PAR TECHNOLOGY CORP, S-2/A, 1996-05-23

PAR TECHNOLOGY CORP
S-2/A, 1996-05-23
CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS)

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 23, 1996

REGISTRATION NO. 333-04077
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------

AMENDMENT NO. 1

FORM S-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PAR TECHNOLOGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 16-1434688
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)

PAR TECHNOLOGY PARK
8383 SENECA TURNPIKE
NEW HARTFORD, NEW YORK 13413-4991
(315) 738-0600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JOHN W. SAMMON, JR.
CHAIRMAN OF THE BOARD AND PRESIDENT
PAR TECHNOLOGY CORPORATION
PAR TECHNOLOGY PARK
NEW HARTFORD, NEW YORK 13413-4991
(315) 738-0600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
TIMOTHY C. MAGUIRE, ESQ. STEVEN R. FINLEY, ESQ.
TESTA, HURWITZ & THIBEAULT, LLP GIBSON, DUNN & CRUTCHER LLP
HIGH STREET TOWER 200 PARK AVENUE
125 HIGH STREET NEW YORK, NY 10166
BOSTON, MASSACHUSETTS 02110 (212) 351-3920
(617) 248-7000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

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

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [_]
If the registrant elects to deliver its latest annual report to security-
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED MAY 23, 1996

2,825,000 SHARES

[LOGO APPEARS HERE]

PAR TECHNOLOGY CORPORATION
COMMON STOCK

Of the 2,825,000 shares of common stock, $0.02 par value per share (the
"Common Stock"), offered hereby, 1,450,000 shares are being offered by PAR
Technology Corporation ("PAR" or the "Company") and 1,375,000 shares are being
offered by Selling Stockholders. See "Principal and Selling Stockholders." The
Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders.

The Common Stock is listed on the New York Stock Exchange ("NYSE") under the
symbol "PTC." On May 22, 1996, the closing sales price of the Common Stock on
the NYSE was $17 1/2 per share. See "Price Range of Common Stock and Dividend
Policy."

FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE "RISK FACTORS" ON PAGES 6-10.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

-----------

<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions* Company+ Stockholders
<S> <C> <C> <C> <C>
Per Share....................... $ $ $ $
Total++......................... $ $ $ $
</TABLE>
- -----
* The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
+ Before deducting expenses of the offering payable by the Company estimated to
be $375,000.
++The Selling Stockholders have granted to the Underwriters a 30-day option to
purchase up to 423,750 additional shares of Common Stock on the same terms
per share solely to cover over-allotments, if any. If such option is
exercised in full, the total price to public will be $ , the total
underwriting discounts and commissions will be $ and the total proceeds to
the Selling Stockholders will be $ . See "Underwriting."

-----------

The Common Stock is being offered by the Underwriters as set forth under
"Underwriting" herein. It is expected that the delivery of the certificates
therefor will be made at the offices of Dillon, Read & Co. Inc., New York, New
York on or about , 1996. The Underwriters include:

DILLON, READ & CO. INC.

THE ROBINSON-HUMPHREY COMPANY, INC.

VOLPE, WELTY & COMPANY

The date of this Prospectus is , 1996.
<PAGE>

Front
- -----

The picture at the upper left hand side of the page illustrates the Company's
open architecture POS III system, including the POS III touch screen
configuration as used by an employee of a quick service restaurant.

Front
- -----

The picture at the upper right hand side of the page illustrates individual
products comprising the Company's POS III System, including the POS III touch
screen configuration in the right foreground of the picture, the POS III
keyboard in the left background of the picture, and a wireless hand-held
terminal in the upper left foreground of the picture. Food and beverage products
of some of the Company's quick service restaurant customers, including Taco
Bell, KFC, McDonald's and Chick-fil-A are featured among the POS III System
components.

PAR is a leading supplier of user-friendly integrated transaction information
processing ("ITIP") solutions to major quick service restaurant organizations.

Front
- -----

The picture at the lower left hand side of the page illustrates the Company's
employees manufacturing open architecture POS III touch screen systems.

PAR's ruggedized restaurant ITIP products are manufactured to perform reliably
under harsh operating conditions.

Inside Front
- ------------

The picture at the lower right hand side of the page illustrates a United States
Air Force captain viewing and analyzing image processing data captured by the
J/STARS phased ray antenna.

The Company develops advanced computer-based systems and technologies for
government agencies, including the U.S. Department of Defense.

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy and
information statements filed by the Company may be inspected and copied at the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, reports, proxy
statements and other information concerning the Company (symbol: PTC) can be
inspected and copied at the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.

The Company has filed with the Commission a Registration Statement on Form
S-2 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
does not contain all of the information set forth in the Registration
Statement certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Copies of the Registration Statement, including
all exhibits thereto, may be obtained from the Commission's principal office
in Washington D.C. upon payment of the fees prescribed by the Commission or
may be examined without charge at the offices of the Commission as described
above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, heretofore filed by the Company with the Commission
pursuant to the Exchange Act, are incorporated by reference in this
Prospectus:

(i) Annual Report on Form 10-K for the fiscal year ended December 31, 1995;

(ii) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1996; and

(iii) Proxy Statement of the Company dated May 13, 1996 for its Annual
Meeting of Stockholders to be held on June 4, 1996.

Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the
shares of Common Stock shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document (other than
exhibits). Requests for such copies should be directed to Karen E. Sammon,
Corporate Counsel, PAR Technology Corporation, PAR Technology Park, 8383
Seneca Turnpike, New Hartford, New York 13413-4991; telephone (315) 738-0600.

Any statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document that is incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

3
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless otherwise indicated, the information in this Prospectus assumes that the
Underwriters' over-allotment option will not be exercised. Investors should
carefully consider the information set forth under the heading "Risk Factors."
Certain of the information contained in this summary and elsewhere in this
Prospectus are forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed under "Risk
Factors."

THE COMPANY

PAR Technology Corporation ("PAR" or the "Company") provides sophisticated
integrated transaction information processing ("ITIP") solutions that enable
the reliable capture, preservation, processing and management of information
throughout a business enterprise. The Company is a leading supplier of ITIP
solutions to the quick service restaurant industry and also provides ITIP
solutions for manufacturing/warehousing enterprises. The Company's systems-
based solutions have been engineered to perform reliably under harsh operating
conditions and incorporate high levels of systems integration, in-depth
knowledge of the customers' workflow processes, and local and wide-area
networking capability.

The Company's POS III(TM) restaurant ITIP system solution combines flexible,
extendible systems software connecting its open-system architecture hardware
platform with ruggedized fixed and wireless order-entry terminals, video
monitors and PAR and third-party supplied peripherals networked via Ethernet
LAN and accessible to enterprise-wide network configurations. For manufacturing
and warehousing enterprises, the Company designs and implements complex ITIP
solutions incorporating its TPS(TM) data collection and management software
that provide real-time connectivity with multiple host computers, diverse
legacy applications software and "best-of-breed" software and data input
hardware technologies. PAR further provides extensive systems integration
capabilities to design, tailor and implement solutions that enable its
customers to manage, from a central location, all aspects of data collection
and processing for single or multiple site enterprises.

The Company also develops advanced computer-based systems and technologies
for government agencies. Through its government-sponsored development work, PAR
has generated significant technologies with commercial applications, from the
transaction information processing capability underlying its primary business,
to advanced vision technology currently being implemented in the Company's
proprietary Corneal Topography System ("CTS") for use in ophthalmic diagnoses
and surgical procedures.

The Company's growth strategies include enhancing its leadership position as
an ITIP solutions provider to the quick service restaurant ("QSR") market and
further penetrating the automated manufacturing/warehousing market by extending
its systems integration capabilities and increasing the software functionality
of its ITIP solutions. In addition, the Company seeks to leverage its
technology generated from government contracts by developing innovative
products serving targeted vertical markets, and then further penetrate that
market by providing its systems integration capabilities to address its
customers' total systems needs.

The Company's net revenues and net income have grown from $78.9 million and
$1.5 million, respectively, for the year ended December 31, 1991 to $107.4
million and $4.7 million, respectively, for the year ended December 31, 1995.
In 1995, 71.8% of the Company's net revenues were derived from sales to its
restaurant customers, 22.4% of net revenues were derived from government
contracting and 5.1% of net revenues were derived from the Company's
manufacturing/warehousing customers. The Company's significant customers
include Taco Bell Corp. ("Taco Bell"), KFC Corp. ( "KFC") and McDonald's
Corporation ("McDonald's") in the restaurant market, and Rhone-Poulenc Inc.
("Rhone-Poulenc") and The Goodyear Tire & Rubber Company ("Goodyear") in the
manufacturing/warehousing market.

The Company, which commenced doing business in 1968, is incorporated under
the laws of Delaware. Its principal executive offices are located at PAR
Technology Park, 8383 Seneca Turnpike, New Hartford, New York 13413-4991, and
its telephone number is (315) 738-0600.

4
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by the Company................ 1,450,000 shares
Common Stock offered by the Selling Stockholders... 1,375,000 shares
Common Stock to be outstanding after the Offering.. 9,211,828 shares(1)
Use of proceeds.................................... To fund research and
development, marketing,
sales and administration
of new product lines under
development, acquisitions
of capital equipment,
working capital and
general corporate
purposes, as well as
potential acquisitions.
See "Use of Proceeds."
New York Stock Exchange symbol..................... PTC
</TABLE>
- --------
(1) Based on the number of shares outstanding on May 17, 1996. Excludes an
aggregate of 794,220 shares of Common Stock reserved for issuance upon the
exercise of outstanding stock options.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net revenues:
Product...................... $ 43,835 $ 52,965 $ 58,306 $ 12,342 $ 10,880
Service...................... 19,213 20,823 25,059 5,607 7,677
Contract..................... 18,199 20,742 24,029 6,085 6,937
-------- -------- -------- --------- ---------
81,247 94,530 107,394 24,034 25,494
-------- -------- -------- --------- ---------
Costs of sales:
Product...................... 25,433 32,527 34,028 7,663 6,778
Service...................... 17,041 17,296 20,807 4,450 6,261
Contract..................... 17,534 19,740 22,492 5,770 6,513
-------- -------- -------- --------- ---------
60,008 69,563 77,327 17,883 19,552
-------- -------- -------- --------- ---------
Gross margin............... 21,239 24,967 30,067 6,151 5,942
-------- -------- -------- --------- ---------
Operating expenses:
Selling, general and
administrative expenses..... 13,009 14,211 17,721 4,179 3,744
Research and development..... 4,239 5,009 5,331 1,333 1,351
-------- -------- -------- --------- ---------
17,248 19,220 23,052 5,512 5,095
-------- -------- -------- --------- ---------
Income before provision for
income taxes.............. 3,991 5,747 7,015 639 847
Provision for income taxes..... 1,462 2,086 2,357 249 296
-------- -------- -------- --------- ---------
Net income................. $ 2,529 $ 3,661 $ 4,658 $ 390 $ 551
======== ======== ======== ========= =========
Earnings per common share...... $ 0.32 $ 0.46 $ 0.58 $ 0.05 $ 0.07
Weighted average number of
common shares outstanding..... 7,968 7,992 8,068 8,073 8,190
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------
ACTUAL AS ADJUSTED(1)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................... $44,498 $67,975
Total assets............................................. 66,364 89,841
Long-term debt........................................... -- --
Stockholders' equity..................................... 53,956 77,433
</TABLE>
- --------

(1) Adjusted to reflect the sale by the Company of 1,450,000 shares of Common
Stock offered hereby, at an assumed offering price of $17.50 per share and
the application of the net proceeds therefrom, after deducting estimated
underwriting discounts and commissions and offering expenses. See "Use of
Proceeds" and "Capitalization."

5
<PAGE>

RISK FACTORS

In addition to the other information in this Prospectus, prospective
investors should consider carefully the following risk factors in evaluating
the Company and its business before purchasing shares of the Common Stock
offered hereby.

CONCENTRATION OF MAJOR CUSTOMERS

A small number of customers has historically accounted for a majority of the
Company's net revenues in any given fiscal period. For the years ended
December 31, 1993, 1994, and 1995, aggregate sales to the Company's top three
commercial segment customers amounted to 57.8%, 59.2% and 58.7%, respectively,
of net revenues. The Company's top three customers in 1995 and 1994 were Taco
Bell, McDonald's and KFC, which accounted for 32.8%, 20.9% and 5.0%,
respectively, of net revenues in 1995, and for 27.0%, 24.1% and 8.2%,
respectively, of net revenues in 1994. Taco Bell and KFC are both wholly-owned
subsidiaries of PepsiCo, Inc. With the exception of certain purchase
commitments by Taco Bell, no customer is obligated to make any minimum level
of future purchases from the Company or to provide the Company with binding
forecasts of product purchases for any future period. In addition, major
customers may elect to delay or otherwise change the timing of orders in a
manner that could adversely effect quarterly and annual results of operations.
There can be no assurance that the Company's current customers will continue
to place orders with the Company, or that the Company will be able to obtain
orders from new customers. The loss of, or reduced sales to, any one or more
of the Company's major customers could materially and adversely affect the
Company's business, operating results and financial condition. See
"Business -- Customers."

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

In the first quarter of 1996, the Company's sales to Taco Bell declined in
comparison to the 1995 first quarter. This decrease was the result of the
timing of Taco Bell's requirements under its sales contract with the Company.
In the first quarter of 1995, Taco Bell's demand for systems was high due to
the size of a replacement program during that period. The Company will
continue providing systems to Taco Bell under its current contract, which runs
through March 31, 1997; however, because the timing of replacement programs
and store openings is determined by Taco Bell based on its requirements, the
volume of systems sales to Taco Bell in any quarter may vary from the prior
comparable quarter. Because a high percentage of the Company's costs,
including personnel and facilities costs, are relatively fixed, variations in
the timing of orders and shipments can cause significant variations in
quarterly financial results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Quarterly Financial
Information."

NEW PRODUCT DEVELOPMENT AND RAPID TECHNOLOGICAL CHANGE

The products sold by the Company are subject to rapid and continual
technological change. Products available from the Company in its current
restaurant ITIP and manufacturing/warehousing ITIP markets, as well as from
its competitors, have increasingly offered a wider range of features and
capabilities. The Company believes that in order to compete effectively in
selected commercial segment markets, it must provide upwardly

6
<PAGE>

compatible systems incorporating new technologies at competitive prices. There
can be no assurance that the Company will be able to continue funding research
and development at levels sufficient to enhance its current product offerings
or will be able to develop and introduce on a timely basis new products that
keep pace with technological developments and emerging industry standards and
address the evolving needs of customers. There can also be no assurance that
the Company will not experience difficulties that will result in delaying or
preventing the successful development, introduction and marketing of new
products in its existing markets or that its new products and product
enhancements will adequately meet the requirements of the marketplace or
achieve any significant degree of market acceptance. Likewise, there can be no
assurance as to the acceptance of Company products in new markets, including
the Company's CTS and Qscan(R) products, nor can there be any assurance as to
the success of the Company's penetration of these markets, or to the revenue
or profit margins with respect to these products. The inability of the
Company, for any reason, to develop and introduce new products and product
enhancements in a timely manner in response to changing market conditions or
customer requirements could materially adversely affect the Company's
business, operating results and financial condition. See "Business -- Systems
and Services."

DEPENDENCE ON GOVERNMENT CONTRACTS

The Company derived 21.9% and 22.4% of its revenues in 1994 and 1995,
respectively, from contracts for the provision of technical products and
services to United States government agencies and defense contractors. The
Government contracting business is subject to various risks including: (1)
unpredictable contract or project termination, reductions in funds available
for the Company's projects due to government policy changes and contract
adjustments and penalties arising from post-award contract audits and incurred
cost audits in which the value of the contract may be reduced; (2) risks of
underestimating costs, particularly with respect to software and hardware
development, for work performed pursuant to "fixed-price" contracts, where the
Company commits to achieve specified deliveries for a predetermined fixed
price; (3) limited profitability from "cost-plus" contracts under which the
amount of profit attainable is limited to a specified negotiated amount,
usually in the range of six to ten percent of estimated costs, although no
assurance can be given that such levels will be obtainable on present or
future contracts; and (4) unpredictable timing of cash collections of certain
unbilled receivables as they may be subject to acceptance of contract
deliverables to the customer, and contract close-out procedures, including
government approval of final indirect rates. In addition, budgetary
constraints and changes in spending priorities in government agencies,
including the Department of Defense, have resulted in sudden program changes,
reductions or cancellations in the past and such conditions may be expected to
continue. As a result, the Company's revenues may fluctuate from year to year
and quarter to quarter depending on government procurement activity in the
Company's areas of business. In addition, the Company's government contracts
are subject to termination for the convenience of the government. If the
government terminates on this basis, the Company would be entitled to recover
its allowable costs incurred as well as a reasonable profit on the work
performed. See "Business -- Customers."

DEPENDENCE ON SUPPLIERS FOR KEY COMPONENTS

Certain key components used in the Company's products, such as base castings
and certain printers and electronic components, are currently being purchased
from single sources of supply. Although the Company believes that additional
sources are available to it, the inability to obtain sufficient components or
subassemblies as required, or to develop alternative sources of supply if and
as required in the future, could result in delays or reductions in product
shipments that could materially and adversely affect the Company's operating
results and damage customer relationships.

COMPETITION

The Company faces extensive competition in the markets in which it operates.
There are currently more than ten suppliers who offer restaurant ITIP systems
similar to the Company's. Some of these competitors are larger than the
Company and have access to substantially greater financial and other resources
than does the Company, and consequently may be able to obtain more favorable
terms than the Company for components and subassemblies incorporated into
their restaurant ITIP products. The rapid rate of technological change in the

7
<PAGE>

restaurant market makes it likely that the Company will face competition from
new products designed by companies not currently competing with the Company.
Such products may have features not currently available on PAR restaurant ITIP
products. The Company believes that its competitive ability depends on its
total solution offering, its product development and systems integration
capability, its direct sales force and its customer service organization.
There is no assurance that the Company will be able to compete effectively in
the restaurant ITIP systems market in the future. The Company's
manufacturing/warehousing ITIP business is also highly competitive. Some of
the Company's competitors in the manufacturing/warehousing ITIP market are
much larger than the Company and have access to substantially greater
financial and other resources than the Company. There is no assurance that the
Company will be able to compete effectively in the manufacturing/warehousing
ITIP business. The Company's government contracting businesses compete with a
large number of companies, large and small, for government contracts. The
Company's government contracting businesses have been focused on niche
offerings, primarily signal and image processing and engineering services.
There are no assurances that the Company will continue to win government
contracts as a prime contractor or subcontractor. Additionally, there are no
assurances that the Government will continue to contract for the provision of
services in the areas in which the Company has expertise. See "Business --
Competition."

