UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 20202021
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: 1-09720


PAR TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware16-1434688
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
PAR Technology Park,
8383 Seneca Turnpike,
New Hartford, New York13413-4991
(Address of principal executive offices)offices, including zip code)
(315) 738-0600
(Zip Code)Registrant’s telephone number, including area code)
Registrant’s telephone number, including area code:  (315) 738-0600


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.02 par valuePARNew York Stock Exchange


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 þ No ☐


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐
Accelerated Filer þ
Non-Accelerated Filer ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



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


As of May 1, 2020, 18,243,6723, 2021, 25,979,138 shares of the registrant’s common stock, $0.02 par value, were outstanding.




PAR TECHNOLOGY CORPORATION


TABLE OF CONTENTS


PART I
FINANCIAL INFORMATION

Item
Number		Page
Item
Number
Page
Item 1.
2
12
23
34
4
5
5
6
6
7
Item 2.
2120
Item 3.
2524
Item 4.
2624
PART II
OTHER INFORMATION
Item 1.
2625
Item 1A.
2625
Item 2.
2726
Item 6.2633
27
28




“PAR,” “Brink POS®,” “PixelPoint®,” “PAR EverServ®,” “Restaurant Magic®”, “Data Central®”, and “Punchh®” are trademarks of PAR Technology Corporation. This report may also contain trade names and trademarks of other companies. Our


use of or reference to such other companies' trade names or trademarks is not intended to imply any endorsement or sponsorship by these companies of PAR Technology Corporation or its products or services.
Forward-Looking Statements
This Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (“Quarterly Report”) contains “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature, but rather are predictive of our future operations, financial condition, financial results, business strategies and prospects. Forward-looking statements are generally identified by words such as “anticipate,” “believe,” “belief,” “continue,” “could,” “expect,” “estimate,” “intend,” “may,” “opportunity,” “plan,” “should,” “will,” “would,” “will likely result,” and similar expressions. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those expressed in or implied by forward-looking statements, including forward-looking statements relating to our expectations regarding the impact of the COVID-19 pandemic on our business, operations, and financial results. While we have taken precautionary measures intended to minimize the impact of COVID-19 to our employees and to our business, there can be no assurances that these actions are sufficient and that additional actions will not be required. Factors that have and may continue to adversely affect, and that could subsequently adversely impact, our business, operations and financial results due to the COVID-19 pandemic include: customer store closures; significant reductions or volatility in demand for our products and services; delayed or canceled store implementations, decreased product adoptions and bookings; reduced or delayed software or hardware deployments and a reprioritization of investments in technology or point-of-sale infrastructure; delayed or payment defaults by customers; our ability to be agile in the execution of our business and strategies and our management of business continuity risks, including increased exposure to potential cybersecurity breaches and attacks, disruptions or delays in product assembly and fulfillment and limitations on our selling and marketing efforts; our ability to successfully attract, hire and retain necessary qualified employees to develop and expand our business; and the possible impairment of goodwill and other intangible assets in the event of a significant decline in our financial performance. The extent to which the COVID-19 pandemic will continue to impact our business, operations, and financial results is uncertain and cannot be predicted, and there can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our business, operations and financial results during any quarter or year in which we are affected. Other factors, risks, trends and uncertainties that could cause our actual results to differ materially from those expressed in or implied by forward-looking statements are described under Part I, Item 2. “Management's Discussion and Analysis of Financial Condition and Results of Operations”, Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on March 16, 2021, and in our other filings with the SEC. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.


Table of Contents
PART I – FINANCIAL INFORMATION


Item 1.
Financial Statements(unaudited)
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, inIn thousands, except share and per share amounts)
 
 
AssetsMarch 31, 2020 December 31, 2019
Current assets:   
Cash and cash equivalents$60,089
 $28,036
Accounts receivable – net42,819
 41,774
Inventories – net23,339
 19,326
Other current assets7,191
 4,427
Total current assets133,438
 93,563
Property, plant and equipment – net14,052
 14,351
Goodwill41,386
 41,386
Intangible assets – net33,103
 32,948
Lease right-of-use assets2,729
 3,017
Other assets4,274
 4,347
Total Assets$228,982
 $189,612
Liabilities and Shareholders’ Equity 
  
Current liabilities: 
  
Current portion of long-term debt$639
 $630
Accounts payable16,603
 16,385
Accrued salaries and benefits6,495
 7,769
Accrued expenses2,893
 3,176
Lease liabilities - current portion2,000
 2,060
Customer deposits and deferred service revenue9,732
 12,084
Total current liabilities38,362
 42,104
Lease liabilities - net of current portion805
 1,021
Deferred service revenue – non current4,535

3,916
Long-term debt101,916
 62,414
Other long-term liabilities7,068
 7,310
Total liabilities152,686
 116,765
Commitments and contingencies

 

Shareholders’ Equity: 
  
Preferred stock, $.02 par value, 1,000,000 shares authorized—
 —
Common stock, $.02 par value, 29,000,000 shares authorized; 19,291,289 and 18,360,205 shares issued, 18,244,350 and 16,629,177 outstanding at March 31, 2020 and December 31, 2019, respectively386
 367
Additional paid in capital106,600
 94,372
Accumulated deficit(21,054) (10,144)
Accumulated other comprehensive loss(5,167) (5,368)
Treasury stock, at cost, 1,046,939 shares and 1,731,028 shares at March 31, 2020 and December 31, 2019, respectively(4,469) (6,380)
Total shareholders’ equity76,296
 72,847
Total Liabilities and Shareholders’ Equity$228,982
 $189,612
See accompanying notes to unaudited interim condensed consolidated financial statements

(Unaudited)

AssetsMarch 31, 2021December 31, 2020
Current assets:  
Cash and cash equivalents$173,122 $180,686 
Accounts receivable – net38,706 42,980 
Inventories – net25,296 21,638 
Other current assets7,970 3,625 
Total current assets245,094 248,929 
Property, plant and equipment – net13,627 13,856 
Goodwill41,214 41,214 
Intangible assets – net32,652 33,121 
Lease right-of-use assets2,423 2,569 
Other assets3,665 4,060 
Total assets$338,675 $343,749 
Liabilities and Shareholders’ Equity  
Current liabilities:  
Current portion of long-term debt$676 $666 
Accounts payable18,886 12,791 
Accrued salaries and benefits10,620 13,190 
Accrued expenses3,930 2,606 
Lease liabilities – current portion1,133 1,200 
Customer deposits and deferred service revenue9,895 9,506 
Total current liabilities45,140 39,959 
Lease liabilities – net of current portion1,410 1,462 
Deferred service revenue – noncurrent2,838 3,082 
Long-term debt106,851 105,844 
Other long-term liabilities4,584 4,997 
Total liabilities160,823 155,344 
Commitments and contingencies00
Shareholders’ equity:  
Preferred stock, $.02 par value, 1,000,000 shares authorized0 0 
Common stock, $.02 par value, 58,000,000 shares authorized, 23,103,979 and 22,982,955 shares issued, 21,961,788 and 21,917,357 outstanding at March 31, 2021 and December 31, 2020, respectively462 459 
Additional paid in capital245,566 243,575 
Accumulated deficit(54,977)(46,706)
Accumulated other comprehensive loss(4,238)(3,936)
Treasury stock, at cost, 1,142,191 shares and 1,065,598 shares at March 31, 2021 and December 31, 2020, respectively(8,961)(4,987)
Total shareholders’ equity177,852 188,405 
Total Liabilities and Shareholders’ Equity$338,675 $343,749 
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share and per share amounts)


 Three Months Ended
March 31,
 2020 2019
Net revenues:   
Product$18,634
 $15,517
Service18,775
 14,043
Contract17,323
 15,122
 54,732
 44,682
Costs of sales: 
  
Product14,905
 11,241
Service12,646
 10,268
Contract16,134
 13,650
 43,685
 35,159
Gross margin11,047
 9,523
Operating expenses: 
  
Selling, general and administrative11,427
 8,564
Research and development4,865
 3,060
Amortization of identifiable intangible assets210
 —
 16,502
 11,624
Operating loss(5,455) (2,101)
Other expense, net(625) (430)
Interest expense, net(1,972) (146)
Loss on extinguishment of debt(8,123) —
Loss before benefit from (provision for) income taxes(16,175) (2,677)
Benefit from (provision for) income taxes5,265
 (52)
Net loss$(10,910) $(2,729)
Basic Earnings per Share: 
  
Net loss$(0.61) $(0.17)
Diluted Earnings per Share:

 

Net loss$(0.61) $(0.17)
Weighted average shares outstanding: 
  
Basic17,941
 16,044
Diluted17,941
 16,044

See accompanying notes to unaudited interim condensed consolidated financial statements

2


Table of Contents
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSOPERATIONS
(Unaudited, inIn thousands, except share and per share amounts)

(Unaudited)


Three Months Ended March 31,
20212020
Net revenues:
Product$18,556 $18,634 
Service18,028 18,775 
Contract17,883 17,323 
54,467 54,732 
Costs of sales:
Product14,885 14,905 
Service12,695 12,646 
Contract16,687 16,134 
44,267 43,685 
Gross margin10,200 11,047 
Operating expenses:
Selling, general and administrative14,537 11,646 
Research and development5,809 4,865 
Amortization of identifiable intangible assets275 210 
Gain on insurance proceeds(4,400)0 
16,221 16,721 
Operating loss(6,021)(5,674)
Other expense – net(51)(406)
Loss on extinguishment of debt0 (8,123)
Interest expense – net(2,160)(1,972)
Loss before provision for income taxes(8,232)(16,175)
(Provision for) benefit from income taxes(39)5,265 
Net loss$(8,271)$(10,910)
Net loss per share (basic and diluted)$(0.38)$(0.61)
Weighted average shares outstanding (basic and outstanding)21,92917,941
 Three Months Ended
March 31,
 2020 2019
Net loss$(10,910) $(2,729)
Other comprehensive income (loss), net of applicable tax: 
  
Foreign currency translation adjustments201
 (10)
Comprehensive loss$(10,709) $(2,739)
See accompanying notes to unaudited interim condensed consolidated financial statements


PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited, in thousands, except share and per share amounts)

 Common StockAdditional Paid in CapitalAccumulated deficit
Accumulated
Other
Comprehensive
Loss
Treasury Stock
Total
Shareholders’
Equity
SharesAmountSharesAmount
         
Balances at December 31, 201918,360
$367
$94,372
$(10,144)$(5,368)1,731
$(6,380)$72,847
Net loss—
—
—
(10,910)—
—
—
(10,910)
Issuance of common stock upon the exercise of stock options2
—
30
—
—


—
30
Net issuance of restricted stock awards21
—
—
—
—


—
—
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock—
—
—
—
—
38
(524)(524)
Issuance of restricted stock for acquisition908
19
—
—
—
—
—
19
Equity component of redeemed 2024 convertible notes, net of deferred taxes and issuance costs—
—
(7,988)—
—
(722)2,435
(5,553)
Equity component of issued 2026 convertible notes, net of deferred taxes and issuance costs—
—
19,097
—
—
—
—
19,097
Stock-based compensation—
—
1,089
—
—
—
—
1,089
Foreign currency translation adjustments—
—
—
—
201
—
—
201
Balances at March 31, 202019,291
$386
$106,600
$(21,054)$(5,167)1,047
$(4,469)$76,296
Balances at December 31, 201817,878
$357
$50,251
$5,427
$(4,253)1,708
$(5,836)$45,946
Net loss—
—
—
(2,729)—
—
—
(2,729)
Issuance of common stock upon the exercise of stock options78
—
30
—
—
—
—
30
Stock-based compensation—
—
248
—
—
—
—
248
Foreign currency translation adjustments—
—
—
—
(10)—
—
(10)
Balances at March 31, 201917,956
$357
$50,529
$2,698
$(4,263)1,708
$(5,836)$43,485

See accompanying notes to unaudited interim condensed consolidated financial statements




3
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PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCOMPREHENSIVE LOSS
(Unaudited, in thousands, except share and per share amounts)In thousands)
(Unaudited)
 Three Months Ended
March 31,
 2020 2019
Cash flows from operating activities:   
Net loss$(10,910) $(2,729)
Adjustments to reconcile net loss to net cash used in operating activities: 
  
Depreciation, amortization and accretion3,142
 1,012
Current expected credit losses244
 107
Provision for obsolete inventory1,188
 588
Stock-based compensation1,089
 248
Loss on debt extinguishment8,123
 —
Deferred income tax(5,386) —
Changes in operating assets and liabilities: 
  
Accounts receivable(1,289) (3,199)
Inventories(5,201) (490)
Other current assets(2,764) (1,848)
Other assets85
 (240)
Accounts payable218
 2,150
Accrued salaries and benefits(1,646) (795)
Accrued expenses(283) 110
Customer deposits and deferred service revenue(1,733) 2,089
Other long-term liabilities—
 (213)
Net cash used in operating activities(15,123) (3,210)
Cash flows from investing activities: 
  
Capital expenditures(188) (887)
Capitalization of software costs(1,852) (1,036)
Net cash used in investing activities(2,040) (1,923)
Cash flows from financing activities: 
  
Payments of long-term debt(154) —
Payment of contingent consideration—
 (2,550)
Payments of bank borrowings—
 (16,777)
Proceeds from bank borrowings—
 25,097
Payments for the extinguishment of notes payable(66,250) —
Proceeds from notes payable, net of issuance costs115,916
 —
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock(153) —
Proceeds from exercise of stock options

30
 30
Net cash provided by financing activities49,389
 5,800
Effect of exchange rate changes on cash and cash equivalents(173) (10)
Net increase in cash and cash equivalents32,053
 657
Cash and cash equivalents at beginning of period28,036
 3,485
Cash and equivalents at end of period$60,089
 $4,142
    
Supplemental disclosures of cash flow information:   
Cash paid during the period for:   
Interest$953
 $115
Additions to right-of-use assets and operating lease liabilities—
 3,717

