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, 2006. 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 a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
(Check one):  Large Accelerated Filer [  ] Accelerated Filer [X]
Non-Accelerated Filer [  ]

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

     The number of shares  outstanding of registrant's  common stock, as of July
31, 2006 - 14,181,082 shares.
<PAGE>



                           PAR TECHNOLOGY CORPORATION


                                TABLE OF CONTENTS
                                    FORM 10-Q


                                     PART I
                              FINANCIAL INFORMATION


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

      Item 1.              Financial Statements (unaudited)
                           -  Consolidated Statements of Income for
                              the three and six months ended
                              June 30, 2006 and 2005

                           -  Consolidated Statements of Comprehensive
                              Income for the three and six months
                              ended June 30, 2006 and 2005

                           -  Consolidated Balance Sheets at
                              June 30, 2006 and December 31, 2005

                           -  Consolidated Statements of Cash Flows
                              for the six months ended June 30, 2006 and 2005

                           -  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 1A.             Risk Factors

      Item 4.              Submission of Matters to a Vote of Security Holders

      Item 6.              Exhibits and Reports on Form 8-K

      Signatures

      Exhibit Index


<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                   PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share amounts)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                         For the three months     For the six months
                                                            ended June 30,           ended June 30,
                                                      -----------------------   ----------------------
                                                         2006          2005       2006         2005
                                                      ---------    ----------   ---------    ---------
<S>                                                   <C>          <C>          <C>          <C>
Net revenues:
     Product ......................................   $  22,710    $  22,930    $  45,730    $  43,931
     Service ......................................      14,886       14,416       28,631       27,818
     Contract .....................................      15,747       13,874       31,579       28,228
                                                      ---------    ---------    ---------    ---------
                                                         53,343       51,220      105,940       99,977
                                                      ---------    ---------    ---------    ---------
Costs of sales:
     Product ......................................      13,074       13,893       25,872       26,769
     Service ......................................      10,840       10,923       21,550       21,370
     Contract .....................................      14,518       12,944       29,244       26,509
                                                      ---------    ---------    ---------    ---------
                                                         38,432       37,760       76,666       74,648
                                                      ---------    ---------    ---------    ---------
           Gross margin ...........................      14,911       13,460       29,274       25,329
                                                      ---------    ---------    ---------    ---------
Operating expenses:
     Selling, general and administrative ..........       8,194        7,323       16,269       14,716
     Research and development .....................       2,836        2,107        5,735        4,385
     Amortization of identifiable intangible assets         308          244          615          490
                                                      ---------    ---------    ---------    ---------
                                                         11,338        9,674       22,619       19,591
                                                      ---------    ---------    ---------    ---------

Operating income ..................................       3,573        3,786        6,655        5,738
Other income, net .................................         218           71          375          304
Interest expense ..................................        (167)         (65)        (252)        (143)
                                                      ---------    ---------    ---------    ---------
Income before provision for income taxes ..........       3,624        3,792        6,778        5,899
Provision for income taxes ........................      (1,286)      (1,441)      (2,428)      (2,242)
                                                      ---------    ---------    ---------    ---------
Net income ........................................   $   2,338    $   2,351    $   4,350    $   3,657
                                                      =========    =========    =========    =========
Earnings per share
     Basic ........................................   $     .16    $     .17    $     .31    $     .27
     Diluted ......................................   $     .16    $     .16    $     .29    $     .25

Weighted average shares outstanding
     Basic ........................................      14,173       13,674       14,162       13,553
                                                      =========    =========    =========    =========
     Diluted ......................................      14,776       14,670       14,802       14,551
                                                      =========    =========    =========    =========
</TABLE>

See notes to unaudited interim consolidated financial statements


<PAGE>



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

<TABLE>
<CAPTION>

                                                         For the three months     For the six months
                                                            ended June 30,           ended June 30,
                                                      -----------------------   ----------------------
                                                         2006          2005       2006         2005
                                                      ---------    ----------   ---------    ---------
<S>                                                   <C>          <C>          <C>          <C>
Net income ........................................   $ 2,338      $   2,351    $ 4,350      $ 3,657
Other comprehensive income (loss), net of tax:
     Foreign currency translation adjustments .....        50           (228)       121         (365)
                                                      -------      ---------    -------      -------

Comprehensive income .............................    $ 2,388      $   2,123    $ 4,471      $ 3,292
                                                      =======      =========    =======      =======



</TABLE>



























See notes to unaudited interim consolidated financial statements


<PAGE>


                   PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                 June 30,   December 31,
                                                                   2006         2005
                                                               ----------   ----------
<S>                                                            <C>          <C>
Assets
Current assets:
       Cash and cash equivalents ...........................   $   2,068    $   4,982
       Accounts receivable-net .............................      50,243       40,781
       Inventories-net .....................................      32,199       29,562
       Income tax refunds ..................................         904          879
       Deferred income taxes ...............................       4,356        5,690
       Other current assets ................................       2,848        2,598
                                                               ---------    ---------
              Total current assets .........................      92,618       84,492
Property, plant and equipment - net ........................       7,931        8,044
Goodwill ...................................................      20,854       20,622
Intangible assets - net ....................................       9,205        9,904
Other assets ...............................................       2,538        2,087
                                                               ---------    ---------
                                                               $ 133,146    $ 125,149
                                                               =========    =========

Liabilities and Shareholders' Equity
Current liabilities:
       Current portion of long-term debt ...................   $      77    $      76
       Borrowings under lines of credit ....................       8,088        3,500
       Accounts payable ....................................      12,472       12,703
       Accrued salaries and benefits .......................       8,861        9,725
       Accrued expenses ....................................       2,205        2,352
       Customer deposits ...................................       3,235        3,973
       Deferred service revenue ............................      10,749       11,332
                                                               ---------    ---------
              Total current liabilities ....................      45,687       43,661
                                                               ---------    ---------
Long-term debt .............................................       1,909        1,948
                                                               ---------    ---------
Deferred income taxes ......................................         695          201
                                                               ---------    ---------
Other long-term liabilities ................................       1,429          847
                                                               ---------    ---------
Commitments and contingent liabilities Shareholders' Equity:
       Preferred stock, $.02 par value,
           1,000,000 shares authorized .....................        --           --
       Common stock, $.02 par value,
           29,000,000 shares authorized;
           15,959,386 and 15,914,958 shares issued;
           14,181,082 and 14,136,654 outstanding ...........         319          318
       Capital in excess of par value ......................      37,736       37,271
       Retained earnings ...................................      51,789       47,442
       Accumulated other comprehensive loss ................        (490)        (611)
       Treasury stock, at cost, 1,778,304 shares ...........      (5,928)      (5,928)
                                                               ---------    ---------
              Total shareholders' equity ...................      83,426       78,492
                                                               ---------    ---------
                                                               $ 133,146    $ 125,149
                                                               =========    =========
</TABLE>

See notes to unaudited interim consolidated financial statements


<PAGE>



                   PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                      For the six months
                                                                        ended June 30,
                                                                     -------------------
                                                                        2006      2005
                                                                     --------   --------
<S>                                                                  <C>        <C>
Cash flows from operating activities:
    Net income ...................................................   $ 4,350    $ 3,657
    Adjustments to reconcile net income to net cash
 provided by (used in) operating activities:
         Depreciation and amortization ...........................     1,914      1,834
         Provision for bad debts .................................       286        515
         Provision for obsolete inventory ........................       622      2,077
         Equity based compensation ...............................       138        --
         Tax benefit of stock option exercises ...................       --       2,476
         Deferred income tax .....................................     1,682     (1,516)
         Changes in operating assets and liabilities:
             Accounts receivable .................................    (9,748)    (4,572)
             Inventories .........................................    (3,259)    (3,293)
             Income tax refunds ..................................       (25)      --
             Other current assets ................................      (250)      (109)
             Other assets ........................................      (451)      (478)
             Accounts payable ....................................      (231)     1,829
             Accrued salaries and benefits .......................      (864)       (90)
             Accrued expenses ....................................      (147)       433
             Customer deposits ...................................      (738)    (1,015)
             Deferred service revenue ............................      (583)     1,026
             Other long-term liabilities .........................       582        530
                                                                     -------    -------
               Net cash provided by (used in) operating activities    (6,722)     3,304
                                                                     -------    -------
Cash flows from investing activities:
    Capital expenditures .........................................      (867)      (868)
    Capitalization of software costs .............................      (234)      (411)
                                                                     -------    -------
               Net cash used in investing activities .............    (1,101)    (1,279)
                                                                     -------    -------
Cash flows from financing activities:
    Net borrowings (payments) under line-of-credit agreements ....     4,588     (8,346)
    Payments of long-term debt ...................................       (38)       (34)
    Proceeds from the exercise of stock options ..................       159      1,403
    Tax benefit of stock option exercises ........................       169        --
    Cash dividend in lieu of fractional shares on stock split ....        (4)       --
                                                                     -------    -------
               Net cash provided by (used in) financing activities     4,874     (6,977)
                                                                     -------    -------
Effect of exchange rate changes on cash and cash equivalents .....        35       (699)
                                                                     -------    -------
Net decrease in cash and cash equivalents ........................    (2,914)    (5,651)
Cash and cash equivalents at beginning of period .................     4,982      8,696
                                                                     -------    -------
Cash and cash equivalents at end of period .......................   $ 2,068    $ 3,045
                                                                     =======    =======

