2005 and relates to the October 1, 2004 acquisition of Springer -
Miller Systems, Inc.

     Other  income,  net,  was $71,000 for the three  months ended June 30, 2005
compared  to  $187,000  for the same  period  in 2004.  Other  income  primarily
includes rental income and foreign currency gains and losses. The decline is due
to currency gains in 2004 that did not recur in 2005.

     Interest expense  represents  interest charged on the Company's  short-term
borrowing  requirements from banks and from long-term debt. Interest expense was
$65,000  for the three  months  ended June 30,  2005  compared to $46,000 in the
second quarter of 2004.  The increase is due to a higher average  borrowing rate
in 2005.

     For the three months ended June 30, 2005, the Company's  effective tax rate
was 38%, compared to 38.2% in 2004. The variance from the federal statutory rate
in 2005 and 2004 was primarily due to state income taxes.

Results of Operations --
Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004

     The Company reported revenues of $100 million for the six months ended June
30, 2005, an increase of 24% from the $80.8 million  reported for the six months
ended June 30, 2004.  The Company's net income for the six months ended June 30,
2005 was $3.7  million,  or $.38  diluted net income per share,  compared to net
income of $2 million and $.22 per diluted share for the same period in 2004.
<PAGE>

     Product revenues from the Company's  Hospitality segment were $43.9 million
for the six  months  ended  June 30,  2005,  an  increase  of 23% from the $35.7
million  recorded in 2004. The primary factor  contributing  to the increase was
software revenue from the Company's resort and spa customers.  Also contributing
to this growth was sales to McDonald's  which increased 15% or $2.2 million over
2004. An additional factor  contributing to the increase in product revenues was
a $2.4 million increase in sales to CKE Restaurants.

     Customer service  revenues are also generated by the Company's  Hospitality
segment.   The  Company's   service   offerings   include  system   integration,
installation, training, twenty-four hour help desk support, software maintenance
and various depot and on-site service  options.  Customer  service revenues were
$27.8  million for the six months ended June 30,  2005,  an increase of 33% from
the $20.9  million for the same period in 2004.  This increase was due primarily
to systems  integration and software  maintenance  revenues  associated with the
Company's resort and spa customers.

     Contract revenues from the Company's  Government segment were $28.2 million
for the six months ended June 30, 2005,  an increase of 16% when compared to the
$24.2 million  recorded in the same period in 2004.  Contributing to this growth
was a $1.3 million or 22% 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 directly
support  U.S.  Navy,  Air Force and Army  operations  as the  military  seeks to
convert its information technology communications facilities into contractor-run
operations  and  to  meet  new  requirements  with  contractor   support.   Also
contributing  to this  growth  was an  increase  in revenue  from the  Company's
Logistics Management Program.

     Product  margins  for the six months  ended June 30,  2005 were  39.1%,  an
increase  from 32% for the six months  ended June 30,  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.

     Customer  Service margins were 23.2% for the six months ended June 30, 2005
compared to 13.6% for the same period in 2004.  This  increase was primarily due
to service  integration  and software  maintenance  revenue  associated with the
Company's resort and spa products.

     Contract  margins  were 6.1% for the six months  ended June 30, 2005 versus
6.7 % for the same period in 2004. The decline in contract  margins is primarily
attributable  to a higher  than  anticipated  performance-based  award fee on an
imagery information technology contract in 2004. The most significant components
of contract costs in 2005 and 2004 were labor and fringe  benefits.  For the six
months ended June 30, 2005 labor and fringe  benefits  were $19.4 million or 73%
of contract  costs  compared to $17.5  million or 77% of contract  costs for the
same period in 2004.
<PAGE>

     Selling,  general and administrative  expenses are virtually all related to
the Company's Hospitality segment.  Selling, general and administrative expenses
for the six months  ended June 30, 2005 were $14.7  million,  an increase of 43%
from the $10.3  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 resort and spa software products and the Company's  traditional
hardware products.

     Research  and  development  expenses  relate  primarily  to  the  Company's
Hospitality segment. Research and development expenses were $4.4 million for the
six  months  ended  June 30,  2005,  an  increase  of 66% from the $2.6  million
recorded in 2004.  The  increase was  primarily  attributable  to the  Company's
development  efforts in its newly acquired resort and spa products.  The Company
also increased its investment in its traditional hardware and software products.