Three Months Ended March 31,
20212020
Net loss$(8,271)$(10,910)
Other comprehensive income loss, net of applicable tax: 
Foreign currency translation adjustments(302)201 
Comprehensive loss$(8,573)$(10,709)

See accompanying notes to unaudited interim condensed consolidated financial statements


4
Table of Contents
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)

Common StockAdditional Paid in CapitalAccumulated deficitAccumulated
Other
Comprehensive
Loss		Treasury StockTotal
Shareholders’
Equity
SharesAmountSharesAmount
Balances at December 31, 202022,983 $459 $243,575 $(46,706)$(3,936)1,066 $(4,987)$188,405 
Issuance of common stock upon the exercise of stock options34 1 408 — — — — 409 
Net issuance of restricted stock87 2 263 — — — — 265 
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 76 (3,974)(3,974)
Stock-based compensation— — 1,320 — — — — 1,320 
Foreign currency translation adjustments— — — — (302)— — (302)
Net loss— — — (8,271)— — — (8,271)
Balances at March 31, 202123,104 $462 $245,566 $(54,977)$(4,238)1,142 $(8,961)$177,852 

Common StockAdditional Paid in CapitalAccumulated deficitAccumulated
Other
Comprehensive
Loss		Treasury StockTotal
Shareholders’
Equity
SharesAmountSharesAmount
Balances at December 31, 201918,360 $367 $94,372 $(10,144)$(5,368)1,731 $(6,380)$72,847 
Issuance of common stock upon the exercise of stock options2 — 30 — — — 30 
Net issuance of restricted stock awards21 — — — — — — 
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 38 (524)(524)
Issuance of restricted stock for acquisition908 19 — — — — — 19 
Equity component of redeemed 2024 convertible notes (net of deferred taxes of $1.8 million)(7,988)(722)2,435 (5,553)
Equity component of issued 2026 convertible notes (net of deferred taxes of $6.2 million and issuance costs of $0.9 million)— — 19,097 — — — — 19,097 
Stock-based compensation— — 1,089 — — — — 1,089 
Foreign currency translation adjustments— — — — 201 — — 201 
Net loss— — — (10,910)— — — (10,910)
Balances at March 31, 202019,291 $386 $106,600 $(21,054)$(5,167)1,047 $(4,469)$76,296 

See accompanying notes to unaudited interim condensed consolidated financial statements
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PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
20212020
Cash flows from operating activities:
Net loss$(8,271)$(10,910)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation, amortization and accretion3,990 3,142 
Current expected credit losses18 244 
Provision for obsolete inventory210 1,188 
Stock-based compensation1,320 1,089 
Loss on debt extinguishment0 8,123 
Deferred income tax0 (5,386)
Changes in operating assets and liabilities:
Accounts receivable4,267 (1,289)
Inventories(3,850)(5,201)
Other current assets(4,343)(2,764)
Other assets421 85 
Accounts payable5,658 218 
Accrued salaries and benefits(3,916)(1,646)
Accrued expenses1,332 (283)
Customer deposits and deferred service revenue143 (1,733)
Other long-term liabilities(413)0 
Net cash used in operating activities(3,434)(15,123)
Cash flows from investing activities:
Capital expenditures(152)(188)
Capitalization of software costs(1,517)(1,852)
Net cash used in investing activities(1,669)(2,040)
Cash flows from financing activities:
Payments of long-term debt(163)(154)
Payments for the extinguishment of notes payable0 (66,250)
Proceeds from notes payable, net of issuance costs0 115,916 
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock(2,362)(153)
Proceeds from exercise of stock options409 30 
Net cash (used in) provided by financing activities(2,116)49,389 
Effect of exchange rate changes on cash and cash equivalents(345)(173)
Net (decrease) increase in operating activities(7,564)32,053 
Cash and cash equivalents at beginning of period180,686 28,036 
Cash and equivalents at end of period$173,122 $60,089 
Supplemental non-cash investing and financing flow information:
Cash paid for interest$19 $953 
Income taxes, net of refunds5 0 
Capitalized software recorded in accounts payable317 0 
Capital expenditures in accounts payable122 0 

See accompanying notes to unaudited interim condensed consolidated financial statement
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PAR TECHNOLOGY CORPORATION
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of presentationPresentation


The accompanying unaudited interim condensed consolidated financial statements ("unaudited condensed consolidated (“financial statements"statement”) of PAR Technology Corporation (thethrough its consolidated subsidiaries (collectively, the “Company” or, “PAR”, "we"“we”,"us" “us” or “our Company”) have been prepared in accordance with U.S.accounting principles generally accepted accounting principlesin the United States of America (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements.statements as promulgated by the Securities and Exchange Commission (“SEC”). In the opinion of management, the Company's unaudited condensed consolidated financial statements include all normal and recurring adjustments necessary in order to make the unaudited condensed consolidated financial statements not misleading and to provide a fair presentation of the Company's financial results for the interim period included in this Quarterly Report on Form 10-Q (“Quarterly(this “Quarterly Report”). Interim results are not necessarily indicative of results for the full year or any future periods. The information included in this Quarterly Report should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020 filed with the Securities and Exchange Commission (“SEC”)SEC on March 16, 2020.2021 (“2020 Annual Report”).


The preparation of the unaudited condensed 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include revenue recognition, stock-based compensation, the recognition and measurement of assets acquired and liabilities assumed in business combinations at fair value, the carrying amount of property, plant and equipment including right-to-use assets and liabilities, identifiable intangible assets and goodwill, the measurement of liabilities and equity recognized for outstanding convertible notes, valuation allowances for receivables, inventories, and measurement of contingent consideration at fair value. Actual results could differ from those estimates. The Company's estimates are subject to uncertainties associated with the ongoing COVID-19 pandemic; the extent to which the COVID-19 pandemic will impact these estimates is uncertain and cannot be predicted, and there can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on these estimates.


The Company operates in two2 distinct reporting segments, Restaurant/Retail and Government. The Company’s chief operating decision maker is the Company’s Chief Executive Officer. The Restaurant/Retail reporting segment provides point-of-sale (POS)(“POS”) software and hardware, back-office software, and integrated technical solutions to the restaurant and retail industries. The Government reporting segment provides intelligence, surveillance, and reconnaissance solutions and mission systems support to the United States Department of Defense and other Federal agencies. In addition, the unaudited condensed consolidated financial statements include corporate and eliminations,operations, which isare comprised of enterprise-wide functional departments.


Additionally,Cash and Cash Equivalents

The Company considers all highly liquid investments, purchased with a remaining maturity of three months or less, to be cash
equivalents including money market funds.

The Company maintained bank balances that, at times, exceeded the Company has reclassified certain costs and expenses in the condensed consolidated statement of operations forfederally insured limit during the three months ended March 31, 2019, amounting2021. The Company has not experienced losses relating to $0.3 million, from amortization of intangible assetsthese deposits and management does not believe that
the Company is exposed to cost of serviceany significant credit risk with respect to conform to the current period presentation. These reclassifications had no effect on previously reported total coststhese amounts.

Cash and operating expenses and net loss.

Use of Estimates

Preparationcash equivalents consist of the unaudited interim condensed consolidated financial statementsfollowing (in thousands):
March 31, 2021December 31, 2020
Cash and cash equivalents
Cash$63,580 $59,700 
Money market funds109,542 120,986 
Total cash and cash equivalents$173,122 $180,686 

Gain on Insurance Proceeds

During the three months ended March 31, 2021, the Company received $4.4 million of insurance proceeds in conformityconnection with GAAP requires managementthe settlement of a legacy claim.

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Other Long-Term liabilities

Other long-term liabilities represent amounts owed to make estimatesemployees that participate in the Company’s deferred compensation
plan, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the datelong-term portion of the condensed consolidated financial statementsCoronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) deferred payroll taxes. The amount owed to employees participating in the deferred compensation plan was $2.8 million at March 31, 2021 and December 31, 2020.

Under the CARES Act employers can defer payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the reported amountsremaining 50% due December 31, 2022. As permitted under the CARES Act, the Company deferred payment of revenuethe employer portion of social security taxes through the end of 2020. As of March 31, 2021 and expensesDecember 31, 2020, the Company deferred a total of $2.8 million of payroll taxes during the reporting period.

Due2020, to the COVID-19 pandemic, there has been uncertainty and disruptionbe paid equally in the global economyfourth quarters of 2021 and financial markets.2022. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revisioncurrent portion of the carrying value of its assets ordeferred payroll taxes was $1.4 million at March 31, 2021 and December 31, 2020 and was included within accrued salaries and benefits and $1.4 million in other long-term liabilities as of May 11, 2020,on the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.consolidated balance sheet.


Recently Adopted Accounting Pronouncements


In June 2016, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update ("ASU") 2016-13, "Financial Instruments – Credit Losses (Topic 326): "Measurement of Credit Losses on Financial Instruments." ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date, based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The Company adopted ASU 2016-13


effective January 1, 2020, and the application of the standard had no material impact on the Company's financial results for the quarter ended March 31, 2020.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates Step 2 from the goodwill impairment test which required entities to compute the implied fair value of goodwill. Under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted ASU 2017-04 effective January 1, 2020, and the application of the standard had no material impact on the Company's financial results for the quarter ended March 31, 2020.

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the fair value measurement disclosures with the primary focus to improve effectiveness of disclosures in the notes to the financial statements that is most important to the users. ASU 2018-13 modifies the required disclosures related to the valuation techniques and inputs used, uncertainty in measurement, and changes in measurements applied. The Company adopted ASU 2018-13 effective January 1, 2020, and the application of the standard had no material impact on the Company's financial results for the quarter ended March 31, 2020.

In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other (Topic 350) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU 2018-15 provides guidance on the measurement of costs for internal-use software during the design, development, and implementation stages for customers in a cloud hosting arrangement. ASU 2018-15 also requires the capitalized costs associated with the design, development and implementation of cloud hosted arrangements to be amortized over the term of the hosting arrangement. The Company adopted ASU 2018-15 effective January 1, 2020, and the application of the standard had no material impact on the Company's financial results for the quarter ended March 31, 2020.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): "SimplifyingSimplifying the Accounting for Income Taxes"Taxes, which is intended to simplify various requirements related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-122016-13 effective January 1, 2021, and the application of the standard had no material impact on the Company's financial statements for the three months ended March 31, 2021.

Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which is intended to reduce the number of accounting models for convertible debt instruments and convertible preferred stock, and amend guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020,2021, with early adoption permitted. The Company is currently assessing the impact of this standard on its unaudited condensed consolidated financial statements.


With the exception of the new standards discussed above, there were no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 20202021 that are of significance or potential significance to the Company, as compared to the recent accounting pronouncements described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.Company.


Note 2 -— Revenue Recognition


OurThe Company's revenue is derived from Softwaresoftware as a Service (SaaS)service (“SaaS”), hardware and software sales, software activation, hardware support, installations, maintenance and professional services. ASC 606: "RevenueAccounting Standards Codification(“ASC”) Topic 606: Revenue from Contracts with Customers" Customers requires usthe Company to distinguish and measure performance obligations under customer contracts. Contract consideration is allocated to all performance obligations within the arrangement or contract. Performance obligations that are determined not to be distinct are combined with other performance obligations until the combined unit is determined to be distinct and that combined unit is then recognized as revenue over time or at a point in time depending on when control is transferred.


WeThe Company evaluated the potential performance obligations within ourits Restaurant/Retail reporting segment and evaluated whether each performance obligation met the ASC Topic 606 criteria to be considered distinct performance obligations. Revenue in the Restaurant/Retail reporting segment is recognized at a point in time for software, hardware and installations. Revenue on these items are recognized when the customer obtains control of the asset. This generally occurs upon delivery and acceptance by the customer or upon installation or delivery to a third party carrier for onward delivery to customer. Additionally, revenue in the Restaurant/Retail reporting segment relating to SaaS, ourAdvanced Exchange hardware Advanced Exchange,service programs, on-site support and other services is recognized over time as the customer simultaneously receives and consumes the benefits of the Company’s performance obligations. OurThe Company’s support services are stand-ready obligations that are provided over the life of the contract, generally 12 months. We offerThe Company offers installation services to ourits customers for hardware and software for which wethe Company primarily hirehires third-party contractors to install the equipment on ourthe Company's behalf. We pay third-partyThe Company pays third party contractors an installation service fees at mutuallyfee based on an hourly rate agreed rates.to by the Company and contractor. When third-partythird party installers are


used, we determinethe Company determines whether the nature of ourits performance obligations is to provide the specified goods or services ourselvesitself (principal) or to arrange for a third-party to provide the goods or services (agent). In directthe Company's customer
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arrangements, we have discretion over our pricing; we arethe Company is primarily responsible for providing a good or service; and we havethe Company has inventory risk before the good or service is transferred to the customer.customer, and the Company has discretion in establishing prices. As a result, we havethe Company concluded that we areit is the principal in the arrangement and recordrecords installation revenue on a gross basis.


Our contractsThe support services associated with hardware and software sales are a “stand-ready obligation” satisfied over time on the basis that the customer consumes and receives a benefit from having access to the Company's support resources, when and as needed, throughout the contract term. For this reason, the support services are recognized ratably over the term since the Company satisfies its obligation to stand ready by performing these services each day. Contracts typically require payment within 30 to 90 days from the shipping date or installation date.date, depending on the Company's terms with the customer. The primary method used to estimate a stand-alone selling price, is by referring to the price that we chargethe Company charges for thatthe particular good or service when we sell itsold by the Company separately under similar circumstances to similar customers. The Company determines stand-alone selling priceprices as follows: hardware, software (on-premises and SaaS) and software activation (which is a one-time(one-time fee charged at the initial offering of software)software or SaaS) performance obligations are recognized at a stand-alone selling price based on the price at which the Company sells the particular good or service separately in similar circumstances and to similar customers. The stand-alone selling price for all other performance obligations, including: pass-through hardware, such as terminals, printers, or card readers; hardware support including(referred to as Advanced Exchange,Exchange), installation, and maintenance;maintenance, software upgrades;upgrades, and professional services including project management,(project management) is recognized by using an expected cost plus margin.


