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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended September 30, 2023
OR
 TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From __________ to __________
Commission File Number: 1-09720
New PAR Logo.jpg
PAR TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)

Delaware16-1434688
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
PAR Technology Park, 8383 Seneca Turnpike, New Hartford, New York 13413-4991
(Address of principal executive offices, including zip code)
(315) 738-0600
(Registrant’s telephone number, including area code)

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

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

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

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

Large Accelerated Filer ☑
Accelerated Filer ☐
Non-Accelerated Filer ☐
Smaller Reporting Company
Emerging Growth Company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of November 7, 2023, 28,021,454 shares of the registrant’s common stock, $0.02 par value, were outstanding.



PAR TECHNOLOGY CORPORATION
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item
Number
DescriptionPage
   
Item 1.
   
 
   
 
   
 
   
 
   
 
   
Item 2.
   
Item 3.
   
Item 4.
PART II
OTHER INFORMATION
Item 1.
   
Item 1A.
   
Item 2.
Item 5.
   
Item 6.
   
 
“PAR®,” “Brink POS®,” “Punchh®,” “MENUTM,” “Data Central®,” "PAR® Pay”, “PAR® Payment Services” and other trademarks identifying our products and services appearing in this Quarterly Report belong to us. This Quarterly Report may also contain trade names and trademarks of other companies. Our use of such other companies’ trade names or trademarks is not intended to imply any endorsement or sponsorship by these companies of us or our products or services.




Unless the context indicates otherwise, references in this Quarterly Report to "we," "us," "our," the "Company," and "PAR" mean PAR Technology Corporation and its consolidated subsidiaries.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 contains “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature, but rather are predictive of PAR's future operations, financial condition, financial results, business strategies and prospects. Forward-looking statements are generally identified by words such as “anticipate,” “believe,” “can”, “could”, “continue,” “expect,” “estimate,” “future”, “goal”, “intend,” “may,” “opportunity,” “plan,” “should,” “target”, “will,” “would,” “will likely result,” and similar expressions. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties, many of which are beyond PAR's control, which could cause PAR's actual results to differ materially from those expressed in or implied by forward-looking statements, including statements relating to and PAR's expectations regarding: the impact of COVID-19 on its business, financial condition, and results of operations; the timing and expected benefits of acquisitions, divestitures, and capital markets transactions; the plans, strategies and objectives of management for future operations, including PAR's service and product offerings, its go-to-market strategies, and the expected development, demand, performance, market share or competitive performance of its products and services; PAR's ability to achieve and sustain profitability; projections of net revenue, margins, expenses, cash flows, or other financial items; PAR's annual recurring revenue, active sites, subscription service margins, net loss, net loss per share and other key performance indicators and non-GAAP financial measures; supply constraints, product and component shortages, manufacturing disruptions or logistics challenges; PAR's human capital strategies and engagement; current or future macroeconomic trends or geopolitical events and the impact of those trends and events on PAR and its business, financial condition, and results of operations; claims, disputes or other litigation matters; and assumptions underlying any of the foregoing. Factors, risks, trends, and uncertainties that could cause PAR's actual results to differ materially from those expressed in or implied by forward-looking statements include: a resurgence of COVID-19 cases and the responses of governments, businesses, customers and consumers; PAR's ability to add and maintain active sites, retain and manage suppliers, secure alternative suppliers, and manage inventory levels, navigate manufacturing disruptions and logistics challenges, shipping delays and increased costs; PAR's ability to successfully attract, hire and retain necessary qualified employees to develop and expand its business, and execute product installations and respond to customer service level needs; the protection of PAR's intellectual property; PAR's ability to retain and add integration partners, and its success in acquiring and developing relevant technology for current, new, and potential customers for its service and product offerings; macroeconomic trends, such as a recession or slowed economic growth, bank failures or other banking industry disruptions, increased interest rates, inflation, and changes in consumer confidence and discretionary spending; geopolitical events, including the effects of the Russia-Ukraine war and escalating tensions between China and Taiwan; risks associated with PAR's international operations; changes in estimates and assumptions we make in connection with the preparation of our financial statements, in building our business and operational plans, and in executing our strategies; disruptions in operations from data breaches and cyberattacks; PAR's ability to maintain proper and effective internal control over financial reporting; PAR's ability to execute its business, operational plans, and strategies and manage its business continuity risks, including disruptions or delays in product assembly and fulfillment; potential impacts, liabilities and costs from pending or potential investigations, claims and disputes; and other factors, risks, trends and uncertainties that could cause PAR's actual results to differ materially from those expressed in or implied by forward-looking statements contained in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 21, 2023, in this Quarterly Report, and in our other filings with the SEC. Given these risks and uncertainties, readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.



PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (unaudited)
PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(unaudited)
AssetsSeptember 30, 2023December 31, 2022
Current assets:  
Cash and cash equivalents$43,136 $70,328 
Cash held on behalf of customers8,758 7,205 
Short-term investments36,717 40,290 
Accounts receivable – net66,441 59,960 
Inventories24,193 37,594 
Other current assets9,516 8,572 
Total current assets188,761 223,949 
Property, plant and equipment – net16,110 12,961 
Goodwill487,073 486,762 
Intangible assets – net96,562 111,097 
Lease right-of-use assets4,303 4,061 
Other assets16,400 16,028 
Total assets$809,209 $854,858 
Liabilities and Shareholders’ Equity  
Current liabilities:  
Current portion of long-term debt$13,638 $ 
Accounts payable27,229 23,283 
Accrued salaries and benefits15,652 18,936 
Accrued expenses10,578 6,531 
Customers payable8,758 7,205 
Lease liabilities – current portion1,327 1,307 
Customer deposits and deferred service revenue10,066 10,562 
Total current liabilities87,248 67,824 
Lease liabilities – net of current portion3,075 2,868 
Deferred service revenue – noncurrent4,329 5,125 
Long-term debt377,148 389,192 
Other long-term liabilities4,669 14,655 
Total liabilities476,469 479,664 
Shareholders’ equity:  
Preferred stock, $.02 par value, 1,000,000 shares authorized
  
Common stock, $0.02 par value, 58,000,000 shares authorized, 28,877,896 and 28,589,567 shares issued, 27,520,284 and 27,319,045 outstanding at September 30, 2023 and December 31, 2022, respectively
574 570 
Additional paid in capital606,836 595,286 
Accumulated deficit(256,327)(205,204)
Accumulated other comprehensive loss(1,507)(1,365)
Treasury stock, at cost, 1,357,612 shares and 1,270,522 shares at September 30, 2023 and December 31, 2022, respectively
(16,836)(14,093)
Total shareholders’ equity332,740 375,194 
Total Liabilities and Shareholders’ Equity$809,209 $854,858 
See accompanying notes to unaudited interim condensed consolidated financial statements
2

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Revenues, net:  
Hardware$25,824 $31,343 $78,991 $84,820 
Subscription service31,363 25,170 89,700 69,591 
Professional service11,514 11,840 38,123 36,959 
Contract38,433 24,414 101,301 66,775 
Total revenues, net107,134 92,767 308,115 258,145 
Costs of sales:  
Hardware19,295 25,458 63,002 69,666 
Subscription service15,497 13,054 46,655 34,332 
Professional service8,775 10,967 31,925 30,649 
Contract35,381 21,880 94,624 60,356 
Total cost of sales78,948 71,359 236,206 195,003 
Gross margin28,186 21,408 71,909 63,142 
Operating expenses:  
Selling, general and administrative26,249 26,543 79,357 75,309 
Research and development14,660 12,843 43,863 33,785 
Amortization of identifiable intangible assets464 465 1,393 1,399 
Adjustment to contingent consideration liability  (7,500) 
Gain on insurance proceeds  (500) 
Total operating expenses41,373 39,851 116,613 110,493 
Operating loss(13,187)(18,443)(44,704)(47,351)
Other expense, net(373)(179)(337)(804)
Interest expense, net(1,750)(2,140)(5,152)(7,054)
Loss before provision for income taxes(15,310)(20,762)(50,193)(55,209)
Provision for income taxes(206)(578)(930)(629)
Net loss$(15,516)$(21,340)$(51,123)$(55,838)
Net loss per share (basic and diluted)$(0.56)$(0.79)$(1.86)$(2.06)
Weighted average shares outstanding (basic and diluted)27,47227,11027,41227,150

See accompanying notes to unaudited interim condensed consolidated financial statements

3

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss$(15,516)$(21,340)$(51,123)$(55,838)
Other comprehensive loss, net of applicable tax:
Foreign currency translation adjustments1,417 (851)(142)(500)
Comprehensive loss$(14,099)$(22,191)$(51,265)$(56,338)