Supplemental disclosures of cash flow information:

Cash paid during the period for:
    Interest .....................................................   $   230    $   171
    Income taxes, net of refunds .................................       548        672

See notes to unaudited interim consolidated financial statements

</TABLE>

<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 U.S. generally accepted  accounting  principles for interim
     financial  statements and with the instructions to Form 10-Q and Regulation
     S-X pertaining to interim financial statements.  Accordingly, these interim
     financial  statements do not include all information and footnotes required
     by U.S.  generally  accepted  accounting  principles for complete financial
     statements. In the opinion of the Company such unaudited statements include
     all adjustments (which comprise only normal recurring  accruals)  necessary
     for a fair  presentation  of the results for such  periods.  The results of
     operations  for the  three  and six  months  ended  June  30,  2006 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, 2005 included in the
     Company's  December 31, 2005 Annual Report to the  Securities  and Exchange
     Commission on Form 10-K.

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

2.   On October 4, 2005, the Company and its wholly-owned  Canadian  subsidiary,
     PixelPoint, ULC (the "Canadian Subsidiary"), completed their acquisition of
     PixelPoint Technologies, Inc. ("PixelPoint") pursuant to which the Canadian
     Subsidiary acquired all of the stock of PixelPoint.  The purchase price was
     $7.5 million and consisted of $542,000 in Company  stock (27,210  shares of
     PAR  Technology   Corporation  common  stock  issued  out  of  treasury)  a
     promissory  note for $671,000 and the  remainder in cash.  The Company also
     incurred  $344,000 in direct  acquisition  costs relating to this purchase.
     The purchase price is also subject to price contingencies based upon future
     revenue performance against certain established targets.  Based in suburban
     Toronto,  Ontario,  PixelPoint Technologies,  Inc. is a premier supplier to
     the  hospitality  industry with over 5,000  installations  in  full-service
     restaurants around the globe.

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

<PAGE>

     On an unaudited  proforma basis,  assuming the completed  acquisitions  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 months   For the six months
                                   ended June 30, 2005    ended June 30, 2005
                                   -------------------    -------------------

     Net revenues                     $    52,948            $    103,268
     Net income                       $     2,506            $      3,899

     Earnings per share:
         Basic                        $       .18            $        .29
         Diluted                      $       .17            $        .27


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

            Finished goods          $      9,090          $      7,217
            Work in process                1,614                 1,874
            Component parts                4,642                 4,693
            Service parts                 16,853                15,778
                                    ------------          ------------
                                    $     32,199          $     29,562
                                    ============          ============

     At June 30, 2006 and December 31, 2005,  the Company had recorded  reserves
     for shrinkage,  excess and obsolete inventory of $4,152,000 and $4,189,000,
     respectively.

4.   Effective  January 1, 2006, the Company adopted the fair value  recognition
     provisions  of  Statement  of  Financial   Accounting  Standards  No.  123R
     Share-Based  Payment  (SFAS  123R) on a modified  prospective  basis.  This
     standard  requires  the Company to measure  the cost of  employee  services
     received in exchange  for equity  awards based on the grant date fair value
     of the awards.  The cost is  recognized  as  compensation  expense over the
     vesting  period of the  awards.  Total  compensation  expense  included  in
     operating  expenses  for the three and six months  ended June 30,  2006 was
     $95,000 and $138,000, respectively.

     As of June 30, 2006, there were 992,431 stock options outstanding.  At June
     30,  2006,  the  unrecognized  compensation  expense  related to non vested
     option  awards was $362,000 (net of estimated  forfeitures).  There were no
     options  granted or forfeited  during the first six months of 2006.  Option
     grants   issued  prior  to  January  1,  2006  have  been  valued  using  a
     Black-Scholes option valuation model.
<PAGE>
     Prior to adopting SFAS 123R on January 1, 2006, the Company's  equity based
     employee  compensation  awards were accounted for under the recognition and
     measurement  principles of APB Opinion No. 25,  Accounting for Stock Issued
     to  Employees,  and related  interpretations.  For the three and six months
     ended June 30, 2005, no equity option based employee  compensation  cost is
     reflected in net income,  as all options  granted under the Company's stock
     option  plans had an exercise  price equal to the  underlying  common stock
     price on the date of grant.  The following table  illustrates the effect on
     net income and  earnings  per share as if the  Company had applied the fair
     value  recognition  provisions  of  SFAS  123R  to  equity  based  employee
     compensation (in thousands, except per share data):

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

  Net income                                 $      2,351         $     3,657
  Compensation expense, net of tax                   (103)               (179)
                                             ------------         -----------
  Proforma net income                        $      2,248         $     3,478
                                             ============         ===========

Earnings per share:
  As reported    --    Basic                 $        .17         $       .27
                 --    Diluted               $        .16         $       .25

  Proforma       --    Basic                 $        .16         $       .26
                 --    Diluted               $        .15         $       .24


     In 2005,  the  Company's  1995 Stock Option plan  expired.  The 2005 Equity
     Incentive  Plan was  approved by the  shareholders  at the  Company's  2006
     Annual Meeting.  The Company has reserved  1,000,000  shares under its 2005
     Equity Incentive Plan. Stock options under this Plan may be incentive stock
     options  or  nonqualified  stock  options.   The  Plan  also  provides  for
     restricted  stock  grants.  To date,  there have been no grants  under this
     Plan.  Stock  options are  nontransferable  other than upon  death.  Option
     grants  generally vest over a three to five year period after the grant and
     typically expire ten years after the date of the grant.
<PAGE>

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

Outstanding at December 31, 2005 ...........     1,037    $   4.03      $15,008
                                                                        =======
    Granted ................................        --         --
    Exercised ..............................       (45)       3.57      $   661
    Forfeited ..............................        --         --
                                               -------    -------
Outstanding at June 30, 2006 ...............       992    $   4.05      $ 9,041
                                               =======    ========      =======

Vested and expected to vest at June 30, 2006       986    $   3.97      $ 8,076
                                               =======    ========      =======

Total shares exercisable as of June 30, 2006       699    $   3.06      $ 6,785
                                               =======    ========      =======


     Stock options outstanding at June 30, 2006 are summarized as follows:

<TABLE>
<CAPTION>


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

       <S>                           <C>                    <C>                        <C>
       $1.25    -     $4.00              626                4.5    Years               $    2.32
       $4.01    -     $7.25              296                8.2    Years               $    5.94
                     $11.40               70                8.8    Years               $   11.40
       --------------------          -------                ------------               ---------

       $1.25    -    $11.40              992                5.9    Years               $    4.05
       ====================          =======                ============               =========
</TABLE>


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.


