PAR Technology Corporation Announces 2019 Third Quarter Results and Announces Plans to Acquire Industry Leading Restaurant Backoffice Software Provider – Restaurant Magic

NEW HARTFORD, N.Y.–(BUSINESS WIRE)–PAR Technology Corporation (NYSE:PAR) (“PAR Technology” or the “Company”) today announced its results for its third quarter ended September 30, 2019.

Summary of Fiscal 2019 Third Quarter and Year-to-Date Financial Results

  • Revenues were reported at $45.4 million for the third quarter of 2019, compared to $46.4 million for the same period in 2018, a 2.2% decrease.
  • GAAP net loss for the third quarter of 2019 was $5.9 million, or $0.36 loss per share, a decrease from the GAAP net loss of $16.7 million, or $1.04 loss per share reported for the same period in 2018.
  • Non-GAAP net loss for the third quarter of 2019 was $4.2 million, or $0.26 loss per share, compared to non-GAAP net loss of $1.0 million, or $0.06 loss per share, for the same period in 2018.
  • Revenues were reported at $134.3 million for the first nine months of 2019, compared to $154.6 million for the same period in 2018, a 13.1% decrease.
  • GAAP net loss for the first nine months of 2019 was $9.7 million, or $0.61 loss per share, a decrease from the GAAP net loss of $18.0 million, or $1.12 loss per share reported for the same period in 2018.
  • Non-GAAP net loss for the first nine months of 2019 was $5.9 million, or $0.37 loss per share, compared to non-GAAP net loss of $1.1 million or $0.07 loss per share, for the same period in 2018.

A reconciliation and description of non-GAAP financial measures to corresponding GAAP financial measures are included in the tables at the end of this press release.

PAR Technology also announced that its wholly owned subsidiary, ParTech, Inc., has entered into an interest purchase agreement to acquire AccSys, LLC (f/k/a AccSys, Inc. and otherwise known as Restaurant Magic (“Restaurant Magic”)), a restaurant software company located in Tampa, FL and the developers of Data Central. Data Central is a suite of cloud backoffice applications to help restaurants achieve operational and financial goals. The purchase price of $42 million for Restaurant Magic will be financed primarily through cash and equity. The acquisition is expected to close during the fourth quarter of 2019.

Savneet Singh, PAR Technology CEO & President commented, “I am very pleased to announce that PAR has signed a definitive agreement to acquire Restaurant Magic, a leader in backoffice subscription software for enterprise restaurants. Restaurant Magic’s software leverages business intelligence and automation technologies to decrease food costs, manage labor and improve overall customer service. This announcement today marks another significant milestone in the rapid evolution of PAR Technology. Our Company continues to transform itself as we build out our restaurant technology solutions, led by our Brink POS software, to be the leading cloud technology provider for enterprise restaurants. I’m extremely excited to announce the merging of two powerful entities to create the premier restaurant technology company delivering the required and critical services that are fundamentally changing how restaurants operate around the world. Combining Restaurant Management with our leading Brink POS software will alter how enterprise restaurants communicate, access data, conduct commerce and manage their businesses across rapidly converging tech platforms.”

“We are thrilled to be joining forces with PAR Technology. Our decision to become a part of PAR was based upon our belief that by combining our companies we will provide new and stronger opportunities to our clients and employees,” said Drew Peloubet, CEO of Restaurant Magic. “The goal of our company has always been to maintain continual growth for our company to better meet the needs of our customers, while fiercely protecting the investment our end users have made in deploying our backoffice software applications. Restaurant Magic’s suite of enterprise applications and services are an excellent fit with PAR Technology’s popular restaurant technology offerings, and together will provide customers throughout the restaurant industry with the most robust set of solutions in the marketplace. The combination of PAR and Restaurant Magic will immediately create an industry leading front to backend cloud technology solution for restaurants.”

Mr. Singh continued, “To report on the quarter, we continued to execute our business strategies for growth through investments in product development and acquisitions. Importantly, we’ve begun to see acceleration in Brink bookings and believe this trend will continue. This increase in bookings is primarily related to the dramatic set of changes we made earlier in the year and we expect a stronger pace of bookings in 2020. Our purchase of 3M Company’s Drive-Thru Communications Systems business has also been exceeding our expectations since we closed on the deal September 30th, leading to additional Brink POS prospects and a number of ancillary software opportunities. In regards to our Government segment, we again reported lower comparative revenues from the same period in 2018, as we navigate funding gaps with specific ISR contract vehicles. Although we are confident this is a timing issue that will be corrected in the coming quarters, we will manage this aggressively in the near-term.”