See accompanying notes to unaudited interim condensed consolidated financial statements
4

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
(unaudited)

Common StockAdditional
Paid in
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Treasury StockTotal
Shareholders’
Equity
SharesAmountSharesAmount
Balances at December 31, 202228,590 $570 $595,286 $(205,204)$(1,365)1,271 $(14,093)$375,194 
Issuance of common stock upon the exercise of stock options5 — 52 — — — — 52 
Net issuance of restricted stock awards and restricted stock units160 2 — — — — — 2 
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 79 (2,478)(2,478)
Stock-based compensation— — 3,055 — — — — 3,055 
Foreign currency translation adjustments— — — — (42)— — (42)
Net loss— — — (15,905)— — — (15,905)
Balances at March 31, 202328,755 $572 $598,393 $(221,109)$(1,407)1,350 $(16,571)$359,878 
Issuance of common stock upon the exercise of stock options9 — 147 — — — — 147 
Net issuance of restricted stock awards and restricted stock units35  — — — — —  
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 6 (205)(205)
Stock-based compensation— — 3,615 — — — — 3,615 
Foreign currency translation adjustments— — — — (1,517)— — (1,517)
Net loss— — — (19,702)— — — (19,702)
Balances at June 30, 202328,799 $572 $602,155 $(240,811)$(2,924)1,356 $(16,776)$342,216 
Issuance of common stock upon the exercise of stock options74 2 709 — — — — 711 
Net issuance of restricted stock awards and restricted stock units5  — — — — —  
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 2 (60)(60)
Stock-based compensation— — 3,972 — — — — 3,972 
Foreign currency translation adjustments— — — — 1,417 — — 1,417 
Net loss— — — (15,516)— — — (15,516)
Balances at September 30, 202328,878 $574 $606,836 $(256,327)$(1,507)1,358 $(16,836)$332,740 

See accompanying notes to unaudited interim condensed consolidated financial statements







5

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
(unaudited)

Common StockAdditional
Paid in
Capital
Accumulated DeficitAccumulated Other Comprehensive Income (Loss)Treasury StockTotal
Shareholders’
Equity
SharesAmountSharesAmount
Balances at December 31, 202128,095 $562 $640,937 $(122,505)$(3,704)1,181 $(10,945)$504,345 
Impact of ASU 2020-06 implementation(66,656)(13,380)(80,036)
Balances at January 1, 202228,095 $562 $574,281 $(135,885)$(3,704)1,181 $(10,945)$424,309 
Issuance of common stock upon the exercise of stock options96 2 811 — — — — 813 
Net issuance of restricted stock awards and restricted stock units88 1 — — — — — 1 
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 45 (2,051)(2,051)
Stock-based compensation— — 3,536 — — — — 3,536 
Foreign currency translation adjustments— — — — 512 — — 512 
Net loss— — — (15,650)— — — (15,650)
Balances at March 31, 2022 28,279 $565 $578,628 $(151,535)$(3,192)1,226 $(12,996)$411,470 
Issuance of common stock upon the exercise of stock options16 — 205 — — — — 205 
Net issuance of restricted stock awards and restricted stock units36 — — — — — —  
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 12 (397)(397)
Stock-based compensation— — 3,231 — — — — 3,231 
Foreign currency translation adjustments— — — — (161)— — (161)
Net loss— — — (18,848)— — — (18,848)
Balances at June 30, 202228,331 $565 $582,064 $(170,383)$(3,353)1,238 $(13,393)$395,500 
Issuance of common stock upon the exercise of stock options17 1 249 — — — — 250 
Net issuance of restricted stock awards and restricted stock units18 — — — — — —  
Issuance of common stock for acquisition163 3 6,297 6,300 
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock— — — — — 9 (263)(263)
Stock-based compensation— — 3,490 — — — — 3,490 
Foreign currency translation adjustments— — — — (851)— — (851)
Net loss— — — (21,340)— — — (21,340)
Balances at September 30, 202228,529 $569 $592,100 $(191,723)$(4,204)1,247 $(13,656)$383,086 

See accompanying notes to unaudited interim condensed consolidated financial statements
6