<PAGE>


     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,
                                                            --------------------
                                                                2006        2005
                                                              -------    -------
Net income ...............................................    $ 2,338    $ 2,351
                                                              =======    =======
Basic:
     Shares outstanding at beginning of period ...........     14,158     13,478
     Weighted average shares issued during the period ....         15        196
                                                              -------    -------
     Weighted average common shares, basic ...............     14,173     13,674
                                                              =======    =======
     Earnings per common share, basic ....................    $   .16    $   .17
                                                              =======    =======
Diluted:
     Weighted average common shares, basic ...............     14,173     13,674
     Dilutive impact of stock options ....................        603        996
                                                              -------    -------
     Weighted average common shares, diluted .............     14,776     14,670
                                                              =======    =======
     Earnings per common share, diluted ..................    $   .16    $   .16
                                                              =======    =======


                                                            For the three months
                                                                ended June 30,
                                                            --------------------
                                                                2006        2005
                                                              -------    -------
Net income ...............................................    $ 4,350    $ 3,657
                                                              =======    =======
Basic:
     Shares outstanding at beginning of period ...........     14,137     13,403
     Weighted average shares issued during the period ....         25        150
                                                              -------    -------
     Weighted average common shares, basic ...............     14,162     13,553
                                                              =======    =======
     Earnings per common share, basic ....................    $   .31    $   .27
                                                              =======    =======
Diluted:
     Weighted average common shares, basic ...............     14,162     13,553
     Dilutive impact of stock options ....................        640        998
                                                              -------    -------
     Weighted average common shares, diluted .............     14,802     14,551
                                                              =======    =======
     Earnings per common share, diluted ..................    $   .29    $   .25
                                                              =======    =======


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

7.   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  communication and
     test  sites,  and  for  planning,   executing  and  evaluating  experiments
     involving new or advanced radar systems.  It is also involved in developing
     technology to track mobile  chassis.  Intersegment  sales and transfers are
     not significant.

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

                                                  (in thousands)
                                   For the three months      For the six months
                                      ended June 30,           ended June 30,
                                 ----------------------    ----------------------
                                    2006         2005         2006         2005
                                 ---------    ---------    ---------   ----------
<S>                              <C>          <C>          <C>          <C>
Revenues:
     Hospitality .............   $  37,596    $  37,346    $  74,361    $  71,749
     Government ..............      15,747       13,874       31,579       28,228
                                 ---------    ---------    ---------    ---------
           Total .............   $  53,343    $  51,220    $ 105,940    $  99,977
                                 =========    =========    =========    =========
Operating income:
     Hospitality .............   $   2,418    $   2,899    $   4,434    $   4,085
     Government ..............       1,155          887        2,221        1,653
                                 ---------    ---------    ---------    ---------
                                     3,573        3,786        6,655        5,738
Other income, net ............         218           71          375          304
Interest expense .............        (167)         (65)        (252)        (143)
                                 ---------    ---------    ---------    ---------
Income before provision
  for income taxes ...........   $   3,624    $   3,792    $   6,778    $   5,899
                                 =========    =========    =========    =========


Depreciation and amortization:
     Hospitality .............   $     797    $     796    $   1,696    $   1,601
     Government ..............          10           22           24           42
     Other ...................         122           96          194          191
                                 ---------    ---------    ---------    ---------
           Total .............   $     929    $     914    $   1,914    $   1,834
                                 =========    =========    =========    =========
Capital expenditures:
     Hospitality .............   $     300    $     485    $     688    $     721
     Government ..............        --             30         --             30
     Other ...................         119           41          179          117
                                 ---------    ---------    ---------    ---------
           Total .............   $     419    $     556    $     867    $     868
                                 =========    =========    =========    =========

Revenues by geographic area:
     United States ...........   $  45,881    $  45,864    $  93,171    $  89,969
     Other Countries .........       7,462        5,356       12,769       10,008
                                 ---------    ---------    ---------    ---------
           Total .............   $  53,343    $  51,220    $ 105,940    $  99,977
                                 =========    =========    =========    =========
</TABLE>


<PAGE>


     The following table represents identifiable assets by business segment:

                                                            (in thousands)
                                                      June 30,      December 31,
                                                        2006              2005
                                                     --------          ---------
Identifiable assets:
    Hospitality ..........................           $114,881           $106,529
    Government ...........................             11,418              9,015
    Other ................................              6,847              9,605
                                                     --------           --------
Total ....................................           $133,146           $125,149
                                                     ========           ========


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

                                                          (in thousands)
                                                     June 30,       December 31,
                                                      2006                2005
                                                    ---------          ---------

United States ..........................            $125,083            $119,627
Other Countries ........................               8,063               5,522
                                                    --------            --------
       Total ...........................            $133,146            $125,149
                                                    ========            ========

     The following table represents Goodwill by business segment:

                                                           (in thousands)
                                                     June 30,       December 31,
                                                      2006                2005
                                                    ---------          ---------

    Hospitality ........................             $20,318             $20,086
    Government .........................                 536                 536
                                                     -------             -------
Total ..................................             $20,854             $20,622
                                                     =======             =======

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

Restaurant Segment:
     McDonald's Corporation .......      27%        29%        26%        29%
     YUM! Brands, Inc. ............      12%        13%        11%        12%
Government Segment:
     Department of Defense ........      30%        27%        30%        28%
All Others ........................      31%        31%        33%        31%
                                        ---        ---        ---        ---
                                        100%       100%       100%       100%
                                        ===        ===        ===        ===


<PAGE>


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

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

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

Overview

     PAR is a  hospitality  technology  provider  that  focuses upon the design,
manufacturer and marketing of technology systems.  PAR is also a provider to the
Federal  Government,  and its agencies,  of Information  Technology  engineering
services and applied technology.  The primary markets for the Company's products
and services are:

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

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

     The  Company's  hospitality  technology  products  are used in a variety of
applications by numerous segment customers. The Company faces competition in all
of its markets (restaurants,  hotels,  theaters, etc.) and competes primarily on
the  basis  of  product  design/features,  product  quality/reliability,  price,
customer service and delivery  capability.  Recently,  there has been a trend in
the hospitality marketplace for end-users to consolidate their lists of approved
vendors to companies  that have global  reach,  can exceed  quality and delivery
standards,  have multiple product offerings, R&D capability,  and be competitive
with their pricing.  PAR's global presence as a hospitality  technology provider
is an  important  competitive  advantage  as it allows  the  Company  to provide
cutting  edge  technology  and  service  products,  matched  with a  significant
delivery capability, globally to its multinational customers such as McDonald's,
Yum!  Brands and the Mandarin  Oriental  Hotel Group.  During 2005,  the Company
acquired PixelPoint Technologies of Toronto, Ontario, Canada. PixelPoint creates
software specifically for the table service (sit down) segment of the restaurant
industry and PAR views this business as a natural progression for the Company as
it strives to be the dominant supplier of hospitality  technology across several
vertical markets in the hospitality segment.  During the first half of 2006, the
Company  competed for and won the Corner  Bakery Cafe account by CBC  Restaurant
Corp. CBC Restaurant selected the Company's  integrated  hospitality  management
technology  solution for its  restaurant  operations  specifying  the PixelPoint
software  application  suite  operating on the Company's  VIGO POS(TM)  hardware
terminals  for their  nearly 100  restaurants.  The  Company  also  announced  a
contract with the Hamilton  Island resort in Australia for its resort  software.
Additionally,  the Company became an approved supplier of integrated  restaurant
technology  solutions  to more than 11,000  Burger King  restaurants  around the
world.

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

     PAR operates  two  wholly-owned  subsidiaries  in the  Government  business
segment, PAR Government Systems Corporation (PGSC) and Rome Research Corporation
(RRC).  As  a  long-standing   Government  contractor,   PAR  provides  software
developers  to work on advanced  technology  systems for the U.S.  Department of
Defense  and  other  U.S.  Governmental  agencies.  Additionally,  PAR  provides
information  technology and  communications  support  services to the U.S. Navy,
U.S. Air Force and U.S. Army. The Company's obligation under its contracts is to
provide  labor hours to conduct  research or to staff  facilities  with no other
deliverables or performance  obligations.  PAR focuses its computer-based system
design  services on providing  high  quality  technical  services,  ranging from
experimental studies to advanced operational systems,  within a variety of areas
of research,  including radar, image and signal processing,  logistic management
systems,  and geospatial  services and products.  PAR's  Government  engineering
service business  provides  management and engineering  services that consist of
facilities  operation  and  management.  In December  2005,  PAR acquired  C(3)I
Associates,   a  government  technology  services  business  that  focuses  upon
developing  technologies  that  enhance the command,  control and  communication
requirements of the U.S. military.
<PAGE>

     In 2005 PAR was awarded several new contracts with the U.S. Navy, including
one for the operation of a Navy I/T facility in Italy,  several  awards with the
General Services  Administration and the International  Broadcast Bureau. In the
first half of 2006,  the Company was awarded a $3.8  million  contract  with the
Government's  Defense  Finance  and  Accounting  Service to provide  Information
Technology  instruction  and helpdesk  services.  The Company  will  continue to
execute  its  strategy  of  leveraging  its  core  technical   capabilities  and
performance  into related  technical  areas and an expanding  customer base. The
Company will seek to accelerate  this growth through  strategic  acquisitions of
businesses that broaden the Company's technology and/or business base.