Highlights of the Third Quarter 2019:

— Brink ARR* at end of Q3 ’19 now totals $17.9 million – an increase of 30% and $4.1 million from end of Q3 ’18

— New store activations in Q3 totaled 630 sites

— Brink bookings in Q3 ’19 – 961 restaurants – a 41% increase from Q2 ‘19

— Active Brink sites as of October 14th – now total 9,300 restaurants (net of churn)

— Brink Open Orders (backlog) totaled 682 stores at end of Q3

— Brink bookings in Q3′ 19 ASP** = over $200 per month

*ARR – Run rate of annual recurring revenues – SaaS and support revenues

**ASP – Average selling price SaaS and support revenues

Conference Call.

There will be a conference call at 4:30 p.m. (Eastern) on November 7, 2019, during which the Company’s management will discuss the financial results for the third quarter ended September 30, 2019. To participate in the call, please call 844-419-5412, approximately 10 minutes in advance. No passcode is required to participate in the live call or to listen to the replay version. Individual & Institutional Investors will have the opportunity to listen to the conference call/event over the internet by visiting the Company’s website at www.partech.com/about/news. Alternatively, listeners may access an archived version of the presentation call after 7:30 p.m. on November 7, 2019 through November 14, 2019 by dialing 855-859-2056 and using conference ID 9384228.

About PAR Technology Corporation.

PAR Technology Corporation’s stock is traded on the New York Stock Exchange under the symbol “PAR”. PAR’s Restaurant/Retail reporting segment has been a leading provider of restaurant and retail technology for more than 40 years. PAR offers management technology solutions for the full spectrum of restaurant operations, from large chain and independent table service restaurants to international quick service chains. PAR products can be found in retailers, cinemas, cruise lines, stadiums, and food service companies. PAR’s Government reporting segment is a leader in providing computer-based system design, engineering and technical services to the Department of Defense and various federal agencies. For more information visit http://www.partech.com or connect with us on Facebook and Twitter.

Forward-Looking Statements.

This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature, but rather are predictive of the Company’s future operations, financial condition, business strategies and prospects. Forward-looking statements are generally identified by words such as “anticipate”, “believe,” “belief,” “continue,” “could,” “expect,” “estimate,” “intend,” “may,” “opportunity,” “plan,” “should,” “will,” “would,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategies, that are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements, including the risk that the transaction among the Company and Restaurant Magic, with others, does not close; uncertainties as to the timing of the closing of the transaction; potential business uncertainties relating to the transaction, including potential disruptions to the Company’s business and operational relationships; the Company’s ability to achieve anticipated synergies, and the anticipated costs, timing and complexity of integration; delays in new product development and/or product introduction; changes in customer base and product, and services demands; and prevailing economic conditions, including fluctuations in supply of, demand for, and pricing of, the Company’s products and services. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and the Company’s other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

 

Assets

 

(unaudited)

September 30, 2019

 

 

(Note 1)

December 31, 2018

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,947

 

 

$

3,485

 

Accounts receivable – net

 

 

28,563

 

 

 

26,219

 

Inventories – net

 

 

19,081

 

 

 

22,737

 

Asset held for sale

 

 

3,350

 

 

 

 

Other current assets

 

 

5,185

 

 

 

3,251

 

Total current assets

 

 

103,126

 

 

 

55,692

 

Property, plant and equipment – net

 

 

14,736

 

 

 

12,575

 

Goodwill

 

 

13,418

 

 

 

11,051

 

Intangible assets – net

 

 

13,895

 

 

 

10,859

 

Operating lease right-of-use assets

 

 

2,999

 

 

 

 

Other assets

 

 

4,395

 

 

 

4,504

 

Total Assets

 

$

152,569

 

 

$

94,681

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Borrowings of line of credit

 

$

 

 

$

7,819

 

Accounts payable

 

 

8,929

 

 

 

12,644

 

Accrued salaries and benefits

 

 

7,419

 

 

 

5,940

 

Accrued expenses

 

 

3,095

 

 

 

2,113

 

Operating lease liabilities – current portion

 

 

1,182

 

 

 

 

Customer deposits and deferred service revenue

 

 

10,823

 

 

 

9,851

 

Liability held for sale

 

 

511

 

 

 

 

Other current liabilities

 

 

 

 

 

2,550

 

Total current liabilities

 

 

31,959

 

 

 

40,917

 

Operating lease liabilities – net of current portion

 

 

1,866

 

 

 

 

Deferred revenue – noncurrent

 

 

4,148

 

 

 

4,407

 

Long-term debt

 

 

60,137

 

 

 

 