     Amortization  of  identifiable  intangible  assets was $490,000 for the six
months  ended June 30, 2005 and relates to the  October 1, 2004  acquisition  of
Springer-Miller Systems, Inc.

     Other  income,  net,  was  $304,000  for the six months ended June 30, 2005
compared  to  $398,000  for the same  period  in 2004.  Other  income  primarily
includes  rental income and foreign  currency gains and losses.  The decline was
due to lower currency gains in 2005.

     Interest expense  represents  interest charged on the Company's  short-term
borrowing  requirements from banks and from long-term debt. Interest expense was
$143,000 for the six months ended June 30, 2005 compared to $119,000 recorded in
2004. The increase was due to a greater average borrowing rate in 2005.

     For the six months ended June 30, 2005,  the  Company's  effective tax rate
was 38%, compared to 37.7% in 2004. The variance from the federal statutory rate
in 2005 and 2004 was primarily due to state 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 provided by continuing
operations  was $3.4 million for the six months ended June 30, 2005  compared to
$9.7 million for 2004. In 2005,  cash flow was generated from operating  profits
and the timing of vendor  payments for material  purchases.  This was  partially
offset by an increase in accounts  receivable and inventory.  In 2004, cash flow
benefited  from a reduction in accounts  receivable,  operating  profits for the
period and timing of vendor payments.
<PAGE>

     Cash used in investing activities was $1.3 million for the six months ended
June 30, 2005 and 2004.  In 2005,  capital  expenditures  were $868,000 and were
principally  for   manufacturing   and  research  and   development   equipment.
Capitalized  software  costs  relating to software  development  of  Hospitality
segment  products  were  $411,000 in 2005. In 2004,  capital  expenditures  were
$952,000  and  were  primarily  for  manufacturing   equipment  and  information
technology  equipment and software for internal use.  Capitalized software costs
relating to software  development of Hospitality  segment products were $378,000
in 2004.

     Cash used in financing activities was $6.7 million for the six months ended
June 30,  2005 versus $6.7  million  for the same period in 2004.  In 2005,  the
Company reduced its short-term bank borrowings by $8.3 million and received $1.4
million from the exercise of employee  stock  options.  During 2004, the Company
reduced its short-term bank borrowings by $7 million and received  $313,000 from
the exercise of employee stock options.

     The Company has an aggregate of  $20,000,000  in bank lines of credit.  One
line totaling  $12,500,000  bears  interest at the bank  borrowing rate (5.4% at
June 30, 2005) and is subject to loan covenants including a debt to tangible net
worth ratio of 1.4 to 1; a minimum working  capital  requirement of at least $25
million;  and a debt  coverage  ratio  of 4 to 1. The  total  amount  of  credit
available  under  this  facility  at a  given  time is  based  on (a) 80% of the
Company's  accounts  receivable  under 91 days  outstanding  attributable to the
Company's Hospitality segment and (b) 40% of the Company's inventory,  excluding
work in  process.  This line  expires  on April 30,  2006.  The  second  line of
$7,500,000 allows the Company,  at its option, to borrow funds at the LIBOR rate
plus the applicable interest rate spread or at the bank's prime lending rate (6%
at June 30, 2005).  This facility  contains  certain loan covenants  including a
leverage  ratio of not greater than 4 to 1 and a fixed charge  coverage ratio of
not less than 4 to 1. This line  expires on  October  30,  2006.  Both lines are
collateralized by certain accounts receivable and inventory.  The Company was in
compliance  with all loan  covenants on June 30, 2005.  At June 30, 2005,  there
were borrowings  under these lines of $1,900,000 and an aggregate of $18,100,000
was available under these lines.