INDUSTRY CONCENTRATION AND CYCLICALITY

Approximately 71.8% of the Company's net revenues in 1995 were related to
the restaurant industry, particularly the QSR industry. The Company's
restaurant ITIP product sales are dependent in large part on the health of
this industry, which in turn is dependent on the domestic and international
economy, as well as factors such as consumer buying preferences and weather
conditions. Although the QSR industry has experienced profitability and growth
recently, there can be no assurance that profitability and growth will
continue. The QSR market is affected by a variety of factors, including war,
global and regional instability, natural disasters and general economic
conditions. Adverse developments in the restaurant industry could materially
affect the Company's restaurant ITIP business, operating results and financial
condition. See "Business -- Integrated Transaction Information Processing."

INTERNATIONAL SALES

In 1995, the Company's net revenues from sales outside the United States
were $17.7 million, accounting for approximately 16.5% of the Company's net
revenues. The Company anticipates that international sales will continue to
account for a significant portion of sales. The Company intends to continue to
expand its operations outside the United States and to enter additional
international markets, which will require significant management attention and
financial resources. The Company's operating results are subject to the risks
inherent in international sales, including, but not limited to, regulatory
requirements, political and economic changes and disruptions, transportation
delays, difficulties in staffing and managing foreign sales operations, and
potentially adverse tax consequences. In addition, fluctuations in exchange
rates may render the Company's products less competitive relative to local
product offerings, or could result in foreign exchange losses, depending upon
the currency in which the Company sells its products. There can be no
assurance that these factors will not have a material adverse effect on the
Company's future international sales and, consequently, on the Company's
operating results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes to Consolidated Financial
Statements.

DEPENDENCE ON PROPRIETARY TECHNOLOGY

PAR's success and ability to compete is dependent in part upon its ability
to protect its proprietary technology. The Company relies on a combination of
patent, copyright and trade secret laws and non-disclosure agreements to
protect its proprietary technology. The Company generally enters into
confidentiality or license agreements with its employees, distributors,
customers and potential customers and limits access to and distribution of its
software, documents and other proprietary information. There can be no
assurance that the steps taken by the Company to protect its proprietary
rights will be adequate to prevent misappropriation of its technology or that
the Company's competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technology. In addition,
the laws of some foreign countries do not

8
<PAGE>

protect the Company's proprietary rights to the same extent as do the laws of
the United States. The Company is also subject to the risk of adverse claims
and litigation alleging infringement of the proprietary rights of other
parties. Additionally, the Company periodically reviews recent patents that
have been issued to third parties. As a result of such reviews, the Company
has from time to time identified and investigated the validity and scope of
issued patents for technologies similar to, or related to, the Company's
technologies. Although the Company believes that it does not infringe the
valid patents of others, there can be no assurance that third parties will not
assert infringement claims in the future with respect to the Company's current
or future products or that any such claim will not require the Company to
enter into license arrangements or result in protracted and costly litigation,
regardless of the merits of such claims. No assurance can be given that any
necessary licenses will be available or that, if available, such licenses can
be obtained on commercially reasonable terms. The failure to obtain such
royalty or licensing agreements on a timely basis would have a material
adverse effect upon the Company's business, results of operations and
financial conditions. See "Business -- Intellectual Property."

RELIANCE ON KEY PERSONNEL

The Company's future success and potential growth depend in part on its
ability to retain its key management and technical and sales personnel and to
recruit, train and retain sufficient numbers of other highly qualified
managerial, technical and sales personnel on a continuing basis. There can be
no assurance that the Company will be able to retain its key management or
technical and sales personnel or that it will be able to attract and retain
sufficient numbers of other highly qualified managerial, technical and sales
personnel. The inability to retain or attract such personnel could materially
adversely affect the Company's business, operating results and financial
condition. In addition, the Company's ability to manage potential growth
successfully will require the Company to attract additional experienced
managerial, technical and sales personnel and to continue to improve its
operational, management and financial systems and controls. See "Management."

PREDOMINANT OWNERSHIP POSITION OF INSIDERS

Following this offering, the existing officers and directors of the Company
and related parties will control approximately 47.2% of the outstanding Common
Stock. As a result, they will be able to exert significant influence on the
Company. Dr. John W. Sammon, Jr., Chairman of the Board of Directors and
President of the Company, and members of his immediate family will control
approximately 41.9% of the outstanding Common Stock. Dr. Sammon will continue
to be the largest stockholder and will have significant influence with respect
to the election of directors and approval or disapproval of fundamental
corporate decisions, which could include a change in control of PAR. See
"Principal and Selling Stockholders."

ENVIRONMENTAL COMPLIANCE

The Company is subject to a variety of federal, state and local governmental
regulations relating to the use, storage, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in the manufacturing process.
The Company also leases space to Phoenix Systems and Technologies, Inc.
("Phoenix"), a corporation 43.9% owned by the Company that is engaged in
contract manufacturing, including printed circuit board assembly services that
may also involve the use of hazardous materials. Under applicable law, in the
event that Phoenix is found liable for failure to comply with applicable
environmental regulations, the Company may be found ultimately liable for
Phoenix's obligations. Any failure of the Company to control the use of, or
adequately restrict the discharge of, hazardous substances, or otherwise
comply with environmental regulations, could subject it to significant future
liabilities. In addition, although the Company believes that its past
operations, and, to the best of its knowledge, those of Phoenix, conformed
with then applicable environmental laws and regulations, there can be no
assurance that the Company or Phoenix has not in the past violated applicable
laws or regulations, which violations could result in remediation or other
liabilities.

9
<PAGE>

VOLATILITY OF STOCK PRICE

The price of the Common Stock historically has experienced significant
volatility due to fluctuations in revenues and earnings, other factors
relating to the Company's operations as well as the market's changing
expectations for the Company's growth, the limited number of shares available
for sale and purchase in the open market, overall equity market conditions and
the conditions relating to the market for technology stocks generally, and
other factors unrelated to the Company's operations. Such fluctuations are
expected to continue. In addition, stock markets have experienced extreme
price volatility in recent years. This volatility has had a substantial effect
on the market prices of securities issued by many technology companies, often
for reasons unrelated to the operating performance of the specific companies.
See "Price Range of Common Stock and Dividend Policy."

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Amended Certificate of Incorporation and
By-Laws could discourage potential acquisition proposals and could delay or
prevent a change in control of the Company. Such provisions could diminish the
opportunities for a stockholder to participate in tender offers, including
tender offers at a price above the then current market value of the Common
Stock. Such provisions may also inhibit fluctuations in the market price of
the Common Stock that could result from takeover attempts. In addition, the
Board of Directors, without further stockholder approval, may issue Preferred
Stock that could have the effect of delaying, deterring or preventing a change
in control of the Company. The issuance of Preferred Stock could also
adversely affect the voting power of the holders of Common Stock, including
the loss of voting control to others. The Company has no present plans to
issue any Preferred Stock. See "Description of Capital Stock -- Certain
Provisions of the Charter and By-Laws Affecting Stockholders."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the public market
following the Offering (pursuant to Rule 144 or otherwise), as well as the
issuance of shares upon exercise of employee stock options, could adversely
affect the prevailing market price of the Common Stock and impair the
Company's ability to raise additional capital through the sale of equity
securities. The Company and all of its executive officers and directors who
are not Selling Stockholders have agreed that they will not, without the prior
written consent of Dillon, Read & Co. Inc., offer, sell, contract to sell,
transfer or otherwise dispose of, directly or indirectly, any shares of the
Common Stock, or any securities convertible into, or exercisable or
exchangeable for, Common Stock or warrants or other rights to purchase Common
Stock, prior to the expiration of 90 days from the date of the consummation of
the offering, except, with respect to the Company, (i) shares of Common Stock
issued pursuant to the exercise of outstanding options and (ii) options
granted to its employees, officers and directors under its existing employee
stock option plans so long as none of such options become exercisable during
said 90 day period. Certain stockholders, including the Selling Stockholders,
who will hold in the aggregate 4,188,846 shares of Common Stock after the
offering, have agreed that they will not, without prior written consent of
Dillon, Read & Co. Inc., sell, contract to sell, transfer or otherwise dispose
of, directly or indirectly, any shares of Common Stock, or any securities
convertible into, or exercisable or exchangeable for, Common Stock or warrants
or other rights to purchase Common Stock, prior to the expiration of 180 days
from the date of the consummation of this offering. See "Shares Eligible for
Future Sale."

10
<PAGE>

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of 1,450,000
shares of Common Stock offered hereby (the "Offering") are estimated to be
approximately $23.5 million assuming a public offering price of $17.50 per
share and after deducting estimated underwriting discounts and commissions and
offering expenses. The net proceeds of the Offering, together with the
Company's existing funds and cash generated from operations are expected to be
used for the following purposes: research and development, marketing, sales
and administration of new product lines under development, acquisitions of
capital equipment, and working capital and general corporate purposes, as well
as possible acquisitions of products, technologies or businesses. While the
Company continually evaluates potential acquisitions, the Company has no
present agreements or commitments with respect to any acquisition, nor are any
negotiations regarding any acquisition currently ongoing. Pending such uses,
the net proceeds will be invested in investment grade, interest-bearing
securities.

The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders. See "Principal and Selling Stockholders."

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is listed on the New York Stock Exchange under the symbol
PTC. The following table sets forth for the periods indicated the high and low
sale prices for the Common Stock on the New York Stock Exchange.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1994
1st Quarter.................................................... 9 1/4 7
2nd Quarter.................................................... 7 7/8 6 5/8
3rd Quarter.................................................... 7 1/4 6 1/4
4th Quarter.................................................... 8 1/4 6 1/8
1995
1st Quarter.................................................... 9 3/4 5 7/8
2nd Quarter.................................................... 10 3/4 8
3rd Quarter.................................................... 10 3/4 8 1/4
4th Quarter.................................................... 10 1/4 8 5/8
1996
1st Quarter.................................................... 16 7/8 8 1/4
2nd Quarter (through May 22, 1996)............................. 19 7/8 14
</TABLE>

The last reported sale price of the Common Stock on the New York Stock
Exchange on May 22, 1996 was $17.50 per share. As of May 7, 1996, there were
approximately 881 holders of record of the Common Stock.

The Company has never declared or paid any dividends on the Common Stock and
does not intend to declare any dividends on its Common Stock in the
foreseeable future. The Company currently intends to retain future earnings to
fund the development and growth of its business.

11
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1996, and as adjusted to give effect to the Offering (assuming an offering
price of $17.50 per share and after deducting estimated underwriting discounts
and commissions and offering expenses payable by the Company). This table
should be read in conjunction with the Company's financial statements and
notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt............................................ $ -- $ --
Stockholders' equity (1):
Preferred Stock, $.02 par value per share; 250,000
shares authorized, none issued and outstanding......... -- --
Common Stock, $.02 par value per share; 12,000,000
shares authorized, 9,177,884 shares issued and
7,747,278 outstanding, 9,197,278 shares issued and
outstanding as adjusted (1)............................ 184 184
Additional paid-in-capital................................ 13,901 35,099
Retained earnings......................................... 42,283 42,283
Cumulative translation adjustment......................... (133) (133)
Treasury stock, at cost, 1,430,606 shares, 0 shares as ad-
justed................................................... (2,279) --
------- -------
Total stockholders' equity............................ 53,956 77,433
------- -------
Total capitalization................................ $53,956 $77,433
======= =======
</TABLE>

- --------
(1) Excludes 914,770 shares of Common Stock issuable upon the exercise of
options outstanding at March 31, 1996, of which options to purchase
555,767 shares were then exercisable. See Note 6 of the Notes to
Consolidated Financial Statements appearing elsewhere in this Prospectus.

12
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following selected consolidated financial data for each of the five
years in the period ended December 31, 1995 have been derived from the
Company's consolidated financial statements, which have been audited by Price
Waterhouse LLP, independent accountants. The selected consolidated financial
data presented below for the three months ended March 31, 1995 and 1996 have
been derived from unaudited financial statements of the Company and, in the
opinion of management, include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the quarterly selected
financial information. The results for the three months ended March 31, 1996
are not necessarily indicative of the results of operations for the entire
fiscal year or any other period. The information set forth below should be
read in conjunction with the Company's consolidated financial statements and
notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Net revenues:
Product............... $ 38,803 $ 38,641 $ 43,835 $ 52,965 $ 58,306 $ 12,342 $ 10,880
Service............... 17,951 18,552 19,213 20,823 25,059 5,607 7,677
Contract.............. 22,143 16,078 18,199 20,742 24,029 6,085 6,937
-------- -------- -------- -------- -------- -------- --------
78,897 73,271 81,247 94,530 107,394 24,034 25,494
-------- -------- -------- -------- -------- -------- --------
Costs of sales:
Product............... 22,176 21,027 25,433 32,527 34,028 7,663 6,778
Service............... 16,784 16,108 17,041 17,296 20,807 4,450 6,261
Contract.............. 21,498 15,004 17,534 19,740 22,492 5,770 6,513
-------- -------- -------- -------- -------- -------- --------
60,458 52,139 60,008 69,563 77,327 17,883 19,552
-------- -------- -------- -------- -------- -------- --------
Gross margin........ 18,439 21,132 21,239 24,967 30,067 6,151 5,942
-------- -------- -------- -------- -------- -------- --------
Operating expenses:
Selling, general and
administrative
expenses............. 11,258 12,296 13,009 14,211 17,721 4,179 3,744
Research and
development.......... 4,742 5,253 4,239 5,009 5,331 1,333 1,351
-------- -------- -------- -------- -------- -------- --------
16,000 17,549 17,248 19,220 23,052 5,512 5,095
-------- -------- -------- -------- -------- -------- --------
Income before
provision for
income taxes....... 2,439 3,583 3,991 5,747 7,015 639 847
Provision for income
taxes.................. 978 1,250 1,462 2,086 2,357 249 296
-------- -------- -------- -------- -------- -------- --------
Net income.......... $ 1,461 $ 2,333 $ 2,529 $ 3,661 $ 4,658 $ 390 $ 551
======== ======== ======== ======== ======== ======== ========
Earnings per common
share.................. $ 0.20 $ 0.30 $ 0.32 $ 0.46 $ 0.58 $ 0.05 $ 0.07
Weighted average number
of common shares
outstanding............ 7,405 7,885 7,968 7,992 8,068 8,073 8,190
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------- MARCH 31,
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $28,609 $31,373 $34,489 $38,915 $42,976 $44,498
Total assets................. 49,019 53,433 60,449 60,642 68,073 66,364
Long-term debt............... -- -- -- -- -- --
Total shareholders' equity... 39,094 41,858 44,530 48,645 53,132 53,956
</TABLE>

13
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

PAR Technology Corporation provides sophisticated integrated transaction
information processing ("ITIP") solutions that enable the reliable capture,
preservation, processing and management of information throughout a business
enterprise. The Company is a leading supplier of ITIP solutions to the quick
service restaurant industry and also provides ITIP solutions for
manufacturing/warehousing enterprises. The Company's systems-based solutions
have been engineered to perform reliably under harsh operating conditions and
incorporate high levels of systems integration, in-depth knowledge of the
customers' workflow processes, and local and wide-area networking capability.

The Company also develops advanced computer based systems and technologies
for federal and state governmental agencies. Through its government sponsored
development work, PAR has generated significant technologies with commercial
applications, from the transaction processing capability underlying its
primary business, to advanced vision technology currently being implemented in
the Company's proprietary Corneal Topography System ("CTS") for use in
ophthalmic diagnoses and surgical procedures.

The Company's business is divided into two segments -- the commercial
segment, which represents all product and service revenues, and the government
segment, which represents all contract revenues. Product revenues principally
arise from sales of ITIP systems to the restaurant industry and, to a lesser
extent, to manufacturing/warehousing enterprises. Service revenues include
installation, repairs, help desk and other service integration activities
related to the restaurant ITIP business. Revenues from sales of commercial
products are generally recorded as the products are shipped, provided that no
significant vendor post-contract support obligations remain and the collection
of the related receivable is probable. The Company's service revenues are
recognized ratably over the related contract period or as the services are
performed.

Contract revenues include all prime and subcontract activities with the
Department of Defense and other governmental agencies. They are derived under
a variety of cost reimbursement, time and material and fixed price contracts.
Contract revenues, including fees and profits, are recorded as services are
performed using the percentage of completion method of accounting, primarily
based on contract costs incurred to date compared with estimated costs at
completion. Anticipated losses on all contracts and programs in process are
recorded in full when identified. Unbilled accounts receivable are stated at
estimated realizable value. Contract costs, including indirect expenses, are
subject to audit and adjustment through negotiations between the Company and
government representatives. Contract revenues have been recorded in amounts
that are expected to be realized on final settlement. Selling, general and
administrative expenses and research and development attributable to the
Company's government businesses are included in costs of contracts.

The Company capitalizes certain costs related to the development of computer
software under the requirements of Statement of Financial Accounting Standards
No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed. Software development costs incurred prior to establishing
technological feasibility are charged to operations and included in research
and development costs. Software development costs incurred after establishing
feasibility are capitalized and amortized on a product by product basis when
the product is available for general release to customers. Annual
amortization, charged to cost of sales, is the greater of the amount computed
using the ratio that current gross revenues for a product bear to the total of
current and anticipated future gross revenues for that product, or the
straight line method over the remaining estimated economic life of the
product.

In June 1992, the Company was approved under the Department of Defense
Mentor Protege Program as a mentor for a minority owned government contractor,
Phoenix Systems and Technologies, Inc. ("Phoenix"). Concurrent with this
approval, the Company acquired a 43.9% interest in Phoenix, which is accounted
for under the equity method. The Company is a subcontractor to Phoenix on
certain engineering service contracts with the United States Government.
Phoenix is also a vendor to PAR, providing manufacturing and certain contract
services.

14
<PAGE>

RESULTS OF OPERATIONS

Three Months Ended March 31, 1996 and 1995

The Company reported an increase in net income of 41.3% for the quarter
ended March 31, 1996 compared to the same quarter of 1995. Net income was
$551,000, or earnings per share of $0.07, on net revenues of $25.5 million for
the quarter ended March 31, 1996, compared to net income of $390,000, or
earnings per share of $0.05, on net revenues of $24.0 million for the same
quarter of 1995.