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

     o    Developing  integrated  solutions  o  Continuing  to grow  our  global
          presence in growth markets

     o    Focusing on customer needs

     o    Encouraging entrepreneurial corporate attitude and spirit

     o    Fostering a mindset of controlling cost

     o    Pursuing strategic acquisitions

Summary

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

     The  following  table sets forth the  Company's  net revenues by reportable
segment (in thousands):

                             For the three months  For the six months
                                 ended June 30,       ended June 30,
                             -------------------   -------------------
                                2006       2005       2006       2005
                             --------   --------   --------   --------
Revenues:
     Hospitality .........   $ 37,596   $ 37,346   $ 74,361   $ 71,749
     Government ..........     15,747     13,874     31,579     28,228
                             --------   --------   --------   --------
Total consolidated revenue   $ 53,343   $ 51,220   $105,940   $ 99,977
                             ========   ========   ========   ========
<PAGE>


     The following discussion and analysis highlights items having a significant
effect on operations  during the three and six months ended June 30, 2006.  This
discussion may not be indicative of future operations or earnings.  It should be
read in conjunction with the audited annual  consolidated  financial  statements
and notes thereto and other  financial and statistical  information  included in
this report.

Results of  Operations  -- Three  Months  Ended June 30, 2006  Compared to Three
Months Ended June 30, 2005

     The Company  reported  revenues of $53.3 million for the quarter ended June
30,  2006,  an increase of 4% from the $51.2  million  reported  for the quarter
ended June 30, 2005.  The  Company's  net income for the quarter  ended June 30,
2006 was $2.3  million,  or $.16  diluted net income per share,  compared to net
income of $2.4 million and $.16 per diluted share for the same period in 2005.

     Product revenues from the Company's  Hospitality segment were $22.7 million
for the quarter  ended June 30, 2006,  a decrease of 1 % from the $22.9  million
recorded in 2005.  This  decrease was due to a $2.2 million  decline in domestic
product sales  primarily due to lower hardware  sales to Hospitality  customers.
This drop in domestic  revenue was partially  offset by a $2 million increase in
international  product sales. This increase was the result of growth in sales to
the Company's restaurant customers in Europe and Asia.

     Customer service  revenues are also generated by the Company's  Hospitality
segment.   The  Company's   service   offerings   include  system   integration,
installation, training, twenty-four hour help desk support and various depot and
on-site service  options.  Customer  service revenues were $14.9 million for the
quarter  ended June 30, 2006,  an increase of 3% from the $14.4  million for the
same period in 2005.  The  increase  was due to a 9% or  $543,000  growth in the
Company's field service and support center revenue for its restaurant  customers
due  to  expansion  of  the  Company's  customer  base.  Additionally,   systems
integration and software  maintenance revenues from the Company's resort and spa
customers  contributed  to its revenue  growth.  This was partially  offset by a
decline in installation revenue due to the timing of customer installations.

     Contract revenues from the Company's  Government segment were $15.7 million
for the quarter  ended June 30,  2006,  an increase of 14% when  compared to the
$13.9 million recorded in the same period in 2005. This growth was primarily due
to a $1.1 million increase in information  technology  outsourcing  revenue from
contracts  for  facility  operations  at  critical  U.S.  Department  of Defense
telecommunication  sites across the globe. These outsourcing operations provided
by the Company directly support U.S. Navy, Air Force and Army operations as they
seek to convert their military information technology  communications facilities
into  contractor-run  operations and to meet new  requirements  with  contractor
support.  Also  contributing  to the growth  was  applied  technology  contracts
involving software to assist the Air Force in battle planning.
<PAGE>


     Product margins for the quarter ended June 30, 2006 were 42.4%, an increase
of 300 basis  points from the 39.4% for the quarter  ended June 30,  2005.  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  including  license sales of the Company's  newly acquired  PixelPoint
software.

     Customer  Service  margins  were 27.2% for the quarter  ended June 30, 2006
compared  to  24.2%  for the  same  period  in  2005.  This  increase  is due to
continuous improvement in operational efficiencies in several service areas.

     Contract  margins were 7.8% for the quarter ended June 30, 2006 versus 6.7%
for the same period in 2005.  This  increase is due to an increase in margins in
the Company's applied  technology  contracts and higher margins on certain fixed
priced contracts in the Company's information  technology outsourcing contracts.
The most  significant  components of contract  costs in 2006 and 2005 were labor
and fringe  benefits.  For the  quarter  ended June 30,  2006,  labor and fringe
benefits were $11.2 million or 77% of contract costs compared to $9.5 million or
74% of contract costs for the same period in 2005.

     Selling,  general and administrative  expenses are virtually all related to
the Company's Hospitality segment.  Selling, general and administrative expenses
for the quarter ended June 30, 2006 were $8.2  million,  an increase of 12% from
the $7.3 million  expense for the same period in 2005. This increase is due to a
rise in sales and marketing expenses  associated with restaurant products as the
Company is planning for future growth including in international  markets.  Also
contributing  to the increase was the Company's  2005  acquisition of PixelPoint
Technologies, Inc.

     Research  and  development  expenses  relate  primarily  to  the  Company's
Hospitality segment. Research and development expenses were $2.8 million for the
quarter ended June 30, 2006,  an increase of 35% from the $2.1 million  recorded
in 2005.  The increase was primarily  attributable  to the  Company's  continued
research  and  development  in  its  hardware  and  software  products  for  its
restaurant,  resort and spa  customers.  The increase also reflects the research
and development of its recently acquired PixelPoint subsidiary.

     Amortization of identifiable  intangible assets was $308,000 for the second
quarter of 2006 compared to $244,000 for 2005.  The increase is primarily due to
amortization  relating to the  acquisition of PixelPoint  Technologies,  Inc. on
October 4, 2005.

     Other  income,  net,  was  $218,000  for the  quarter  ended June 30,  2006
compared to $71,000 for the same period in 2005. Other income primarily includes
rental income and foreign  currency gains and losses.  The increase is primarily
due to additional rental income.
<PAGE>

     Interest expense  represents  interest charged on the Company's  short-term
borrowing  requirements from banks and from long-term debt. Interest expense was
$167,000 for the quarter ended June 30, 2006 as compared to $65,000 in 2005. The
Company  experienced  a  higher  borrowing  interest  rate  and  higher  average
borrowings in 2006 when compared to 2005.

     For the quarter  ended June 30, 2006,  the Company's  effective  income tax
rate was 35.5%, compared to 38% in 2005. The variance from the federal statutory
rate in 2006  and 2005  was  primarily  due to state  income  taxes,  offset  by
benefits  related to export  sales as well as tax  benefits  related to domestic
production activities.

Results of  Operations  -- Six Months Ended June 30, 2006 Compared to Six Months
Ended June 30, 2005

     The Company  reported  revenues of $105.9  million for the six months ended
June 30,  2006,  an increase of 6% from the $100  million  reported  for the six
months ended June 30, 2005.  The  Company's  net income for the six months ended
June 30, 2006 was $4.3 million,  or $.29 diluted net income per share,  compared
to net income of $3.7 million and $.25 per diluted  share for the same period in
2005.

     Product revenues from the Company's  Hospitality segment were $45.7 million
for the six months ended June 30, 2006, an increase of 4% from the $43.9 million
recorded in 2005. In the domestic  restaurant market the Company  experienced an
increase in the sales of its software  products  which was more than offset by a
decline in hardware sales  resulting in an overall  $577,000  decline in product
revenue.  Internationally,  product revenues grew $2.4 million  primarily due to
hardware and software sales to restaurant customers in Europe and Asia.

     Customer service  revenues are also generated by the Company's  Hospitality
segment.   The  Company's   service   offerings   include  system   integration,
installation, training, twenty-four hour help desk support and various depot and
on-site service  options.  Customer  service revenues were $28.6 million for the
six months ended June 30, 2006, an increase of 3% from the $27.8 million for the
same period in 2005. The increase was due to a 13% or $1.5 million growth in the
Company's field service and support center revenue for its restaurant  customers
due  to  expansion  of  the  Company's  customer  base.  Additionally,   systems
integration and software  maintenance revenues from the Company's resort and spa
customers  contributed  to its revenue  growth.  This was partially  offset by a
decline in installation revenue due to the timing of customer installations.