Other long-term liabilities

 

 

3,903

 

 

 

3,411

 

Total liabilities

 

 

102,013

 

 

 

48,735

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, $.02 par value, 1,000,000 shares authorized

 

 

 

 

 

 

Common stock, $.02 par value, 29,000,000 shares authorized; 18,053,477 and 17,879,761 shares issued, 16,345,368 and 16,171,652 outstanding at September 30, 2019 and December 31, 2018, respectively

 

 

362

 

 

 

357

 

Capital in excess of par value

 

 

64,832

 

 

 

50,251

 

(Accumulated deficit) retained earnings

 

 

(4,313

)

 

 

5,427

 

Accumulated other comprehensive loss

 

 

(4,489

)

 

 

(4,253

)

Treasury stock, at cost, 1,708,109 shares

 

 

(5,836

)

 

 

(5,836

)

Total shareholders’ equity

 

 

50,556

 

 

 

45,946

 

Total Liabilities and Shareholders’ Equity

 

$

152,569

 

 

$

94,681

 

See notes to unaudited interim consolidated financial statements included in the Quarterly Report on Form 10-Q.

 

Note 1 – The balance sheet at December 31, 2018 has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the U.S. Securities and Exchange Commission (“SEC”).

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

15,904

 

 

$

15,451

 

 

$

46,149

 

 

$

62,658

 

Service

 

 

13,937

 

 

 

13,475

 

 

 

41,514

 

 

 

40,615

 

Contract

 

 

15,539

 

 

 

17,436

 

 

 

46,646

 

 

 

51,321

 

 

 

 

45,380

 

 

 

46,362

 

 

 

134,309

 

 

 

154,594

 

Costs of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

12,259

 

 

 

12,065

 

 

 

34,912

 

 

 

46,844

 

Service

 

 

9,241

 

 

 

10,248

 

 

 

29,144

 

 

 

30,000

 

Contract

 

 

14,643

 

 

 

15,511

 

 

 

42,679

 

 

 

46,005

 

 

 

 

36,143

 

 

 

37,824

 

 

 

106,735

 

 

 

122,849

 

Gross margin

 

 

9,237

 

 

 

8,538

 

 

 

27,574

 

 

 

31,745

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

9,539

 

 

 

7,967

 

 

 

27,162

 

 

 

25,587

 

Research and development

 

 

3,448

 

 

 

2,992

 

 

 

9,233

 

 

 

9,082

 

Amortization of identifiable intangible assets

 

 

241

 

 

 

241

 

 

 

724

 

 

 

724

 

 

 

 

13,228

 

 

 

11,200

 

 

 

37,119

 

 

 

35,393

 

Operating loss

 

 

(3,991

)

 

 

(2,662

)

 

 

(9,545

)

 

 

(3,648

)

Other (expense) income, net

 

 

(401

)

 

 

455

 

 

 

(1,205

)

 

 

120

 

Interest expense, net

 

 

(1,588

)

 

 

(142

)

 

 

(2,978

)

 

 

(261

)

Loss before benefit from (provision for) income taxes

 

 

(5,980

)

 

 

(2,349

)

 

 

(13,728

)

 

 

(3,789

)

Benefit from (provision for) income taxes

 

 

78

 

 

 

(14,355

)

 

 

3,988

 

 

 

(14,170

)

Net loss

 

$

(5,902

)

 

$

(16,704

)

 

$

(9,740

)

 

$

(17,959

)

Basic Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(0.36

)

 

$

(1.04

)

 

$

(0.61

)

 

$

(1.12

)

Diluted Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(0.36

)

 

$

(1.04

)

 

$

(0.61

)

 

$

(1.12

)

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

16,300

 

 

 

16,071

 

 

 

16,086

 

 

 

16,033

 

Diluted

 

 

16,300

 

 

 

16,071

 

 

 

16,086

 

 

 

16,033

 

See notes to unaudited interim consolidated financial statements included in the Quarterly Report on Form 10-Q

PAR TECHNOLOGY CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share and per share data)

(Unaudited)

 

 

 

For the three months ended

September 30, 2019

 

 

For the three months ended

September 30, 2018

 

 

 

Reported

basis

(GAAP)

 

 

Adjustments

 

 

Comparable

basis (Non-

GAAP)

 

 

Reported

basis

(GAAP)

 

 

Adjustments

 

 

Comparable

basis (Non-

GAAP)

 

Net revenues

 

$

45,380

 

 

$

 

 

$

45,380

 

 

$

46,362

 

 

$

 

 

$

46,362

 

Costs of sales

 

 

36,143

 

 

 

207

 

 