Product revenues decreased 11.8% to $10.9 million in 1996 versus $12.3
million in 1995. This decrease was the result of the timing of Taco Bell's
requirements under its sales contract with the Company. In the first quarter
of 1995, Taco Bell's demand for systems was high due to the size of a
replacement program during that period. The Company will continue providing
systems to Taco Bell under its current contract, which runs through March 31,
1997; however, because the timing of replacement programs and new store
openings is determined by Taco Bell based on its requirements, the volume of
systems sales to Taco Bell in any quarter may vary from the prior comparable
quarter. Partially offsetting this decrease was an increase in sales to KFC in
several international markets. During the current period, the Company sold 15
systems for use in China and 23 systems for use in Thailand to KFC.

Service revenues increased 36.9% to $7.7 million in the first quarter of
1996, compared to $5.6 million for the first quarter of 1995. This increase
was due to a greater volume of special integration projects requested by
customers in 1996 compared to 1995 and the ongoing activities with Taco Bell
under the exclusive service integration contract awarded in 1995. Under this
agreement, the Company is responsible for servicing of all restaurant ITIP
systems, back office systems and Help Desk and on-site support activities.

Contract revenues were $6.9 million in 1996, an increase of 14.0% from $6.1
million reported in 1995. The government segment's software development and
systems integration business increased due to its ongoing work in
environmental monitoring systems and hazardous materials tracking.
Additionally, the Company continues to perform as a subcontractor to Northrop
Grumman on the Joint Surveillance Target Attack Radar System Program
("J/STARS"). The Company's engineering services business increased primarily
due to the Griffiss Minimum Essential Airfield Contract awarded to Phoenix in
1995. The Company is a subcontractor to Phoenix to operate and maintain
Griffiss Air Force Base.

Gross margin on product revenues was 37.7% in the first quarter of 1996
virtually unchanged from 37.9% for the first quarter of 1995. Although the
Company has experienced reductions in average selling prices to certain
customers during this period as compared to the first quarter of 1995, the
impact has been partially mitigated by favorable product mix and cost
reduction programs implemented by the Company.

Gross margin on service revenues was 18.4% for the three months ended March
1996, versus 20.6% for the same three months of 1995. This decline was
primarily the result of lower margins attributable to the special integration
projects discussed above.

Gross margin on contract revenues was 6.1% in 1996 versus 5.2% in 1995. The
improved margins were due to a favorable contract mix in 1996 versus 1995.

Selling, general and administrative expenses were $3.7 million in 1996, a
decline of 10.4% from the $4.2 million reported in 1995. This decrease was
mainly the result of non-recurring charges in 1995 relating to the Company's
accounts receivable from and equity interest in Phoenix. This was partially
offset by an increase in the restaurant ITIP sales force costs in 1996 over
1995.

Research and development expenses increased 1.4% to $1.4 million in 1996
compared to $1.3 million in 1995. Research and development costs attributable
to government contracts are included in cost of contract revenues.

The Company's effective tax rate was 34.9% in 1996 compared to 39.0% in
1995. This decrease was due to adjustments in prior years' accruals in 1995.

15
<PAGE>

Years ended December 31, 1995 and 1994

The Company reported earnings per share of $0.58 for the year ended December
31, 1995, an increase of 26.1% from the $0.46 per share recorded for the year
ended December 31, 1994. Net income increased 27.2% to $4.7 million in 1995
compared to $3.7 million for 1994. Net revenues for 1995 were $107.4 million
versus $94.5 million for 1994, an increase of 13.6%.

Product revenues were $58.3 million for 1995, a 10.1% increase from the
$53.0 million recorded in 1994. Most of this increase occurred in the fourth
quarter of 1995. This was primarily due to the Company's continuing successful
relationship with Taco Bell. In the fourth quarter of 1995, the Company
received a $23.0 million order from Taco Bell for restaurant ITIP products.
The Company began delivery of this order in 1995, with the majority to be
shipped in 1996. The increase is also due to new contract awards from the
Chick-fil-A, Inc. ("Chick-fil-A") restaurant chain. Product sales also
increased in 1995 due to the growth in the Company's manufacturing/warehousing
ITIP business. This business won several new contracts in 1995 and grew 34.0%
over 1994. Partially offsetting these increases was a decline in sales to KFC
International due to a greater number of new store openings and replacement
orders in 1994 than in 1995.

Service revenues increased 20.3% to $25.1 million in 1995, compared to $20.8
million for 1994. The growth in service revenues was primarily related to
higher installation revenue as a result of the increase in product sales
discussed above. Additionally, in the third quarter of 1995 the Company was
awarded a service integration contract with Taco Bell. Under this agreement,
the Company is responsible for servicing of all restaurant ITIP systems, back
office systems and Help Desk and on-site support activities. Certain product
enhancement programs for various customers also contributed to this increase
in 1995.

Contract revenues were $24.0 million for 1995, an increase of 15.8% from the
$20.7 million reported in 1994. The government segment's site maintenance and
testing activities and its software development business both contributed to
this increase. The Company was awarded new site contracts and expanded the
scope of other existing contracts during 1995. Additionally, the Company's
software development business continues to expand its work in environmental
monitoring systems.

RRC was awarded a $10.0 million, five-year contract as the prime
subcontractor for the Griffiss Minimum Essential Airfield Contract awarded to
Phoenix. Under this contract, Phoenix and RRC will provide engineering
services to Griffiss Air Force Base.

Gross margin on product revenues was 41.6% compared to 38.6% in 1994.
Restaurant ITIP margins improved primarily due to certain customer discounts
earned in 1994 that did not recur in 1995. Additionally, the Company was able
to achieve certain product cost reductions in 1995.

Gross margin on service revenues was 17.0% in 1995, versus 16.9% in 1994.
Margins benefited from increased revenues, including revenue from certain
product enhancement programs. However, this was offset by start-up costs
related to the service integration contract with Taco Bell discussed above.

Gross margin on contract revenues was 6.4% in 1995, compared to 4.8% in
1994. This margin improvement was the result of higher award fees earned on
certain contracts due to high performance ratings and to a favorable contract
mix.

Selling, general and administrative expenses were $17.7 million in 1995, an
increase of 24.7% from the $14.2 million recorded in 1994. This increase is
primarily due to the expansion of the Company's worldwide restaurant ITIP
sales force and growth in the manufacturing/warehousing ITIP sales force.
Also, 1995 expenses included $1.1 million for allowances related to the
Company's investment in and receivable from Phoenix. See Note 9 to the
Consolidated Financial Statements for further discussion.

Research and development expenses were $5.3 million in 1995, an increase of
6.4% from the $5.0 million reported a year ago. The Company is continuing its
investment in restaurant ITIP hardware and software products. Additionally,
the Company continues to improve the technological performance of its CTS
products.

16
<PAGE>

The Company's effective tax rate was 33.6% in 1995 compared to 36.3% in
1994. The lower rate is primarily due to the utilization of foreign tax
credits in 1995.

Years ended December 31, 1994 and 1993

The Company reported earnings per share of $0.46 for the year ended December
31, 1994, an increase of 43.7% from the $0.32 per share recorded for the year
ended December 31, 1993. Net income increased 44.8% to $3.7 million in 1994,
compared to $2.5 million for 1993. Net revenues for 1994 were $94.5 million
versus $81.2 million for 1993, an increase of 16.3%.

Product revenues were $53.0 million for 1994, a 20.8% increase from the
$43.8 million recorded in 1993. This increase was due to sales to Taco Bell of
the Company's third generation point-of-sale system (POS III). Another major
factor was sales of the Company's POS II products to McDonald's, KFC and other
fast food chains in both domestic and international markets. During 1994, the
Company received follow-on purchase orders from Taco Bell totaling $20.0
million. The Company's system integration work related to its
manufacturing/warehousing ITIP business also contributed to the increase.

Customer service revenues increased 8.4% to $20.8 million in 1994, compared
to $19.2 million for 1993. The growth in service revenue was primarily related
to higher installation revenue as a result of the increase in product sales
discussed above.

Contract revenues were $20.7 million for 1994, an increase of 14.0% from the
$18.2 million reported in 1993. This growth was due to the success of the
Company's site maintenance and testing business. The Company currently has
several contracts at different government-owned sites across the country. The
government segment software development business also contributed to the
increase. In 1994, the Company announced it was successful in winning a $2.5
million, multi-year contract from the National Institute for Environmental
Renewal for the development and application of an environmental monitoring and
management system for the detection of ground and water contamination.

Gross margin on product revenues was 38.6% in 1994, compared to 42.0% in
1993. This decrease in margin was a result of volume discounts earned in 1994
by a major customer in accordance with the terms of its sales agreement with
the Company. Partially offsetting this was improved absorption of certain
fixed manufacturing costs as a result of increased production in 1994.

Gross margin on service revenues was 16.9% in 1994, versus 11.3% in 1993.
This increase was the result of increased installation and service contract
revenue directly related to the increased restaurant ITIP product revenue
discussed above.

Gross margin on contract revenues was 4.8% in 1994 compared to 3.7% in 1993.
During 1994, the Company controlled its overhead costs, which resulted in
improved margins on certain contracts.

Selling, general and administrative expenses were $14.2 million in 1994, an
increase of 9.2% from the $13.0 million recorded in 1993. This increase was
primarily due to the Company's expanded restaurant ITIP sales efforts and to
sales and marketing activities associated with the Company's CTS products.

Research and development expenses of the Commercial segment were $5.0
million in 1994, an increase of 18.2% from the $4.2 million reported a year
ago. The Company's net investment in restaurant ITIP and CTS products
increased in 1994 compared to the prior year.

17
<PAGE>

QUARTERLY FINANCIAL INFORMATION

The following table sets forth unaudited consolidated financial information
for the nine quarters ending March 31, 1996. The Company believes that this
information has been prepared on the same basis as the audited consolidated
financial statements appearing elsewhere in this Prospectus and all necessary
adjustments (consisting only of normal recurring adjustments) have been
included in the amounts stated below to present fairly the unaudited quarterly
results when read in conjunction with the audited consolidated financial
statements of the Company and notes thereto appearing elsewhere in this
Prospectus. The operating results for any quarter are not necessarily
indicative of the results for any future period. See "Risk Factors --
Fluctuations in Quarterly Operating Results."

<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT 30, DEC. 31, MARCH 31,
1994 1994 1994 1994 1995 1995 1995 1995 1996
-------- -------- --------- -------- -------- -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Net revenues:
Product................ $10,722 $12,959 $13,889 $15,395 $12,342 $11,884 $11,428 $22,652 $10,880
Service................ 4,807 5,205 5,288 5,523 5,607 5,889 6,440 7,123 7,677
Contract............... 5,241 4,959 4,726 5,816 6,085 6,593 6,112 5,239 6,937
------- ------- ------- ------- ------- ------- ------- ------- -------
20,770 23,123 23,903 26,734 24,034 24,366 23,980 35,014 25,494
------- ------- ------- ------- ------- ------- ------- ------- -------
Costs of sales:
Product................ 6,690 8,485 8,611 8,741 7,663 6,782 6,539 13,044 6,778
Service................ 4,146 4,241 4,220 4,689 4,450 4,856 4,857 6,644 6,261
Contract............... 4,932 4,730 4,455 5,623 5,770 6,234 5,552 4,936 6,513
------- ------- ------- ------- ------- ------- ------- ------- -------
15,768 17,456 17,286 19,053 17,883 17,872 16,948 24,624 19,552
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross margin.......... 5,002 5,667 6,617 7,681 6,151 6,494 7,032 10,390 5,942
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating expenses:
Selling, general and
administrative
expenses.............. 3,509 3,635 3,419 3,648 4,179 4,144 3,668 5,730 3,744
Research and
development........... 1,121 1,227 1,209 1,452 1,333 1,302 1,187 1,509 1,351
------- ------- ------- ------- ------- ------- ------- ------- -------
4,630 4,862 4,628 5,100 5,512 5,446 4,855 7,239 5,095
------- ------- ------- ------- ------- ------- ------- ------- -------
Income before
provision for income
taxes................ 372 805 1,989 2,581 639 1,048 2,177 3,151 847
Provision for income
taxes................. 145 337 545 1,059 249 412 644 1,052 296
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income............ $ 227 $ 468 $ 1,444 $ 1,522 $ 390 $ 636 $ 1,533 $ 2,099 $ 551
======= ======= ======= ======= ======= ======= ======= ======= =======
Earnings per common
share................. $ 0.03 $ 0.06 $ 0.18 $ 0.19 $ 0.05 $ 0.08 $ 0.19 $ 0.26 $ 0.07
Weighted average number
of common shares
outstanding........... 8,022 7,994 7,970 7,976 8,073 8,110 8,082 8,063 8,190
</TABLE>

The Company has experienced and expects to continue to experience quarterly
fluctuations in its net revenues and net income. Due to the dynamics
associated with the year-end capital budget planning of many of PAR's
restaurant ITIP customers and the preference of some restaurant ITIP customers
to install new systems between the busy summer and Christmas seasons, the
Company has historically realized a higher amount of its restaurant ITIP
systems sales and overall net income during the second half of the year. In
1994 and 1995, the Company realized 81.0% and 78.0%, respectively, of its net
income in the final six months of those years. Major restaurant ITIP customers
may, however, elect to delay purchases of the Company's products. If for any
reason the Company's sales were below seasonal norms during its fourth fiscal
quarter, the Company's annual operating results could be adversely affected.
The Company's quarterly operating results may also vary as a result of factors
such as the timing or cancellation of customer orders, especially major
customers, including Taco Bell, delays in order placement on the part of major
customers in anticipation of the introduction of new products by the Company,
price reductions by competitors or by the Company, the market acceptance of
newly introduced products, significant fluctuation in the pricing of
components of the Company's products and introductions of new or enhanced
competing products. In the first quarter of 1996, the Company's sales to Taco
Bell declined in comparison to the 1995 first quarter. This decrease was the
result of the timing of Taco Bell's requirements under its sales contract with
the Company. In the first quarter of 1995, Taco Bell's demand for systems was
high due to the size of a replacement program during that period. The Company
will continue providing systems to Taco Bell under its current contract, which
runs through March 31, 1997; however, because the timing of replacement
programs and store openings is determined by Taco Bell based on its
requirements, the volume of systems sales to Taco Bell in any quarter may vary
from the prior comparable quarter.

18
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of liquidity has been from operations. Cash
provided by operating activities was $1.9 million in the first quarter of
1996, compared to $2.4 million in 1995. The Company historically has
experienced significant collections of accounts receivable in its first
quarter due to the volume of sales generated in the preceding quarter. This is
primarily due to the seasonal demands of the Company's restaurant ITIP
customers. However, this factor was offset by the build up of restaurant ITIP
and service inventory in anticipation of future sales orders and service
requirements and the timing of estimated income tax payments in 1996 versus
1995.

Cash used in investing activities was $198,000 for the first quarter of
1996, compared to $486,000 in 1995. In 1996, capital expenditures were for
internal use computers and other miscellaneous items. In 1995, capital
expenditures were primarily for upgrades to internal use software.

Cash provided from financing activities was $336,000 for the first quarter
of 1996 compared to $67,000 in 1995. This increase was due primarily to the
proceeds from the exercise of stock options.

Cash used by operating activities in 1995 was $767,000, compared to cash
provided by operations of $8.0 million in 1994. The Company's accounts
receivable balance grew substantially in 1995 as a result of record fourth-
quarter revenues, which increased $8.3 million over the fourth quarter of
1994. During 1994, the Company's net profit and a reduction in accounts
receivable were the primary reasons for the positive cash flow.

Cash used in investing activities in 1995 was $1.8 million, compared to $2.2
million in 1994. The Company used $1.3 million for capital expenditures in
1995, versus $1.7 million in 1994. In 1995, the Company purchased additional
internal use computer hardware and software and upgraded certain
communications equipment. Capital expenditures in 1994 were primarily for
continued improvements to the Company's headquarters' facility and computer
equipment upgrades.

Cash flow provided by financing activities in 1995 was $101,000, versus cash
used of $3.9 million in 1994. In 1995, cash flow benefited by the proceeds
from the exercise of employee stock options and short-term bank borrowings for
working capital requirements. This was partially offset by the acquisition of
treasury stock during the year. In 1994, the Company used cash provided by
operations to pay off all of its short term borrowings with banks.

The Company has line-of-credit agreements, which aggregate $27.2 million,
with certain banks, of which $383,000 was in use at March 31, 1996. The
Company believes that it has adequate financial resources to meet its future
liquidity and capital requirements.

19
<PAGE>

BUSINESS

THE COMPANY

PAR Technology Corporation provides sophisticated integrated transaction
information processing solutions that enable the reliable capture,
preservation, processing and management of information throughout a business
enterprise. The Company is a leading supplier of ITIP solutions to the quick
service restaurant industry and also provides ITIP solutions for
manufacturing/warehousing enterprises. The Company's systems-based solutions
have been engineered to perform reliably under harsh operating conditions, and
incorporate high levels of systems integration, in-depth knowledge of the
customers' workflow processes, and local and wide-area networking capability.

The Company's POS III(TM) restaurant ITIP system solution combines flexible,
extendible systems software connecting its open-system architecture hardware
platform with ruggedized fixed and wireless order-entry terminals, video
monitors and PAR and third-party supplied peripherals networked via an
Ethernet LAN and accessible to enterprise-wide network configurations. For
manufacturing and warehousing enterprises, the Company designs and implements
complex integrated ITIP solutions incorporating its TPS(TM) data collection
and management software that provide real-time connectivity with multiple host
computers, diverse legacy applications software and "best-of-breed" software
and data input hardware technologies. PAR further provides extensive systems
integration capabilities to design, tailor and implement solutions that enable
its customers to manage, from a central location, all aspects of data
collection and processing for single or multiple site enterprises.

The Company also develops advanced computer-based systems and technologies
for government agencies. Through its government-sponsored development work,
PAR has generated significant technologies with commercial applications, from
the transaction information processing capability underlying its primary
business to the advanced vision technology currently being implemented in the
Company's proprietary Corneal Topography System ("CTS") for use in ophthalmic
diagnoses and surgical procedures.

INTEGRATED TRANSACTION INFORMATION PROCESSING

Businesses worldwide are increasingly focused on the means to more
effectively obtain, preserve, manage and utilize information related to the
processes by which their products are produced and sold. Automated capture and
analysis of certain information, including cost, price, volume, throughput and
other data, enable businesses to improve production efficiencies and gain
competitive advantages. Consequently, business managers increasingly require
ITIP solutions -- integrated computerized systems that enable the reliable
capture, preservation, integration, processing and management of business-
critical information throughout the enterprise. In complex systems
environments, ITIP solutions include the ability to communicate and share
information among disparate hardware and software platforms across local site
and enterprise-wide data networks. ITIP solutions are increasingly required by
managers to provide real-time access to operational data from local and remote
company sites for operational and strategic decision-making.