     Contract revenues from the Company's  Government segment were $31.6 million
for the six months ended June 30, 2006,  an increase of 12% when compared to the
$28.2 million recorded in the same period in 2005. This growth was primarily due
to a $2  million  increase  in  applied  technology  contracts  including  those
involving  the  development  of  software  to  assist  Air Force  command  level
personnel in air battle  planning.  Also  contributing to this growth was a $1.5
million increase in information  technology  outsourcing  revenue from contracts

<PAGE>

for facility operations at critical U.S. Department of Defense telecommunication
sites across the globe.  These  outsourcing  operations  provided by the Company
directly  support  U.S.  Navy,  Air  Force and Army  operations  as they seek to
convert their military  information  technology  communications  facilities into
contractor-run operations and to meet new requirements with contractor support.

     Product  margins  for the six months  ended June 30,  2006 were  43.4%,  an
increase of 430 basis  points  from the 39.1% for the six months  ended June 30,
2005.  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  including  license sales of the Company's  newly acquired
PixelPoint software.

     Customer  Service margins were 24.7% for the six months ended June 30, 2006
compared  to  23.2%  for the  same  period  in  2005.  The  increase  was due to
continuous  improvements in operational  effectiveness  in certain service areas
offset by a decline in installation  margins for restaurant customers due to the
drop in installation revenue for the period.

     Contract  margins  were 7.4% for the six months  ended June 30, 2006 versus
6.1% for the same period in 2005. The margin increase  resulted from a favorable
cost share adjustment on our Logistics  Management program and higher margins on
certain fixed price contracts. The most significant components of contract costs
in 2006 and 2005 were labor and fringe  benefits.  For the six months ended June
30, 2006,  labor and fringe benefits were $22.9 million or 78% of contract costs
compared to $19.4 million or 73% of contract costs for the same period in 2005.

     Selling,  general and administrative  expenses are virtually all related to
the Company's Hospitality segment.  Selling, general and administrative expenses
for the six months  ended June 30, 2006 were $16.3  million,  an increase of 11%
from the $14.7  million  expense for the same period in 2005.  The  increase was
primarily  attributable to a rise in selling and marketing  expenses  related to
sales  of  the  Company's  traditional  hardware  and  software  products.  Also
contributing to the increase was an investment in the Company's restaurant sales
force and the Company's 2005 acquisition of PixelPoint Technologies, Inc.

     Research  and  development  expenses  relate  primarily  to  the  Company's
Hospitality segment. Research and development expenses were $5.7 million for the
six  months  ended  June 30,  2006,  an  increase  of 31% from the $4.4  million
recorded in 2005.  The  increase was  primarily  attributable  to the  Company's
continuing  research  and  development  related  to its  hardware  and  software
products for its restaurant,  resort and spa customers also  contributing to the
increase was the Company's acquisition of PixelPoint in 2005.
<PAGE>

     Amortization  of  identifiable  intangible  assets was $615,000 for the six
months  ended June 30,  2006  compared  to $490,000  for 2005.  The  increase is
primarily  due  to  amortization  relating  to  the  acquisition  of  PixelPoint
Technologies, Inc. on October 4, 2005.

     Other  income,  net,  was  $375,000  for the six months ended June 30, 2006
compared  to  $304,000  for the same  period  in 2005.  Other  income  primarily
includes  rental income and foreign  currency gains and losses.  The increase in
2006 resulted primarily from an increase in rental income.

     Interest expense  represents  interest charged on the Company's  short-term
borrowing  requirements from banks and from long-term debt. Interest expense was
$252,000 for the six months ended June 30, 2006 as compared to $143,000 in 2005.
The Company  experienced a higher  borrowing  interest  rate and higher  average
borrowings outstanding in 2006 which compared to 2005.

     For the six months ended June 30, 2006, the Company's  effective income tax
rate was 35.8%, compared to 38% in 2005. The variance from the federal statutory
rate in 2006  and 2005  was  primarily  due to state  income  taxes,  offset  by
benefits  related to export  sales as well as tax  benefits  related to domestic
production activities.


Liquidity and Capital Resources

     The  Company's  primary  sources  of  liquidity  have  been  cash flow from
operations and lines of credit with various  banks.  Cash used in operations was
$6.7 million for the six months ended June 30, 2006 compared to cash provided by
operations of $3.3 million for 2005. In 2006,  cash was  negatively  impacted by
the timing of customer  receipts and by inventory  purchases in  anticipation of
future demand. In 2005, cash flow was generated primarily from operating profits
and the timing of vendor  payments for material  purchases.  This was  partially
offset by an increase in accounts receivable and inventory purchases.

     Cash used in investing activities was $1.1 million for the six months ended
June 30, 2006  compared to $1.3 million  from the same period in 2005.  In 2006,
capital  expenditures  were  $867,000  and were  principally  for  manufacturing
equipment and  information  technology  equipment and software for internal use.
Capitalized  software  costs  relating to software  development  of  Hospitality
segment  products  were  $234,000 in 2006. In 2005,  capital  expenditures  were
$868,000 and were  primarily  for  manufacturing  and  research and  development
equipment.  Capitalized  software  costs  relating  to software  development  of
Hospitality segment products were $411,000 in 2005.

     Cash provided by financing  activities  was $4.9 million for the six months
ended June 30, 2006 versus cash used by  financing  activities  of $7 million in
2005.  During 2006, the Company increased its short-term bank borrowings by $4.6
million and received  $159,000 from the exercise of employee stock  options.  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.
<PAGE>

     The Company has an aggregate  availability of $20,000,000 in unsecured bank
lines of credit which expire in April, 2009. One line totaling $12,500,000 bears
interest at the bank borrowing rate (6.1% at June 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
(6.3% at June 30, 2006).

     At June 30, 2006,  there was $8,088,000  outstanding  under these lines and
$11,912,000  available under these lines.  These facilities contain certain loan
covenants  including a leverage  ratio of greater than 5 to 1 and a fixed charge
coverage ratio of not greater than 4 to 1.

     During  fiscal  year  2006,  the  Company   anticipates  that  its  capital
requirements  will be  approximately  $2 million.  The Company  does not usually
enter into long term contracts with its major Hospitality segment customers. The
Company  commits  to  purchasing   inventory  from  its  suppliers  based  on  a
combination  of internal  forecasts and the actual orders from  customers.  This
process, along with good relations with suppliers, minimizes the working capital
investment  required  by the  Company.  Although  the  Company  lists  two major
customers,  McDonald's  and Yum!  Brands,  it sells to  hundreds  of  individual
franchisees of these corporations, each of which is individually responsible for
its own debts. These broadly made sales  substantially  reduce the impact on the
Company's  liquidity  if one  individual  franchisee  reduces  the volume of its
purchases  from the  Company in a given  year.  The  Company,  based on internal
forecasts,  believes  its  existing  cash,  line of  credit  facilities  and its
anticipated operating cash flow will be sufficient to meet its cash requirements
through at least the next twelve months.  However,  the Company may be required,
or could elect,  to seek  additional  funding prior to that time.  The Company's
future capital  requirements  will depend on many factors  including its rate of
revenue growth, the timing and extent of spending to support product development
efforts,  expansion of sales and marketing,  the timing of  introductions of new
products and  enhancements to existing  products,  and market  acceptance of its
products.  The Company  cannot assure that  additional  equity or debt financing
will be  available  on  acceptable  terms or at all.  The  Company's  sources of
liquidity  beyond  twelve  months,  in  management's  opinion,  will be its cash
balances on hand at that time,  funds  provided by operations,  funds  available
through  its lines of credit and the  long-term  credit  facilities  that it can
arrange.

Critical Accounting Policies

     The  Company's   consolidated   financial   statements  are  based  on  the
application  of U.S.  generally  accepted  accounting  principles  (GAAP).  GAAP
requires  the  use  of  estimates,   assumptions,   judgments   and   subjective
interpretations  of  accounting  principles  that have an impact on the  assets,
liabilities,  revenue and expense amounts reported. The Company believes its use
of  estimates  and  underlying  accounting  assumptions  adhere  to GAAP and are

<PAGE>

consistently   applied.   Valuations   based  on  estimates   are  reviewed  for
reasonableness  and  adequacy on a  consistent  basis  throughout  the  Company.
Primary areas where  financial  information of the Company is subject to the use
of  estimates,  assumptions  and the  application  of judgment  include  revenue
recognition, accounts receivable, inventories, intangible assets and taxes.