 

35,936

 

 

 

37,824

 

 

 

 

 

 

37,824

 

Gross margin

 

 

9,237

 

 

 

207

 

 

 

9,444

 

 

 

8,538

 

 

 

 

 

 

8,538

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

9,539

 

 

 

1,091

 

 

 

8,448

 

 

 

7,967

 

 

 

785

 

 

 

7,182

 

Research and development

 

 

3,448

 

 

 

 

 

 

3,448

 

 

 

2,992

 

 

 

 

 

 

2,992

 

Acquisition amortization

 

 

241

 

 

 

241

 

 

 

 

 

 

241

 

 

 

241

 

 

 

 

Total operating expenses

 

 

13,228

 

 

 

1,332

 

 

 

11,896

 

 

 

11,200

 

 

 

1,026

 

 

 

10,174

 

Operating (loss) income

 

 

(3,991

)

 

 

1,539

 

 

 

(2,452

)

 

 

(2,662

)

 

 

1,026

 

 

 

(1,636

)

Other (expense) income, net

 

 

(401

)

 

 

 

 

 

(401

)

 

 

455

 

 

 

 

 

 

455

 

Interest (expense) income, net

 

 

(1,588

)

 

 

706

 

 

 

(882

)

 

 

(142

)

 

 

 

 

 

(142

)

(Loss) income before benefit from (provision for) income taxes

 

 

(5,980

)

 

 

2,245

 

 

 

(3,735

)

 

 

(2,349

)

 

 

1,026

 

 

 

(1,323

)

Benefit from (provision for) income taxes

 

 

78

 

 

 

(539

)

 

 

(461

)

 

 

(14,355

)

 

 

14,648

 

 

 

293

 

Net loss

 

$

(5,902

)

 

 

 

 

 

$

(4,196

)

 

$

(16,704

)

 

 

 

 

 

$

(1,030

)

Loss per diluted share

 

$

(0.36

)

 

 

 

 

 

$

(0.26

)

 

$

(1.04

)

 

 

 

 

 

$

(0.06

)

About Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP. However, non-GAAP adjusted financial measures, as set forth in the reconciliation table above, are provided because management uses these non-GAAP financial measures in evaluating the results of the Company’s continuing operations and believes this information provides investors supplemental insight into underlying business trends and operating results. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, these non-GAAP financial measures should be read in conjunction with the Company’s financial statements prepared in accordance with GAAP.

The Company’s results of operations are impacted by certain non-recurring charges, including equity based compensation, acquisition and divestiture related expenditures, expense related to the internal investigation into conduct in China and Singapore (the “China/Singapore internal investigation”), and other non-recurring charges that may not be indicative of the Company’s financial performance. Management believes that adjusting its operating expenses, operating loss, net loss and diluted loss per share to remove non-recurring charges provides a useful perspective with respect to the Company’s operating results and provides supplemental information to both management and investors by removing items that are difficult to predict and are often unanticipated. While the Company believes the adjustments provide a useful comparison, the reconciliations of non-GAAP financial measures to corresponding GAAP measures should be carefully evaluated.

During the third quarter of 2019, the Company recorded approximately $207,000 of expenses related to the expected sale of its SureCheck product group within the Company’s Restaurant/Retail reporting segment. This represents approximately $217,000 included in costs of sales related to a reserve for inventory and an approximately $10,000 decrease in costs of service related to the impairment of intangible assets for the SureCheck product group. The Company recorded approximately $105,000 of expenses related to the Company’s continued cooperation with the Singapore authorities in connection with the findings of the completed China/Singapore internal investigation. Additionally, approximately $986,000 of equity based compensation charges were recorded during the third quarter of 2019. The Company recognized amortization of acquired intangible assets of approximately $241,000 related to the Company’s 2014 acquisition of Brink Software, Inc. (the “Brink Acquisition”). The provision for income tax was netted down by a 24%, or approximately $539,000, tax impact from non-GAAP adjustments. Further, the Company recognized approximately $706,000 accretion of interest related to the Company’s 4.5% Convertible Senior Notes due 2024 (the “Notes”).

During the third quarter of 2018, the Company recorded $305,000 of selling, general and administrative expenses related to the internal investigation into conduct at the Company’s China and Singapore offices and the SEC subpoena. Additionally, $323,000 of equity based compensation charges were recorded during the third quarter of 2018. There were $157,000 of severance expenses recorded in the third quarter. The Company recognized amortization of acquired intangible assets of $241,000 related to the Brink Acquisition and recorded a one-time $14,894,000 valuation allowance to reduce the carrying value of its deferred tax assets pursuant to FASB ASC 740. The valuation allowance was offset by $0.3 million or 24% representing the tax impact of non-GAAP adjustments.