     During  fiscal  year  2005,  the  Company   anticipates  that  its  capital
requirements  will be  approximately  $2 million.  The Company  does not usually
enter into long term contracts with its major Hospitality segment customers. The
Company  commits  to  purchasing   inventory  from  its  suppliers  based  on  a
combination  of internal  forecasts and the actual orders from  customers.  This
process, along with good relations with suppliers, minimizes the working capital
investment  required  by the  Company.  Although  the  Company  lists  two major
customers,  McDonald's  and Yum!  Brands,  it sells to  hundreds  of  individual
franchisees of these corporations, each of which is individually responsible for
its own debts. These broadly made sales  substantially  reduce the impact on the
Company's  liquidity  if one  individual  franchisee  reduces  the volume of its
purchases  from the  Company in a given  year.  The  Company,  based on internal
forecasts,  believes  its  existing  cash,  line of  credit  facilities  and its
anticipated operating cash flow will be sufficient to meet its cash requirements
through at least the next twelve months.  However,  the Company may be required,
or could elect,  to seek  additional  funding prior to that time.  The Company's
<PAGE>

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

Revenue Recognition Policy

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

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

Accounts Receivable

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

Inventories

     The Company's  inventories  are valued at the lower of cost or market.  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  feasibility are capitalized and
amortized when the product is available for general release to customers.
<PAGE>

Goodwill

     Following  Financial  Accounting  Standards  Board issuance of Statement of
Financial  Accounting  Standards No. 142 "Goodwill and Other Intangible Assets",
(SFAS 142),  the Company  tests all goodwill for  impairment  annually,  or more
frequently if circumstances indicate potential impairment,  through a comparison
of fair value to its carrying  amount.  The Company has elected to annually test
for impairment at December 31.

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  streams  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.

Factors that could affect future results

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, 2004, 2003 and 2002,  aggregate sales to our top
two Hospitality segment customers,  McDonald's and Yum! Brands, amounted to 51%,
50% and 51%, respectively,  of total revenues. For the six months ended June 30,
2005 and 2004, sales to those customers were 41% and 51%, respectively, of total
revenues.  Most of the Company's  customers are not obligated to provide us with
any minimum  level of future  purchases  or with  binding  forecasts  of product
purchases for any future period. In addition, 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
<PAGE>

products. If any of our competitors were to introduce superior software products
at competitive  prices,  or if our software  products no longer met the needs of
the  marketplace  due  to  technological   developments  and  emerging  industry
standards,  our software  products may no longer retain any  significant  market
share.  If this were to occur,  we could be required to record a charge  against
capitalized software costs, which amount to $4.1 million as of June 30, 2005.

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

     For the fiscal years ended  December 31,  2004,  2003 and 2002,  we derived
71%,  70% and 72%,  respectively,  of our total  revenues  from the  Hospitality
industry, primarily the quick service restaurant marketplace. For the six months
ended June 30, 2005 and 2004,  revenues from the  Hospitality  industry were 72%
and  70%,  respectively,  of  total  revenues.   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 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,  2004,  2003 and 2002,  we derived
29%, 30% and 28%, respectively,  of our total revenues from contracts to provide
technical services to U.S. Government agencies and defense contractors.  For the
six months ended June 30, 2005 and 2004,  revenues from such  contracts were 28%
and 30%,  respectively,  of  total  revenues.  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  propor-tionate  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.
<PAGE>

     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  61% of the revenue that we derived
from  Government  contracts  for the six months  ended  June 30,  2005 came from
fixed-price or time-and-material  contracts.  The balance of the revenue that we
derived from Government contracts in the first six months of 2005 primarily came
from cost-plus  fixed fee  contracts.  Most of our contracts are for one-year to
five-year terms.

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

     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.
<PAGE>

     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,
Boeing 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.

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,  2004,  2003 and 2002,  our net
revenues   from  sales   outside  the  United  States  were  9%,  11%  and  11%,
respectively, of the Company's total revenues. For the six months ended June 30,
2005 and 2004, sales outside the United States were 10% and 8%, respectively, of
the 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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

INFLATION

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

INTEREST RATES

     As of June 30, 2005, the Company has $2 million in variable  long-term debt
and $2 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.
<PAGE>

FOREIGN CURRENCY

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

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

     As of June 30,  2005,  the  Company  carried out an  evaluation,  under the
supervision and with the  participation of the Company's  management,  including
the Company's  President  and Chief  Executive  Officer and the Chief  Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls and procedures,  as defined in Exchange Act Rule 15d-14(c).
Based upon the evaluation,  the Company's  President and Chief Executive Officer
and the Chief Financial Officer concluded that the Company's disclosure controls
and  procedures  are  effective in enabling  the Company to  identify,  process,
record and report information  required to be included in the Company's periodic
SEC filings within the required time period.