Revenue Recognition Policy

     The Company recognizes  revenue generated by the Hospitality  segment using
the  guidance  from SEC  Staff  Accounting  Bulletin  (SAB)  No.  104,  "Revenue
Recognition" and the AICPA Statement of Position (SOP) 97-2,  "Software  Revenue
Recognition".  Product  revenues  consist  of  sales of the  Company's  standard
point-of-sale  and  property  management  systems  of the  Hospitality  segment.
Product   revenues  include  both  hardware  and  software  sales.  The  Company
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.  The
Company also records service revenues relating to its standard point-of-sale and
property management systems of the Hospitality segment. Service revenues include
installation  and training,  support  maintenance for both hardware and software
products, and field and depot repair. For elements of service revenues,  such as
installation and training, revenue is based upon standard hourly/daily rates and
revenue is recognized as the services are  performed.  For hardware and software
support  maintenance,  revenue is based on established  renewal  rates.  Service
revenues  from  maintenance  contracts are  recognized  ratably over the related
contract period. For depot repair,  revenue is charged based on established flat
rates for the items being repaired.

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

     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

<PAGE>

labor hours delivered in the performance of the contract by the contract billing
rates and  adding  other  direct  costs as  incurred.  Revenue  for  fixed-price
contracts is  recognized  as labor hours are delivered  which  approximates  the
straight-line basis of the life of the contract.  The Company's obligation under
these  contracts  is to  provide  labor  hours to conduct  research  or to staff
facilities with no other  deliverables or performance  obligations.  Anticipated
losses on all contracts are recorded in full when identified.  Unbilled accounts
receivable  are stated in the  Company's  consolidated  financial  statements at
their estimated realizable value.  Contract costs,  including indirect expenses,
are subject to audit and adjustment through negotiations between the Company and
U.S. Government representatives.

Accounts Receivable

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

Inventories

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

Capitalized Software Development Costs

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

Taxes

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

INFLATION

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

INTEREST RATES

     As of June 30,  2006,  the Company has $1.9  million in variable  long-term
debt and $8.2 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.

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 the end of the period covered by this report, the Company,  under the
supervision and with the  participation of the Company's  management,  including
the Company's President and Chief Executive Officer and Chief Financial Officer,
carried out an evaluation of the  effectiveness of the "disclosure  controls and
procedures"  (as defined in the Securities  Exchange Act of 1934 Rules 13a-15(e)
and  15d-15(e))  and internal  control over  financial  reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) of the Company.  These officers have
concluded  that our disclosure  controls and procedures are effective.  As such,

<PAGE>

the Company believes that all material  information  relating to the Company and
its consolidated  subsidiaries required to be disclosed in periodic filings with
the Securities and Exchange  Commission (i) is recorded,  processed,  summarized
and  reported  within the  required  time period,  and (ii) is  accumulated  and
communicated to the Company's management,  including the Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.

     (b) Changes in Internal Controls.

     There was no change  in the  Company's  internal  controls  over  financial
reporting,  as defined in Rule  13a-15(f) of the Exchange Act during the quarter
ended June 30, 2006 that has  materially  affected,  or is reasonably  likely to
materially affect, such internal controls over financial reporting.

                           PART II - OTHER INFORMATION

Item 1A.  Risk Factors

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

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


     A small  number of related  customers  have  historically  accounted  for a
majority of the  Company's  net  revenues in any given  fiscal  period.  For the
fiscal years ended December 31, 2005, 2004 and 2003,  aggregate sales to our top
two Hospitality segment customers,  McDonald's and Yum! Brands, amounted to 41%,
51% and 50%, respectively,  of total revenues. For the six months ended June 30,
2006 and 2005, sales to those customers were 37% and 41%,  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.
<PAGE>

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

     The  products  we sell  are  subject  to rapid  and  continual  changes  in
technology. Our competitors offer products that have an increasingly wider range
of features and capabilities. We believe that in order to compete effectively we
must provide systems incorporating new technologies at competitive prices. There
can be no  assurance  that we will be able  to  continue  funding  research  and
development at levels  sufficient to enhance our current product  offerings,  or
that the Company  will be able to develop and  introduce  on a timely  basis new
products that keep pace with  technological  developments and emerging  industry
standards  and address the  evolving  needs of  customers.  There also can be no
assurance that we will not experience  difficulties that will result in delaying
or preventing  the  successful  development,  introduction  and marketing of new
products  in our  existing  markets,  or  that  our  new  products  and  product
enhancements will adequately meet the requirements of the marketplace or achieve
any significant degree of market acceptance. Likewise, there can be no assurance
as to the  acceptance  of our  products  in new  markets,  nor can  there be any
assurance  as to the success of our  penetration  of these  markets,  nor to the
revenue  or  profit  margins  realized  by the  Company  with  respect  to these
products. If any of our competitors were to introduce superior software products
at competitive  prices,  or if our software  products no longer met the needs of
the  marketplace  due  to  technological   developments  and  emerging  industry
standards,  our software  products may no longer retain any  significant  market
share.  If this were to occur,  we could be required to record a charge  against
capitalized software costs, which amount to $3.3 million as of June 30, 2006.

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

     For the fiscal years ended  December 31,  2005,  2004 and 2003,  we derived
73%,  71% and 70%,  respectively,  of our total  revenues  from the  Hospitality
industry, primarily the quick service restaurant marketplace. For the six months
ended June 30, 2006 and 2005,  revenues from the  Hospitality  industry were 70%
and  72%,  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.


<PAGE>


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

     For the fiscal years ended  December 31,  2005,  2004 and 2003,  we derived
27%, 29% and 30%, respectively,  of our total revenues from contracts to provide
technical services to U.S. Government agencies and defense contractors.  For the
six months ended June 30, 2006 and 2005,  revenues from such  contracts were 30%
and 28%,  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 proportionate share of our fee or profit for work actually performed.
Most U.S.  Government  contracts are also subject to modification or termination
in the event of changes in funding. As such, we may perform work prior to formal
authorization,  or the  contract  prices may be adjusted for changes in scope of
work. Termination or modification of a substantial number of our U.S. Government
contracts  could  have a  material  adverse  effect on our  business,  financial
condition and results of operations.

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

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

     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.

<PAGE>


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

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

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

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

     For the fiscal  years  ended  December  31,  2005,  2004 and 2003,  our net
revenues   from  sales   outside  the  United  States  were  11%,  9%  and  11%,
respectively, of the Company's total revenues. For the six months ended June 30,
2006 and 2005,  sales outside the United States were 12% and 10%,  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
<PAGE>

the currency in which we sell our products. There can be no assurance that these
factors  will not have a material  adverse  affect on our  future  international
sales and, consequently, on our operating results.

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

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

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

     We have goodwill and identifiable  intangible assets totaling approximately
$20.9  million  and $9.2  million  at June  30,  2006,  respectively,  resulting
primarily from several  business  acquisitions.  At least annually,  we evaluate
goodwill and  identifiable  intangible  assets for impairment  based on the fair
value  of the  operating  business  unit to  which  these  assets  relate.  This
estimated fair value could change if we are unable to achieve  operating results
at the levels that have been forecasted,  the market valuation of such companies
decreases  based on  transactions  involving  similar  companies,  or there is a
permanent,  negative change in the market demand for the services offered by the
business  unit.  These  changes  could result in an  impairment  of the existing
goodwill  and  identifiable  intangible  asset  balances  that  could  require a
material non-cash charge to our results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

         PAR's annual meeting of shareholders was held on May 11, 2006. At the
meeting:

     1)   the two nominees named in PAR's proxy  statement,  Sangwoo Ahn and Dr.
          Paul D.  Nielsen,  were elected to serve as directors for a three-year
          term expiring in 2009;

     2)   the  PAR  Technology   Corporation  2005  Equity  Incentive  Plan  was
          approved;

     3)   an amendment to the  Corporation's  Certificate  of  Incorporation  to
          increase the authorized  shares of voting Common Stock from 19,000,000
          to 29,000,000 was approved; and

     4)   the selection of KPMG LLP to service as the Corporation's  independent
          registered public accounting firm for the year 2006 was ratified.