PAR TECHNOLOGY CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share and per share data)

(Unaudited)

 

 

 

For the nine months ended

September 30, 2019

 

 

For the nine months ended

September 30, 2018

 

 

 

Reported

basis

(GAAP)

 

 

Adjustments

 

 

Comparable

basis (Non-

GAAP)

 

 

Reported

basis

(GAAP)

 

 

Adjustments

 

 

Comparable

basis (Non-

GAAP)

 

Net revenues

 

$

134,309

 

 

$

 

 

$

134,309

 

 

$

154,594

 

 

$

 

 

$

154,594

 

Costs of sales

 

 

106,735

 

 

 

1,719

 

 

 

105,016

 

 

 

122,849

 

 

 

 

 

 

122,849

 

Gross margin

 

 

27,574

 

 

 

1,719

 

 

 

29,293

 

 

 

31,745

 

 

 

 

 

 

31,745

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

27,162

 

 

 

2,549

 

 

 

24,613

 

 

 

25,587

 

 

 

1,904

 

 

 

23,683

 

Research and development

 

 

9,233

 

 

 

108

 

 

 

9,125

 

 

 

9,082

 

 

 

 

 

 

9,082

 

Acquisition amortization

 

 

724

 

 

 

724

 

 

 

 

 

 

724

 

 

 

724

 

 

 

 

Total operating expenses

 

 

37,119

 

 

 

3,381

 

 

 

33,738

 

 

 

35,393

 

 

 

2,628

 

 

 

32,765

 

Operating (loss) income

 

 

(9,545

)

 

 

5,100

 

 

 

(4,445

)

 

 

(3,648

)

 

 

2,628

 

 

 

(1,020

)

Other (expense) income, net

 

 

(1,205

)

 

 

 

 

 

(1,205

)

 

 

120

 

 

 

 

 

 

120

 

Interest (expense) income, net

 

 

(2,978

)

 

 

1,279

 

 

 

(1,699

)

 

 

(261

)

 

 

 

 

 

(261

)

(Loss) income before benefit from (provision for) income taxes

 

 

(13,728

)

 

 

6,379

 

 

 

(7,349

)

 

 

(3,789

)

 

 

2,628

 

 

 

(1,161

)

Benefit from (provision for) income taxes

 

 

3,988

 

 

 

(2,534

)

 

 

1,454

 

 

 

(14,170

)

 

 

14,264

 

 

 

94

 

Net loss

 

$

(9,740

)

 

 

 

 

 

$

(5,895

)

 

$

(17,959

)

 

 

 

 

 

$

(1,067

)

Loss per diluted share

 

$

(0.61

)

 

 

 

 

 

$

(0.37

)

 

$

(1.12

)

 

 

 

 

 

$

(0.07

)

During the nine months ended September 30, 2019, the Company recorded $1,576,000 of expenses related to the expected sale of its SureCheck product group within the Company’s Restaurant/Retail reporting segment, this represents $798,000 related to reserve for inventory and $778,000 in costs of service related to impairment of intangible assets for the SureCheck product group. The Company recorded $395,000 of expenses related to the China/Singapore internal investigation and severance expenses of $143,000 in cost of sales and $316,000 in selling, general and administrative expenses and $108,000 in research and development expenses. Additionally, $1,838,000 of equity based compensation charges were recorded during the nine months ended September 30, 2019. The Company recognized amortization of acquired intangible assets of $724,000 related to the Brink Acquisition. The provision for income tax was netted down by a 24%, or $1,531,000, tax impact from non-GAAP adjustments as well as a $4,065,000 tax benefit relating to the sale of the Notes. Further, the Company recognized $1,279,000 accretion of interest related to the Notes.

During the nine months ended September 30, 2018, the Company recorded $916,000 of selling, general and administrative expenses related to the internal investigation into conduct at the Company’s China and Singapore offices and the SEC subpoena. Additionally, $754,000 of equity based compensation charges were recorded during the first nine months of 2018. There were $234,000 of severance expenses recorded in the first nine months of 2018. The Company recognized amortization of acquired intangible assets of $724,000 related to the Brink Acquisition and recorded a one-time $14,894,000 valuation allowance to reduce the carrying value of its deferred tax assets pursuant to FASB ASC 740. The valuation allowance was offset by $0.6 million or 24% representing the tax impact of non-GAAP adjustments.

Contacts

Christopher R. Byrnes (315) 738-0600 ext. 6226

cbyrnes@partech.com, www.partech.com

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