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine Months Ended
September 30,
20232022
Cash flows from operating activities:
Net loss$(51,123)$(55,838)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization20,480 19,625 
Accretion of debt in interest expense1,594 1,485 
Current expected credit losses783 739 
Provision for obsolete inventory(1,271)1,773 
Stock-based compensation10,642 10,257 
Adjustment to contingent consideration liability(7,500) 
Changes in operating assets and liabilities:
Accounts receivable(7,342)(5,823)
Inventories14,607 (6,678)
Other current assets(1,008)321 
Other assets(389)(3,461)
Accounts payable3,383 3,580 
Accrued salaries and benefits(3,258)325 
Accrued expenses1,839 (260)
Customer deposits and deferred service revenue(1,292)(2,924)
Customers payable1,553 3,985 
Other long-term liabilities(186)(685)
Net cash used in operating activities(18,488)(33,579)
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired (18,797)
Capital expenditures(5,021)(812)
Capitalization of software costs(3,364)(4,719)
Proceeds from (purchase of) held to maturity investments3,573 (40,015)
Net cash used in investing activities(4,812)(64,343)
Cash flows from financing activities:
Principal payments of long-term debt (525)
Treasury stock acquired from employees upon vesting or forfeiture of restricted stock(2,743)(2,711)
Proceeds from exercise of stock options912 1,268 
Net cash used in financing activities(1,831)(1,968)
Effect of exchange rate changes on cash and cash equivalents(508)975 
Net decrease in cash and cash equivalents and cash held on behalf of customers(25,639)(98,915)
Cash and cash equivalents and cash held on behalf of customers at beginning of period77,533 188,419 
Cash and cash equivalents and cash held on behalf of customers at end of period$51,894 $89,504 
Reconciliation of cash and cash equivalents and cash held on behalf of customers
Cash and cash equivalents$43,136 $85,519 
Cash held on behalf of customers8,758 3,985 
Total cash and cash equivalents and cash held on behalf of customers$51,894 $89,504 

See accompanying notes to unaudited interim condensed consolidated financial statements
7

PAR TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(unaudited)

Nine Months Ended September 30,
20232022
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest$4,022 $20 
Income taxes2,392 660 
Capitalized software recorded in accounts payable468 36 
Capital expenditures in accounts payable98 37 
Common stock issued for acquisition 6,300 
Acquisition contingent consideration recorded in other long-term liabilities 14,200 

See accompanying notes to unaudited interim condensed consolidated financial statements

8

PAR TECHNOLOGY CORPORATION
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1 — Summary of Significant Accounting Policies

Nature of Business

PAR Technology Corporation (the “Company” or “PAR,” “we,” or “us”), through its consolidated subsidiaries, operates in two segments - the Restaurant/Retail segment and the Government segment. The Restaurant/Retail segment provides leading technology platforms to the restaurant and retail industries. We provide enterprise restaurants, franchisees, and other restaurant outlets in the three major restaurant categories - quick service, fast casual, and table service - with operational efficiencies by offering them a comprehensive suite of subscription services, hardware, and professional services. Our subscription services are grouped into three categories: Guest Engagement, which includes Punchh for customer loyalty and engagement and MENU for omnichannel digital ordering and delivery; Operator Solutions, which includes Brink POS for front-of-house and PAR Pay and PAR Payment Services for payments; and Back Office, which includes Data Central. PAR's Government segment provides technical expertise and development of advanced systems and software solutions for the U.S. Department of Defense ("DoD"), the intelligence community and other federal agencies. Additionally, we provide support services for satellite command and control, communication, and information technology ("IT") systems at several DoD facilities worldwide. The Government segment has three principal contract offerings: intelligence, surveillance, and reconnaissance solutions, mission systems operations and maintenance, and commercial software products for use in analytic and operational environments that leverage geospatial intelligence data. The accompanying unaudited interim condensed consolidated financial statements ("financial statements") include the Company's accounts and those of its consolidated subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying financial statements of PAR Technology Corporation and its consolidated subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements as promulgated by the SEC. In the opinion of management, the Company's financial statements include all normal and recurring adjustments necessary in order to make the financial statements not misleading and to provide a fair presentation of the Company's financial results for the interim period included in this Quarterly Report. Interim results are not necessarily indicative of results for the full year or any future periods. The information included in this Quarterly Report should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2022 (the “2022 Annual Report”).