Many businesses have turned to third-party suppliers and systems integrators
to assist in the design, implementation and support of ITIP systems, as the
complexity of total systems solutions and rapid technological change require a
broad range of specialized capabilities. An ITIP solutions provider must
possess strong and diverse technical knowledge of open systems architectures,
multiple device and software interfaces, data formats, wireless communications
and local and wide-area networking. In addition, in order to effectively
design an ITIP solution that meets a particular customer's specific needs, the
ITIP provider must thoroughly understand the operational aspects and work
process flow requirements of its customer's business. Systems integration,
including the ability to design and implement reliable and extendible ITIP
solutions that enable data transmission and communication among disparate
hardware devices, multiple software applications, different host computers and
diverse operating systems, is a critical competency required of the solutions
provider. Finally, an ITIP solutions provider must commit to providing full
life-cycle support and service to meet the customer's needs for consistent,
reliable operation under rigorous conditions.

20
<PAGE>

The Company markets its ITIP solutions to two vertical markets -- the
restaurant industry and automated manufacturing/warehousing enterprises. The
Company's ITIP systems solutions incorporate its experience and competencies
in designing and integrating hardware and software into complex systems that
meet the rigorous operating requirements of its target markets.

Restaurant ITIP

Restaurants increasingly require real-time information access and management
that permit employees to increase the speed and accuracy of taking an order,
preparing the food, and filling the order, while simultaneously providing
real-time access to operational data for decision support in areas such as
inventory control, personnel management, cash management, menu modification
and market trend analysis. This need for information systems capable of
capturing, preserving, processing and managing data from a large number of
time-critical transactions for effective operational decision-making and
efficient revenue generation has created a significant opportunity for the
implementation of ITIP solutions.

Quick service restaurant chains were early adopters of ITIP solutions. Quick
service restaurant ITIP solutions must accommodate numerous concurrent
customer orders at multiple counter-top and drive-through locations. Multiple
order input devices, such as wireless, hand-held terminals and touch screen
monitors, may be required to handle high order volumes at peak busy periods.
Order information must be communicated to and shared with food preparers and
order assemblers by video monitors. Printers for customer receipts, change
machines and cash boxes, as well as other peripherals must be networked within
the system to enable efficient throughput of customers and orders, which is
critical to fast-food operations. Additionally, the captured transaction data
must be shared not only with store management for accurate and real-time
access to data for back-office decision-making, such as inventory management
and employee work scheduling, but also across wide area networks with the QSR
chain's regional and national headquarters for market information and trend
analysis.

The successful implementation of a quick service restaurant ITIP solution
poses significant technical, environmental and business challenges. The
solution must reflect an in-depth understanding of the business dynamics of
the QSR industry and the customer's specific needs. The system design must
meet the high-transaction rate workflow process of the business, yet be
flexible and extendible to accommodate market needs such as menu changes and
special promotions. A solution provider must have connectivity and open-
systems architecture expertise in order to solve the multiple interfacing and
data formatting complexities arising from the need to enable local and remote
interconnection and communication among multiple diverse hardware devices and
software applications, while maintaining high system reliability and
integrity. The ability to engineer ruggedized hardware to withstand the
hostile environment of spills, grease, heat and misuse common to QSR sites, as
well as to implement user interfaces that are understandable to a low-skill,
high-turnover employee base, is critical to system useability and reliability.
Additionally, the solutions provider must be able to commit to rapid global
service and support, as the ITIP system, once implemented, serves a critical
function in the restaurant as well as throughout the QSR chain.

Manufacturing/Warehousing ITIP

The manufacturing and warehousing industries are increasingly subjected to
competitive pressures to increase individual worker productivity, manage
inventory controls effectively and optimize the use of fixed assets. Over
time, companies have made significant investments in technology to improve
particular process inefficiencies, creating "islands of automation," such as
in the shipping or receiving department, rather than developing an integrated
solution that automates an entire workflow process. Managers increasingly
recognize that substantial cost savings and production efficiencies can be
obtained, both within the manufacturing or warehouse site and throughout a
multiple site enterprise, by implementing an integrated ITIP solution that
automates data collection, storage, retrieval and processing.

21
<PAGE>

A complex manufacturing operation typically includes multiple data
collection networks with efficient, paperless data capture devices at critical
points in the production line, including stationary, hard-wire input terminals
as well as wireless devices for flexible monitoring and data capture,
inventory control devices, including barcode printers and scanners for
inventory tracking, security and order management in a just-in-time structure,
and other tailored data input and collection devices. An ITIP solution for
such a complex manufacturing site must be designed to enable information
sharing, distributed data processing, and seamless integration into plant-wide
and enterprise-wide data networks to permit real-time access to events and
trends, so that managers can respond flexibly and quickly, both to problems
within the manufacturing process and to market opportunities that become
available.

Implementation of an effective ITIP solution for a complex, often multiple
site manufacturing/warehousing enterprise requires a systems provider to
understand the complexity of the customer's workflow processes, as well as to
be able to provide consultation on industry best practices. The ITIP system
must be designed to seamlessly and reliably integrate the enterprise's legacy
data collection hardware and applications software with new technology,
requiring sophisticated understanding of the multiple interfaces among
mainframe and mid-range host computers from a variety of vendors, incompatible
operating systems and applications software, as well as diverse peripheral
devices. Systems integration by the ITIP solutions provider requires in-depth
knowledge of data formatting to collect, process and share information among
the disparate hardware and software elements of the system, and the
engineering capability to implement a robust solution that is reliable,
flexible and extendible. An ITIP solutions provider must further possess the
competency to deliver, install and implement the system and to train the
customer's personnel on its use and the commitment to maintain and enhance the
ITIP system throughout its life cycle.

THE PAR SOLUTION

PAR currently offers fully integrated ITIP solutions that satisfy the
specific needs of its targeted vertical markets. The PAR solution incorporates
the following features:

. INDUSTRY KNOWLEDGE. PAR applies its in-depth industry knowledge and
understanding of the workflow and production process needs of its
restaurant and manufacturing/warehousing customers to integrate
software, hardware and services into a flexible, user friendly solution
to its customers. PAR's industry expertise has been developed over its
19 years of experience servicing the needs of the QSR restaurant market
and over its eight years of experience servicing
manufacturing/warehousing enterprises.

. SYSTEMS INTEGRATION EXPERTISE. PAR utilizes its systems integration
capabilities to design and implement open-systems architecture ITIP
solutions that solve the interfacing and data formatting challenges
inherent in systems incorporating a variety of hardware devices and both
legacy and new software applications, and which must communicate and
share data over local and enterprise-wide networks.

. OPERATING ENVIRONMENT EXPERTISE. PAR's software solution for the QSR
market is tailored for ease-of-use by a low-skill, high-turnover QSR
employee base, while its manufacturing/warehousing software is robustly
structured to address the rigorous demands of complex, transaction
intensive workflow processes. PAR manufactures ruggedized hardware that
can survive the harsh environmental conditions of a QSR restaurant,
while at the same time being cost-effective for the customer over the
life of the system.

. SERVICE COMMITMENT. PAR offers a complete solution to its customers'
ITIP systems service needs, including the ability to provide ongoing
services and support for ITIP systems on a global basis. PAR has offices
in eight countries and 19 cities in the U.S., and provides 24 hour a
day, seven day a week hotline support for domestic restaurant customers
through a call center in its Boulder, Colorado office.

For the restaurant market, PAR's POS III ITIP system combines flexible,
extendible systems software connecting PAR's open-system architecture hardware
platform with PAR's ruggedized order-entry terminals, video monitors, and
other PAR and third-party peripherals networked via an Ethernet LAN and
accessible to enterprise-wide network configurations. PAR's solution further
includes extensive systems integration capabilities to design, tailor and
implement its customer's total data collection, preservation, processing and
management requirements.

22
<PAGE>

For manufacturing/warehousing enterprises, PAR's solution entails extensive
systems integration services coupled with its TPS(TM) data collection and
management enabling software. PAR designs and implements complex integrated
ITIP solutions offering concurrent connectivity with multiple host computers,
diverse legacy applications software, and "best-of-breed" software and
hardware technologies, providing its customers the ability to manage, from a
central location, all aspects of data collection and processing for single and
multiple site enterprises.

GROWTH STRATEGY

The Company's business objective is to be a leading supplier of innovative
systems solutions for targeted ITIP applications and to provide value-added
systems integration capabilities for selected vertical markets. In addition,
the Company seeks out commercial applications for its advanced technologies
developed under sponsored government research projects. The Company pursues
this objective by following the growth strategies listed below.

MAINTAIN ITIP TECHNOLOGY LEADERSHIP. The Company intends to maintain its
leadership position by enhancing ease of use in its current ITIP solutions in
the automated manufacturing/warehousing market, as well as broadening the base
of platforms supported, and by developing modular, object-oriented software
for its restaurant ITIP solutions, thus providing customers with increased
maintainability, upgradeability, extendibility and configurability, while
improving price/performance and time-to-market. The Company believes that
migration to a technologically advanced object-oriented software platform will
enable it to penetrate new QSR accounts, as well as upgrade its installed base
of QSR customers by incorporating new features and functionality.

LEVERAGE SYSTEMS INTEGRATION CAPABILITIES. The Company seeks to expand its
business opportunities within its targeted vertical markets by leveraging its
complete systems integration capabilities for current and new end-user
customers. In addition to developing modular hardware and software ITIP
products for the restaurant industry, the Company has been able to add
significant value for its QSR customers by configuring and integrating its own
and third-party peripheral products, such as configurable touch screens,
wireless hand-held order-entry terminals, video display monitors and printers
into an integrated, networked system that meets particular customer
requirements based on restaurant configuration or operational demands. The
Company believes that it can address additional systems integration
opportunities in the restaurant ITIP market by extending the capabilities of
the ITIP network to provide real-time decision support for restaurant and
headquarters-based management. In the automated manufacturing/warehousing
market, the Company intends to enhance design, configuration and
implementation services to further develop integrated data collection and
management solutions.

EXPLOIT RESTAURANT ITIP OPPORTUNITIES. The Company intends to further
penetrate the major QSR chains and to expand into the pizza and full service
restaurant sectors. A substantial part of growth expected by QSR chains in the
near future is represented by international expansion and the introduction of
"satellite" facilities (such as those interspersed throughout an airport
terminal). In order to exploit this opportunity, the Company intends to
support additional country-specific versions of its ITIP systems, as well as
to increase its worldwide sales, systems integration and service capabilities.
In addition, the Company has introduced its pizza/full service software
platform to pursue opportunities in these sectors, which it has not serviced
in the past. This software enables custom configuration of ITIP solutions
which meet the different operational and data capture requirements of both
pizza and full-service restaurants.

ENHANCE AUTOMATED MANUFACTURING/WAREHOUSING MARKET PRESENCE. The Company
intends to expand and leverage strategic partnering relationships to further
penetrate the automated manufacturing/warehousing market, as well as to
develop relationships with value added resellers to increase its market
presence. In addition to its direct, consultative sales focus, the Company
teams with leading data collection hardware suppliers, including Intermec
Corporation and Telxon Corporation, to offer total systems solutions to its
customers, and with the management consulting division of Ernst and Young LLP,
which provides business consulting services through over 10,000 consultants to
a wide variety of industries, including manufacturing, consumer products and
others.

23
<PAGE>

LEVERAGE EXISTING CLIENT BASE. The Company believes it can sustain growth in
its existing ITIP markets by continuing to establish and maintain long-term
client relationships. In addition to providing upgrade opportunities within
its significant customer base, the access and goodwill offered by customer
relationships provide the Company with significant advantages over its
competitors in marketing additional services and solutions to its clients. The
Company also believes its long-term client relationships and ability to
address its clients' needs throughout the life cycle of their ITIP systems
distinguish the Company from many of its competitors, and provide the
opportunity to become a preferred provider of ITIP solutions for a broad range
of its existing and new clients.

EXPAND INTERNATIONAL SALES AND SUPPORT. The Company intends to leverage its
relationships with its customers and expand its sales and support capabilities
to enable it to increase international sales. The Company expects that
international sales will continue to be a significant portion of its total
revenues. In the restaurant ITIP market, the Company's QSR customers
anticipate international growth at rates higher than domestic growth over the
next several years. Currently, the Company's products are installed in
customer sites in 62 countries outside of the United States. The Company's
strategy has been to partner with high-quality local service and support
providers upon first entering a new geographic market, and to transition to
providing direct support as the market for its products and services evolves.
The Company currently intends to open offices in China and Latin America, in
addition to its current sales and service offices located in Australia,
Canada, France, the Netherlands, Singapore, South Africa, Spain and the United
Kingdom.

CONTINUE TO EXPAND SUPPORT AND SERVICE OFFERINGS. In addition to its systems
integration capabilities, the Company understands that full-service support to
customers' operations is critical to long-term success. The Company is able to
serve as a single service provider to customers in the restaurant market,
supporting and maintaining all the customer's computer-based products in its
restaurants. The Company believes that its capability to provide one-stop
shopping to its customers for all their systems service and support needs
maintains and strengthens long-term customer relationships, as well as
providing cross-selling opportunities for systems integration and other
product offerings. The Company has contracted with Taco Bell, the Company's
largest customer in fiscal 1995, to serve as the exclusive service integrator
for ITIP systems, back office computer systems, hand-held data entry devices
and other computer-based equipment, whether Company or third-party supplied,
in all company-owned Taco Bell, Taco Bell Express and Hot 'n Now restaurants
in the United States, Canada and Puerto Rico. The Company believes that its
ability to address all support and maintenance requirements for a customer's
ITIP network provides it with a competitive advantage.

COMMERCIALIZE PROPRIETARY TECHNOLOGY GENERATED FROM SPONSORED RESEARCH. The
Company focuses its product development and marketing efforts on identifying
commercial applications for implementing technologies generated by and
developed under the Company's sponsored research pursuant to contracts with
governmental agencies. The Company's competencies in ITIP, developed in
connection with government contract work, has led to the growth of its
restaurant and manufacturing/warehousing ITIP businesses. More recent work in
the area of computerized digital image processing has led to the Company's
development of its CTS ophthalmic diagnostic and surgical support product,
which measures the topography of the human cornea, including elevation, in
real-time in both clinical and surgical environments. The Company has also
used its telecommunications and signal processing expertise in the development
of its HAZMAT system, which enables computerized tracking of hazardous
materials in transit. Further, the Company has commenced development on
products targeting complex document management and full-text retrieval
applications, and intends to continue to exploit technology transfers from
ongoing government development projects.

SYSTEMS AND SERVICES

The Company has targeted two vertical markets for its transaction
information processing solutions--the restaurant market and the automated
manufacturing/warehousing market. Each of these markets requires equipment
that performs reliably under adverse environmental conditions and the stress
of numerous concurrent transactions, while being operated by an often
unsophisticated and inexperienced workforce. The Company's governmental
systems business focuses its efforts on governmental agencies, including the
U.S. Department of Defense, or prime contractors operating under government
contracts. In addition, the Company markets its CTS corneal topography system
to the ophthalmic diagnostic and surgical market.

24
<PAGE>

RESTAURANT ITIP SYSTEMS

The Company's primary focus in the restaurant market has been the QSR
segment of the top 100 chains. The demands of the major quick service chains
include rugged, reliable point of sale systems capable of recording,
transmitting and coordinating large numbers of orders for quick delivery. The
Company's modular, integrated solutions permit its QSR customers to configure
their restaurant ITIP systems to meet their order-entry, menu, food
preparation and delivery coordination requirements while recording all aspects
of the transaction at the site. The current offerings are the result of the
Company's 19 years of experience in and an in-depth understanding of the QSR
market. This knowledge and expertise is reflected in its product design,
manufacturing capability and systems integration skills. The Company's current
offerings include the POS III, McDonald's and Pizza and Full Service software
applications, the POS II system, the POS III hardware, and PAR and third-party
peripherals, as well as system customization and integration services.

Software. The Company's software was originally developed as a proprietary
application for the POS I and POS II systems. The Company's latest version,
POS III, has been written in the C programming language, operates under
Microsoft DOS, is compatible with QNX real-time operating systems and supports
a distributed processing environment across an Ethernet LAN. The features and
functions of the software are extensive and incorporate a high degree of
flexibility for the routing and displaying of orders in real-time and for the
design and configurability of the Company's display data-entry terminals.

In 1995, PAR introduced a new software application which enables the Company
to expand its offerings beyond QSR to the full service and pizza restaurant
markets. This software application incorporates custom features, including
automatic customer retrieval by phone number, automatic delivery-time
calculation, time-displayed order entry, printed condiment totals for
packaging, street grid database support, dispatch, delivery, coupon tracking
and the ability to record an historical record of customer buying habits, in
order to address the specific needs of pizza and full service restaurants. The
software also supports in-store communications between terminals, remote
printers and displays, and back office PCs through an Ethernet LAN.

In 1994, PAR, Olivetti and Panasonic assisted McDonald's in creating a PC-
based software application for use throughout all of McDonald's restaurants.
This development effort, referred to as the Alliance, resulted in a software
application which was released for sale in August 1995. The Company's domestic
McDonald's corporate and franchise customers use its open architecture POS III
hardware platform with this software. McDonald's licenses the Company,
Olivetti and Panasonic to market the software to its corporate and franchise
restaurants, in return for royalty payments.

The Company continually introduces new features and functions in its
software and generally introduces a major release once a year. The Company is
currently developing its next generation restaurant ITIP software
applications. This new software will use object-oriented design techniques and
will incorporate the expertise gained during nearly two decades of creating
and supporting restaurant computer systems. New features such as mirror
imaging of critical data, on-line graphical help, intelligent/interactive
diagnostics and extensive graphical user interfaces, will enhance the
reliability and ease of use for which the Company's software is known.

Hardware. PAR's restaurant ITIP systems have been designed to exceed the
requirements of the Company's customers. PAR's current systems have evolved
from its original proprietary systems, the POS I, and the POS II, which were
state of the art at the time of their release and surpassed the then-current
reliability and speed-of-service requirements of the large QSR chains.

The POS III system, first installed in 1994, is an open architecture
hardware platform with industry standard components. The POS III hardware
supports a distributed processing environment and incorporates an advanced
restaurant ITIP system, utilizing Intel microprocessors, standard PC expansion
slots, Ethernet LAN and standard Centronics printer ports. The system augments
its industry standard components with features for QSR applications such as
multiple video ports. The POS III system utilizes distributed processing
architecture to integrate a broad range of PAR and third-party peripherals and
is designed to withstand the harsh QSR environment. The system has a favorable
price-to-performance ratio over the life of the system as a result of its PC
compatibility, ease of expansion and use and high reliability design.