<PAGE>


     The  number of votes  cast for,  against  or  withheld,  and the  number of
abstentions and broker non-votes,  where applicable, as to each such matter, are
set forth below:
<TABLE>
<CAPTION>

----------------------------------------------------------------- ---------------- ------------- --------------- --------------
                                                                                     Against/                       Broker
                                                                        For          Withheld      Abstained       Non-Votes
----------------------------------------------------------------- ---------------- ------------- --------------- --------------
<S>                                                                     <C>           <C>                 <C>        <C>
1) Election of Directors
         NOMINEE
         Sangwoo Ahn                                                   12,190,196       394,534
         Dr. Paul D. Nielsen                                           12,274,802       309,928
----------------------------------------------------------------- ---------------- ------------- --------------- --------------
2) Approval of PAR Technology Corporation 2005
   Equity Incentive Plan                                                8,445,864     2,876,497           8,837      1,253,531
----------------------------------------------------------------- ---------------- ------------- --------------- --------------
3) Approval of the amendment to the Corporation's
   Certificate of Incorporation to increase the
   authorized shares of voting Common Stock from
   19,000,000 to 29,000,000                                            12,225,205       358,290           1,235
----------------------------------------------------------------- ---------------- ------------- --------------- --------------
4) Ratification of KPMG LLP as the independent                         12,509,705        61,565          13,459
   registered public accounting firm
----------------------------------------------------------------- ---------------- ------------- --------------- --------------

</TABLE>


<PAGE>


Item 6.  Exhibits and Reports on Form 8-K




                                List of Exhibits




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

          3(i)           Certificate of Incorporation of PAR
                         Technology Corporation (as amended).

          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, 2006,  PAR Technology  Corporation  furnished a report on Form
8-K pursuant to Item 2.02  (Results of Operations  and  Financial  Condition) of
that Form relating to its financial  information for the quarter ended March 31,
2006, as presented in a press release of April 27, 2006 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 9, 2006



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











<PAGE>




                                  Exhibit Index




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

     3(i)          Certification of Incorporation of PAR                E1 - E5
                   Technology Corporation (as amended).

     31.1          Certification of Chairman of the Board               E-6
                   and Chief Executive Officer Pursuant
                   to Section 302 of the Sarbanes-Oxley Act
                   of 2002.

    31.2           Certification of Vice President, Chief               E-7
                   Financial Officer and Treasurer Pursuant
                   to Section 302 of the Sarbanes-Oxley Act
                   of 2002.

    32.1           Certification of Chairman of the Board               E-8
                   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 3 (i)


           CERTIFICATE OF INCORPORATION OF PAR TECHNOLOGY CORPORATION

                                      FIRST

The name of the Corporation is PAR Technology Corporation (the "Corporation").

                                     SECOND

The address of the registered office of the Corporation in the State of Delaware
is The Corporation Trust Company, 1209 Orange Street, in the City of Wilmington,
County of New Castle 19801.  The name of its registered agent at that address is
The Corporation Trust Company.

                                      THIRD

The purpose of the  Corporation  is to engage in any lawful act or activity  for
which a Corporation  may be organized  under the General  Corporation Law of the
State of Delaware.

                                     FOURTH

1. The total number of shares of capital stock which the Corporation  shall have
authority to issue is thirty  million  (30,000,000)  shares of stock,  par value
$0.02 per share, consisting of twenty-nine million (29,000,000) shares of Common
Stock, and one million (1,000,000) shares of Preferred Stock.

2. The  Preferred  Stock may be issued from time to time in one or more  series.
The Board of Directors is hereby authorized,  prior to issuance of any series of
Preferred Stock, to fix by resolution or resolutions  providing for the issue of
such series the number of shares  included in such series and the voting powers,
designations,  preferences,  and  relative,  participating,  optional  and other
special rights,  and the  qualifications,  limitations of restrictions  thereof.
Pursuant to the foregoing  general  authority  vested in the Board of Directors,
but not in limitation of the powers conferred on the Board of Directors  thereby
and by Delaware Law, the Board of Directors is expressly authorized to determine
with respect to each series of Preferred Stock:

     (a) the designation or designations of such series and the number of shares
(which number from time to time may be decreased by the Board of Directors,  but
not below the number of such shares then outstanding, or may be increased by the
Board  of  Directors,  but not in  excess  of the  number  of such  shares  then
authorized,  unless otherwise  provided in the resolution  creating such series)
constituting such series;

     (b) the  rate or  amount  and  times  at  which,  and the  preferences  and
conditions under which, dividends shall be payable on shares of such series, the
status of such dividends as cumulative or noncumulative,  the date or dates from
which dividends, if cumulative,  shall accumulate, and the status of such shares
as participating or nonparticipating  after the payment of dividends as to which
such shares are entitled to any preference;





                                       E-1
<PAGE>

     (c) the rights and  preferences,  if any,  of the holders of shares of such
series  upon the  liquidation,  dissolution  or winding up of the affairs of, or
upon any distribution of the assets of, the  Corporation,  which amount may vary
depending upon whether such liquidation, dissolution, or winding up is voluntary
or involuntary and, if voluntary, may vary at different dates, and the status of
the  shares  of such  series  as  participating  or  nonparticipating  after the
satisfaction of any such rights and preferences;

     (d) the full or limited voting rights, if any, to be provided for shares of
such series, in addition to the voting rights provided by law;

     (e) the times,  terms and  conditions,  if any,  upon which  shares of such
series  shall be  subject to  redemption,  including  the amount the  holders of
shares of such series shall be entitled to receive upon redemption (which amount
may vary under different  conditions or at different  redemption  dates) and the
amount, terms, conditions and manner of operation of any purchase, retirement or
sinking fund to be provided for the shares of such series;

     (f) the rights, if any, of the Corporation or the holders of shares of such
series to convert such shares into,  or to exchange  such shares for,  shares of
any other  class or  classes  or of any other  series of the same class or other
securities  of the  Corporation,  the prices or rates of conversion or exchange,
and adjustments thereto,  and any other terms and conditions  applicable to such
conversion or exchange;

     (g) the limitations, if any, applicable while such series is outstanding on
the payment of dividends or making of  distributions  on, or the  acquisition or
redemption of, Common Stock or any other class of shares ranking junior,  either
as to dividends or upon liquidation, to the shares of such series;

     (h)  the  conditions  or  restrictions,  if  any,  upon  the  issue  of any
additional  shares  (including  additional  shares  of such  series or any other
series or of any other class) ranking on a parity with or prior to the shares of
such series either as to dividends or upon liquidation; and

     (i) any other relative  powers,  preferences  and relative,  participating,
optional or other special rights, and qualification, limitations or restrictions
thereof, of shares of such series;

     In each  case,  so far as not  inconsistent  with  the  provisions  of this
Certificate  of  Incorporation  or Delaware  Law. All shares of Preferred  Stock
shall be identical and of equal rank except in respect to the  particulars  that
may be fixed by the Board of Directors as provided above, and all shares of each
series of Preferred  Stock shall be identical and of equal rank except as to the
times from which cumulative dividends, if any, thereon shall be cumulative.

3.  Shares of any series of  Preferred  Stock  which have been  acquired  by the
Corporation, whether by purchase or redemption or by their having been converted
into or  exchanged  for  other  shares  of the  Corporation,  shall  upon  their
acquisition and without any other action by the Corporation resume the status of
authorized but unissued  shares of Preferred Stock and may be reissued as shares
of the series of which they were originally a part or may be issued as shares of
a new series or as shares of any other series.

4. Except as otherwise  provided by Delaware Law or by any resolution adopted by
the  Board  of  Directors  fixing  the  powers,   preferences  and  rights,  the
qualifications,  limitations or restrictions, of the Preferred Stock, the entire
voting power of the shares of the Corporation for the election of Directors and





                                       E-2

<PAGE>

for all other purposes,  as well as all other rights pertaining to shares of the
Corporation,  shall be vested  exclusively  in the Common  Stock.  Each share of
Common  Stock shall have one vote upon all matters to be voted on by the holders
of the Common Stock and share ratably,  subject to the rights and preferences of
the  Preferred  Stock,  in all  assets  of the  Corporation  in the event of any
voluntary or involuntary  liquidation,  dissolution or winding up of the affairs
of the Corporation, or upon any distribution of the assets of the Corporation.

5.  Shares  of  capital  stock  of  the  Corporation  may  be  issued  for  such
consideration,  not less than the par value thereof, as shall be fixed from time
to time by the Board of  Directors,  and shares  issued  for such  consideration
shall be fully paid and non-assessable.

                                      FIFTH

The duration of the Corporation is to be perpetual.