Revenue and Cost of Sales Presentation Changes

Beginning with the 2022 Annual Report, we retroactively split our "Service" financial statement line items ("FSLIs"), presented in the consolidated statements of operations under "Revenues, net" and "Cost of sales", into two FSLIs, "Subscription Service" and "Professional Service", to provide clearer insight into these operationally and economically different revenue streams in light of recent acquisitions. This change in presentation did not impact revenue or cost of sales reported in our consolidated statements of operations prior to this change. With the change in our presentation of “Service”, we also changed the FSLI "Product", previously presented in our consolidated statements of operations under "Revenue, net" and "Cost of sales", to "Hardware", to better describe this revenue stream.
Use of Estimates

The preparation of the financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to these estimates and assumptions include revenue recognition, stock-based compensation, the recognition and measurement of assets acquired and liabilities assumed in business combinations at fair value, the carrying amount of property, plant, and equipment including right-to-use assets and
9

liabilities, identifiable intangible assets and goodwill, valuation allowances for receivables, valuation of excess and obsolete inventories, and measurement of contingent consideration at fair value. Actual results could differ from those estimates.

Contingent Consideration

The acquisition date fair value of contingent consideration associated with the acquisition of MENU Technologies AG ("MENU") in July 2022 (the "MENU Acquisition") was determined using Monte-Carlo simulation valuation techniques, with significant inputs that are not observable in the market and thus are classified in Level 3 of the fair value hierarchy as defined in ASC Topic 820, Fair Value Measurement. The simulation uses probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. Significant increases or decreases to these inputs in isolation would result in a significantly higher or lower liability. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the liability on the acquisition date is reflected as cash used in financing activities in the Company's condensed consolidated statements of cash flows. Any amount paid in excess of the liability on the acquisition date is reflected as cash used in operating activities.

During the three months ended June 30, 2023, the MENU earn-out was amended to remove the EBITDA based threshold and reduce the future software as a service ("SaaS") annual recurring revenue threshold.

For the three months ended September 30, 2023, the Company did not make an adjustment to the fair value of the contingent consideration liability related to the MENU Acquisition. For the nine months ended September 30, 2023, the Company recorded a $7.5 million adjustment to decrease the fair value of the contingent consideration liability related to the MENU Acquisition from $9.8 million as of December 31, 2022 to $2.3 million as of September 30, 2023.

Gain on Insurance Proceeds

During the nine months ended September 30, 2023, the Company received $0.5 million of insurance proceeds in connection with the settlement of a legacy claim. No insurance proceeds were received during the nine months ended September 30, 2022.

Cash and Cash Equivalents and Cash Held on Behalf of Customers

Cash and cash equivalents and cash held on behalf of customers consist of the following:

(in thousands)September 30, 2023December 31, 2022
Cash and cash equivalents
Cash$43,096 $18,856 
Money market funds40 51,472 
Cash held on behalf of customers8,758 7,205 
Total cash and cash equivalents and cash held on behalf of customers$51,894 $77,533 

The Company maintained bank balances that, at times, exceeded the federally insured limit during the nine months ended September 30, 2023. The Company has not experienced losses relating to these deposits and management does not believe that the Company is exposed to any significant credit risk with respect to these amounts.








10

Short-Term Investments

The carrying value of investment securities consist of the following:

(in thousands)September 30, 2023December 31, 2022
Short-term investments
Treasury bills and notes36,717 40,290 
Total short-term investments$36,717 $40,290 

The Company did not record any material gains or losses on these securities during the nine months ended September 30, 2023. The estimated fair value of these securities approximated their carrying value as of September 30, 2023 and December 31, 2022.

Other Assets

Other assets include deferred implementation costs of $8.5 million and $7.4 million at September 30, 2023 and December 31, 2022, respectively. Based on ASC Topic 340, Other Assets and Deferred Costs, we capitalize and amortize incremental costs of fulfilling a contract over the period we expect to derive benefits from the contract, which we have determined as the initial term of a contract. We periodically adjust the carrying value of deferred implementation costs to account for customers ceasing operations or otherwise discontinuing use of our subscription services. Amortization expense is included in "Costs of sales: Professional service" in the Company's condensed consolidated statements of operations. Amortization of deferred implementation costs were $1.2 million and $0.7 million for the three months ended September 30, 2023 and 2022, respectively. Amortization of deferred implementation costs were $3.2 million and $1.6 million for the nine months ended September 30, 2023 and 2022, respectively.

Other assets also include the cash surrender value of life insurance related to the Company’s deferred compensation plan eligible to certain employees. The funded balance is reviewed on an annual basis. The balance of the life insurance policies was $3.2 million and $3.2 million at September 30, 2023 and December 31, 2022, respectively.