OurThe Company's revenue in the Government reporting segment is generally recognized over time as control of products or services is generally transferred continuously to ourits customers. While revenueRevenue generated by the Government reporting segment is predominantly related to services, we do generateservices; provided, however, revenue from salesis also generated through the sale of materials, software, hardware, and maintenance. For the Government reporting segment cost plus fixed fee contract portfolio, revenue is recognized over time using costs incurred as of a determinationto date to measure progress toward satisfying ourthe Company's performance obligations. Incurred costs representcost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, overhead and general and administrative expenses. Profit is recognized on the fixed fee portion of the contract as costs are incurred and invoiced. Long-term fixed price contracts and programs involve the use of various techniquesjudgment to estimate the total contract revenue and costs. For long-term fixed price contracts, we estimatethe Company estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract, and recognize itthat profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include: labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; and the performance of subcontractors. Revenue and profit in future periods of contract performance are recognized using the sameaforesaid assumptions, adjusted for estimatedand adjusting the estimate of costs to complete a contract. Once the services provided are determined to be distinct or not distinct, we evaluatethe Company evaluates how to allocate the transaction price. Generally, the Government reporting segment does not sell the same good or service to similar customers and the contract performance obligations are unique to each government contract.solicitation. The performance obligations are typically not distinct; however, indistinct. In cases where there are distinct performance obligations, the transaction price iswould be allocated to each performance obligation ratably,on a ratable basis based upon the stand-alone selling price of each performance obligation. Cost plus margin is used for the cost plus fixed fee contract portfolios as well as the fixed price and time and materials contracts portfolios to determine the stand-alone selling price.


In determining when to recognize revenue, we analyzethe Company analyzes whether ourits performance obligations in ourits Government contracts are satisfied over a period of time or at a point in time. In general, ourthe Company's performance obligations are satisfied over a period of time. However, there may be circumstances where the latter or both scenarios could apply to a contract.


We generally anticipate receipt ofThe Company does not include backlog as revenue as it may not result in actual revenue in any particular period, or at all. The Company usually expects payment within 30 to 90 days from the datesatisfaction of service.a performance obligation. None of ourthe Company's contracts as of DecemberMarch 31, 20192021 or March 31, 2020 contained a significant financing component.
 
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Performance Obligations Outstanding


The Company's performance obligations outstanding represent the transaction price of firm, non-cancellable orders, with expected delivery dates to customers subsequent toafter March 31, 20202021 and March 31, 2019,2020, respectively, for work that has not yet been performed. The activity of outstanding performance obligations as isit relates to customer deposits and deferred service revenue is as follows:



(in thousands)20212020
Beginning balance - January 1$11,082 $12,486 
Recognition of deferred revenue(2,603)(4,034)
Deferral of revenue2,597 4,026 
Ending balance - March 31$11,076 $12,478 
The above table excludes customer deposits of $1.6 million and $1.8 million for the three months ended March 31, 2021 and 2020, respectively. The majority of the deferred revenue balances above relate to professional services, maintenance agreements, and software licenses. These are recognized straight-line over the life of the contract, with the majority of the balance being recognized within the next twelve months.
(in thousands)

20202019
Beginning balance - January 1$16,000
$14,134
Deferral of revenue8,579
7,023
Recognition of revenue(8,571)(6,047)
Changes in customer deposits(1,741)1,237
Ending balance - March 31$14,267
$16,347

In the Restaurant/Retail reporting segment most performance obligations over one year are relatedrelate to service and support contracts, approximately 59%78% of which we expectthe Company expects to fulfill within the one-year periodone year. The Company expects to fulfill 100% of support and 100%service contracts within 60 months. At March 31, 2021 and December 31, 2020, transaction prices allocated to future performance obligations were $11.1 million and $11.1 million, respectively.


During the three months ended March 31, 20202021 and March 31, 2019, we2020, the Company recognized revenue of $7.2$2.6 million and $5.7$4.0 million,
respectively, which are included in the contract liabilities at the beginning of the respectiveeach such period.


The value of existing contracts in the Government reporting segment at March 31, 2021, net of amounts relating to work performed to that date, was approximately $140.1 million, of which $30.2 million was funded, and at December 31, 2020, net of amounts relating to work performed to that date, was approximately $136.1$150.5 million, of which $34.5 million was funded, and at December 31, 2019, net of amounts relating to work performed to that date, was approximately $148.7 million, of which $32.8$27.8 million was funded. The value of existing contracts, net of amounts relating to work performed to that dateat March 31, 2021 are expected to be recognized as revenue over time as follows (in thousands):


Next 12 Months$56,238 
Months 13-2447,328 
Months 25-3624,434 
Thereafter12,066 
TOTAL$140,066 
Next 12 Months$52,796
Months 13-2435,110
Months 25-3627,924
Thereafter20,227
TOTAL$136,057



Disaggregated Revenue
The Company disaggregates revenue from customer contracts with customers by major product groupline for each of its reporting segment. Thesegments because the Company believes this methodit best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Disaggregation of revenue for the three months ended March 31, 2020 and March 31, 2019 is as follows:follows (in thousands):
Three months ended March 31, 2021
Restaurant/Retail
Point in Time		Restaurant/Retail
Over Time		Government
Over Time
Hardware$17,835 $0 $0 
Software243 7,633 0 
Service3,412 7,461 0 
Mission Systems0 0 9,547 
ISR Solutions0 0 8,131 
Product0 0 205 
TOTAL$21,490 $15,094 $17,883 
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Three months ended March 31, 2020
(in thousands)

Three months ended March 31, 2020
Restaurant/Retail - Point in TimeRestaurant/Retail - Over TimeGovernment - Over TimeRestaurant/Retail
Point in Time		Restaurant/Retail
Over Time		Government
Over Time
Restaurant/Retail$28,838
$8,571
$—
HardwareHardware$18,137 $0 $0 
SoftwareSoftware562 6,382 0 
ServiceService4,942 7,386 0 
Mission Systems—
—
8,448
Mission Systems0 0 8,448 
ISR Solutions—
—
8,875
ISR Solutions0 0 8,772 
ProductProduct0 0 103 
TOTAL$28,838
$8,571
$17,323
TOTAL$23,641 $13,768 $17,323 
The Company has reclassified the prior year information in the above table to conform to the current year presentation.
(in thousands)Three months ended March 31, 2019

Restaurant/Retail - Point in TimeRestaurant/Retail - Over TimeGovernment - Over Time
Restaurant/Retail$23,023
$5,103
$—
Grocery490
944
—
Mission Systems—
—
8,546
ISR Solutions—
—
6,576
TOTAL$23,513
$6,047
$15,122




Practical Expedients and Exemptions

The Company generally expenses sales commissions when incurred because the amortization period iswould be less than one year or the total amount of commissions is immaterial. We record these expensesCommissions are recorded in selling, general and administrative in the condensed consolidated statements of operations.

Weexpenses. The Company elected to exclude from the transaction price measurement, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (for example, sales, use, value added, and some excise taxes).


Note 3 — Acquisitions

Drive-Thru Acquisition

Effective September 30, 2019, the Company, through its wholly-owned subsidiary ParTech, Inc. ("ParTech"), acquired assets of 3M Company's Drive-Thru Communications Systems business, including the XT-1 and G5 headset systems, contracts and intellectual property associated with the business, for a purchase price of $8.4 million (total fair value of assets were $8.4 million, net of warranty liability of $1.4 million, resulting in cash paid of $7.0 million) (the "Drive-Thru Acquisition").

Restaurant Magic Acquisition

Effective December 18, 2019, the Company, through ParTech, acquired 100% of the limited liability company interests of AccSys LLC (f/k/a AccSys, Inc., and otherwise known as Restaurant Magic) in base consideration of approximately $43.0 million, of which approximately $13.0 million was paid in cash, $27.5 million was paid in restricted shares of Company common stock (issued in January 2020) and $2.0 million was paid by delivery of a subordinated promissory note (the "Restaurant Magic Acquisition"). Topic 805: "Business Combinations" allows entities a measurement period of up to one year from the acquisition date to finalize the allocation. The measurement period remains open pending the completion of valuation procedures related to the acquired tangible and intangible assets and assumed liabilities. Following the closing of the transaction, the sellers have the opportunity through 2022 to earn additional purchase price consideration subject to the achievement of certain post-closing revenue focused milestones (“Earn-Out”). As of December 31, 2019 and March 31, 2020, the value of the Earn-Out based on the Monte Carlo simulation was $3.3 million. The Earn-Out, if any, will be payable 50% in cash or subordinated promissory notes, or a combination of both, at the Company's election, and 50% in restricted shares of Company common stock. This Earn-out has no maximum payment.

The Company issued restricted stock units in connection with its assumption of awards granted by Restaurant Magic to its employees and contractors prior to the closing of the acquisition.

The fair values assigned to the acquired assets and assumed liabilities presented in the table below are based on our best estimates and assumptions as of the reporting date:
(in thousands)Purchase price allocation
Developed technology$16,400
Customer relationships1,100
Trade name900
Tangible assets1,344
Goodwill27,945
Total assets47,689
Accounts payable and accrued expenses629
Deferred revenue715
Earn out liability3,340
Consideration paid$43,005







Unaudited Pro Forma Financial Information

For the three months ended March 31, 2020, the Drive-Thru Acquisition and Restaurant Magic Acquisition resulted in additional revenues of $3.5 million and $2.2 million, respectively. The Company has determined it is impractical to report the amounts of net loss for the Drive-Thru and Restaurant Magic acquisition for each entity for the quarter ended March 31, 2020. The following unaudited pro forma financial information presents our results as if the Drive-Thru Acquisition and Restaurant Magic Acquisition amounts of net loss had occurred January 1, 2019:
(in thousands)Three months ended March 31, 2019
Total revenue$51,352
Net loss$(263)
Note 4 — Divestiture

Sale of SureCheck

During the second quarter of 2019, ParTech entered into an asset purchase agreement to sell substantially all of the assets relating to the SureCheck product group within the Company's Restaurant/Retail reporting segment. The sale does not qualify for treatment as a discontinued operation, and therefore, the SureCheck product group is included in the Company’s continuing operations for all periods presented.

Note 5 — Accounts Receivable, Net


The Company’s net accounts receivable, net,receivables consists of:of (in thousands):

March 31, 2021December 31, 2020
Government segment:  
Billed$10,700 $11,225 
Advanced billings(159)(948)
 10,541 10,277 
Restaurant/Retail segment:28,165 32,703 
Accounts receivable - net$38,706 $42,980 
 March 31, 2020 December 31, 2019
Government reporting segment:   
Billed$9,895
 $11,608
Advanced billings(754) (608)
 9,141
 11,000
    
Restaurant/Retail reporting segment:33,678
 30,774
Accounts receivable - net$42,819
 $41,774


At March 31, 20202021 and December 31, 2019,2020, the Company recorded allowances for doubtful accountshad current, expected credit loss of $2.1$1.3 million and $1.8$1.4 million, respectively, against the accounts receivable for the Restaurant/Retail reporting segment. The changesChanges in the allowance for doubtful accounts during the three months ended March 31, 2020current, expected credit loss were as follows:

(in thousands)20212020
Beginning Balance - January 1$1,416 $1,849 
(Reductions) provisions(18)380 
Write-offs(129)(156)
Recoveries(15)0 
Ending Balance - March 31$1,254 $2,073 
(in thousands)2020
Beginning balance - January 1$1,849
Provisions380
Write-offs(156)
Recoveries—
Ending balance - March 31$2,073


Receivables recorded as of March 31, 20202021 and December 31, 20192020 all represent unconditional rights to payments from customers.

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Note 64 — Inventories, Net


Inventories are primarily used in the manufacture maintenance and service of products within the Restaurant/Retail reporting segment.products. The components of inventories,inventory, net consist of the following:

(in thousands)March 31, 2021December 31, 2020
Finished goods$14,634 $12,747 
Work in process8 16 
Component parts6,717 6,105 
Service parts3,937 2,770 
 $25,296 $21,638 
 (in thousands)March 31, 2020 December 31, 2019
Finished goods$11,630
 $8,320
Component parts7,370
 6,768
Service parts4,339
 4,238
 $23,339
 $19,326


At March 31, 20202021 and December 31, 2019,2020, the Company had inventoryexcess and obsolescence reserves of $11.4$12.2 million and $9.8$12.0 million, respectively, against inventories used in the Restaurant/Retail reporting segment, which relate primarily to service parts.inventories.


Note 75 — Identifiable Intangible Assets and Goodwill


IdentifiableThe Company's identifiable intangible assets represent intangible assets acquired by the Company in connection with its acquisition of Brink Software Inc. ("Brink Acquisition"), the Drive-Thru Acquisition and the Restaurant Magic Acquisition,from acquisitions and software development costs. The Company capitalizes certain costs related to the development of its platform and other software applications for internal use in accordance with ASC Topic 350-40, Intangibles - Goodwill and Other - Internal - Use Software. The Company begins to capitalize its costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. The Company stops capitalizing these costs when the software is substantially complete and ready for its intended use, including the completion of all significant testing. These costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated to be three to five years. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditure will result in additional functionality and expense costs incurred for maintenance and minor upgrades and enhancements. Costs incurred prior to meeting these criteria together with costs incurred for training and maintenance are expensed as incurred and recorded within research and development expenses in the Company's consolidated statements of operations.