(b) Changes in Internal Controls.

     There was no  significant  change in the Company's  internal  controls over
financial reporting, as defined in Rule 13a-15(f) of the Exchange Act during the
quarter  ended June 30,  2005 that has  materially  affected,  or is  reasonably
likely to materially affect, such internal controls over financial reporting.



<PAGE>


Item 6.  Exhibits and Reports on Form 8-K




                                List of Exhibits




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


     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.






Reports on Form 8-K


     On April 27, 2005,  PAR Technology  Corporation  furnished a report on Form
8-K pursuant to Item 2.02  (Results of Operations  and  Financial  Condition) of
that Form relating to its financial  information for the quarter ended March 31,
2005, as presented in a press release of April 27, 2005 and furnished thereto as
an exhibit.

<PAGE>

                                   SIGNATURES




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






                                        PAR TECHNOLOGY CORPORATION
                                        --------------------------
                                                (Registrant)









Date:  August 12, 2005



                                        RONALD J. CASCIANO
                                        -------------------------------
                                        Ronald J. Casciano
                                        Vice President, Chief Financial Officer
                                        and Treasurer


<PAGE>
                                  Exhibit Index




                                                                     Sequential
                                                                        Page
Exhibit                                                                Number
-------                                                                ------


31.1           Certification of Chairman of the Board                    E-1
               and Chief Executive Officer Pursuant
               to Section 302 of the Sarbanes-Oxley Act
               of 2002.

31.2           Certification of Vice President, Chief                    E-2
               Financial Officer and Treasurer Pursuant
               to Section 302 of the Sarbanes-Oxley Act
               of 2002.

32.1           Certification of Chairman of the Board                    E-3
               and Chief Executive Officer and
               Vice President, Chief Financial Officer
               and Treasurer Pursuant to 18 U.S.C.
               Section 1350, as Adopted Pursuant to
               Section 906 of the Sarbanes-Oxley Act of 2002.

<PAGE>
                                  Exhibit 31.1

                           PAR TECHNOLOGY CORPORATION
                         STATEMENT OF EXECUTIVE OFFICER

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

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

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

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

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and  15d-15(e)),  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.   [Reserved]

     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 and that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting.

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: August 12, 2005
                                        John W. Sammon, Jr.
                                        ----------------------------------------
                                        John W. Sammon, Jr.
                                        Chairman of the Board and
                                        Chief Executive Officer


                                       E-1
<PAGE>

                                  Exhibit 31.2

                           PAR TECHNOLOGY CORPORATION
                         STATEMENT OF EXECUTIVE OFFICER

I, Ronald J. Casciano, certify that:

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

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

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

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and  15d-15(e)),  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.   [Reserved]

     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 and that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting.

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: August 12, 2005
                                            Ronald J. Casciano
                                            ------------------------------------
                                            Ronald J. Casciano
                                            Vice President,
                                            Chief Financial Officer & Treasurer




                                       E-2
<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 Quarterly Report of PAR Technology  Corporation (the
"Company")  on Form 10-Q for the  quarter  ended June 30, 2005 as filed with the
Securities and Exchange  Commission on the date hereof (the "Report"),  we, John
W. Sammon,  Jr. and Ronald J. Casciano,  Chairman of the Board & Chief Executive
Officer and Vice President,  Chief Financial Officer & Treasurer of the Company,
certify  pursuant to 18 U.S.C.  ss. 1350, as adopted  pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to the best of our knowledge:


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

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






John W. Sammon, Jr.
-------------------------------
John W. Sammon, Jr.
Chairman of the Board & Chief Executive Officer
August 12, 2005


Ronald J. Casciano
--------------------------------
Ronald J. Casciano
Vice President, Chief Financial Officer & Treasurer
August 12, 2005









                                       E-3