25
<PAGE>

Display terminals process and track customer orders, process employee
timekeeping records, and provide on-screen production and labor scheduling.
Registers may be configured with a touch screen rather than a fixed position
keyboard, allowing greater flexibility in menu design. The POS III touch
screen configuration allows a restaurant manager to easily reconfigure or
change the menu to add new food items or provide combination meals without
reprogramming the system. Wireless hand-held terminals permit restaurant
employees to take orders while customers are waiting or in drive-thru lines,
thus increasing the speed of service, as the customer's food order is complete
by the time he or she reaches the counter and pays for the order. Video
monitors display upcoming food orders in the food preparation areas. Multiple
monitors used in the kitchen, at drink stations and in the final assembly area
help assure that the order is properly completed. Printers are incorporated to
print customer receipts or to produce management reports, while various other
devices such as change dispensers and personal computers can be added to a
LAN, which permits the sharing of transaction information generated by the
restaurant ITIP system. The manager can use a standard microcomputer to
collect and report on store-generated data.

Systems Integration. The Company utilizes its systems integration and
engineering expertise in developing functions and interfaces for its
restaurant ITIP products to meet diverse customer requirements. The Company
works closely with its customers to identify and accommodate the latest
developments in restaurant technology by developing interfaces to equipment,
including innovations such as automated cooking and drink dispensing devices,
customer-activated terminals and order display units located inside and
outside of the restaurant. The Company provides systems integration to
interface specialized components, such as television monitors, coin dispensers
and non-volatile memory for journalizing transaction data, as may be required
in some international applications. The Company also integrates the restaurant
manager's back office computer, as well as corporate home office computers, as
management information requirements dictate.

MANUFACTURING/WAREHOUSING ITIP SYSTEMS

The Company's manufacturing/warehousing information processing systems
business provides enabling and applications software and systems integration
services to manufacturing and warehousing end users through distributed
enterprise networks. The Company's primary product offering to the
manufacturing/warehousing industry is its TPS data collection enabling
software package. TPS is an open platform, middleware application that
provides connectivity across multiple non-compatible host computers, including
those manufactured by International Business Machines Corporation, Hewlett-
Packard Company, and Digital Equipment Corporation. TPS also provides
connectivity among diverse MRP, MRP II and MES programs (such as Manman and
SAP) and fixed-base and hand-held RF data collection terminals on the factory
floor, including those sold by Intermec Corporation, Telxon Corporation, Burr-
Brown Corporation, and Zebra Technologies Corp. The Company is currently
developing support for Norand Corporation and Symbol Technologies data
collection devices. TPS offers simplified system use and operations while
maintaining system speed in complex transaction processing environments. TPS
provides a flexible and highly functional platform for on-line transaction
processing applications such as distribution time and attendance, inventory
control, warehousing, job status, scheduling and quality control. Data can be
directly read from and written to host databases, as well as forwarded to
managers, who can respond quickly to production deviations based on real-time
information.

The Company's additional data collection products include CIMport(TM) and
CIMprint(TM), a series of application software products used with Telxon
portable hand-held terminals to collect data without fixed-wire attachment.
TPS enables radio-frequency and store-and-forward portable terminals to be
used in data collection environments that previously could not support this
capability. CIMprint is a barcode document printing software package designed
for demanding client/server environments, which can be used for printing tags,
labels, employee badges and other documents with any combination of text
barcode, graphic images, and optical character reading fonts. CIMprint is
fully integrated into the TPS platform.

26
<PAGE>

The Company offers system integration services for implementing data
collection hardware and its TPS software for its clients. PAR's team of
systems engineers, application developers, and product support personnel have
experience in providing optimal system integration solutions, and work closely
with customer personnel to define requirements, identify solutions, and
implement solutions based on the customer's needs.

GOVERNMENT CONTRACTING

The Company's two wholly-owned subsidiaries in the government business
segment, PAR Government Systems Corporation ("PGSC") and Rome Research
Corporation ("RRC"), provide the Department of Defense ("DOD") and other
federal and state government organizations with a wide range of technical
products and services. PGSC is engaged in the design, development and
implementation of state-of-the-art data handling systems and advanced research
and development for high-technology projects. RRC provides engineering
services, software development and testing, and operation and maintenance for
government facilities.

PGSC provides high technology research and development to address problems
associated with large real- time data sets and to provide decision support
software systems. PGSC's principal focus involves the development of image and
signal processing systems that are able to collect and analyze complex and
massive sensor data associated with radar and infrared sensor systems. PGSC's
telecommunications programs address the movement of large data sets and the
adaptation of data to meet user needs for system control, mission planning and
decision support. These projects have been undertaken in order to improve
environmental and transportation safety, reduce record-keeping costs and
improve efficiency.

RRC provides professional and engineering services to operate and maintain
DOD laboratories, ranges and related facilities. At these sites, Company
personnel plan, execute, and evaluate experiments involving new or advanced
radar systems, electronic countermeasures systems and communications systems,
and operate training and operational communications equipment. RRC also offers
software engineering support.

OPHTHALMIC DIAGNOSTIC AND SURGICAL MARKET

PAR's Vision System Corporation's Corneal Topography System is a current
example of the Company's ability to develop a commercial product from
technology developed under contract for the U.S. Government. With the growth
of refractive surgery to change the shape of the cornea, the foreseeable
introduction of the excimer laser for photorefractive keratotomy ("PRK") and
the desire to develop customized contact lenses, PAR recognized a need for a
corneal topography system which could directly measure the true
elevation/shape of the cornea and created CTS. CTS uses PAR patented
technology and complex proprietary algorithms and software to provide the eye
care professional with true elevation, curvature and refractive power data
across the entire cornea.

PAR CTS makes no assumptions regarding the shape of the cornea and is able
to image irregular and damaged corneas. This represents a significant
advantage in measuring post-surgical corneas. PAR Vision Systems Corporation
currently offers eye care professionals two products, including a Clinical
Diagnostic System which is sold as a stand-alone unit or as an attachment to a
variety of manufacturers' slit lamps. PAR also offers an FDA-approved Intra-
Operative System which attaches to a number of different operating microscopes
and is the only corneal topographer currently available for usage during
surgical procedures.

The Company's focus market for its CTS products is the eye care industry,
including ophthalmologists, optometrists, excimer laser centers, refractive
surgery centers, hospitals, eye banks, custom contact lens labs, research
centers and university medical schools. Corneal topography has important
applications in diagnostics, inpatient screening, preoperative surgical
planning, postoperative evaluation, patient follow-up, patient co-management,
and contact lens fitting and design. In addition, corneal topography is an
effective patient education and marketing tool.

27
<PAGE>

With the recent U.S. FDA approvals of PRK in December 1995, industry sources
estimated that during the period 1996 through 1999, 2.8 million to 4.8 million
excimer refractive procedures will be performed in the U.S., virtually all of
which will include one or more corneal topography examinations.

CUSTOMER SERVICE

The Company offers a range of maintenance and support services as part of
its total solutions for its targeted transaction processing markets. In the
North American restaurant ITIP market, the Company provides comprehensive
maintenance and upgrade services for its own and third-party equipment and
systems through a 24-hour central telephone customer support and diagnostic
service in Boulder, Colorado and a field service network consisting of 60
locations offering factory, on-site, and depot maintenance and spare unit
rentals. When a restaurant ITIP system is installed, PAR employees train the
restaurant employees and managers to ensure efficient use of the system. If a
problem occurs, PAR's current software products allow a service technician to
diagnose the problem by telephone, greatly reducing the need for on-site
service calls. The Company has contracted with Taco Bell, the Company's
largest customer in fiscal 1995, to serve as the exclusive service integrator
for restaurant ITIP systems, back office computer systems, hand-held data
entry devices and other computer-based equipment in all company-owned Taco
Bell, Taco Bell Express and Hot 'n Now restaurants in the United States,
Canada and Puerto Rico. The Company will provide Taco Bell with telephone
diagnostic support, on-site service and parts depot capabilities for all such
equipment, whether Company- or third party-supplied. The Company believes that
its ability to address all support and maintenance requirements for a
customer's restaurant ITIP network provides it with a competitive advantage.
Restaurant ITIP services generated $25.0 million in revenue in fiscal 1995,
representing 32.4% of total restaurant ITIP revenues. As of March 31, 1996,
226 employees were engaged in providing restaurant ITIP services.

In the manufacturing/warehousing market, the Company offers technical
support through an experienced product support staff available in the field or
by telephone. The Company also provides training classes, led by experienced
and highly qualified personnel, on its products and implementations, including
both hands-on experience with use of software and operation of hardware. The
Company offers ongoing maintenance and enhancements.

RESEARCH AND DEVELOPMENT

The Company engages in the research and development ("R&D") of new
technologies under government contracts and through internally funded
projects. A total of 77 Company employees were engaged in internally funded
R&D as of March 31, 1996, and total expenditures on internally funded R&D
totaled $4.2, $5.0 and $5.3 million in fiscal 1993, 1994 and 1995,
respectively.

RESTAURANT ITIP. The Company is currently developing its next generation
restaurant ITIP software applications, based on an open architecture system
and object-oriented software technology, which will incorporate new features
including mirror imaging of critical data, on-line graphical help,
intelligent/interactive diagnostics and extensive graphical user interfaces.
The Company also focuses R&D for the restaurant ITIP market on enhancing its
ability to integrate third-party software and continuing development of
systems integration and software improvements to its flexible open
architecture POS III system. The Company believes that such improvements will
enable it to increase its penetration of the pizza and full service restaurant
markets.

MANUFACTURING/WAREHOUSING ITIP. The Company is currently developing a
Windows NT-based version of its TPS system. In addition, the Company continues
its improvement of its TPS software to enhance its ability to interface with
various host-based modular business packages and hardware.

CTS. The Company is developing an excimer laser-compatible system with an
application for planning, monitoring and simulating the topographic and
refractive changes that occur as a result of excimer surgical procedures such
as PRK, PTK and LASIK. In addition, the Company is currently testing a contact
lens fitting product that utilizes elevation-based data to create a contact
lens that provides an optimal fit on a patient's cornea.

28
<PAGE>

OTHER. The Company is engaged in R&D for commercial applications based on a
variety of other technologies. These include technologies in the fields of
data/text retrieval and environmental testing. The Company is developing two
systems in the field of document management, Insight, a desktop data manager
that allows an individual user to organize, categorize, search and review
large quantities of textual information, and Hawkeye, a real-time data
classifier that evaluates incoming documents and categorizes them according to
user-specified or automatically generated criteria. In the field of
environmental monitoring, the Company is developing a system to detect
underground contaminants, and a system of computerized links to track
hazardous materials in transit.

CUSTOMERS

The following are included among the customers of the Company:

<TABLE>
<CAPTION>
MANUFACTURING/
RESTAURANT ITIP WAREHOUSING ITIP GOVERNMENT
- --------------- ------------------------------------ ----------
<S> <C> <C>
Arby's American Boa, Inc. Advanced Research Project Agency
Chick-fil-A, Inc. Goodyear National Institute for Environmental Renewal
Hungry Bunny Integrated Systems, Inc. Northrop-Grumman
KFC Mercedes Benz of North America, Inc. U.S. Air Force Rome Laboratory
McDonald's Nissan Motor Co. Ltd. U.S. Air Force Special Operations Command
MOS Burger Rhone-Poulenc U.S. Army Topographic Engineering
Pizza Hut Teepack, Inc. Center
Taco Bell Whirlpool Corporation
Taco Cabana
Wendy's
International, Inc.
</TABLE>

In the restaurant ITIP market, the Company has established long-term
relationships with several of the largest QSR corporations based on its
ability to provide a total system solution, including highly flexible and
functional software, worldwide service and support, ruggedized hardware and
systems integration of third-party products. Typically, the Company markets
its products at the corporate level to obtain approved vendor status for sales
to company-owned restaurants and then markets to both individual franchisees
and company-owned locations. Franchisees generally purchase from corporate-
approved vendors, but are not required to do so, and may purchase from other
suppliers. The Company is the sole approved vendor of restaurant ITIP
equipment to Taco Bell, KFC International and Chick-fil-A, and is one of three
approved vendors to McDonald's.

Taco Bell, KFC and Pizza Hut are wholly owned subsidiaries of PepsiCo, Inc.
Taco Bell accounted for 32.8% of the Company's revenue for fiscal 1995, and
KFC and its franchisees and Pizza Hut franchisees accounted for 5.0% and 0.6%,
respectively. Sales to McDonald's and its franchisees accounted for 20.9% of
net revenues in 1995. There can be no assurance that any of the Company's
current customers will continue to place orders with the Company. The loss of
any one or more of the Company's major customers could materially and
adversely affect its business, operating results and financial condition. See
"Risk Factors -- Concentration of Major Customers."

SALES AND MARKETING

RESTAURANT ITIP. Sales in the restaurant ITIP market are generally generated
by first gaining the approval of the restaurant chain as an approved vendor.
Upon approval, marketing efforts are then directed to franchisees of the
chain. Sales efforts are also directed toward franchisees of chains for which
the Company is not an approved vendor. The Company employs direct sales
personnel in five sales groups that together employed 73 persons as of March
31, 1996. The National Accounts Group (13 employees) works with major
restaurant chain customers. The North and South America Sales Group (24
employees) targets franchisees of the major restaurant chain customers, as
well as franchisees of other major chains, as well as smaller chains. The
International Sales Group (12 employees) seeks sales to major customers with
restaurants overseas and to international chains that do not have a presence
in the United States. The New Accounts Group seeks sales to major new
corporate accounts.

29
<PAGE>

MANUFACTURING/WAREHOUSING ITIP. The Company's direct sales efforts in the
manufacturing/warehousing ITIP market are generally focused on the highest
level of the customer's executive management. Substantial lead time is
required in sales efforts due to the fact that automation equipment is
normally fitted into the manufacturing or warehousing environment as a plant
is constructed. The Company has also entered into strategic marketing
relationships with several companies, including Intermec Corporation, Norand
Corporation and Telxon Corporation, and Ernst and Young LLP.

CTS. The Company currently utilizes a direct sales force of six employees to
market CTS. The Company intends to expand this sales force. The Company also
has created an international dealer network of 10 dealers in Europe, Asia,
South America, Australia and Canada in order to address the wide geographical
scope of the market.

COMPETITION

Competition in the restaurant ITIP and manufacturing/warehousing ITIP
markets is based primarily on functionality, reliability, quality, performance
and price of products, and service and support. The Company believes that its
principal competitive advantages include its focus on a total solution
offering, its advanced development capabilities, its industry knowledge and
experience, product reliability, its direct sales force, the quality of its
support and quick service response, and, to a lesser extent, price.
Competition in the ophthalmic imaging market is based primarily on
functionality, sales and marketing strength, and pricing. The Company believes
that its principal competitive advantages include the superior functionality
of its product and the quality of its service and support. Competition for
government contracts is based primarily on customer relationships, price and
technical capability. The Company believes that its principal competitive
advantages include the long-term strength of its customer relationships,
competitive pricing, and proven capability.

The markets in which the Company competes are highly competitive. There are
currently more than 10 suppliers who offer some form of sophisticated
restaurant ITIP system similar to the Company's. The Company competes with
other vendors of ITIP systems and the internal efforts of its current or
prospective customers. Major competitors include Panasonic, International
Business Machines Corporation, NCR and Micros Systems Inc. The Company
believes that the manufacturing/warehousing ITIP market is highly fragmented.
In the CTS market, competitors include EyeSys Technologies Inc., Tomey
Technology, Inc., Alcon Laboratories, Inc. and Humphrey Instruments (a
division of Carl Zeiss, Inc.). In its government contracting business, the
Company competes with many larger companies such as Lockheed Martin
Corporation, Science Applications International Corporation, and TRW Inc., as
well as many smaller companies that target particular segments of the
government contracting market. Many of the Company's competitors in each of
these markets have substantially greater financial resources than the Company.
There can be no assurance that the Company will be able to compete effectively
in any of its markets.

INTELLECTUAL PROPERTY

The Company principally relies on copyright and trademark protection, trade
secrets and proprietary know-how to protect its intellectual property. The
Company enters into confidentiality agreements with its key employees,
consultants and strategic partners, restricts access to the Company's
facilities, and identifies and secures confidential documents. The
confidentiality agreements between the Company and its employees restrict the
disclosure by such employees of any confidential information and assign to the
Company the rights to inventions made during their employment with the
Company.

While the Company relies on certain patents covering certain of its
products, it does not believe that patents are material to its business in its
entirety. To date, the Company has not experienced any material litigation or
been subjected to any material patent office interference proceedings with
respect to patents. There can be no assurance, however, that third parties
will not assert claims against the Company with respect to existing or future
products or technologies. In the event of litigation to determine the validity
of any third-party claims, such litigation, whether or not determined in favor
of the Company, could result in significant expense to the Company and divert
the efforts of the Company's technical and management personnel from
productive tasks. In the event of an adverse ruling in such litigation, the
Company might be required to discontinue the use of certain processes,

30
<PAGE>

cease the manufacture, use and sale of infringing products, expend significant
resources to develop non-infringing technology or obtain licenses to the
infringed technology. There can be no assurance that such licenses would be
available on commercially reasonable terms, or at all, with respect to any
disputed third-party technology. In the event of a successful claim against
the Company and the Company's failure to develop or license a substitute
technology at a reasonable cost, the Company's business, financial condition
and results of operations could be materially and adversely affected. See
"Risk Factors -- Dependence on Proprietary Technology."

BACKLOG

The Company's backlog of unfilled orders in the restaurant ITIP and
manufacturing/warehousing ITIP businesses at March 31, 1996 was approximately
$15.6 million as compared to $10.2 million the previous year. Orders in both
the restaurant ITIP and manufacturing/warehousing ITIP businesses are
generally of a short-term nature and are usually booked and shipped in the
same fiscal year. The dollar value of existing government contracts at March
31, 1996, net of work performed to that date, was approximately $29.1 million,
of which approximately $8.2 million was funded. At March 31, 1995, the
comparable amount was approximately $18.1 million, of which $9.3 million was
funded. Funded amounts reflect amounts committed under contract by Government
agencies and prime contractors. The March 31, 1996 government contract backlog
of $29.1 million represents firm, existing contracts. Approximately $15.1
million of this amount will be completed over the next twelve months.