The Company exercises judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized. To the extent that the Company can change the manner in which new features and functionalities are developed and tested related to its platform, assessing the ongoing value of capitalized assets or determining the estimated useful lives over which the costs are amortized, the amount of internal-use software development costs for software used in its Restaurant/Retail reporting segment. Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs.  The technological feasibility of a software product is established when the Company has completed all planning, designing, coding,capitalizes and testing activities necessary to establish that the software product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility of software sold as a perpetual license, as defined within ASC 985-20, "Software – Costs of Software to be sold, Leased, or Marketed", are capitalized and amortized on a product-by-product basis when the software product is available for general release to customers. amortizes could change in future periods.

Included in "Acquired and internally developed software costs" in the table belowidentifiable intangible assets are approximately $4.4$3.6 million and $2.5$6.5 million of costs related to software products that have not satisfied the general release threshold as of March 31, 20202021 and December 31, 2019,2020, respectively. These software products are expected to satisfy the general release threshold within the next 12 months. Software development costs are also capitalized in accordance with ASC 350-40, “Intangibles - Goodwill and Other - Internal - Use Software,” and are amortized over the expected benefit period, which generally ranges from three to five years. Software development costs capitalizedplaced into service during the three months ended March 31, 20202021 and March 31, 20192020 were $4.8 million and $1.8 million, and $1.0 million, respectively. 

Annual amortization charged to cost of sales is computed using the straight-line method over the remaining estimated economic life of software products,the product, generally three to five years. Amortization of capitalized software development costs from continuing operations for the three months ended March 31, 20202021 and 2019 were $1.6 million and $0.5 million, respectively. 

Amortization of intangible assets acquired in the Brink Acquisition, the Drive-Thru Acquisition and the Restaurant Magic Acquisition equaled $0.2 million, $0.2 million and $0.6 million, respectively, for the three month period ended March 31, 2020 compared to $0.2were $2.0 million related to the Brink Acquisition for the three month period ended March 31, 2019.and $1.6 million, respectively. 



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The components of identifiable intangible assets are:
(in thousands)March 31, 2021December 31, 2020Estimated
Useful Life
Acquired and internally developed software costs$44,979 $40,170 3 - 5 years
Customer relationships4,860 4,860 7 years
Trade names1,410 1,410 2 - 5 years
Non-competition agreements30 30 1 year
 51,279 46,470  
Less accumulated amortization(22,624)(20,265) 
 28,655 26,205  
Internally developed software costs not meeting general release threshold3,597 6,516 
Trademarks, trade names (non-amortizable)400 400 
 $32,652 $33,121 
 (in thousands)March 31, 2020 December 31, 2019 
Estimated
Useful Life
Acquired and internally developed software costs$36,137
 $36,137
 3 - 5 years
Customer relationships4,860
 4,860
 7 years
Non-competition agreements30
 30
 1 year
 41,027
 41,027
  
Less accumulated amortization(14,087) (12,389)  
 $26,940
 $28,638
  
Internally developed software costs not meeting general release threshold4,353
 2,500
  
Trademarks, trade names (non-amortizable)1,810
 1,810
 Indefinite
 $33,103
 $32,948
    


The expected future amortization of intangible assets, assuming straight-line amortization of capitalized software development costs and acquisition related intangibles, and excluding software costs not meeting the general release threshold, is as follows (in thousands):

2021, remaining$6,479 
20227,321 
20235,321 
20243,360 
20253,105 
Thereafter3,069 
Total$28,655 
2020, remaining$3,837
20214,112
20225,311
20234,182
20244,182
Thereafter5,316
Total$26,940


The Company operates in two2 reporting segments, Restaurant/Retail and Government, which are also the Company's identified reporting units.units for purposes of evaluating goodwill impairment. The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment of goodwill. Goodwill is assigned to a specific reporting unit at the date the goodwill is initially recorded; once assigned, goodwill no longer retains its association with a particular acquisition and all of the activities within the reporting unit, whether acquired organically or from a third-party, or organically acquired, are available to support the value of the goodwill. The amount of goodwill carried by the Restaurant/Retail and Government reporting unit was $41.4segments remained at $41.2 million atfor both March 31, 20202021 and December 31, 2019,2020, respectively. The Company recognized additions to goodwill as part of the Drive-Thru Acquisition and Restaurant Magic Acquisition as indicated in Note 3.

The Company is actively monitoring the impacts of COVID-19 that could impact the need to consider a triggering event in the future. As of December 31, 2019 and March 31, 2020, the goodwill asset balance was $41.4 million. No impairment charges were recorded for the periods ended March 31, 2020 or March 31, 2019.
Note 86 — Debt


On April 15, 2019, the Company sold $80.0 million in aggregate principal amount of 4.500% Convertible Senior Notes due 2024 (the "2024 Notes"“2024 Notes”). The 2024 Notes were sold pursuant to an indenture, dated April 15, 2019, (the "2024 Indenture"), between the Company and The Bank of New York Mellon Trust Company, N.A. (“Trustee”, as Trustee (the “2024 Indenture”). The 2024 Notes pay interest at a rate equal to 4.500% per year, payable semiannually in arrears on April 15 and October 15 of each year, beginning October 15, 2019. Interest accrues on the 2024 Notes from the last date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from April 15, 2019. Unless earlier converted, redeemed or repurchased, the 2024 Notes mature on April 15, 2024.


On February 10, 2020, the Company sold $120.0 million in aggregate principal amount of 2.875% Convertible Senior Notes due 2026 (the "2026 Notes"“2026 Notes” and, together with the 2024 Notes, the "Notes"“Notes”). The 2026 Notes were sold pursuant to an indenture, dated February 10, 2020 (the "2026 Indenture"“2026 Indenture” and, together with the 2024 Indenture, the "Indentures"“Indentures”), between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee. The 2026 Notes pay interest at a rate equal to 2.875% per year, payable semiannually in arrears on April 15 and October 15 of each year, beginning October 15, 2020. Interest accrues on the


2026 Notes from the last date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from April 15,February 10, 2020. Unless earlier converted, redeemed or repurchased, the 2026 Notes mature on April 15, 2026.


The Company used approximately $66.3 million (excluding cash payments relating to accrued interest and fractional shares) from its sale of the 2026 Notes and issued 722,423 shares of common sharesstock at $32.43 per share out of treasury stock with an average cost basis of $3.37 per share per share to repurchase approximately $66.3 million in aggregate principal amount of the 2024
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Notes through individually negotiated transactions. Of the total price paid for the 2024 Notes, $59.0 million was allocated to the 2024 Notes settlement, $30.8 million was allocated to the equity component, and $1.0 million was used to pay off accrued interest on the 2024 Notes. The consideration transferred was allocated to the liability and equity components of the 2024 Notes using the equivalent rate that reflected the borrowing rate for a similar non-convertible debt instrument immediately prior to settlement. The transaction resulted in a loss on settlement of convertible notes of $8.1 million, which is recorded as a Loss on extinguishment of debt in the Company’s unaudited condensed consolidated statementstatements of operations. The loss represents the difference between (i) the fair value of the liability component and (ii) the sum of the carrying value of the debt component and any unamortized debt issuance costs at the time of settlement.


The carrying amount of the liability component was calculated by estimating the fair value of similar notes that do not have associated convertible features. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the fair value amount of the Notes. The valuation model used in determining the fair value of the liability component for the Notes includes inputs, such as the implied debt yield within the nonconvertible borrowing rate. The implied estimated effective rate of the liability component of the 2024 Notes and 2026 Notes is 10.24%was 10.2% and 7.33%7.3%, respectively.


The Notes are senior, unsecured obligations of the Company. The 2024 Notes and the 2026 Notes are convertible, in whole or in part, at the option of the holder, upon the occurrence of specified events or certain fundamental changes set forth in the Indentures prior to the close of business on the business day immediately preceding October 15, 2023 and October 15, 2025, respectively; and, thereafter, at any time until the close of business on the second business day immediately preceding maturity. The 2024 Notes are convertible into Company common stock at an initial conversion rate of 35.0217 shares per $1,000 principal amount and the 2026 Notes are convertible into Company common stock at an initial conversion rate of 23.2722 shares per $1,000 principal amount. Upon conversion, the Company may elect to settle by paying or delivering either solely cash, shares of Company common stock or a combination of cash and shares of Company common stock.


In accordance with ASC Topic 470-20 "Debt Debt with Conversion and Other Options — Beneficial Conversion Features"Features, the initial measurement of the 2024 Notes at fair value resulted in a liability of $62.4 million and as such, the calculated discount resulted in an implied value of the convertible feature recognized in Additional Paid in Capital of $17.6 million. In accordance with ASC 470-20,million; and the initial measurement of the 2026 Notes at fair value resulted in a liability of $93.8 million and as such, the calculated discount resulted in an implied value of the convertible feature recognized in Additional Paid in Capital of $26.2 million. Issuance costs for the transactionsNotes amounted to $4.9 million and $4.2 million for the 2024 Notes and 2026 Notes, respectively. These costs were allocated to debt and equity components on a ratable basis. For the 2024 Notes this amounted to $3.8 million and $1.1 million to the debt and equity components, respectively. For the 2026 Notes this amounted to $3.1$3.3 million and $1.1$0.9 million to the debt toand equity components, respectively.


The Indentures contain covenants that, among other things, restrict the Company’s ability to merge, consolidate or sell, or otherwise dispose of, substantially all of its assets and customary Events of Default (as defined in the Indentures).


In connection with the saleAs a result of the 2026changes to the equity components of the Notes, the Company recorded anrecognized a deferred income tax benefit of $5.4 million induring the first quarter of 2020 as a result of the creation of a deferred tax liability associated with the portion of the 2026 Notes that was classified within stockholders' equity. While GAAP requires the offset of the deferred tax liability to be recorded in additional paid-in capital, consistent with the equity portion of the 2026 Notes, the creation of the deferred tax liability produced evidence of recoverability of the Company's net deferred tax assets which resulted in the release of a valuation allowance, totaling $5.4 million, reflected as an income tax benefit in the first quarter ofthree months ended March 31, 2020.


The following table summarizes information about the net carrying amounts of the 2024 Notes and 2026 Notes as of March 31, 2020:2021:
(in thousands)2024 Notes2026 Notes
Principal amount of notes outstanding$13,750 $120,000 
Unamortized discount (including unamortized debt issuance cost)(2,447)(24,984)
Total long-term portion of notes payable$11,303 $95,016 
(in thousands)2024 Notes2026 Notes
Principal amount of 2024 Notes outstanding$13,750
$120,000
Unamortized discount (including unamortized debt issuance cost)(3,219)(29,804)
Total long-term portion of notes payable$10,531
$90,196




The following table summarizes interest expense recognized:recognized on the Notes:
(in thousands)Three months ended March 31,
20212020
Contractual interest expense$(1,017)$(1,014)
Amortization of debt issuance costs and discount(1,174)(958)
Total interest expense$(2,191)$(1,972)

14
(in thousands)Three Months Ended March 31, 2020
 20202019
Contractual interest expense$(1,014)$(146)
Amortization of debt issuance costs and discount(958)—
Total interest expense$(1,972)$(146)
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The following table summarizes the future principal payments for the 2024 Notes and 2026 Notesas of March 31, 2021 (in thousands):
2021, remaining$0 
20220 
20230 
202413,750 
20250 
Thereafter120,000 
Total$133,750 
2020, remaining$—
2021—
2022—
2023—
202413,750
Thereafter120,000
 $133,750


In connection with the Restaurant Magic Acquisition, see Note 3 - Acquisitions,acquisition of AccSys, LLC in December 2019, the Company entered into a $2.0 million was paid by delivery of a subordinated promissory note. The note bears interest at 4.5%5.75% per annum, with monthly payments of principal and interest in the amount of $60,391$60,625 payable beginning January 15, 2020 through maturity on December 15, 2022. As of March 31, 2020,2021, the outstanding balance of the subordinated promissory note was $1.8$1.2 million of which $0.7 million was in the current portion of long-term debt. The Company's future minimum principal payments are $0.5 million $0.7 million and $0.7 million for the remainder of 2020, 2021 and 2022, respectively.

Note 97 — Common Stock

On October 5, 2020, the Company completed an underwritten public offering (the “Secondary Offering”) of 3,350,000 shares of common stock at a price to the public of $38.00 per share, resulting in $121.8 million of proceeds, net of underwriting discounts and commissions and offering expenses payable by the Company. In connection with the Secondary Offering, the Company granted Jeffries LLC, the underwriter of the offering, a 30 day option to purchase up to an additional 502,500 shares of common stock at the same public offering price, less underwriting discounts and commissions. On November 3, 2020, Jeffries, LLC partially exercised its option and purchased 266,022 shares of common stock, resulting in an additional $9.6 million of proceeds, net of underwriting discounts and commissions and offering expenses payable by the Company.
Note 8 — Stock Based Compensation


The Company applies the fair value recognition provisions of ASC Topic 718: "Stock Compensation"718: Stock Compensation. The CompanyStock-based compensation expense, net of forfeitures of $34.0 thousand and $52.0 thousand for March 31, 2021 and March 31, 2020, respectively, was recorded stock based compensationto the following line items in the consolidated statements of $1.1 million and $0.2 millionoperations for the three month periodsmonths ended March 31, 2020 and March 31, 2019, respectively. 31:
20212020
Cost of Sales - Contracts$67 $94 
Selling, general and administrative1,253 995 
Total stock-based compensation expense$1,320 $1,089 
At March 31, 2020,2021, the aggregate unrecognized compensation expense related to unvested equity awards was $10.1$9.1 million, (net of estimated forfeitures), which is expected to be recognized as compensation expense in fiscal years 20202021 through 2023.2024.