Accrued Expenses

As of September 30, 2023, accrued expenses include the contingent consideration liability recognized in conjunction with the MENU Acquisition (refer to “Contingent Consideration” above for additional information). During the three months ended September 30, 2023, the balance of the contingent consideration liability was reclassified from other long-term liabilities to accrued expenses. The balance of the contingent consideration liability included within accrued expenses was $2.3 million and zero at September 30, 2023, and December 31, 2022, respectively.

Other Long-Term Liabilities

As of December 31, 2022, other long-term liabilities include the contingent consideration liability recognized in conjunction with the MENU Acquisition (refer to “Contingent Consideration” above for additional information). During the three months ended September 30, 2023, the balance of the contingent consideration liability was reclassified from other long-term liabilities to accrued expenses. The balance of the contingent consideration liability included within other long-term liabilities was zero and $9.8 million at September 30, 2023, and December 31, 2022, respectively.

Additionally, other long-term liabilities include amounts owed to employees that participate in the Company’s deferred compensation plan. Amounts owed to employees participating in the deferred compensation plan were $1.6 million and $1.7 million at September 30, 2023 and December 31, 2022, respectively.







11

Related Party Transactions

During the nine months ended September 30, 2022, Act III Management LLC (“Act III Management”), a service company to the restaurant, hospitality, and entertainment industries, provided software development and restaurant technology consulting services to the Company pursuant to a master development agreement.

Additionally, during the nine months ended September 30, 2023, Ronald Shaich, the sole member of Act III Management, served as a strategic advisor to the Company's board of directors pursuant to a strategic advisor agreement, which terminated on June 1, 2023. Keith Pascal, a director of the Company, is an employee of Act III Management and serves as its vice president and secretary. Mr. Pascal does not have an ownership interest in Act III Management.

As of September 30, 2023 and December 31, 2022, the Company had zero accounts payable owed to Act III Management. During the three months ended September 30, 2023 and 2022, the Company paid Act III Management zero and $0.1 million, respectively, and during the nine months ended September 30, 2023 and 2022, the Company paid Act III Management $0.1 million and $0.6 million, respectively, for services performed under the master development and strategic advisor agreements.

Recently Adopted Accounting Pronouncements

There were no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2023 that are of significance or potential significance to the Company.

Note 2 — Revenue Recognition
Performance Obligations Outstanding
The Company's performance obligations outstanding represent the transaction price of firm, non-cancellable orders, with expected delivery dates to customers after September 30, 2023 and December 31, 2022, respectively, for work that has not yet been performed. The aggregate incomplete performance obligations attributable to each of the Company's reporting segments is as follows:
September 30, 2023December 31, 2022
Current under one yearNon-current over one yearCurrent under one yearNon-current over one year
Restaurant/Retail$8,070 $4,329 $8,459 $5,125 
Government    
Total$8,070 $4,329 $8,459 $5,125 

Deferred revenue is recorded when cash payments are received or due in advance of revenue recognition from subscription services and professional services. The timing of revenue recognition may differ from when customers are invoiced. The changes in deferred revenue, inclusive of both current and long-term, are as follows:

(in thousands)20232022
Beginning balance - January 1$13,584 $20,046 
Acquired deferred revenue (Note 3) 443 
Recognition of deferred revenue(19,074)(28,493)
Deferral of revenue17,889 24,837 
Ending balance - September 30$12,399 $16,833 
The above tables exclude customer deposits of $2.0 million and $1.7 million as of the nine months ended September 30, 2023 and 2022, respectively. All deferred revenue relates to subscription services and professional services. These balances are recognized on a straight-line basis over the life of the contract, with the majority of the balance being recognized within the next twelve months.


12

In the Restaurant/Retail segment most performance obligations relate to subscription service and professional service contracts, approximately 65% of which the Company expects to fulfill within 12 months of September 30, 2023. Most performance obligations greater than one year relate to professional service contracts that the Company expects to fulfill within 36 months of September 30, 2023. The Company expects to fulfill 100% of subscription service and professional service contracts within 60 months of September 30, 2023. At September 30, 2023 and December 31, 2022, transaction prices allocated to future performance obligations were $12.4 million and $13.6 million, respectively.

During the three months ended September 30, 2023 and 2022, the Company recognized revenue included in deferred revenue at the beginning of each respective period of $2.7 million and $3.1 million. During the nine months ended September 30, 2023 and 2022, the Company recognized revenue included in deferred revenue at the beginning of each respective period of $8.7 million and $12.7 million.