EMPLOYEES

At March 31, 1996, the Company had 864 employees. Approximately 575
employees are engaged in its ITIP businesses. Approximately 208 persons are
employed by Rome Research Corporation and PAR Government Systems Corporation,
22 by PAR Vision Systems, and the remainder are corporate and administration
employees.

The Company is not a party to any collective bargaining agreements. The
Company considers its employee relations to be good.

FACILITIES

The Company's headquarters and principal business facility are located in a
148,000 square foot facility in New Hartford, New York, located in central New
York State. The Company also maintains a 17,500 square foot service center in
Boulder, Colorado and additional R&D, sales and service facilities totaling
33,300 square feet serving its ITIP businesses in Norcross, Georgia;
Arlington, Texas; San Antonio, Texas; Irvine, California; and Sydney,
Australia. The Company also maintains facilities totaling 23,400 square feet
in Rome, New York and La Jolla, California in connection with its work under
government contracts.

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

LEGAL PROCEEDINGS

The Company is not currently subject to any material legal proceedings.

31
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dr. John W. Sammon,
Jr.(1)(3)(4)........... 57 Chairman of the Board, President and Director
Charles A.
Constantino(1)(3)(4)... 56 Executive Vice President and Director
J. Whitney Haney........ 61 President, PAR Microsystems and Director
Sangwoo Ahn(1)(2)(3).... 57 Director
Dr. James C. Castle(2).. 59 Director
Albert Lane, Jr......... 54 President, Rome Research
Dr. John P. Retelle,
Jr..................... 50 President, PAR Government Systems
Ronald J. Casciano...... 42 Vice President, Chief Financial Officer and Treasurer
</TABLE>

- --------
(1) Member of Executive Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
(4) Member of Stock Option Committee.

JOHN W. SAMMON, JR. is the founder of the Company and has been the President
and a director since its incorporation in 1968. Dr. Sammon graduated from the
United States Naval Academy in 1960 with a B.S.E.E. in Astronautics and
Aeronautics. He attended Massachusetts Institute of Technology, graduating
with a S.M. in 1962. Dr. Sammon received his Ph.D. in Electrical Engineering
from Syracuse University in 1966. He has written several papers in the field
of Artificial Intelligence and Pattern Recognition and is a Fellow of the
Institute of Electronic Engineers. Dr. Sammon's term as director will expire
at the 1998 Annual Meeting of Shareholders.

CHARLES A. CONSTANTINO has been a Vice President and a director of the
Company since its inception in 1971 and has held the position of Executive
Vice President since 1974. Mr. Constantino received a B.S. in Mathematics from
St. John Fisher College in Rochester, New York and a M.S. in Applied
Mathematics from the University of Rochester. Mr. Constantino's term as
director will expire at the 1998 Annual Meeting of Shareholders.

J. WHITNEY HANEY has been a director of the Company and President of PAR
Microsystems Corporation since April 1988. Mr. Haney graduated from The
Citadel in 1956 with a B.S. in Electrical Engineering. He attended the
University of Maine and the University of Pennsylvania from 1957-1962 pursuing
graduate studies in Electrical Engineering. Prior to joining the Company, Mr.
Haney was employed by Xerox Corporation as the President Operations,
Development & Artificial Intelligence from 1985 to 1988. From 1973 until 1985,
Mr. Haney was employed by Harris Corporation where he held many positions,
including the Vice President of Development & MIS. Mr. Haney's term as
director will expire at the 1997 Annual Meeting of Shareholders.

SANGWOO AHN was appointed a director of the Company in March 1986. He has
been a partner of Morgan, Lewis, Githens and Ahn, L.P. (investment banking)
since 1982. Mr. Ahn also serves as a director of Haynes International, Inc.,
Kaneb Pipe Line Partners, LP Quaker Fabric Corporation, ITI Technologies,
Inc., Kaneb Services, Inc. and Stuart Entertainment, Inc. Mr. Ahn's term as
director will expire at the 1997 Annual Meeting of Shareholders.

DR. JAMES C. CASTLE was appointed a director of the Company in December
1989. Dr. Castle has been the Chairman and the Chief Executive Officer of U.S.
Computer Services Corporation since August 1992. Prior to assuming that
position, he was the Chief Executive Officer of Teradata Corporation from
August 1991 to April 1992. He also held the position of Chairman of the Board,
President and Chief Executive Officer of Infotron Systems Corporation from
October 1987 to August 1991. Dr. Castle's term as director will expire at the
1996

32
<PAGE>

Annual Meeting of Shareholders. Dr. Castle also serves as a director of
Leasing Solutions, Inc. and ADC Telecommunications, Inc.

ALBERT LANE, JR. has served as President of Rome Research Corporation since
1988. He received a B.S. in Economics and Business Administration and an M.S.
in Business Administration from Chapman College. Mr. Lane also received an
M.S. in Systems Management from the University of Southern California and a
Ph.D., Business Administration from the United States International
University.

DR. JOHN P. RETELLE, JR. has served as President of PAR Government Systems
Corporation since November 1993. From July 1993 until November 1993, Dr.
Retelle served as Vice President, Advanced Business Development of the
Company. From June 1990 until July 1993, Dr. Retelle served as the Program
Manager, Advanced Computing Laboratory, R&D Division, of the Lockheed Missiles
& Space Company. Dr. Retelle earned a B.S. in aeronautics from the U.S. Air
Force Academy in 1963 and a M.S. in 1969 and Ph.D. in 1978, both from the
University of Colorado in aerospace engineering sciences. He also completed a
Master of Business Administration from Golden Gate University in 1971. Dr.
Retelle is a registered Professional Engineer.

RONALD J. CASCIANO, C.P.A. serves as the Company's Chief Financial Officer,
Vice President, and Treasurer. Mr. Casciano joined the Company in 1983 as
Corporate Controller. Mr. Casciano joined PAR from Price Waterhouse where he
was an Audit Manager. He is a member of the Financial Executives Institute and
has served as President of the Syracuse chapter. Mr. Casciano graduated from
LeMoyne College in 1975 with a B.S. in Accounting.

CERTAIN TRANSACTIONS

In December 1991, PAR Microsystems granted Mr. J. Whitney Haney, President
of PAR Microsystems and a director of the Company, a loan for $60,000 with
interest at the prime rate, adjusted monthly, and which is due on January 2,
1997. In January 1992, PAR Microsystems granted Mr. Haney an additional loan
that totaled $540,000, with interest at the prime rate, adjusted monthly,
which is also due on January 2, 1997. The total principal amount of $600,000
of the loan was secured by a Deed to Secure Debt on real estate owned by Mr.
Haney and his wife. As of May 17, 1996, the total principal and interest
outstanding was $817,831.

Pursuant to an agreement approved by the Board of Directors of the Company
on April 17, 1996, Mr. Haney exercised options on May 17, 1996 to buy 106,000
shares of Common Stock at an exercise price of $3.00 per share. Mr. Haney
immediately surrendered such shares to the Company as payment in full of the
outstanding principal and interest of the loans and, in addition received
$491,269 in cash from the Company, substantially all of which was withheld for
the payment of taxes. Such shares were surrendered at a price of $15.35 per
share, which represented the average closing price of the Common Stock over
the prior one-month period.

33
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock as of May 17, 1996 and as adjusted to
reflect the offering, by (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each
director of the Company, (iii) all officers and directors as a group and (iv)
the Selling Stockholders. Unless otherwise indicated below, to the knowledge
of the Company, all persons listed below have sole voting and investment power
with respect to their shares of Common Stock, except to the extent authority
is shared by spouses under applicable law.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES TO BE
OWNED PRIOR BENEFICIALLY OWNED
TO OFFERING(1) NUMBER OF AFTER OFFERING(1)(2)
-------------------- SHARES -----------------------
NUMBER PERCENT OFFERED(2) NUMBER PERCENT
----------- -------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
DIRECTORS, OFFICERS AND
5% STOCKHOLDERS:
Dr. John W. Sammon, Jr. and
Deanna D. Sammon(3)........ 5,035,885 64.88% 1,175,000(11) 3,860,885 41.91%
Charles A. Constantino(4)... 527,961 6.80% 200,000 327,961 3.56%
J. Whitney Haney(5)......... 173,200 2.18% -- 173,200 1.85%
Sangwoo Ahn(6).............. 53,500 * -- 53,500 *
Albert Lane, Jr.(7)......... 14,845 * -- 14,845 *
Dr. John R. Retelle, Jr.(8). 10,150 * -- 10,150 *
Dr. James C. Castle(9)...... 12,500 * -- 12,500 *
All Directors and Executive
Officers as a Group (8
persons)(10),,,,........... 5,851,691 72.95% 1,375,000 4,476,691 47.27%
</TABLE>
- --------
*Represents less than 1%
(1) Except as otherwise noted, each individual has sole voting and investment
power with respect to all shares.
(2) Assumes that the Underwriters' over-allotment option is not exercised.
(3) Of the shares held by Dr. and Mrs. Sammon, Dr. Sammon has sole voting and
investment power as to 4,100,200 shares and Mrs. Sammon has sole voting
and investment power as to 935,685 shares. Includes 77,700 held by Dr.
Sammon as trustee for the benefit of his daughter under a trust agreement
dated July 5, 1983. Includes 158,175 shares held by Mrs. Sammon as
custodian for her children. Also includes 600,000 shares currently held
by Mrs. Sammon and to be contributed prior to the commencement of the
offering to the John W. and Deanna D. Sammon Charitable Trust (the
"Charitable Trust"), of which Dr. and Mrs. Sammon are the sole trustees
and will share voting and dispositive power over such shares.
(4) Does not include 8,800 shares owned by Mr. Constantino's wife, Elaine
Constantino. Mr. Constantino disclaims beneficial ownership of such
shares.
(5) Includes 170,700 shares that Mr. Haney has or will have the right to
acquire within 60 days of May 17, 1996 pursuant to the Company's stock
option plans.
(6) Includes 32,500 shares that Mr. Ahn has the right to acquire within 60
days of May 17, 1996 pursuant to the Company's stock option plans.
(7) Represents shares Mr. Lane has or will have the right to acquire within
60 days of May 17, 1996 pursuant to the Company's stock option plans.
(8) Represents shares Dr. Retelle has or will have the right to acquire
within 60 days of May 17, 1996 pursuant to the Company's stock option
plans.
(9) Includes 7,500 shares which Dr. Castle has or will have the right to
acquire within 60 days of May 17, 1996 pursuant to the Company's stock
option plans.
(10) Includes 259,345 shares that such persons have the right to acquire
within 60 days of May 17, 1996 pursuant to the Company's stock option
plans.
(11) Of the shares offered, 600,000 will be sold by the Charitable Trust,
397,490 will be sold by Dr. Sammon and 177,510 will be sold by Mrs.
Sammon.

The address for Dr. John W. Sammon, Jr., Deanna D. Sammon and Charles A.
Constantino is c/o PAR Technology Corporation, PAR Technology Park, 8383
Seneca Turnpike, New Hartford, NY 13413-4991.

34
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 12,000,000 shares of
Common Stock and 250,000 shares of Preferred Stock, $0.02 par value per share
("Preferred Stock"). The Board of Directors has recommended for stockholder
approval at the Company's Annual Meeting of Stockholders to be held on June 4,
1996, a proposal to increase the Company's authorized capital stock to
20,000,000 shares of Common Stock and 500,000 shares of Preferred Stock.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on matters to be
voted upon by the stockholders. Holders of Common Stock do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of Common
Stock can elect all of the directors standing for election. Holders of Common
Stock are entitled to receive dividends when and as declared by the Board of
Directors and to share ratably in the assets of the Company legally available
for distribution to stockholders in the Company. Holders of Common Stock have
no preemptive, subscription, redemption or conversion rights. The rights,
preferences and privileges of holders of Common Stock are subject to, and may
be adversely affected by, the rights of holders of shares of any series of
Preferred Stock that the Company may designate and issue in the future. All
outstanding shares of Common Stock are, and the shares to be sold in the
Offering, upon issuance and payment therefor, will be, validly issued, fully
paid and nonassessable.

As of May 7, 1996, there were 7,752,178 shares of Common Stock outstanding,
held by 881 stockholders of record.

PREFERRED STOCK

The Board of Directors is authorized to issue the Preferred Stock in
different series and classes and to fix the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), liquidation preferences and other rights and
preferences of the Preferred Stock not in conflict with the Company's
Certificate of Incorporation or Delaware law. There are currently no shares of
Preferred Stock outstanding. The Board of Directors, without stockholder
approval, can issue Preferred Stock with voting and conversion rights that
could adversely affect the voting power of holders of Common Stock. The
issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of the Company. The Company has no present
plans to issue any shares of Preferred Stock.

CERTAIN PROVISIONS OF THE CHARTER AND BY-LAWS AFFECTING STOCKHOLDERS

The Company's Amended and Restated Certificate of Incorporation (the
"Charter") provides for the division of the Board of Directors into three
classes as nearly equal in size as possible with staggered three-year terms.
Subject to the rights of holders of any series of Preferred Stock, any
director may be removed, with or without cause, by the affirmative vote of the
holders of a majority of the voting power of all shares of the Company
entitled to vote generally in the election of directors, voting together as a
single class. The By-Laws of the Company may be amended or repealed, and new
By-Laws adopted, at any time on either the vote of 66 2/3% of the stockholders
entitled to vote generally for the election of directors, or the vote of a
majority of directors present at a meeting of the Board of Directors, except
that amendments of certain By-Laws always requires the vote of 66 2/3% of the
stockholders. These By-Laws include provisions dealing with special meetings
of stockholders, notice and order of business of stockholder meetings,
nominations and elections of directors, and special meetings of the Board of
Directors. In addition, amendment of certain provisions of the Charter
concerning special meetings of stockholders, unanimous consents of
stockholders, number of directors and classification of the Board of
Directors, and indemnification of directors require the affirmative vote of
holders of at least 66 2/3% of all the shares entitled to vote generally in
the election of directors, voting as single class.

35
<PAGE>

The Charter contains certain provisions permitted under the Delaware General
Corporation Law relating to the liability of directors. These provisions
eliminate the directors' liability for monetary damages for a breach of
fiduciary duty, except in certain circumstances involving wrongful acts,
including the breach of a director's duty of loyalty or acts or omissions
which involve intentional misconduct or a knowing violation of a law. The
Company's Certificate of Incorporation also contains provisions to indemnify
its directors and officers to the fullest extent permitted by the Delaware
General Corporation Law.

CERTAIN PROVISIONS OF DELAWARE LAW

The Company is subject to the provisions of Section 203 of Delaware General
Corporation Law. That section generally provides, with certain exceptions,
that a Delaware corporation may not engage in any of a broad range of business
combinations with a person or affiliate, or associate of such person, who is
an "interested stockholder" for a period of three years from the date that
such person became an interested stockholder unless the transaction is
approved in a prescribed manner. An "interested stockholder" is defined as any
person that is (i) the owner of 15% or more of the outstanding voting stock of
the corporation or (ii) an affiliate or associate of the corporation and was
the owner of 15% or more of the outstanding voting stock of the corporation at
any time within the three-year period immediately prior to the date on which
it is sought to be determined whether such person is an interested
stockholder.

TRANSFER AGENT

The Transfer Agent and the Registrar for shares of the Company's Common
Stock is Registrar and Transfer Company, 10 Commerce Drive, Cranford, New
Jersey 07016.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, the Company will have 9,211,828 shares of
Common Stock outstanding and, based on options outstanding at May 17, 1996,
approximately 794,220 shares will be issuable upon exercise of outstanding
employee stock options. The Company and all of its executive officers and
directors who are not Selling Stockholders have agreed that they will not,
without the prior written consent of Dillon, Read & Co. Inc., offer, sell,
contract to sell, transfer or otherwise dispose of, directly or indirectly,
any shares of the Common Stock, or any securities convertible into, or
exercisable or exchangeable for, Common Stock or warrants or other rights to
purchase Common Stock, prior to the expiration of 90 days from the date of the
consummation of the offering, except, with respect to the Company, (i) shares
of Common Stock issued pursuant to the exercise of outstanding options and
(ii) options granted to its employees, officers and directors under its
existing employee stock option plans so long as none of such options become
exercisable during said 90 day period. Certain stockholders, including the
Selling Stockholders, who will hold in the aggregate 4,188,846 shares of
Common Stock after the offering, have agreed that they will not, without prior
written consent of Dillon, Read & Co. Inc., sell, contract to sell, transfer
or otherwise dispose of, directly or indirectly, any shares of Common Stock,
or any securities convertible into, or exercisable or exchangeable for, Common
Stock or warrants or other rights to purchase Common Stock, prior to the
expiration of 180 days from the date of the consummation of this offering.

The Company can make no predictions as to the effect, if any, that sales of
shares or the availability of shares for sale will have on the market price
for the Common Stock prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock in the public market could adversely
affect prevailing market prices.

36
<PAGE>

UNDERWRITING

The names of the Underwriters of the shares of Common Stock offered hereby
and the aggregate number of shares that each has severally agreed to purchase
from the Company and the Selling Stockholders (subject to the terms and
conditions specified in the Underwriting Agreement) are as follows:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
Dillon, Read & Co. Inc. ....................................
The Robinson-Humphrey Company, Inc. ........................
Volpe, Welty & Company......................................
---------
Total..................................................... 2,825,000
=========
</TABLE>

The Managing Underwriters are Dillon, Read & Co. Inc., The Robinson-Humphrey
Company, Inc. and Volpe, Welty & Company.

If any shares of Common Stock offered hereby are purchased by the
Underwriters, all such shares will be so purchased. The Underwriting Agreement
contains certain provisions whereby if any Underwriter defaults in its
obligation to purchase such shares and if the aggregate obligations of the
Underwriters so defaulting do not exceed 10% of the shares offered hereby,
some or all of the remaining Underwriters must assume such obligations.

The shares of Common Stock offered hereby are being offered severally by the
Underwriters for sale at the price set forth on the cover page hereof, or at
such price less a concession not to exceed $ per share on sales to certain
dealers. The Underwriters may allow, and such dealers may reallow, a
concession not to exceed $ per share on sales to certain other dealers.
The offering of the shares of Common Stock is made for delivery when, as, and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares. After
the shares are released for sale to the public, the public offering price, the
concession and the reallowance may be changed by the Managing Underwriters.

The Selling Stockholders have granted to the Underwriters an option, which
must be exercised within 30 days after the date of this Prospectus, to
purchase up to an additional 423,750 shares of Common Stock to cover over-
allotments, if any, on the same terms per share. To the extent the
Underwriters exercise this option, each Underwriter will be obliged, subject
to certain conditions, to purchase the number of additional shares
proportionate to such Underwriter's initial commitment.