The fair value of options at the date of the grant was estimated using the Black-Scholes model with the following assumptions for the respective period ending March 31, 2020:
 March 31, 2020
Expected option life4.4 years
Weighted average risk-free interest rate0.4%
Weighted average expected volatility47%
Expected dividend yield0%
Fair value of options granted$4.87


A summary of stock option activity for the three months ended March 31, 2020:2021 is below:
(in thousands, except for exercise price)Options OutstandingWeighted
Average
Exercise Price
Outstanding at January 1, 2021957 $14.29 
Exercised(34)12.29 
Canceled/forfeited(29)18.78 
Outstanding at March 31, 2021894 $14.22 

15
(in thousands)Options Outstanding Weighted
Average
Exercise Price
Outstanding at January 1, 2020410
 14.50
Granted587
 12.64
Exercised(2) 11.66
Canceled/forfeited(44) —
Outstanding at March 31, 2020951
 13.40
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A summary of non-vestedunvested restricted stock activity for the three months ended March 31, 2020:2021 is below:
(in thousands, except for award value)Restricted Stock AwardsWeighted
Average
Award Value
Outstanding at January 1, 202161 $25.62 
Granted2 22.36 
Vested(33)24.91 
Forfeited and cancelled(1)20.94 
Outstanding at March 31, 202129 $26.25 
(in thousands)Restricted Stock Awards Weighted
Average
Award Value
Outstanding at Balance at January 1, 2020171
 23.53
Granted21
 29.19
Vested(122) 25.82
Forfeited and cancelled(38) 14.97
Outstanding at March 31, 202032
 28.73


A summary of non-vestedunvested restricted stock units ("RSU"(“RSU”) activity for the three months ended March 31, 2020:2021 is below:
(in thousands, except for award value)RSU AwardsWeighted
Average
Award Value
Outstanding at January 1, 2021427 $15.46 
Granted73 76.13 
Vested(86)16.40 
Outstanding at March 31, 2021414 $26.22 
(in thousands)RSU Awards Weighted
Average
Award Value
Outstanding at Balance at January 1, 2020—
 —
Granted360
 12.64
Vested—
 —
Forfeited and cancelled—
 —
Outstanding at March 31, 2020360
 12.64

Note 109 — Net loss per shareLoss Per Share


Earnings per share areis calculated in accordance with ASC Topic 260: "EarningsEarnings per Share"Share, which specifies the computation, presentation and disclosure requirements for earnings per share (EPS)(“EPS”). It requires the presentation of basic and diluted EPS. Basic EPS excludes all dilution and is based upon the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that would occur if convertible securities or other contracts to issue common stock were exercised. For the three months endedAt March 31, 2020,2021, there were 951,000894,000 anti-dilutive stock options outstanding compared to 486,000951,000 as of March 31, 2019. 2020. At March 31, 2021 there were 414,000 anti-dilutive restricted stock units compared to 67,000 as of March 31, 2020.

The potential effecteffects of the conversion feature with respect to the 2024 Notes and 2026 Notes (See Note 8 - Debt) wasconversion features were excluded from the diluted net loss per share as of March 31, 2020 as the Company's closing stock price on2021 and March 31, 2020 did not exceed the initial conversion price of $28.55 per share or $42.97 per share, respectively. The potential2020. Potential shares from the 2024 Notes and 2026 Notes conversion features at the initialrespective maximum conversion rate wasrates of 46.4037 per share and 30.8356 per share are approximately 481,548638,051 and 2,792,664,3,700,272, respectively. Refer to “Note 6 — Debt” for additional information.

The following is a reconciliation of the weighted average of shares of common stock outstanding for the basic and diluted EPS computations:

(in thousands, except per share data)Three Months Ended March 31,
 2020 2019
Net loss$(10,910) $(2,729)
    
Basic: 
  
Shares outstanding at beginning of period16,629
 16,041
Weighted average shares issued during the period, net1,312
 3
Weighted average common shares, basic17,941
 16,044
Net loss per common share, basic$(0.61) $(0.17)
Diluted: 
  
Weighted average common shares, basic17,941
 16,044
Weighted average common shares, diluted17,941
 16,044
Net loss per common share, diluted$(0.61) $(0.17)



Note 1110 — Contingencies


From time to time, the Company is party to legal proceedings arising in the ordinary course of business. Additionally, U.S. Government contract costs are subject to periodic audit and adjustment. Based on information currently available, and based on its evaluation of such information, the Company believes the legal proceedings in which it is currently involved are not material or are not likely to result in a material adverse effect on the Company’s business, financial condition or results of operations, or cannot currently be estimated.


The Company is a party to a proceeding filed byOn March 21, 2019, Kandice Neals on behalf of herself and others similarly situated (the "Neals Plaintiff"“Neals Plaintiff”) filed a complaint against the Company on March 21, 2019PAR Technology Corporation in the Circuit Court of Cook County, Illinois County Department, Chancery Division. The complaint asserted that the CompanyPAR Technology Corporation violated the Illinois Biometric Information Privacy Act in the alleged collection, use, and storage of her and others' biometric data derived from fingerprint scans taken for authentication purposes on point-of-sale systems. The Neals lawsuit was removed to the Federal District Court for the Northern District of Illinois (the District Court"“District Court”) and was subsequently dismissed on December 19, 2019 without prejudice. On January 15, 2020, the Neals Plaintiff filed an amended complaint against ParTech, Inc. with the District Court. On January 29, 2020, ParTech, Inc. filed its answer and affirmative defenses to the amended complaint. The Company believes the Nealsthat this lawsuit is without merit. The Company doesCompany’s estimated liability for this complaint is not currently believe an accrual is appropriate, but will continuematerial and related contingencies are not expected to monitorhave a material effect on the lawsuit to provide for probable and estimable losses.Company’s financial statements.


In 2016, the Company's Audit Committee commenced an internal investigation into conduct at the Company's China and Singapore offices and voluntarily notified the SEC and the U.S. Department of Justice ("DOJ"(“DOJ”) of the internal investigation. Following the conclusion of the Audit Committee's internal investigation, the Company voluntarily reported the relevant findings of the investigation to the China and Singapore authorities. In early April 2019, the SEC notified the Company that
16
based on current information, it did not intend to recommend an enforcement action against the Company; shortly thereafter, the DOJ advised that it did not intend to separately proceed. Based on recent communications from the Singaporean authority, a penalty related to this matter is probable; the Company’s estimated liability for this penalty is not material and related contingencies are not expected to have a material effect on the Company’s financial statements. The Company is cooperatinghas cooperated with the China and SingaporeChinese authorities, but it is currently not ableunable to predict what actions these authoritiesthe Chinese agencies might take or what the likely outcome of any such actions might be, or fully estimate the range of reasonably possible fines or penalties, which may be material. The China and Singapore authorities have a broad range of civil and criminal sanctions, and the imposition of fines or penalties could have a material adverse effect on the Company’s business, prospects, reputation, financial condition, results of operations or cash flows.at this time.

Note 1211 — Segment and Related Information


The Company operatesis organized in two distinct reporting2 segments, Restaurant/Retail and Government. The Company’s chiefManagement views the Restaurant/Retail and Government segments separately in operating decision maker isits business, as the Company’s Chief Executive Officer. products and services are different for each segment.

The Restaurant/Retail segment provides point-of-sale (POS)is a provider of software, systems and hardware, back-office software, and integrated technical solutionsservices to the restaurant and retail industries. The Restaurant/Retail segment provides multi-unit and individual restaurants, franchisees, and enterprise customers in the three major restaurant categories (fast casual, quick serve, and table service) a fully integrated cloud solution with its Brink POS cloud software and POS hardware for the front-of-house, its back-office cloud software Data Central for the back-of-house, and its wireless headsets for drive-thru order taking. This segment also offers a comprehensive portfolio of services to support its customer' technology and hardware requirements before, during and after software and/or hardware deployments. The Government segment provides intelligence, surveillance, and reconnaissanceperforms complex technical studies, analysis, experiments, develops innovative solutions, and mission systemsprovides on-site engineering in support to the United States Department of Defenseadvanced defense, security and other Federal agencies. In addition, the unaudited condensed consolidated financial statements include corporateaerospace systems. This segment also provides expert on-site services for operating and eliminations, which is comprised of enterprise-wide functional departments.maintaining U.S. Government-owned communication assets.


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




Information as to the Company’s reporting segments is set forth below (in thousands).below:


(in thousands)Three Months
Ended March 31,
 20212020
Net Revenues:  
Restaurant/Retail$36,584 $37,409 
Government17,883 17,323 
Total$54,467 $54,732 
Operating loss:
Restaurant/Retail$(9,285)$(6,070)
Government1,190 1,179 
Other2,074 (783)
Total(6,021)(5,674)
Other expense, net(51)(406)
Interest expense, net(2,160)(1,972)
Loss on extinguishment of debt0 (8,123)
Loss before benefit from income taxes$(8,232)$(16,175)
Depreciation, amortization and accretion:
Restaurant/Retail$2,429 $1,855 
Government36 16 
Other1,525 1,271 
Total$3,990 $3,142 
17
 Three Months
Ended March 31,
 2020 2019
Revenues:   
Restaurant/Retail$37,409
 $29,560
Government17,323
 15,122
    Total$54,732
 $44,682
    
Operating loss: 
  
Restaurant/Retail$(6,070) $(2,982)
Government1,179
 1,363
Other(564) (482)
    Total(5,455) (2,101)
Other expense(625) (430)
Interest expense, net(1,972) (146)
Loss on extinguishment of debt(8,123) —
Loss before provision for income taxes$(16,175) $(2,677)
    
Depreciation, amortization and accretion: 
  
Restaurant/Retail$1,855
 $868
Government16
 19
Other1,271
 125
Total$3,142
 $1,012
    
Capital expenditures including software costs: 
  
Restaurant/Retail$1,707
 $1,063
Government211
 176
Other122
 684
Total$2,040
 $1,923
    
Revenues by country: 
  
United States$52,631
 $41,925
Other Countries2,101
 2,757
Total$54,732
 $44,682



Segment information, continued:
(in thousands)Three Months
Ended March 31,
 20212020
Capital expenditures including software costs:  
Restaurant/Retail$1,517 $1,707 
Government152 211 
Other0 122 
Total$1,669 $2,040 
Revenues by country:  
United States$50,603 $52,631 
Other Countries3,864 2,101 
Total$54,467 $54,732 

The following table represents assets by reporting segment.

(in thousands)March 31, 2021December 31, 2020
Restaurant/Retail$141,330 $140,606 
Government13,165 13,150 
Other184,180 189,993 
Total$338,675 $343,749 

The following table represents identifiable long-lived assets by reporting segment (in thousands).

 March 31, 2020 December 31, 2019
Restaurant/Retail$1,974
 $1,987
Government257
 272
Other11,821
 12,093
Total$14,052
 $14,352

The following table represents identifiable long-livedtangible assets by country based on the location of the assets (in thousands).assets.



(in thousands)March 31, 2021December 31, 2020
United States$247,937 $250,275 
Other Countries14,449 16,570 
Total$262,386 $266,845 

 March 31, 2020 December 31, 2019
United States$13,760
 $14,260
Other Countries292
 92
Total$14,052
 $14,352


The following table represents goodwill by reporting segment (in thousands).segment.


(in thousands)March 31, 2021December 31, 2020
Restaurant/Retail$40,478 $40,478 
Government736 736 
Total$41,214 $41,214 

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 March 31, 2020 December 31, 2019
Restaurant/Retail$40,650
 $40,650
Government736
 736
Total$41,386
 $41,386

Customers comprising 10% or more of the Company’s total revenues by reporting segment are summarized as follows:


Three Months Ended March 31,
 20212020
Restaurant/Retail reporting segment:  
Dairy Queen9 %16 %
Yum! Brands, Inc.12 %11 %
Government reporting segment:
U.S. Department of Defense33 %32 %
All Others46 %41 %
 100 %100 %
 Three months ended March 31,
 2020 2019
Restaurant/Retail reporting segment:   
McDonald’s Corporation9% 10%
Yum! Brands, Inc.11% 13%
Dairy Queen16% 7%
Government reporting segment:  

U.S. Department of Defense32% 34%
All Others32% 36%
 100% 100%


No other customer within All Others represented 10% ofor more of the Company’s total revenue for the three months ended March 31, 20202021 or 2019.2020.

 December 31,
 2019 2018
Restaurant and Retail segment:
   
McDonald’s Corporation10% 19%
Yum! Brands, Inc.16% 13%
Government segment:
   
U.S. Department of Defense34% 33%
All Others40% 35%
 100% 100%

The above represents the final 2019 year end concentration disclosure table, which has been revised to reflect the proper percentage of customers that represented greater than 10% revised for reference.

Note 1312 — Fair Value of Financial Instruments


The Company’s financial instruments have been recorded at fair value using available market information and valuation techniques. The fair value hierarchy is based upon three levels of input, which are:


Level 1 — quoted prices in active markets for identical assets or liabilities (observable)


Level 2 — inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable market data for essentially the full term of the asset or liability (observable)
Level 3 — unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable)


The Company’s financial instruments primarily consist of cash and cash equivalents, trade receivables, trade payables, debt instruments and deferred compensation assets and liabilities. The carrying amounts of cash and cash equivalents, trade receivables and trade payables as of March 31, 20202021 and December 31, 20192020 were considered representative of their fair values. The estimated fair value of the 2024 Notes and 2026 Notes was $10.8 million and $89.8 million, respectively, at March 31, 2020. 2021 was $32.0 million and $206.0 million, respectively. The valuation techniques used to determine the fair value of the 2024 Notes and the 2026 Notes are classified within Level 2 of the fair value hierarchy.


The deferred compensation assets and liabilities primarily relate to the Company’s deferred compensation plan, which allows for pre-tax salary deferrals for certain key employees. Changes in the fair value of the deferred compensation liabilities are derived using quoted prices in active markets of the asset selections made by the participants. The deferred compensation liabilities are classified within Level 2, the fair value classification as defined under FASB ASC Topic 820: "FairFair Value Measurements"Measurements, because their inputs are derived principally from observable market data by correlation to the hypothetical investments. The Company holds insurance investments to partially offset the Company’s liabilities under its deferred compensation plan, which are recorded at fair value each period using the cash surrender value of the insurance investments.