In the Government segment, the value of existing contracts at September 30, 2023, net of amounts relating to work performed to that date, was approximately $327.5 million, of which $88.3 million was funded, and at December 31, 2022, the value of existing contracts, net of amounts relating to work performed to that date, was approximately $333.9 million, of which $86.5 million was funded. The value of existing contracts in the Government segment, net of amounts relating to work performed at September 30, 2023, is expected to be recognized as revenue over time as follows:

(in thousands)
Next 12 months$169,076 
Months 13-24127,274 
Months 25-3616,631 
Thereafter14,504 
Total$327,485 

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers by major product line for each of its reporting segments because the Company believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by contract terms and economic factors.

Disaggregated revenue is as follows:
Three Months Ended September 30, 2023
(in thousands)Restaurant/Retail
point in time
Restaurant/Retail
over time
Government point in timeGovernment
over time
Hardware$25,824 $ $ $ 
Subscription service 31,363   
Professional service4,272 7,242   
Mission systems   8,808 
Intelligence, surveillance, and reconnaissance solutions
   29,275 
Commercial software  190 160 
Total$30,096 $38,605 $190 $38,243 
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Three Months Ended September 30, 2022
(in thousands)Restaurant/Retail
point in time
Restaurant/Retail
over time
Government point in timeGovernment
over time
Hardware$31,343 $ $ $ 
Subscription service 25,170   
Professional service4,276 7,564   
Mission systems   8,982 
Intelligence, surveillance, and reconnaissance solutions
   14,710 
Commercial software  541 181 
Total$35,619 $32,734 $541 $23,873 
Nine Months Ended September 30, 2023
Restaurant/Retail
point in time
Restaurant/Retail
over time
Government point in timeGovernment
over time
Hardware$78,991 $ $ $ 
Subscription service 89,700   
Professional service16,467 21,656   
Mission systems   27,408 
Intelligence, surveillance, and reconnaissance solutions   73,000 
Commercial software  401 492 
Total$95,458 $111,356 $401 $100,900 
Nine Months Ended September 30, 2022
Restaurant/Retail
point in time
Restaurant/Retail
over time
Government point in timeGovernment
over time
Hardware$84,820 $ $ $ 
Subscription service 69,591   
Professional service13,117 23,842   
Mission systems   26,781 
Intelligence, surveillance, and reconnaissance solutions   38,746 
Commercial software  753 495 
Total$97,937 $93,433 $753 $66,022 

Note 3 — Acquisitions

MENU Acquisition

On July 25, 2022, ParTech, Inc. ("ParTech") acquired 100% of the stock of MENU, a restaurant technology company offering fully integrated omnichannel ordering solutions to restaurants worldwide, for purchase consideration of approximately $18.4 million paid in cash and $6.3 million paid in shares of Company common stock. 162,917 shares of common stock were issued as purchase consideration, determined using a fair value share price of $38.67. In addition, the sellers have the opportunity to earn additional cash and Company common stock consideration over an earn-out period ending July 31, 2024, primarily based on MENU's future SaaS annual recurring revenues. As of the date of acquisition, the Company determined the fair value of the MENU earn-out to be $14.2 million.

The transaction was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. Accordingly, assets acquired and liabilities assumed have been accounted for at their determined respective fair values as of the date of acquisition. The fair value determinations were based on management's best estimates and assumptions, and with the assistance of independent valuation and tax consultants.
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During the three months ended March 31, 2023, the fair values of assets and liabilities as of July 25, 2022, were finalized with no adjustments from the preliminary purchase price allocation.

The following table presents management's final purchase price allocation:

(in thousands)Purchase price allocation
Cash$843
Accounts receivable209
Property and equipment204
Developed technology10,700
Prepaid and other acquired assets221
Goodwill28,495
Total assets40,672
Accounts payable and accrued expenses1,300
Deferred revenue443
Earn-out liability14,200
Consideration paid$24,729

The Company determined the acquisition date fair value of contingent consideration associated with the MENU earn-out using a Monte Carlo simulation of a discounted cash flow model, with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820, Fair Value Measurement; refer to "Note 12 - Fair Value of Financial Instruments".