                                      SIXTH

Except as required by law, and subject to the rights of holders of any series of
Preferred Stock,  established  pursuant to Article Fourth of this Certificate of
Incorporation,  a special meeting of  shareholders  may be called at any time by
the Board of Directors,  the Chairman or the President, and shall be called only
by the  Board of  Directors  or the  Chairman  or the  President  pursuant  to a
resolution  approved by a majority of the then authorized number of Directors of
the  Corporation.  Any such call must  specify the matter or matters to be acted
upon at such  meeting  and only  such  matter  or  matters  shall be acted  upon
thereat.  Any such  meeting  shall be at such time and at such place,  within or
without the State of Delaware,  as shall be set forth in the Board of Directors'
resolution calling for such meeting.

                                     SEVENTH

Any  action  required  or  permitted  to be  taken  by the  shareholders  of the
Corporation  must be effected at an annual or special meeting of shareholders of
the Corporation,  and no action required to be taken or that may be taken at any
annual or  special  meeting  of  shareholders  of the  Corporation  may be taken
without a meeting except by the unanimous  written  consent of all  shareholders
entitled to vote on such action.

                                     EIGHTH

1. The number of directors of the Corporation  shall be fixed in accordance with
the By-Laws of the  Corporation,  and may be increased or decreased from time to
time in such a manner as may be prescribed in the By-Laws of the Corporation.

2. Unless and except to the extent that the By-Laws of the Corporation  shall so
require,  the election of directors  of the  Corporation  need not be by written
ballot.

3. The  directors,  other than  those who may be  elected by the  holders of any
series of preferred  stock,  voting as a separate  class,  shall be divided into
three  classes,  as nearly equal in number as  possible.  One class of directors
shall  be  initially  elected  for a term  expiring  at the  annual  meeting  of
shareholders to be held in 1993,  another class shall be initially elected for a
term  expiring  at the annual  meeting of  shareholder  to be held in 1994,  and
another class shall be initially elected for a term expiring at the annual


                                       E-3
<PAGE>

meeting of  shareholders  to be held in 1995.  Members of each class  shall hold
office until their  successors  are elected and  qualified.  At each  succeeding
annual meeting of the  shareholders  of the  Corporation,  the successors of the
class of  directors  whose term  expires at that  meeting  shall be elected,  in
accordance  with the  By-Laws  of the  Corporation,  to hold  office  for a term
expiring at the annual meeting of shareholders  held in the third year following
the year of their election.

                                      NINTH

No contract or other  transaction of the  Corporation  shall be void,  voidable,
fraudulent or otherwise  invalidated,  impaired or affected,  in any respect, by
reason  of  the  fact  that  any  one or  more  of the  officers,  directors  or
shareholders of the Corporation shall individually be a party or parties thereto
or otherwise interested therein or shall be officers,  directors or shareholders
or any other  Corporation  or  corporations  which  shall be a party or  parties
thereto or otherwise  interested  therein;  provided that such contract or other
transaction shall be duly authorized or ratified by the Board of Directors, with
the assenting  vote of a majority of the  disinterested  directors then present,
or, if only one such is present, with his assenting vote.

                                      TENTH

The By-laws of the  Corporation  or any them may be amended or repealed,  in any
respect,  and  new  By-Laws  may be  adopted,  at  any  time,  either  (i) by an
affirmative vote of 66 2/3% of the  shareholders  entitled to vote generally for
the election of directors  or (ii) by an  affirmative  vote of a majority of the
directors  present at a meeting  of the Board of  Directors,  in each  case,  in
accordance  with the terms of the By-Laws.  Notwithstanding  the  foregoing  and
anything contained in this Certificate of Incorporation to the contrary, Section
3  ("Special  Meetings")  or  Section 7 ("Order  of  Business")  of  Article  II
("Meeting of  Stockholders")  of the By-Laws  Section 2, ("Number,  Election and
Terms")  or  Section 3  ("Nominations  of  Directors,  Elections")  or Section 6
("Special  Meetings") or Article III ("Directors") of the By-Laws,  or the final
sentence of Article XII  ("Amendments")  of the By-Laws  shall not be amended or
repealed and no provision inconsistent with any thereof shall be adopted without
the  affirmative  vote  of the 66  2/3%  of the  shareholders  entitled  to vote
generally  for the election of  directors,  voting  together as a single  class.
Notwithstanding  anything  contained in this Certificate of Incorporation to the
contrary,  the affirmative vote of the 66 2/3% of the  shareholders  entitled to
vote generally for the election of directors, voting together as a single class,
shall be required to amend or repeal, or adopt any provision  inconsistent with,
any provision of this Article TENTH.

                                    ELEVENTH

1.  Notwithstanding  anything  contained in this Certificate of Incorporation to
the contrary,  Articles Sixth,  Seventh,  Eighth and Twelfth hereof shall not be
altered,  amended or repealed and no provision  inconsistent  therewith shall be
adopted without the  affirmative  vote of the holders of at least 66 2/3% of all
of the shares of the  corporation  entitled to vote generally in the election of
directors, voting together as a single class. Notwithstanding anything contained
in this Certificate of  Incorporation  to the contrary,  the affirmative vote of
the holders of at least 66 2/3% of all of the shares of the corporation entitled
to vote  generally in the  election of  directors,  voting  together as a single
class,  shall be  required  to alter,  amend or  repeal  or adopt any  provision
inconsistent with this paragraph (1) of Article Eleventh.

2. The  Corporation  reserves  the right to amend,  alter,  change or repeal any
provision  contained  in its  Certificate  of  Incorporation,  or any  amendment
thereof, in the manner now or thereafter  prescribed by the laws of the State of
Delaware of this Certificate of Incorporation, and all rights conferred upon the
shareholders of the corporation are granted subject to this reservation.

                                       E-4
<PAGE>

                                     TWELFTH

1.  A  Director  of  the  Corporation  shall  not be  personally  liable  to the
Corporation  or its  shareholders  for monetary  damages for breach of fiduciary
duty as a director,  except for liability  (i) for any breach of the  director's
duty of  loyalty  to the  Corporation  or its  shareholders,  (ii)  for  acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law,  (iii) under Section 174 of the Delaware  General  Corporation
Law, or (iv) for any  transaction  from which the  director  derived an improper
personal benefit.

2. If, after approval of this Article by the  shareholders  of the  Corporation,
the  Delaware  General  Corporation  Law is amended  to  authorize  the  further
elimination  or limitation  of the  liability of  directors,  the liability of a
Director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.

3. Any  repeal  or  modification  of this  Article  by the  shareholders  of the
Corporation  shall not adversely affect any right or protection of a Director of
the Corporation existing at the time of such repeal or modification.

                                   THIRTEENTH

The name and mailing address of the incorporator is as follows:

                               Gregory T. Cortese
                   Vice President, General Counsel & Secretary
                           PAR Technology Corporation
                              8383 Seneca Turnpike
                             New Hartford, NY 13413


















                                       E-5


<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))  and internal  control over
     financial  reporting  (as  defined  in  Exchange  Act Rules  13a-15(f)  and
     15d-15(f)), for the registrant and have:

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

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

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

     d.   Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal  quarter 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 9, 2006
                                                /s/John W. Sammon, Jr.
                                                --------------------------------
                                                John W. Sammon, Jr.
                                                Chairman of the Board and
                                                Chief Executive Officer

                                       E-6
<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))  and internal  control over
     financial  reporting  (as  defined  in  Exchange  Act Rules  13a-15(f)  and
     15d-15(f)), for the registrant and have:

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

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

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

     d.   Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal  quarter 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 9, 2006
                                                 /s/Ronald J. Casciano
                                                 ------------------------------
                                                 Ronald J. Casciano
                                                 Vice President, Chief Financial
                                                 Officer & Treasurer


                                       E-7
<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, 2006 as filed with the
Securities and Exchange  Commission on the date hereof (the "Report"),  we, John
W. Sammon,  Jr. and Ronald J. Casciano,  Chairman of the Board & Chief Executive
Officer and Vice President,  Chief Financial Officer & Treasurer of the Company,
certify  pursuant to 18 U.S.C.  ss. 1350, as adopted  pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to the best of our knowledge:


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

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






/s/John W. Sammon, Jr.
-------------------------------
John W. Sammon, Jr.
Chairman of the Board &
Chief Executive Officer
August 9, 2006

/s/Ronald J. Casciano
-------------------------------
Ronald J. Casciano
Vice President,
Chief Financial Officer & Treasurer
August 9, 2006












                                       E-8