The amounts owed to employees participating in the deferred compensation plan at March 31, 20202021 was $2.9$2.6 million compared to $3.2$2.8 million at December 31, 20192020 and is included in other long-term liabilities on the balance sheets.


As it relates to the contingent consideration associated with the Restaurant Magic Acquisition we may use various valuation techniques depending on the terms and conditions of the contingent consideration, includingThe Company's Level 3 liability had a Monte-Carlo simulation. This simulation uses probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring, as such it is classified as Level 3. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability with a higher liability. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimateof $0 at March 31, 2021 and amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in our consolidated statementsDecember 31, 2020.
19

The following table presents a summary of changes inprovides quantitative information associated with the fair value measurement of the Company’s Level 3 assetsliability for contingent consideration at March 31, 2021 and liabilitiesDecember 31, 2020.
Contingency TypeMaximum Payout
(undiscounted) (in thousands)		Fair ValueValuation TechniqueUnobservable InputsWeighted Average or Range
Revenue-based payments$1,965 $0 Monte CarloRevenue volatility25.0 %
Discount rate14.0 %
Projected year(s) of payment2021-2022
Note 13 — Subsequent Event

On April 8, 2021, the Company, ParTech, Inc., and Sliver Merger Sub, Inc., a wholly owned subsidiary of ParTech, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Punchh Inc. (“Punchh”), and Fortis Advisors LLC (“Stockholder Representative”), solely in its capacity as the initial Stockholder Representative. The Merger was executed as part of the Company's strategy to be a unified commerce cloud platform for restaurants and retailers, and included the addition of Punchh's loyalty and customer engagement platform. Pursuant to the Merger Agreement, on April 8, 2021, Merger Sub merged with and into Punchh (the “Merger”), with Punchh surviving the Merger and becoming a wholly owned subsidiary of the Company. In connection with the Merger, the Company paid former Punchh stockholders approximately $500.0 million (including holders of vested options and warrants) consisting of approximately (i) $390.0 million in cash (the “Cash Consideration”), and (ii) 1,594,202 shares of the Company's common stock, in each case subject to certain adjustments (including customary adjustments for Punchh cash, debt, debt-like items, and net working capital at closing) for 100% of the equity interests in Punchh.

In connection with, and to partially fund the Cash Consideration for, the Merger, on April 8, 2021, the Company entered into (i) a credit agreement, as the borrower, with certain of its U.S. subsidiaries, as guarantors, the lenders that are measuredparty thereto, and Owl Rock First Lien Master Fund, L.P., as administrative agent and collateral agent, that provides for a term loan in an initial aggregate principal amount of $180.0 million; and (ii) securities purchase agreements with each of PAR Act III, LLC (“Act III”), and certain funds and accounts advised by T. Rowe Price Associates, Inc., acting as investment adviser, to raise approximately $160.0 million through a private placement of the Company's common stock. The Company also issued to Act III a warrant to purchase 500,000 shares of the Company's common stock with an exercise price of $76.50 per share.

The initial accounting for the business combination was incomplete at fair value on a recurring basis, and are recorded as a component of other long-term liabilities onMay 10, 2021; however, the consolidated balance sheet (in thousands):

(in thousands)Level 3 Inputs
 Liabilities
Balance at December 31, 2019$3,340
New level 3 liability—
Total gains (losses) reported in earnings—
Settlement of Level 3 liabilities—
Balance at March 31, 2020$3,340

Note 14 — Subsequent Events

In March 2020, the World Health Organization characterized COVID-19 as a pandemic and President Trump declared the COVID-19 outbreak a national emergency. While the COVID-19 pandemic did not have a material adverse impact on our business, operations, andCompany's financial results for the three months endedthree-month period ending March 31, 2020, in late March 2020 our Restaurant/Retail reporting segment began experiencing2021 did include acquisition related costs of $0.7 million. The assets and liabilities of Punchh will be adjusted to their respective fair values as of April 8, 2021, the impactclosing date of the COVID-19 pandemic as a resulttransaction, including working capital, property, plant and equipment, and identifiable intangible assets acquired through the Merger. The excess of its impactthe purchase price over the fair value of net assets acquired will be recorded to goodwill. Intangible assets acquired include, but are not necessarily limited to, developed technology and customer relationships. The estimated acquisition date fair value of these and other acquired assets and liabilities assumed may ultimately be based, in part, on our restaurant and retail customers


and their response, including store closures; changes in product and service offerings and delivery formats, and delayed product adoptions and installations.
We have taken a number of actions to mitigate the impact. Earlyinputs that are unobservable. The Company's initial purchase price allocation will be presented in the secondCompany's Form 10-Q for the quarter of 2020, reduced discretionary costs, implemented a hiring freeze on non-essential positions, we reduced the size of our workforce, and temporarily furloughed employees and temporarily reduced the salaries of others in our Restaurant/Retail reporting segment and corporate group.ending June 30, 2021.
The extent to which the COVID-19 pandemic will continue to impact our business, operations, and financial results will depend on future developments, which are uncertain and cannot be predicted, including the duration and severity of the pandemic, future government actions in response to the pandemic, how quickly and to what extent normal economic and operating conditions can resume in the United States and globally, and a potential resurgence of the pandemic. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including as a result of any recession that may occur. As of the date of this Quarterly Report, it is impossible to predict the overall impact of the COVID-19 pandemic on our business, operations and financial results, and there can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our business, operations, and financial results during any quarter or year in which we are affected.


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


When used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the terms “PAR”, “Company,“the Company,” “we,” “us” and “our” meanrefers to PAR Technology Corporation and its consolidated subsidiaries, unless the context indicates otherwise. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim condensed consolidated financial statements and the notes thereto included under Part I, Item 1 of this Quarterly Report and our audited consolidated financial statement and the notes thereto included under Part II, Item 8 of ourthe Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.2020 filed with the SEC on March 16, 2021 (“2020 Annual Report”). See also, “Forward-Looking Statements” below..


Forward-Looking Statements
This Quarterly Report contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature, but rather are predictive of our future operations, financial condition, business strategies and prospects. Forward-looking statements are generally identified by words such as "anticipate," "believe," "belief," "continue," "could," "expect," "estimate," "intend," "may," "opportunity," "plan," "should," "will," "would," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those expressed in, or implied by, the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described below in this Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations - The Impact of COVID-19," in Part II, "Item 1A. Risk Factors" and elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and our other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.
Overview

PAR Technology Corporation operates in two distinct businesses: ourreporting segments: Restaurant/Retail businessand Government. Our Restaurant/Retail segment provides point-of-sale (POS)(“POS”) software and hardware, back-office software, and integrated technical solutions to the retail and restaurant industries; ourindustries. Our Government businesssegment provides intelligence, surveillance, and reconnaissance solutions (“ISR”) and mission systems support to the U.S. Department of Defense ("DoD"(“DoD”) and other Federal agencies.
We are
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Our Restaurant/Retail segment is a leading provider of POS software, systems, and services to the restaurant and retail industries. Our promise is to deliver the solutions that connect people to the restaurants, meals, and moments they love. We provide multi-unit and individual restaurants, franchisees, and enterprise customers in the three major restaurant categories: fast casual, quick serve, and table service, a fully integrated cloud solution, with our leading Brink POS cloud software and our point-of-sale hardware for the front-of-house, our leading back-office cloud software - Data Central - for the back-of-house, and our wireless headsets for drive-thru order taking.


The Brink POS is an open solution offersoffering customers anthe opportunity to integrate with third party products and in-house systems. In support of our customers need to quickly adapt to changing market conditions, we claim the largest integration ecosystem providing access to industry trends and features,– 200+ partners across various product solution categories including mobile/on-lineonline ordering, self-ordering kiosks, loyalty programs, kitchen video systems, guest surveys, enterprise reporting, and other featuressolutions relevant to our customers’ businesses, including Restaurant Magic's cloud, SaaSour cloud-based back-office applicationssolution - Data Central. Data Central providesThese integration capabilities enables restaurants with the necessary tools to achieve peakincrease visits, customer check size, improve operational and financial efficiency, and most importantly, position them to win in an ever changing and challenging market.



Our open architecture POS platforms are optimized to host our POS software applications, as well as many third-party POS applications, and are compatible with a variety of peripheral devices. We partner with numerous vendors that offer complementary in-store peripherals, such as cash drawers, card readers and printers and kitchen video systems, allowing us to deliver a completely integrated solution through one vendor.
integrates information from POS, inventory, supply, payroll, and accounting systems to provide a comprehensive view of a restaurant's operations.


We believe our cloudsoftware, hardware and integrated solutions hardware offerings and services uniquely positionsposition us to be a leader in helpingassisting customers to digitizeinnovate and improve their in-store operations in a rapidly changing and challenging market, particularly in light of the modern restaurant.continued impacts of the COVID-19 pandemic on the restaurant industry. Our continued success and growth will depend upon our ability to successfullyadvance and create new technology, products and services to meet customer demands, as well as deploy capital to where it earns its highest return.and resources that uniquely deliver customer value. This will includeincludes the development and introduction of new products and product enhancements,services, targeted acquisitions and a constant review of internal spend. We have spent extensive time building a culture of intense rigor around capital allocation and we believe it will be a key part of our future success.


OurPAR's Government businesssegment provides technical expertise in contract development of advanced systems and software solutions for the U.S. DoD and other Federal agencies, as well as satellite, communication, and IT mission systems support at a number of U.S. Government facilities both in the U.S. and worldwide. Our strategyThe Government segment is to build upon our Government business' sustained performancefocused on existing service contracts, coupledtwo principal offerings, intelligence solutions and mission systems contract support, with investmentsadditional revenue from a small number of licensed software products for use in enhanced business development capabilities. We believe we are well positioned to realize continued renewals of expiring contractsanalytic and extensions of existing contracts, and to secure service and solution contracts in expanded areas within the U.S. DoD and other Federal agencies.operational environments that leverage geospatial intelligence data. We believe our highly relevant technical competencies, intellectual property, and investments in new technologies provide opportunities to offer systems integration, products, and highly-specialized service solutions to the U.S. DoD and other Federal agencies. The general uncertainty in U.S. defense total workforce policies (military, civilian, and contract), procurement cycles, and spending levels for the next several years are factors we monitor as we develop and implement our business strategy for our Government business.segment.


Recent Developments Affecting Our BusinessCOVID 19 Update

On February 10, 2020, the Company sold an aggregate principal amount of $120.0 million of 2.875% Convertible Senior Notes due 2026 (“2026 Notes”) and received net proceeds of approximately $115.9 million. Approximately $66.3 million (excluding cash payments relating to accrued interest and fractional shares) of the proceeds and 722,423 shares of the Company’s common stock were used to repurchase approximately $66.3 million in aggregate principal amount of the Company’s 2024 Notes through individually negotiated transactions.


The Impact of COVID-19

We are closely monitoring the impact of the novel coronavirus, or COVID-19, on all aspects of our business. In March 2020, the World Health Organization characterized COVID-19 as a pandemic and President Trump declared the COVID-19 outbreak a national emergency. While the COVID-19 pandemic did notcontinues to cause significant disruption to the U.S. and global economies. While certain foreign jurisdictions, such as Canada and Europe, have re-imposed lockdowns and curfews in 2021, a material adverse impact onnumber of localities in the U.S. have eased restrictions in the first quarter of 2021 and the U.S. economy continues to show signs of recovery. Although our business operations, and financial results for the three months ended March 31, 2020, in late March 2020 our Restaurant/Retail reporting segment began experiencing the impact of the COVID-19 in the second quarter of 2020, we have seen improvements in our financial results as markets have strengthened and businesses have gained confidence in the progress to control the pandemic duein the U.S. Beginning in the second half of 2020 through the quarter ended March 31, 2021, revenue has been in line with or above prior year results, our annual recurring revenue has increased quarter-over-quarter, and we have booked at least 1,181 new Brink POS sites in each of the last three quarters. Our Government business continues to its impact on our restaurant and retail customers and their response, including store closures; changes in product and service offerings and delivery formats, and delayed product adoptions and installations.not be materially impacted by the COVID-19 pandemic.

We have taken a number of actionscontinue to mitigatemonitor the impact of the virus on our employeeseffects and potential effects of the COVID-19 pandemic on our business. In March 2020, to support the health and safetyall aspects of our employees, we suspended all non-essential travel for our employees, implemented work-from-home for all non-manufacturing employees, and augmented shifts for our manufacturing employees;business, however it is difficult to mitigatepredict the full impact of the COVID-19 pandemic on our operations, we initiated operational initiatives,business in future periods. The pandemic may affect our Restaurant/Retail business in certain ways, including increasing safety stock inventory and the use of alternative sources when available; and to support our customers, we introduced new product offerings that promote social distancing, including PARkit, a virtual kiosk, virtual drive-thru and/or on-line ordering solution, and self-install hardware product configurations. Additionally, early in the second quarter of 2020, we reduced discretionary costs, implemented a hiring freeze on non-essential positions, we reduced the size of our workforce, and temporarily furloughed employees and temporarily reduced the salaries of otherscausing disruptions in our Restaurant/Retail reporting segmentsupply chain, increasing payment defaults by customers, causing reductions or delays in software or hardware deployments and in the Company's corporate group.
While the COVID-19 pandemic has not had a material adversecurtailing customer demand, any of which could adversely impact on our Government reporting segment to date, we have implemented work-from-home for all non-essential employees and on-site operations are accomplished through telework and a staggered staffing approach that achieves the intent and benefits of social distancing. For contracts requiring specialized equipment, we established an off-site lab environment that permits the safe continuation of development and testing activities until government facilities reopen.
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act includes provisions addressing the carryback of net operating losses for specific periods, refunds of alternative minimum tax credits, temporary modifications to the limitations placed on the tax deductibility of net interest expenses, and technical


amendments for qualified improvement property. Additionally, the CARES Act, in support of efforts to enhance business’ liquidity, provides for the deferral of the employer-paid portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. As of March 31, 2020, these provisions are expected to provide us with approximately $1.8 to $2.2 million of additional liquidity during the current year.
Significant uncertainty exists regarding the magnitude and duration of the impact of the COVID-19 pandemic; therefore, we cannot predict at this time the full extent of its impact on our business, operations, financial condition and financial resultsresults.