The Company and all of its executive officers and directors who are not
Selling Stockholders have agreed that they will not, without the prior written
consent of Dillon, Read & Co. Inc., offer, sell, contract to sell, transfer or
otherwise dispose of, directly or indirectly, any shares of the Common Stock,
or any securities convertible into, or exercisable or exchangeable for, Common
Stock or warrants or other rights to purchase Common Stock, prior to the
expiration of 90 days from the date of the consummation of the offering,
except, with respect to the Company, (i) shares of Common Stock issued
pursuant to the exercise of outstanding options and (ii) options granted to
its employees, officers and directors under its existing employee stock option
plans so long as none of such options become exercisable during said 90 day
period. Certain stockholders, including the Selling Stockholders, who will
hold in the aggregate 4,188,846 shares of Common Stock after the offering have
agreed that they will not, without prior written consent of Dillon, Read & Co.
Inc., sell, contract to sell, transfer or otherwise dispose of, directly or
indirectly, any shares of Common Stock, or any securities convertible into, or
exercisable or exchangeable for, Common Stock or warrants or other rights to
purchase Common Stock, prior to the expiration of 180 days from the date of
the consummation of this offering.

37
<PAGE>

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain civil liabilities, including liabilities under
the Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.

Dillon, Read & Co. Inc. has provided financial advisory services to the
Company during the past 12 months for which Dillon, Read & Co. Inc. received
fees in the amount of $50,000.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Testa, Hurwitz & Thibeault, LLP, Boston,
Massachusetts. Certain legal matters in connection with this offering will be
passed upon for the Underwriters by Gibson, Dunn & Crutcher LLP, New York, New
York.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1995
and 1994 and for each of the three years in the period ended December 31, 1995
included in this Prospectus have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

38
<PAGE>

PAR TECHNOLOGY CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheet as of December 31, 1994 and 1995, and March 31,
1996 (unaudited)......................................................... F-3
Consolidated Statement of Income for the Years Ended December 31, 1993,
1994 and 1995, and the Three Months Ended March 31, 1995 and 1996 (unau-
dited)................................................................... F-4
Consolidated Statement of Changes in Shareholders' Equity for the Years
Ended December 31, 1993, 1994, and 1995 and the Three Months Ended March
31, 1996 (unaudited)..................................................... F-5
Consolidated Statement of Cash Flows for the Years Ended December 31,
1993, 1994 and 1995, and the Three Months Ended March 31, 1995 and 1996
(unaudited).............................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of PAR Technology Corporation.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
PAR Technology Corporation and its subsidiaries at December 31, 1995 and 1994,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

Price Waterhouse LLP

Syracuse, New York
February 13, 1996

F-2
<PAGE>

PAR TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------- -----------
1994 1995 1996
------- ------- -----------
(UNAUDITED)
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS:
Cash....................................... $ 2,912 $ 458 $ 2,448
Accounts receivable -- net (Note 2)........ 28,103 36,474 29,151
Inventories (Note 3)....................... 16,467 17,801 20,921
Deferred income taxes (Note 7)............. 1,034 1,303 1,129
Other current assets....................... 1,460 1,090 2,470
------- ------- -------
Total current assets..................... 49,976 57,126 56,119
Property, plant and equipment -- net (Note
4)........................................ 7,716 7,580 7,281
Other assets............................... 2,950 3,367 2,964
------- ------- -------
$60,642 $68,073 $66,364
======= ======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Notes payable (Note 5)..................... $ -- $ 286 $ 383
Accounts payable........................... 3,632 4,925 4,051
Accrued salaries and benefits.............. 3,874 4,186 3,475
Accrued expenses........................... 1,237 1,534 766
Deferred service revenue................... 2,010 2,214 2,606
Income taxes payable (Note 7).............. 308 1,005 340
------- ------- -------
Total current liabilities................ 11,061 14,150 11,621
------- ------- -------
Deferred income taxes (Note 7)............... 936 791 787
------- ------- -------
Shareholders' Equity (Note 6):
Common stock, $.02 par value, 12,000,000
shares authorized; 9,030,787, 9,113,031
and 9,177,884 shares issued 7,656,320,
7,682,425 and 7,747,278 outstanding....... 181 182 184
Preferred stock, $.02 par value, 250,000
shares authorized......................... -- -- --
Capital in excess of par value............. 13,268 13,664 13,901
Retained earnings.......................... 37,074 41,732 42,283
Cumulative translation adjustment.......... (181) (167) (133)
Treasury stock, at cost, 1,374,467,
1,430,606 and 1,430,606 shares............ (1,697) (2,279) (2,279)
------- ------- -------
Total shareholders' equity................. 48,645 53,132 53,956
------- ------- -------
$60,642 $68,073 $66,364
======= ======= =======
Contingent liabilities (Note 10)
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

F-3
<PAGE>

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ -------------------
1993 1994 1995 1995 1996
------- ------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues:
Product........................ $43,835 $52,965 $ 58,306 $ 12,342 $ 10,880
Service........................ 19,213 20,823 25,059 5,607 7,677
Contract....................... 18,199 20,742 24,029 6,085 6,937
------- ------- -------- --------- ---------
81,247 94,530 107,394 24,034 25,494
------- ------- -------- --------- ---------
Costs of sales:
Product........................ 25,433 32,527 34,028 7,663 6,778
Service........................ 17,041 17,296 20,807 4,450 6,261
Contract....................... 17,534 19,740 22,492 5,770 6,513
------- ------- -------- --------- ---------
60,008 69,563 77,327 17,883 19,552
------- ------- -------- --------- ---------
Gross margin................. 21,239 24,967 30,067 6,151 5,942
------- ------- -------- --------- ---------
Operating expenses:
Selling, general and adminis-
trative....................... 13,009 14,211 17,721 4,179 3,744
Research and development....... 4,239 5,009 5,331 1,333 1,351
------- ------- -------- --------- ---------
17,248 19,220 23,052 5,512 5,095
------- ------- -------- --------- ---------
Income before provision for in-
come taxes...................... 3,991 5,747 7,015 639 847
Provision for income taxes (Note
7).............................. 1,462 2,086 2,357 249 296
------- ------- -------- --------- ---------
Net income....................... $ 2,529 $ 3,661 $ 4,658 $ 390 $ 551
======= ======= ======== ========= =========
Earnings per common share........ $ .32 $ .46 $ .58 $ .05 $ .07
======= ======= ======== ========= =========
Weighted average number of common
shares outstanding.............. 7,968 7,992 8,068 8,073 8,190
======= ======= ======== ========= =========
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

F-4
<PAGE>

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN CUMULATIVE TREASURY STOCK
------------- EXCESS OF RETAINED TRANSLATION ---------------
SHARES AMOUNT PAR VALUE EARNINGS ADJUSTMENT SHARES AMOUNT
------ ------ ---------- -------- ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992................... 8,907 $178 $12,727 $30,884 $(256) (1,371) $(1,675)
Net income.............. 2,529
Issuance of common stock
upon the exercise of
stock options (Note 6)
....................... 69 2 296
Translation adjust-
ments.................. (155)
----- ---- ------- ------- ----- ------ -------
Balance at December 31,
1993................... 8,976 180 13,023 33,413 (411) (1,371) (1,675)
Net income.............. 3,661
Issuance of common stock
upon the exercise of
stock options (Note
6)..................... 55 1 245
Translation adjust-
ments.................. 230
Acquisition of treasury
stock.................. (3) (22)
----- ---- ------- ------- ----- ------ -------
Balance at December 31,
1994................... 9,031 181 13,268 37,074 (181) (1,374) (1,697)
Net income.............. 4,658
Issuance of common stock
upon the exercise of
stock options (Note
6)..................... 82 1 396
Translation adjust-
ments.................. 14
Acquisition of treasury
stock.................. (57) (582)
----- ---- ------- ------- ----- ------ -------
Balance at December 31,
1995................... 9,113 182 13,664 41,732 (167) (1,431) (2,279)
Net income (unaudited).. 551
Issuance of common stock
upon the exercise of
stock options (Note 6)
(unaudited)............ 65 2 237
Translation adjustments
(unaudited)............ 34
----- ---- ------- ------- ----- ------ -------
Balance at March 31,
1996 (unaudited)....... 9,178 $184 $13,901 $42,283 $(133) (1,431) $(2,279)
===== ==== ======= ======= ===== ====== =======
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

F-5
<PAGE>

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- --------------------
1993 1994 1995 1995 1996
------- ------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating ac-
tivities:
Net income................... $ 2,529 $ 3,661 $ 4,658 $ 390 $ 551
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortiza-
tion..................... 3,027 2,683 2,414 610 655
Provision for obsolete in-
ventory.................. 1,227 1,834 2,072 341 62
Translation adjustments... (155) 230 14 200 34
Increase (decrease) from
changes in:
Accounts receivable-net... (5,595) 1,337 (8,371) 3,012 7,323
Inventories............... (3,680) (1,994) (3,406) (1,491) (3,182)
Other current assets...... (103) (189) 370 (162) (1,380)
Other assets.............. (193) (57) (907) 328 245
Accounts payable.......... 496 267 1,293 (749) (874)
Accrued salaries and bene-
fits..................... 703 560 312 (403) (711)
Accrued expenses.......... 601 (874) 297 21 (768)
Deferred service revenue.. 20 325 204 259 392
Income taxes payable...... (459) 28 697 526 (665)
Deferred income taxes..... 48 231 (414) (448) 170
------- ------- ------- --------- ---------
Net cash provided (used) by
operating activities......... (1,534) 8,042 (767) 2,434 1,852
------- ------- ------- --------- ---------
Cash flows from investing ac-
tivities:
Capital expenditures......... (1,220) (1,726) (1,288) (346) (102)
Capitalization of software
costs....................... (1,047) (448) (500) (140) (96)
------- ------- ------- --------- ---------
Net cash used in investing ac-
tivities..................... (2,267) (2,174) (1,788) (486) (198)
------- ------- ------- --------- ---------
Cash flows from financing ac-
tivities:
Net borrowings (payments)
under line-of-credit
agreements.................. 3,106 (4,087) 286 -- 97
Proceeds from the exercise of
stock options............... 298 246 397 67 239
Acquisition of treasury
stock....................... -- (22) (582) -- --
------- ------- ------- --------- ---------
Net cash provided (used) by
financing activities......... 3,404 (3,863) 101 67 336
------- ------- ------- --------- ---------
Net increase (decrease) in
cash and cash equivalents.... (397) 2,005 (2,454) 2,015 1,990
Cash and cash equivalents at
beginning of period.......... 1,304 907 2,912 2,912 458
------- ------- ------- --------- ---------
Cash and cash equivalents at
end of period................ $ 907 $ 2,912 $ 458 $ 4,927 $ 2,448
======= ======= ======= ========= =========
Supplemental disclosures of
cash flow information:
Cash paid during the period
for:
Interest.................... $ 588 $ 69 $ 20 $ 9 $ 20
Income taxes, net of re-
funds...................... 1,418 1,759 1,940 131 764
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements

F-6
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of PAR Technology
Corporation and its wholly owned subsidiaries (PAR Microsystems Corporation,
PAR Government Systems Corporation, Rome Research Corporation and PAR Vision
Systems Corporation), collectively referred to as the "Company." All
significant intercompany transactions have been eliminated in consolidation.

REVENUE RECOGNITION

Revenues from sales of commercial products are generally recorded as the
products are shipped, provided that no significant vendor and post-contract
support obligations remain and the collection of the related receivable is
probable. Costs relating to any remaining insignificant vendor and post-
contract obligations are accrued. The Company's service revenues are
recognized ratably over the related contract period or as the services are
performed. Billings in advance of the Company's performance of such work are
reflected as deferred service revenue in the accompanying consolidated balance
sheet.

The Company's contract revenues result primarily from contract services
performed for the United States Government under a variety of cost-
reimbursement, time-and-material and fixed-price contracts. Contract revenues,
including fees and profits, are recorded as services are performed using the
percentage-of-completion method of accounting, primarily based on contract
costs incurred to date compared with estimated costs at completion.
Anticipated losses on all contracts and programs in process are recorded in
full when identified. Unbilled accounts receivable are stated at estimated
realizable value. Contract costs, including indirect expenses, are subject to
audit and adjustment through negotiations between the Company and government
representatives. Contract revenues have been recorded in amounts that are
expected to be realized on final settlement. The Company follows accepted
industry practice and records amounts retained by the government on contracts
as a current asset.

STATEMENT OF CASH FLOWS

For purposes of reporting cash flows, the Company considers all highly
liquid investments, purchased with a remaining maturity of three months or
less, to be cash equivalents. The effect of changes in foreign-exchange rates
on cash balances is not material.

INVENTORIES

Inventories are valued at the lower of cost or market, cost being determined
on the basis of the first-in, first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT

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

WARRANTIES

A majority of the Company's products are under warranty for defects in
material and workmanship for various periods of time. The Company establishes
an accrual for estimated warranty costs at the time of sale.

F-7
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
INCOME TAXES

The provision for income taxes is based upon pretax earnings with deferred
income taxes provided for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities.

FOREIGN CURRENCY

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

RESEARCH AND DEVELOPMENT COSTS

The Company capitalizes certain costs related to the development of computer
software under the requirements of Statement of Financial Accounting Standards
No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed. Software development costs incurred prior to establishing
technological feasibility are charged to operations and included in research
and development costs. Software development costs incurred after establishing
feasibility, are capitalized and amortized on a product-by-product basis when
the product is available for general release to customers. The unamortized
computer software costs included in other assets amounted to $1,801,000 and
$1,311,000 at December 31, 1994 and 1995, respectively. Annual amortization,
charged to cost of sales, is the greater of the amount computed using the
ratio that current gross revenues for a product bear to the total of current
and anticipated future gross revenues for that product, or the straight-line
method over the remaining estimated economic life of the product. Amortization
of capitalized software costs amounted to $1,231,000 $1,076,000, and $990,000,
in 1993, 1994, and 1995, respectively.

EARNINGS PER SHARE

Earnings per share are based upon the weighted average number of shares
outstanding plus common stock equivalents under the Company's stock option
plans.

RECLASSIFICATIONS

Certain revenues and related costs relating to systems integration activity
which previously were reflected as service revenues and costs have been
reclassified to product sales and costs.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates,
judgments and assumptions that affect the reported amounts of assets,
liabilities and revenues and expenses (as well as disclosures of contingent
liabilities) during the reporting period. Actual results could differ from
those estimates.

INTERIM FINANCIAL DATA

The interim financial data is unaudited; however, in the opinion of the
Company, the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods.

F-8
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2 -- ACCOUNTS RECEIVABLE

The Company's accounts receivable consist of:

<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
--------------- -------------------
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Government segment:
United States Government
Billed.................................... $ 2,673 $ 2,522 $ 2,414
Unbilled.................................. 2,009 1,474 1,438
------- ------- -------
4,682 3,996 3,852
------- ------- -------
Other --
Billed.................................... 2,898 2,947 3,343
Unbilled.................................. 1,148 681 839
------- ------- -------
4,046 3,628 4,182
------- ------- -------
Commercial segment:
Trade accounts receivable-net............... 19,375 28,850 21,117
------- ------- -------
$28,103 $36,474 $29,151
======= ======= =======
</TABLE>

Included in billed amounts at December 31, 1995 are retentions totaling
$95,000. Of these retentions, $39,000 is expected to be collected in 1996.
Retained amounts are collectible upon contract completion and the acceptance
of costs incurred. At December 31, 1994 and 1995, the Company had recorded a
reserve for doubtful accounts of $818,000 and $768,000, respectively, against
trade accounts receivable. Trade accounts receivable are primarily with major
fast-food corporations or their franchisees.

NOTE 3 -- INVENTORIES

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

<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
--------------- -------------------
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Finished goods.............................. $ 3,891 $ 4,427 $ 5,904
Work in process............................. 1,697 3,337 2,575
Component parts............................. 5,411 3,979 5,459
Service parts............................... 5,468 6,058 6,983
------- ------- -------
$16,467 $17,801 $20,921
======= ======= =======
</TABLE>

F-9
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 -- PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment are:

<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
--------------- -----------
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Land...................................... $ 253 $ 253 $ 253
Building and improvements................. 8,356 8,371 8,371
Furniture and equipment................... 21,515 21,952 21,929
------- ------- -------
30,124 30,576 30,553
Less accumulated depreciation and
amortization............................. 22,408 22,996 23,272
------- ------- -------
$ 7,716 $ 7,580 $ 7,281
======= ======= =======
</TABLE>

The Company has constructed certain facilities at a cost of approximately
$216,000 on land it leases from an officer. The terms of the related lease
provide that title to the facility will pass to the officer at the end of the
lease in 1996.

The Company leases office space under various operating leases. Rental
expense on these operating leases was approximately $845,000, $817,000 and
$879,000 for the years ended December 31, 1993, 1994, and 1995, respectively.

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

<TABLE>
<S> <C>
1996............................................................... $ 716
1997............................................................... 287
1998............................................................... 252
1999............................................................... 248
2000............................................................... 180
Thereafter......................................................... 308
------
$1,991
======
</TABLE>

NOTE 5 -- NOTES PAYABLE

The Company has an aggregate of $27,200,000 in bank lines of credit. Certain
lines totaling $23,000,000 allow the Company to choose among unsecured
borrowings which bear interest at the prime rate (8.5% at December 31, 1995),
banker's acceptance borrowings which bear interest at a rate below the prime
rate or other bank negotiated rates below prime. These lines are negotiated
annually. The remaining line of $4,200,000 is unsecured, bears interest at the
prime rate, requires a compensating balance and expires on June 30, 1996. At
December 31, 1995, $286,000 was outstanding under these lines at an interest
rate of 6.6%.