The estimated fair value of acquired developed technology was determined utilizing the "multi-period excess earnings method", which is predicated upon the calculation of the net present value of after-tax net cash flows respectively attributable to each asset. The acquired developed technology asset is being amortized on a straight-line basis over its estimated useful life of seven years.

Consideration paid in cash on the date of acquisition included $3.0 million deposited into an escrow account administered by a third party, to be held for up to 18-months following the date of acquisition, to fund potential post-closing adjustments and obligations.

During the third and fourth quarter of 2022, the Company incurred acquisition expenses related to its acquisition of MENU of approximately $1.1 million.

The Company has not presented combined pro forma financial information of the Company and MENU because the results of operations of the acquired business are considered immaterial.

Note 4 — Accounts receivable, net

The Company’s net accounts receivables consist of:

(in thousands)September 30, 2023December 31, 2022
Government segment$21,895 $17,320 
Restaurant/Retail segment44,546 42,640 
Accounts receivable, net$66,441 $59,960 

Accounts receivables recorded as of September 30, 2023 and December 31, 2022 represent unconditional rights to payments from customers. At September 30, 2023 and December 31, 2022, the Company had current expected credit loss of $2.2 million and $2.1 million, respectively, against accounts receivable for the Restaurant/Retail segment.
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Changes in the current expected credit loss for the nine months ended September 30 were:

(in thousands)20232022
Beginning Balance - January 1$2,134 $1,306 
Provisions783 739 
Write-offs(734)(263)
Ending Balance - September 30$2,183 $1,782 

Note 5 — Inventories, net

Inventories are used in the assembly and service of Restaurant/Retail hardware. The components of inventory, adjusted for reserves, consisted of the following:

(in thousands)September 30, 2023December 31, 2022
Finished goods$13,418 $21,998 
Work in process241 383 
Component parts9,612 13,749 
Service parts922 1,464 
Inventories, net$24,193 $37,594 

At September 30, 2023 and December 31, 2022, the Company had excess and obsolescence reserves of $9.6 million and $10.9 million, respectively, against inventories.
Note 6 — Identifiable Intangible Assets and Goodwill

The Company's identifiable intangible assets represent intangible assets acquired in acquisitions and software development costs. The components of identifiable intangible assets are:
(in thousands)September 30, 2023December 31, 2022Estimated
Useful Life
Weighted-Average Amortization Period
Acquired developed technology $119,800 $119,800 
3 - 7 years
4.59 years
Internally developed software costs34,986 32,274 3 years1.86 years
Customer relationships12,360 12,360 7 years4.13 years
Trade names1,410 1,410 
2 - 5 years
1.25 years
Non-competition agreements30 30 1 year1 year
 168,586 165,874  
Impact of currency translation on intangible assets430 304 
Less: accumulated amortization(81,879)(63,386) 
 87,137 102,792  
Internally developed software costs not meeting general release threshold3,225 2,105 
Trademarks, trade names (non-amortizable)6,200 6,200 Indefinite
 $96,562 $111,097 

Software costs placed into service during the three months ended September 30, 2023 and 2022, were $0.4 million and $1.4 million, respectively. Software costs placed into service during the nine months ended September 30, 2023 and 2022, were $2.7 million and $4.3 million, respectively.



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The following table summarizes amortization expense for acquired developed technology and internally developed software:

Three Months Ended September 30,Nine Months Ended
September 30,
(in thousands)2023202220232022
Amortization of acquired developed technology$4,020 $4,219 $12,160 $11,519 
Amortization of internally developed software1,555 1,749 4,892 5,053 
Impact of foreign currency translation on intangible assets215  (126) 

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

(in thousands)
2023, remaining$6,089 
202421,949 
202520,328 
202617,912 
202714,747 
Thereafter6,112 
Total$87,137 

Goodwill carried by the Restaurant/Retail and Government segments is as follows:

(in thousands)
Beginning balance - December 31, 2022$486,762 
Foreign currency translation311 
Ending balance - September 30, 2023$487,073 
Note 7 — Debt

Convertible Senior Notes

The following table summarizes information about the net carrying amounts of long-term debt, consisting of the 4.500% Convertible Senior Notes due 2024 (the “2024 Notes”), 2.875% Convertible Senior Notes due 2026 (the “2026 Notes”), and the 1.50% Convertible Senior Notes due 2027 (the “2027 Notes”, and together with the 2024 Notes and 2026 Notes, the “Senior Notes”), as of September 30, 2023:

(in thousands)2024 Notes2026 Notes2027 NotesTotal