Recent Developments

•On April 8, 2021, we acquired Punchh Inc (“Punchh”) for approximately $500 million paid in future periods. Please see “Risk Factors” under Part II, Item 1A.cash and shares of this Quarterly ReportPAR common stock to Punchh shareholders. The cash consideration for further discussion regarding risks associatedthe acquisition was primarily financed with a combination of equity and debt. Refer to the COVID-19 pandemic.“Liquidity and Capital Resource” section of Management's Discussion
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and Analysis for additional acquisition financing information. The acquisition enabled us to take an important step in executing our strategy to be the leading unified commerce cloud platform for restaurants and retailers. The addition of Punchh's loyalty and customer engagement platform positions us to offer integrated point-of-sale, back office, payment and customer engagement solutions across channels. Refer to Note 13 — “Subsequent Event” for additional information.

Condensed Consolidated Results of Operations —

Three months ended March 31, 20202021 Compared to Three months ended March 31, 20192020


We reported consolidated revenues of $54.7$54.5 million for the quarter ended March 31, 2020, an increase2021, a decrease of 22.4%0.5% from $44.7$54.7 million recorded for the quarter ended March 31, 2019.2020. Our net loss from continuing operations was $8.3 million, or $0.38 per diluted share, for the first quarter of 2021, compared to a net loss of $10.9 million, or $0.61 per diluted share, for the first quarter of 2020 versus net loss of $2.7 million, or $0.17 per diluted share, for the first quarter of 2019. Our year-over-year unfavorable performance was primarily driven by corporate financing charges, including an $8.1 million Loss on extinguishment of debt related to the partial repurchase of the 2024 Notes, an additional $1.8M of interest expense related to the 2024 Notes and 2026 Notes, and an increased investment in sales, marketing and research and development within the Restaurant/Retail operating segment.2020.

Operating segment revenue is set forth below:
  Three Months Ended March 31,$%
(in thousands) 20202019variancevariance
 Restaurant/Retail    
Core *$19,869
$18,650
1,219
7 %
Brink **17,540
9,477
8,063
85 %
SureCheck—
1,433
(1,433)(100)%
 Total Restaurant Retail$37,409
$29,560
$7,849
27 %
      
 Government    
Intelligence, surveillance, and reconnaissance$8,772
$6,290
2,482
39 %
Mission Systems8,448
8,541
(93)(1)%
Product Sales103
291
(188)(65)%
 Total Government$17,323
$15,122
$2,201
15 %

* CORE includes $3.5 million of Drive-Thru revenue for 2020
** Brink includes $2.2 million of Restaurant Magic revenue for 2020


Product revenues were $18.6 million for the quarter ended March 31, 2020, an increase of 20.0% from $15.52021, comparable with the $18.6 million recorded for the quarter ended March 31, 2019, primarily driven by increased hardware attachment associated with installations attributable to our Brink line of business ("Brink") and hardware sales from our new Drive-Thru product line. Product revenue related to Brink2020.

Service revenues were $18.0 million for the quarter ended March 31, 2020 was $6.7 million, an increase2021, a decrease of 49%4.3% from $4.5the $18.8 million recorded for the quarter ended March 31, 2019. Drive-thru2020, primarily driven by a $1.8 million decrease in implementation revenue partially offset by $0.9 million increase in software revenue.

Contract revenues were $17.9 million for the quarter ended March 31, 2021, an increase of 3.5% or $0.6 million from $17.3 million recorded for the quarter ended March 31, 2020. The favorable increase in contract revenue was driven by stronger backlog in our intelligence, surveillance, and reconnaissance (“ISR”) solutions product revenueline entering 2021.

Product margins for the quarter ended March 31, 2021 were 19.8%, compared to 20.0%, recorded for the quarter ended March 31, 2020. The decrease in margin is primarily due to increased overheads costs.

Service margins for the quarter ended March 31, 2021 were 29.6%,compared to 32.6% recorded for the quarter ended March 31, 2020, was $3.4 million.primarily driven by a decrease in implementation revenue and increase in software related costs.


ServiceContract margins for the quarter ended March 31, 2021 were 6.7%, compared to 6.9% for the quarter ended March 31, 2020, primarily due to reduced revenues were $18.8in Mission Systems and higher labor costs compared to the quarter ended March 31, 2020.

Selling, general, and administrative expenses increased to $14.5 million for the quarter ended March 31, 2021 from $11.6 million for the quarter ended March 31, 2020, an increase of 34.3% from $14.024.9%. The increase was primarily driven by a $1.1 million recorded for the quarter ended March 31, 2019, primarily dueincrease in variable compensation and $0.7 million in acquisition costs related to growth in recurring softwareour acquisition of Punchh, Inc on April 8th, 2021.

Research and hardware installation revenues. Service revenue associated with Brink includes recurring software revenue of $5.2 million, an increase of 40% from $3.7 million recorded for the quarter ended March 31, 2019. Restaurant Magic service revenue includes recurring software revenue of $2.0 million.



Contract revenuesdevelopment expenses were $17.3$5.8 million for the quarter ended March 31, 2020, a increase of 14.6% from $15.1 million recorded for the quarter ended March 31, 2019.  The favorable increase in revenue was driven by contracts entered into during the first quarter of 2020 relating to intelligence, surveillance, and reconnaissance ("ISR") solutions, with $8.0 million more in backlog compared to the first quarter of 2019.

Product margins for the quarter ended March 31, 2020 were 20.0%, compared to 27.6%, recorded for the quarter ended March 31, 2019, primarily due to unfavorable product mix shift, increased freight, and reserve costs.

Service margins for the quarter ended March 31, 2020 were 32.6%, compared to 26.9% recorded for the quarter ended March 31, 2019, primarily due to the continued shift in revenue mix to SaaS revenue with Brink and Restaurant Magic partially offset by $0.6 million increase in amortization expense of acquired developed technology costs resulting from the recent Restaurant Magic Acquisition.

Contract margins for the quarter ended March 31, 2020 were 6.9%, compared to 9.7% for the quarter ended March 31, 2019, primarily due to lower product services revenue and increased investment in product services reduced margin rates compared to the quarter ended March 31, 2019.

Selling, general and administrative ("SG&A") expenses increased to $11.4 million for the quarter ended March 31, 2020 from $8.6 million for the quarter ended March 31, 2019,2021, an increase of 32.6%. The increase was primarily driven by an additional $0.7$0.9 million of Brink sales and marketing expenses, an additional $0.8 million in stock-based compensation, and the inclusion of $0.7 million of SG&A expense from recently acquired Restaurant Magic.
Research and development ("R&D") expenses were $4.9 million for the quarter ended March 31, 2020, driven primarily by an increase in Brink POS and Data Central development.

For the quarters ended March 31, 2021 and March 31, 2020, we recorded $0.3 million and $0.2 million, respectively of 1.8amortization expense associated with acquired identifiable non-developed technology intangible assets and recorded as cost of sales within service costs of sales.

Also included in operating expense for the three-months ended March 31, 2021 was a $4.4 million from $3.1gain on insurance proceeds received in connection with the Company's settlement of a legacy claim. There was no comparable reduction to expense for the three months ended March 31, 2020.

In other expense, net, we recorded $0.1 million for the quarter ended March 31, 2019, driven by a $3.5 million investment in Brink development, an increase of $1.8 million and $0.3M investment in recently acquired Restaurant Magic development.

For the quarter ended March 31, 2020, we recorded $0.2 million of amortization expense associated with identifiable non-developed technology intangible assets acquired in the Drive-Thru Acquisition and the Restaurant Magic Acquisition, compared to $0.0 million for the quarter ended March 31, 2019. Amortization expense associated with identifiable developed technology intangible assets was accounted for as cost of sales within service.

In other expense, net, we recorded $0.6 million for the quarter ended March 31, 2020,2021, compared to other expense, net, of $0.4 million recorded for the quarter ended March 31, 2019. This increase was primarily by fair market value fluctuations of our deferred compensation plan, rental income and respective costs, and foreign currency fair value adjustments.2020.


In interest expense, net, we recorded $2.0$2.2 million for the quarter ended March 31, 2020,2021, compared to $0.1$2.0 million recorded for the quarter ended March 31, 2019.2020. This increase was primarily driven by an increase in the balance of convertible debt and associated interest expense related to the 2024 Notes and 2026 Notes whichissued in the first quarter of 2020. Interest expense, net includes $1.0$1.2 million of non-cash accretion of debt discount and amortization of issuance costs for the three months ended March 31, 2020.

Loss on extinguishment of debt of $8.12021 compared with $1.0 million for the quarter ended March 31, 2020, as a resultsame period last year.
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Segment Revenue by Product Line are set forth below:
Three Months Ended March 31$%
(in thousands)20212020variancevariance
 Restaurant/Retail
Hardware$17,835 $18,137 $(302)(2)%
Software7,876 6,944 932 13 %
Services10,873 12,328 (1,455)(12)%
Total Restaurant Retail*$36,584 $37,409 $(825)(2)%
Government
Intelligence, surveillance, and reconnaissance$9,547 $8,772 $775 9 %
Mission systems8,131 8,448 (317)(4)%
Product sales205 103 102 99 %
Total Government$17,883 $17,323 $560 3 %
Total Net Revenue$54,467 $54,732 $(265)(0.5)%

Liquidity and Capital Resources


For the three months ended March 31, 2020 the Company’s2021 our primary source of liquidity was its sale of the 2026 Notes.existing cash and cash equivalents generated through financing transactions in 2020. Cash used in operating activities was $3.4 million for the three months ended March 31, 2021, compared to $15.1 million for the three months ended March 31, 2020, compared to $3.2 million for quarter ended March 31, 2019. The2020. This variance was driven primarily by an increaseimprovements in net loss and net working capital needs as a result of an increase in inventory, annual variable compensation, prepaid assets for annual insurance premiums and strategic procurement of inventory, and decrease in customer deposits. Inventory levels were strategically increased to support the roll out of projects for Brink and to mitigate risk of supply chain disruption due to the COVID-19 pandemic.requirements.


Cash used in investing activities was $1.7 million for the three months ended March 31, 2021 compared to $2.0 million for the three months ended March 31, 2020 compared to $1.9 million for the three months ended March 31, 2019.2020. Investing activities during the three months ended March 31, 20202021 included capital expenditures of $1.9$1.5 million infor developed technology costs associated with investments in our Restaurant/Retail reporting segment software platforms compared to $0.9$1.9 million and $1.0for software platforms for the quarter ended March 31, 2020.

Cash used in financing activities was $2.1 million respectively, for the three months ended March 31, 2019.  

Cash2021, compared to cash provided by financing activities wasof $49.4 million for the three months ended March 31, 2020, compared to cash provided by financing activities of $5.8 million for2020. During the three months ended March 31, 2019.  The increase was primarily driven by the


2020, we received net proceeds of $49.5 million from the sale$120.0 million issuance of the 2026 Notes net of issuance costs and offset by the settlementrepurchase of a portionmajority of the 2024 NotesNotes.

On April 8, 2021, we entered into a merger agreement with Punchh Inc., Punchh survived the merger becoming our wholly owned subsidiary. In connection with the merger, we paid former Punchh stockholders an aggregate of approximately (i) $390.0 million in privately negotiated transactions.cash (the “Cash Consideration”), and (ii) 1,594,202 shares of our common stock. To partially fund the Cash Consideration, we entered into a credit agreement with the lenders thereto and Owl Rock First Lien Master Fund, L.P. as administrative agent and collateral agent that provides for a term loan in an initial aggregate principal amount of $180.0 million, and securities purchase agreements with each of PAR Act III, LLC, and certain funds and accounts advised by T. Rowe Price Associates, Inc., acting as investment adviser to raise approximately $160.0 million through a private placement of our common stock. The credit facility matures four years from the date of the credit agreement, and the outstanding loans thereunder bear interest currently at a rate equal to the Eurocurrency rate plus a margin of 4.75%. The remainder of the Cash Consideration was provided from our cash and cash equivalent accounts. Total cash used from our balance sheet for the merger including transaction costs was approximately $66.0 million. Refer to Part I, Refer to Note 13 — “Subsequent Event” for additional information.


We expect our available cash and cash equivalents will be sufficient to meet our operating needs for the next 12 months. Our actual cash needs will depend on many factors, including our rate of revenue growth, including growth of our SaaS revenues, the timing and extent of spending to support our product development efforts, the timing of introductions of new products and enhancements to existing products, market acceptance of our products, potential fines and penalties that may be imposed by Singapore/China authorities that are not currently estimable, but could be material, and the factors described above in this Part I, Item 2. "Management's“Management's Discussion and Analysis of Financial Condition and Results of Operations - The Impact of COVID-19," in Part II, "Item 1A. Risk Factors"Operations” and elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the fiscal yearperiod ended DecemberMarch 31, 20192021, and in the 2020 Annual Report and our other filings with the Securities and Exchange Commission.SEC.


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Off-Balance Sheet Arrangements


We do not have any off-balance sheet arrangements or obligations.


Contractual Obligations


The following table summarizesAs of March 31, 2021, there were no material changes in our contractual obligations at March 31,from those reported in our 2020 and the effect such obligations are expected to have on our liquidity and cash flow in future periods.Annual Report.


(in thousands)Payments Due by Period
Total Less Than 1 Year 1-3 Years 4-5 Years More Than 5 Years
Operating lease obligations$3,106
 $919
 $2,112
 $75
 $—
Other purchase obligations10,745
 10,745
      
Debt obligations135,595
 639
 1,206
 13,750
 120,000
 $149,446
 $12,303
 $3,318
 $13,825
 $120,000

The commitments in the table above consist of lease payments for our San Diego, California office, Ontario, Canada office, our other United States locations, and our international locations. The debt obligations include the 2024 Notes, the 2026 Notes and the subordinated promissory note related to the Restaurant Magic Acquisition. The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding. Obligations under contracts that we can cancel without significant penalty are not included in the table above.