NOTE 6 -- COMMON STOCK

The Company had reserved 2,052,500 shares of common stock for issuance under
its Stock Option Plans. By November 30, 1994, these Plans had expired. In
1995, the Company reserved 500,000 shares under the 1995 Stock Option Plan.
Options under this Plan may be incentive stock options or nonqualified
options. Stock options are nontransferable other than upon death and are not
exercisable prior to six months from date of grant. A summary of the stock
options follows:

F-10
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
NO. OF SHARES OPTION PRICE TOTAL
(IN THOUSANDS) PER SHARE (IN THOUSANDS)
-------------- --------------- --------------
<S> <C> <C> <C>
Outstanding at December 31,
1992........................... 911 $2.00 -- $15.00 $2,987
Granted....................... 76 4.00 -- 6.06 372
Exercised..................... (69) 3.00 -- 5.00 (228)
Forfeited..................... (55) 3.00 -- 11.00 (249)
--- ------
Outstanding at December 31,
1993........................... 863 2.00 -- 15.00 2,882
Granted....................... 72 6.50 -- 7.25 476
Exercised..................... (55) 3.00 -- 5.00 (169)
Forfeited..................... (21) 3.00 -- 15.00 (110)
--- ------
Outstanding at December 31,
1994........................... 859 2.00 -- 13.00 3,079
Granted....................... 38 9.31 -- 10.19 372
Exercised..................... (82) 3.00 -- 5.81 (269)
Forfeited..................... (5) 5.25 -- 13.00 (56)
--- ------
Outstanding at December 31,
1995........................... 810 2.00 -- 11.25 3,126
Granted (unaudited)........... 181 9.25 -- 9.25 1,670
Exercised (unaudited)......... (65) 3.00 -- 11.25 (242)
Forfeited (unaudited)......... (11) 6.50 -- 9.31 (95)
--- ------
Outstanding at March 31, 1996
(unaudited).................... 915 $2.00 -- $11.25 $4,459
=== ======
Shares remaining available for
grant at
March 31, 1996 (unaudited)..... 291
===
Total shares vested and
exercisable as of
March 31, 1996 (unaudited)..... 556
===
</TABLE>

NOTE 7 -- INCOME TAXES

The provision for income taxes consists of:

<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- -----------
1993 1994 1995 1996
------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current tax expense:
Federal............................... $ 826 $ 1,219 $ 2,248 $ 53
State................................. 250 457 542 46
Foreign............................... 161 150 (11) 28
------- ------- ------- -----
1,237 1,826 2,779 127
------- ------- ------- -----
Deferred income tax:
Federal............................... 225 260 (422) 169
------- ------- ------- -----
Provision for income taxes.............. $ 1,462 $2,086 $2,357 $ 296
======= ======= ======= =====
</TABLE>

F-11
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- -----------
1993 1994 1995 1996
------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Depreciation.......................... $ 712 $ 730 $ 744 $ 731
Software development expense.......... 826 612 446 392
Other................................. 79 136 -- --
------- ------- ------- -------
Gross deferred liabilities............ 1,617 1,478 1,190 1,123
------- ------- ------- -------
Reserves.............................. (1,444) (1,132) (1,250) (1,023)
Capitalized inventory costs........... (98) (90) (84) (89)
Wage and salary accruals.............. (311) (314) (342) (337)
Other................................. (93) (40) (26) (16)
------- ------- ------- -------
Gross deferred tax assets............. (1,946) (1,576) (1,702) (1,465)
------- ------- ------- -------
$ (329) $ (98) $ (512) $ (342)
======= ======= ======= =======
</TABLE>

Total income tax provision differed from total tax expense as computed by
applying the statutory U.S. federal income tax rate to income before taxes.
The reasons were:

<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- -----------
1993 1994 1995 1996
------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Statutory U.S. federal tax rate...... 34.0% 34.0% 34.0% 34.0%
State taxes net of federal benefit... 2.5 5.2 5.1 3.6
Foreign income taxes................. 4.0 2.6 0.8 --
FSC benefit.......................... (1.6) (1.4) (2.6) (2.0)
Adjustment to prior years' accrual... -- 2.5 1.8 --
Foreign tax credits.................. (2.1) (6.5) (7.7) --
Other................................ (0.2) (0.1) 2.2 (.7)
------- ------- ------- ----
36.6% 36.3% 33.6% 34.9%
======= ======= ======= ====
</TABLE>

The provision for income taxes is based on income before income taxes as
follows:

<TABLE>
<CAPTION>
(UNAUDITED)
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- -----------
1993 1994 1995 1996
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Domestic operations..................... $ 3,953 $ 5,519 $ 7,697 $1,202
Foreign operations...................... 38 228 (682) (355)
------- ------- ------- ------
Total................................. $ 3,991 $ 5,747 $ 7,015 $ 847
======= ======= ======= ======
</TABLE>

NOTE 8 -- EMPLOYEE BENEFIT PLANS

The Company has a deferred profit-sharing retirement plan that covers
substantially all employees. The Company's annual contribution to the plan is
discretionary. The contributions to the plan in 1993, 1994 and 1995 were
approximately $626,000 $749,000 and $824,000, respectively. The plan also
contains a 401(K) provision that allows employees to contribute a percentage
of their salary.

The Company also maintains an incentive compensation plan. Participants in
the plan are key employees as determined by executive management. Compensation
under the plan is based on the achievement of predetermined financial
performance goals of the Company and its subsidiaries. Awards under the plan
are

F-12
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
payable in cash. For the years ended December 31, 1993, 1994 and 1995, the
Company expensed approximately $506,000, $764,000 and $628,000, respectively,
in cash awards under the plan.

NOTE 9 -- INVESTMENT IN AFFILIATE

In June 1992, the Company was approved under the Department of Defense
Mentor-Protege Program as a mentor for a minority-owned government contractor,
Phoenix Systems and Technologies, Inc. (Phoenix). Concurrent with this
approval, the Company acquired a 43.9% interest in Phoenix which is accounted
for under the equity method.

The Company is a subcontractor to Phoenix on certain engineering service
contracts with the United States Government. Additionally, Phoenix rents its
office space from the Company. Phoenix is also a vendor to PAR providing
manufacturing and some contract services. As a result of this business
relationship, PAR had a net receivable from Phoenix of $1,000,000 at December
31, 1994. During 1995, $450,000 of this amount was paid and the Company
recorded an allowance for the remainder. During 1995, PAR billed Phoenix
approximately $1.6 million and Phoenix billed PAR $1.1 million in connection
with the above activities. At December 31, 1995, the Company had recorded
$957,000 of receivables relating to 1995 activities. This amount is net of a
$282,000 allowance and is included in other assets in the consolidated balance
sheet. The Company determined that allowances were necessary as a result of
delays in new contract starts, Phoenix exiting certain unprofitable
manufacturing activities and the settlement of a contracting claim with the
federal government. Also during 1995, as a result of the Company's equity in
Phoenix's losses, the Company's remaining investment of $264,000 was written
off. During the three months ended March 31, 1996, the Company billed Phoenix
$1.0 million for work performed and was paid a total of $803,000. At March 31,
1996, the net receivable due the Company from Phoenix was $1.2 million.

In connection with the Mentor-Protege program discussed above, Company
management assisted Phoenix in the development of their business plan for 1996
and beyond. This plan, which Phoenix believes to be achievable, anticipates
the development of a profitable manufacturing business and continued
profitable services business. The plan provides for payment of the amount due
the Company over the next three years. The Company has also guaranteed a
$1,000,000 line-of-credit borrowing of Phoenix at December 31, 1995. As of
March 31, 1996, the guaranteed line of credit was reduced to $900,000. If
Phoenix is unable to successfully execute its business plan, the Company could
incur additional losses.

NOTE 10 -- CONTINGENCIES

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

NOTE 11 -- INDUSTRY SEGMENTS

The Company, through its separate operating subsidiaries, operates in two
principal segments: a Commercial segment and a Government segment. The
Commercial segment designs, develops, manufactures, sells, installs and
services point-of-sale terminal systems for the restaurant industry,
industrial data collection systems for manufacturing industries, and image
processing systems for the ophthalmic and food-processing industries. The
Government segment designs and implements advanced technology computer
software systems primarily for military and intelligence agency applications,
and provides services for operating and maintaining certain U.S. Government-
owned test sites, and for planning, executing and evaluating experiments
involving new or advanced radar systems. Inter-segment sales and transfers are
not material.

F-13
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Information as to the Company's operations in these two segments is set forth
below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1994 1995
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Commercial segment
United States.................................. $57,636 $67,079 $ 76,984
Europe......................................... 4,352 5,579 6,335
Australia...................................... 3,372 4,299 2,654
Other Non U.S.................................. 1,869 3,190 3,432
Eliminations................................... (4,181) (6,359) (6,040)
Government segment.............................. 18,199 20,742 24,029
------- ------- --------
Total......................................... $81,247 $94,530 $107,394
======= ======= ========
Income before provision for income taxes:
Commercial segment
United States.................................. $ 2,104 $ 2,930 $ 4,880
Europe......................................... 395 783 1,047
Australia...................................... 549 840 260
Other Non U.S.................................. 331 215 164
Government segment.............................. 645 1,020 1,389
Corporate....................................... (33) (41) (725)
------- ------- --------
Total........................................ $ 3,991 $ 5,747 $ 7,015
======= ======= ========
Identifiable assets:
Commercial segment
United States.................................. $43,826 $39,574 $ 50,186
Europe......................................... 2,335 3,227 3,263
Australia...................................... 1,341 1,341 1,195
Other Non U.S.................................. 1,339 2,920 2,511
Government segment.............................. 9,935 9,834 10,730
Corporate....................................... 1,673 3,746 188
------- ------- --------
Total......................................... $60,449 $60,642 $ 68,073
======= ======= ========
Depreciation and amortization:
Commercial segment............................. $ 2,609 $ 2,304 $ 1,959
Government segment............................. 232 182 210
Corporate...................................... 186 197 245
------- ------- --------
Total......................................... $ 3,027 $ 2,683 $ 2,414
======= ======= ========
Capital expenditures:
Commercial segment............................. $ 895 $ 1,051 $ 1,063
Government segment............................. 119 295 137
Corporate...................................... 206 380 88
------- ------- --------
Total......................................... $ 1,220 $ 1,726 $ 1,288
======= ======= ========
</TABLE>

F-14
<PAGE>

PAR TECHNOLOGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Customers comprising 10% or more of the Company's Commercial segment sales
are summarized as follows:

<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Taco Bell Corporation........................................ 34% 34% 42%
McDonald's Corporation....................................... 31 31 27
KFC.......................................................... 9 10 6
All Others................................................... 26 25 25
--- --- ---
100% 100% 100%
</TABLE>

Substantially all revenues derived by the Government segment arise from
Federal government contracts, or subcontracts related thereto, virtually all
of which are with the Department of Defense.

NOTE 12--FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
--------------
CARRYING FAIR
VALUE VALUE
-------- -----
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents........................................ $458 $458
Long-term receivables and other investments...................... 957 957
Notes Payable.................................................... 286 286
</TABLE>

Fair value of financial instruments classified as current assets or
liabilities approximate carrying value due to the short-term maturity of the
instruments. Fair value of long-term receivables and other investments was
based on discounted cash flows.

NOTE 13--SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------
SEPT.
1994 MARCH 31 JUNE 30 30 DEC. 31
---- -------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Net revenues.................................. $20,770 $23,123 $23,903 $26,734
Gross margin.................................. 5,002 5,667 6,617 7,681
Net income.................................... 227 468 1,444 1,522
Earnings per common share..................... $ .03 $ .06 $ .18 $ .19
<CAPTION>
QUARTER ENDED
--------------------------------
SEPT.
1995 MARCH 31 JUNE 30 30 DEC. 31
---- -------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Net revenues.................................. $24,034 $24,366 $23,980 $35,014
Gross margin.................................. 6,151 6,494 7,032 10,390
Net income.................................... 390 636 1,533 2,099
Earnings per common share..................... $ .05 $ .08 $ .19 $ .26
</TABLE>

F-15
<PAGE>

Back
- ----

The picture at the top of the page illustrates a third party pen-based data
collection device networked through the Company's TPS software application.

PAR's ITIP solutions for automated manufacturing/warehousing enterprises involve
extensive systems integration, incorporating the Company's TPS/TM/ enabling
software with third-party supplied data collection devices and mid-range
computer manufacturing applications.

Back
- ----

The picture at the lower left hand side of the page illustrates the Company's
manufacturing/warehousing information processing system by means of an Intermec
portable hand-held data collection terminal.

PAR integrates products from a variety of third-party vendors, including
Intermec Corporation and Telxon Corporation, for manufacturing and warehousing
applications.

Back
- ----

The picture at the lower right hand side of the page illustrates two
ophthalmologists performing corneal surgery on a patient utilizing the Company's
intra-operative corneal topography system.

PAR's proprietary corneal topography system can be utilized in opthalmic
diagnoses and surgical procedures.
<PAGE>

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

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPEC-
TUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SHARES OF COMMON STOCK
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 3
Prospectus Summary....................................................... 4
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 11
Price Range of Common Stock and Dividend Policy.......................... 11
Capitalization........................................................... 12
Selected Consolidated Financial Data..................................... 13
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 14
Business................................................................. 20
Management............................................................... 32
Certain Transactions..................................................... 33
Principal and Selling Stockholders....................................... 34
Description of Capital Stock............................................. 35
Shares Eligible for Future Sale.......................................... 36
Underwriting............................................................. 37
Legal Matters............................................................ 38
Experts.................................................................. 38
Index to Consolidated Financial Statements............................... F-1
</TABLE>

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

PAR TECHNOLOGY CORPORATION

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

2,825,000 SHARES

COMMON STOCK

PROSPECTUS

, 1996

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

DILLON, READ & CO. INC.

THE ROBINSON-HUMPHREY COMPANY, INC.

VOLPE, WELTY & COMPANY

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Estimated expenses (other than underwriting discounts and commissions), all
of which will be borne by the Registrant, payable in connection with the sale
of the Common Stock offered hereby are as follows:

<TABLE>
<S> <C>
Registration Fee................................................... $ 17,504
NASD Filing Fee.................................................... 5,576
Printing and Engraving Expenses.................................... 80,000
Legal Fees and Expenses............................................ 175,000
Accounting Fees and Expenses....................................... 25,000
Blue Sky Fees and Expenses (including legal fees).................. 15,000
Miscellaneous...................................................... 56,920
--------
Total............................................................ $375,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that the or she is or was a director, officer, employee or
agent of the corporation or another enterprise if serving at the request of
the corporation. Depending on the character of the proceeding, a corporation
may indemnify against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with such action, suit or proceeding if the person indemnified acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct
was unlawful. In the case of an action by or in the right of the corporation,
no indemnification may be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine that despite the adjudication
of liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses that the court
shall deem proper. Section 145 further provides that to the extent a director
or officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to above, or in defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him or her in connection
therewith.

The Registrant's Certificate of Incorporation provides that the Registrant
shall, to the fullest extent permitted by law, indemnify all directors,
officers, employees and agents of the company. The Certificate of
Incorporation also contains a provision eliminating the liability of directors
of the Registrant to the Registrant or its stockholders for monetary damage,
except under certain circumstances. The Certificate of Incorporation also
permits the Registrant to maintain insurance to protect itself and any
director, officer, employee or agent against any liability with respect to
which the Corporation would have the power to indemnify such persons under the
Delaware General Corporation Law. The Registrant maintains an insurance policy
insuring its directors and officers against certain liabilities.

II-1
<PAGE>

ITEM 16. EXHIBITS.

<TABLE>
<C> <S>
1.1** Form of Underwriting Agreement.
3.1* Certificate of Incorporation, as amended.
3.2* Form of Certificate of Amendment to the Certificate of Incorporation.
3.3* By-laws, as amended.
4* Specimen Certificate representing the Common Stock.
5** Opinion of Testa, Hurwitz & Thibeault, LLP.
10.1+* Agreement between Taco Bell Corporation and PAR Microsystems
Corporation, dated
December 18, 1995.
10.2+* Service Integration Agreement between Taco Bell and PAR Microsystems
Corporation, dated September 12, 1995.
11* Statement re: Computation of Earnings per Share.
23.1 Consent of Price Waterhouse LLP.
23.2** Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5).
24* Power of Attorney (see page II-3).
</TABLE>
- --------

* Previously filed.

**To be filed by amendment.
+ Confidential treatment requested as to certain portions.

ITEM 17. UNDERTAKINGS.

The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where appropriate, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-2
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or amendment thereto to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
Hartford, New York on May 23, 1996.

PAR TECHNOLOGY CORPORATION:

/s/ Ronald J. Casciano
By:__________________________________
RONALD J. CASCIANO
CHIEF FINANCIAL OFFICER, VICE
PRESIDENT AND TREASURER

POWER OF ATTORNEY AND SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.

SIGNATURE TITLE(S) DATE

Chairman of the
/s/ John W. Sammon* Board of Directors May 23, 1996
- ------------------------------------- and President
DR. JOHN W. SAMMON, JR.

Executive Vice
/s/ Charles A. Constantino* President and May 23, 1996
- ------------------------------------- Director
CHARLES A. CONSTANTINO

President, PAR
/s/ J. Whitney Haney* Microsystems and May 23, 1996
- ------------------------------------- Director
J. WHITNEY HANEY

Director
/s/ Sangwoo Ahn* May 23, 1996
- -------------------------------------
SANGWOO AHN

Director
/s/ James C. Castle* May 23, 1996
- -------------------------------------
DR. JAMES C. CASTLE

/s/ Ronald J. Casciano
*By: ___________________________
RONALD J. CASCIANO
ATTORNEY-IN-FACT

II-3
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS PAGE
-------- ----
<C> <S> <C>
1.1** Form of Underwriting Agreement.
3.1* Certificate of Incorporation, as amended.
3.2* Form of Certificate of Amendment to the Certificate of
Incorporation.
3.3* By-laws, as amended.
4* Specimen Certificate representing the Common Stock.
5** Opinion of Testa, Hurwitz and Thibeault, LLP.
10.1+* Agreement between Taco Bell Corporation and PAR Microsystems
Corporation, dated December 18, 1995.
10.2+* Service Integration Agreement between Taco Bell and PAR
Microsystems Corporation, dated September 12, 1995.
11* Statement re: Computation of Earnings per Share.
23.1 Consent of Price Waterhouse LLP.
23.2** Consent of Testa, Hurwitz & Thibeault, LLP (included in
Exhibit 5).
24* Power of Attorney (See page II-3).
</TABLE>
- --------

* Previously filed.

**To be filed by amendment.
+ Confidential treatment requested as to certain parties.

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-2 of our report dated February 13, 1996,
relating to the financial statements of PAR Technology Corporation, which
appears in such Prospectus. We also consent to the application of such report
to the Financial Statement Schedules for the three years ended December 31,
1995 listed under Item 14(a) of PAR Technology Corporation's Annual Report on
Form 10-K for the year ended December 31, 1995 when such schedules are read in
conjunction with the financial statements referred to in our report. The
audits referred to in such report also included these Financial Statement
Schedules. We also consent to the references to us under the headings
"Experts" and "Selected Consolidated Financial Data" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Selected Consolidated Financial Data."

Price Waterhouse LLP

Syracuse, New York

May 23, 1996