Critical Accounting Policies and Estimates


Our unaudited interim condensed consolidated financial statements are based on the application of U.S.accounting principles generally accepted accounting principlesin the United States of America (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently applied. Valuations based on estimates are reviewed for reasonableness and adequacy on a consistent basis. Primary areas where financial information is subject to the use of estimates, assumptions and the application of judgment include revenue recognition, accounts receivable, inventories, accounting for business combinations, contingent consideration, equity compensation, the recognition of right-to-use assets and liabilities, goodwill and intangible assets, the measurement of liabilities and equity recognized for outstanding convertible notes and taxes. Our critical accounting policies have not changed materially from the discussion of those policies included under “Critical Accounting Policies and Estimates” in ourthe 2020 Annual Report on Form 10-K for the year ended December 31, 2019.Report.


Item 3.Quantitative and Qualitative Disclosures About Market Risk


Not Required.Foreign Currency Exchange Risk




Our primary exposures relate to certain non-dollar denominated sales and operating expenses in Europe and Asia. These primary currencies are the Great British Pound, the Euro, the Australian dollar, the Singapore dollar and the Chinese Renminbi. Accordingly, changes in exchange rates may negatively affect our revenue and net income (loss) as expressed in U.S. dollars. We also have foreign currency risk related to foreign currency transactions and monetary assets and liabilities, including intercompany balances denominated in currencies that are not the functional currency. We have experienced and will continue to experience fluctuations in our net income (loss) as a result of gains (losses) on these foreign currency transactions and the remeasurement of monetary assets and liabilities. As of March 31, 2021, the impact of foreign currency exchange rate changes on our revenues and net income (loss) have not been material. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.

Interest Rate Risk

As of March 31, 2021, we had $13.8 million and $120.0 million in aggregate principal amount of the 2024 Notes and 2026 Notes outstanding, respectively. We carry the Notes at face value less amortized discount on the consolidated balance sheet. Since the Notes bear interest at fixed rates, we have no financial statement risk associated with changes in interest rates. However, the fair value of the Notes changes when the market price of our stock fluctuates or interest rates change.

Item 4.
Controls and Procedures


Evaluation of Disclosure Controls and Procedures


Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2020.2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2020.such date due to material weaknesses in our internal control over financial reporting previously identified in Item 9A. “Controls and Procedures” of our 2020 Annual Report.


Remediation Efforts to Address the Material Weaknesses

Our remediation efforts previously identified in Item 9A. “Controls and Procedures” of our 2020 Annual Report to address the identified material weaknesses are ongoing as we continue to implement and document necessary policies, procedures, and internal controls. While we believe the steps taken to date and those planned for future implementation will improve the effectiveness of our internal control over financial reporting, we have not completed all remediation efforts. The material
24
weaknesses cannot be considered remediated until applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control Over Financial Reporting.


There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 20202021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As a result of the COVID-19 pandemic, the majority of our workforce began working remotely in March 2020. These changes to the working environment did not have a material adverse effect on our internal control over financial reporting during the quarter ended March 31, 2020.



Part II - Other Information


Item 1.Legal Proceedings


The information in Note 1110 – Contingencies, to the unaudited interim condensed consolidated financial statements, is responsive to this Item and is incorporated by reference herein.


Item 1A.Risk Factors


The risks described in the “Risk Factors” section of our 2020 Annual Report, as amended and supplemented by this Quarterly Report, including the risks below, remain current in all material respects.

Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our operating subsidiaries to pay our debt.

In additionconnection with, and to partially fund the Risk Factors discussed inpurchase price of our Annual Reportacquisition of Punchh Inc., the Company, as the borrower, with certain of its U.S. subsidiaries, as guarantors, entered into a credit agreement on Form 10-K for the fiscal year ended December 31, 2019 and our other filingsApril 8, 2021 with the SEC, consideration should be givenlenders thereto and Owl Rock First Lien Master Fund, L.P., as the administrative agent and collateral agent, that provides for a term loan in an initial aggregate principal amount of $180.0 million. As of May 10, 2021, $180.0 million of the term loan are outstanding, and we had $180.0 million aggregate principal amount of the 2024 Notes and 2026 Notes outstanding.

Our ability to make scheduled payments on the following:

The COVID-19 pandemic has adversely affected,principal of, to pay interest on, or to refinance our debt, including our debt evidenced by the 2024 Notes and will continue to adversely affect, our business, operations2026 Notes and financial results forunder the foreseeable future.

As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, we identified that the COVID-19 pandemic had caused disruption to our suppliers and their manufacturers located in China and elsewhere, and that we took steps to mitigate the impactterm loan, depends on our supply chain, including increasing safety stock inventoryfuture performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our operating subsidiaries may not generate sufficient cash flow from operations in the use of alternative sources when possible. In late March 2020,future to service our debt. If our operating subsidiaries are unable to generate such cash flow, we began seeing the impact of the COVID-19 pandemicmay be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on all aspects of our Restaurant/Retail reporting segment. While the COVID-19 pandemic did not have a material adverse impact on our business, operations, financial results or financial condition for the three months ended March 31, 2020, since then, it has caused significant economic disruption to our restaurant and retail customers, which has adversely affected our business and is expected to continue for at least the foreseeable future. Factors that have and will likely continue to adversely affect, and that could subsequently adversely impact, our business, operations, financial results and financial condition, include:

•As a result of the COVID-19 pandemic many of our customers have temporarily or permanently closed their restaurants and stores, reconfigured their product and service offerings, including closing dining rooms and only offering take-out and delivery services, or are operating at substantially reduced volumes;

•Due to the uncertainty surrounding the COVID-19 pandemic, including the duration of the pandemic, the severity of the virus and outbreak, future and ongoing actionsterms that may be taken by governmental authorities (including extended shelter-in-place orders, travel restrictions, and mandated business closures), and the length of the COVID-19 pandemic and its impact on the U.S. and global economies, we expect significant volatility in our currentonerous or prospective customers' investment decisions, resulting in decreased demand for our products and services; delayed or canceled store implementations, product adoptions and bookings, and hardware sales and installations; and delayed or a reprioritization of investments in technology or point-of-sale infrastructure;

•Payment delays or defaults by our customers as a result of the COVID-19, intensified by increased COVID-19 related bankruptcies and insolvencies;



•The COVID-19 pandemic could create business continuity issues and operational risks for us. Employees working remotely could increase our exposure to cybersecurity breaches and attacks; if our supply-chain is disrupted or a significant portion of our manufacturing and operations workforce were to become ill with the virus, we could experience a disruption or delay in product assembly and product fulfillment; travel restrictions have limited, and may continue to limit, our sales and marketing efforts; and our management team's focus on addressing the effects of the COVID-19 pandemic on our employees, business and customers, has required, and will continue to require, a large investment of time and resources, and may distract the team from executing our business and growth strategies;

•highly dilutive. Our success depends on our ability to hireraise funds through additional financing, such as the issuance of equity or debt securities, refinancing our debt, and retain highly skilled individuals. As a result ofotherwise accessing the COVID-19 pandemic employee morale may suffercredit and our ability to hire skilled individuals may be adversely impacted by limited employeecapital markets at the times and candidate engagement due to work-from-home arrangementsin the amounts needed and travel restrictions; and

•We could incur a material non-cash charge to our income statement for the impairment of goodwill and other intangible assets, if our financial performance significantly declines.
The extent to which the COVID-19 pandemic will continue to impact our business, operations, financial results and financial conditionon acceptable terms will depend on future developments,the capital markets and our financial condition at such time. We may not be able to engage in any of these activities on desirable terms or at all, which are uncertain and cannot be predicted, including the duration and severity of the pandemic, future government actionscould result in response to the pandemic, how quickly and to what extent normal economic and operating conditions can resume in the United States and globally, and a potential resurgence of the pandemic. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including as a result of any recession that may occur. As of the date of this Quarterly Report, it is impossible to predict the overall impact of the COVID-19 pandemicdefault on our business, results of operationsdebt obligations, and financial results, and there can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our financial results during any quarter or year in which we are affected.

Two customers account for a significant portion of our revenues in the first quarter of 2020 in the Restaurant/Retail reporting segment. The loss of one of these customers, or a significant reduction, delay, or cancellation of purchases by one of these customers, would materially adversely affect our business, financial condition, and results of operations.

Revenues from our Restaurant/Retail reporting segment constituted 68% of our total consolidated revenues for the first quarter of 2020. Aggregate sales attributable to our two largest customers in the first quarter of 2020 (which include sales to our customers' franchisees) - Dairy Queen and Yum! Brands, Inc., which consists of the Kentucky Fried Chicken, Taco Bell, and Pizza Hut brands, constituted consolidated revenues for the first quarter of 2020 of 16% (Dairy Queen) and 11% (Yum!). There were no other customers that comprised greater than 10% of our total consolidated revenues during the first quarter of 2020. Significant reductions, delays, or cancellation of orders by one of these customers, or the loss of one of these customers, would reduce our revenue and operating income and would materially and adversely affect our business,financial condition and restrict our operations.

The covenants in the credit agreement that govern our indebtedness under the term loan may limit our operating results, and financial condition.flexibility.


The covenants in the credit agreement limit our ability to:

•incur debt and liens;
•make investments, loans and advances;
•consummate a merger or consolidation;
•sell, lease, assign, transfer or otherwise dispose of property;
•declare or pay dividends;
•prepay, redeem or repurchase debt;
•engage in affiliate transactions;
•change our business; and
•terminate or modify our organizational documents.

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Under the Credit Agreement, the Company is required to maintain liquidity of at least $20 million and a first lien net annual recurring revenue leverage ratio of no greater than the level set forth in the Credit Agreement for the relevant quarter, which starts at 2.60 to 1.00 and declines over time to 1.30 to 1.00.

These covenants may limit our ability to make strategic acquisitions, fund investments or otherwise engage in other business activities that could be in our interest.

Item 2.Unregistered Sales of Equity Securities and Use Ofof Proceeds


Under our equity incentive plan, employees may elect to have us withhold shares to satisfy minimum statutory federal, state and local tax withholding obligations arising from the vesting of their restricted stock.stock and restricted stock units. When we withhold these shares, we are required to remit to the appropriate taxing authorities the market price of the shares withheld, which could be deemed a purchase of shares by us on the date of withholding. For the three months ended March 31, 2020, 30,3982021, 61,181 shares were purchasedwithheld at an average price of $17.22$74.88 per share.






Item 6.
Exhibits
Exhibit
Number		 
Incorporated by reference into
this Quarterly Report on Form 10-Q 
Date
Filed or
Furnished
Exhibit DescriptionFormExhibit No.
2.1*Form 8-K (File No. 001-09720)2.14/8/2021
10.1††Form 10-K (File No. 001-09720)10.243/16/2021
10.2Form 8-K (File No. 001-09720)10.14/8/2021
10.3*Form 8-K (File No. 001-09720)10.24/8/2021
10.4*Form 8-K (File No. 001-09720)10.34/8/2021
10.5
Common Stock Purchase Warrant, dated April 8, 2021, in favor of PAR Act III, LLC. of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Form 8-K (File No. 001-09720)10.74/8/2021
31.1Filed herewith
31.2Filed herewith
32.1Furnished herewith
32.2Furnished herewith
101.INSXBRL Instance DocumentFiled herewith
101.SCHXBRL Taxonomy Extension Schema DocumentFiled herewith
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentFiled herewith
Exhibit
Number
 
Incorporated by reference into
this Quarterly Report on Form 10-Q 
Date
Filed or
Furnished
Exhibit DescriptionFormExhibit No.
     
3(ii)
By-laws, as amended March 29, 2020
  Filed herewith
     
4.2
Indenture, dated as of February 10, 2020, between PAR Technology Corporation, as Issuer, and the Bank of New York Mellon Trust Company, N.A., as Trustee
Form 8-K (File No. 001-09720)4.12/10/2020
     
10.1 ††
Form of Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan - Grant Notices - Restricted Stock Unit Award and Restricted Stock Unit Award Agreement


Form 10-K (File No. 001-09720)

10.153/16/2020
     
10.2 ††
Employment Letter: Service as Chief Executive Officer, dated February 27, 2020, between PAR Technology Corporation and Savneet Singh

Form 10-K (File No. 001-09720)

10.203/16/2020
     
31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
  Filed herewith
     
31.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
  Filed herewith
     
32.1
Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350
  Furnished herewith
     
32.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350
  Furnished herewith
     
101.INSXBRL Instance Document  Filed herewith
     
101.SCHXBRL Taxonomy Extension Schema Document  Filed herewith
     
101.CALXBRL Taxonomy Extension Calculation Linkbase Document  Filed herewith
     
101.DEFXBRL Taxonomy Extension Definition Linkbase Document  Filed herewith
     
101.LABXBRL Taxonomy Extension Label Linkbase Document  Filed herewith
     
101.PREXBRL Taxonomy Extension Presentation Linkbase Document  Filed herewith
* The schedules and exhibits to such agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
†† Indicates management contract or compensatory plan or arrangement.



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Table of Contents

Exhibit
Number
Incorporated by reference into
this Quarterly Report on Form 10-Q
Date
Filed or
Furnished
Exhibit DescriptionFormExhibit No.
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentFiled herewith
101.LABXBRL Taxonomy Extension Label Linkbase DocumentFiled herewith
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentFiled herewith
104Cover Page Interactive Data File (embedded within the Inline XBRL document)Filed herewith
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SIGNATURES


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

PAR TECHNOLOGY CORPORATION
(Registrant)
Date:May 11, 202010, 2021/s/ Bryan A. Menar
Bryan A. Menar
Chief Financial and Accounting Officer
(Principal Financial and Accounting Officer)



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