8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)November 26, 2007

Datawatch Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdictionof Incorporation)

000-19960	02-0405716
(Commission File Number)	(IRS Employer Identification No.)

Quorum Office Park 271 Mill Road Chelmsford, Massachusetts	01824
(Address of Principal Executive Offices)	(Zip Code)

(978) 441-2200

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On November 27, 2007, Datawatch Corporation (the “Company”) issued a press release regarding its financial results for its quarter and fiscal year ended September 30, 2007.  A copy of the press release is furnished as Exhibit 99.1 to this report.

The information in this Item 2.02, including in Exhibit 99.1 attached hereto, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 5.02 Departure of Directors or Certain Officers; Election of Director; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On November 26, 2007, the Board of Directors of the Company approved discretionary bonus payments to executive officers of the Company.  The bonus payments were for fiscal year 2007, which ended on September 30, 2007.  The bonuses for executive officers were as follows:

Name and Title	Bonus
Robert W. Hagger President and Chief Executive Officer	$	153,000
Ken Bero Chief Operating Officer	$	81,000
John H. Kitchen Senior Vice President, Server and Desktop Solutions	$	54,000
Murray Fish Chief Financial Officer	$	14,000

The Compensation and Stock Committee of the Board of Directors (the “Committee”) also approved a fiscal 2008 Corporate Officers Compensation Plan, which provides that up to 15% of the Company’s net income (before the grant of any awards) is to be available in the aggregate for bonus payments to the Company’s executive officers at the end of the 2008 fiscal year.  The Committee will have the final authority to determine whether any bonuses are paid and if so, the amount of such bonuses.  The Committee reserves the right to make adjustments to the plan at any time.  At the Committee’s discretion, amounts intended for the bonus pool may be accrued at the end of each fiscal quarter, but no amounts will be awarded until the results for the 2008 fiscal year are available.

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Item 9.01 Financial Statements and Exhibits

(d)           Exhibits

The following Exhibit is filed as part of this report:

Exhibit No. Description

99.1 Press Release dated November 27, 2007

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SIGNATURES

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

	DATAWATCH CORPORATION
Date:               November 27, 2007
	By:  /s/ Robert W. Hagger
	Name:   Robert W. Hagger
	Title:     President and Chief Executive Officer

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EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

DATAWATCH CORPORATION REPORTS RESULTS FOR FOURTH QUARTER AND FISCAL YEAR END 2007

§   Year-over-Year Quarterly Revenue Grows 29%

§   Annual Revenue Increases 21%

§   Company Returns to Profitability with $1.7M in Annual Net Income

Chelmsford, MA—November 27, 2007—Datawatch Corporation (NASDAQ-CM: DWCH), a leader in Enterprise Information Management (EIM), today announced results for its fourth quarter and fiscal year ended September 30, 2007.

Revenues for the quarter ended September 30, 2007 were $6,851,000, up by 29 percent when compared to $5,326,000 for the quarter ended September 30, 2006. Net income for the fourth quarter of fiscal 2007 was $829,000, or $0.14 per diluted share, compared to a net loss of $(530,000), or $(0.10) per diluted share, for the fourth quarter of fiscal 2006.

Revenues for the year ended September 30, 2007 were $25,259,000, up by 21 percent when compared to $20,811,000 for the year ended September 30, 2006. Net income for the year ended September 30, 2007 was $1,669,000, or $0.28 per diluted share, compared to a net loss of $(555,000), or $(0.10) per diluted share, for the year ended September 30, 2006.

As of September 30, 2007, the company had $3,841,000 in net cash and cash equivalents, an increase of $1,979,000, or 106 percent, compared to September 30, 2006. In February 2007, the company also completely paid down its loan of $1,000,000 and has no long-term debt.

Commenting on the year-end results, President and CEO Robert W. Hagger said, “We are very pleased with the double-digit revenue growth we experienced in both the current quarter and the full fiscal year. Our strong management team has been built with future company growth in mind.  Over the past year, we have strategically reorganized the business; centralizing development, support and services to prepare us for this growth. Since Ken Bero, COO and senior VP of sales, joined us from Business Objects in June 2006, he and his team have done a tremendous job helping me to reposition the company.”

On October 22, 2007, the company announced that Mr. Hagger will retire from his position as president and CEO effective December 31, 2007. The Board of Directors named Mr. Bero as his successor, with his appointment to be effective on January 1, 2008.

“Datawatch’s leadership position in the EIM market allows us to take advantage of the increasing intersection of Business Intelligence and Content Management, as evidenced by strong sales and critical strategic partnerships with companies including Microsoft, IBM and Hyland Software,” said Mr. Bero. “It’s clear from the traction we are realizing in the market that customers benefit from our ability to turn existing business documents and reports into live, actionable data for analysis and better business decision making.

“During the last quarter, Datawatch continued to experience strong demand for its world-leading report mining and analytics solution, Monarch V9, which was released in February 2007. In addition to strong sales of Monarch V9, the quarter saw the continued robust growth of the company’s enterprise business.

“During the year, Datawatch also significantly enhanced its product portfolio with easy-to-use products that help customers improve business intelligence across the organization with dramatically reduced time, cost and complexity.  New products include an e-mail archiving solution, Datawatch|MailManager, which helps organizations maximize e-mail storage efficiency, manage the e-mail lifecycle, and fulfill regulatory and e-discovery requirements.  In addition, Datawatch introduced a web-enabled enterprise BPM Solution, BDS|Workflow; and optimized versions of Datawatch’s web-based report mining and analysis solution, Monarch|RMS (Report Mining Server), for use with the IBM Content Manager OnDemand and Hyland Software OnBase enterprise content management (ECM) software suites.

“In 2007, Microsoft selected Datawatch as a High Potential Managed Independent Software Vendor (ISV) because of Datawatch’s ability to add significant value to SQL Server and Microsoft Office, including Excel and SharePoint Server,” concluded Mr. Bero.

As previously announced, Datawatch will host a live webcast to discuss its fourth quarter and fiscal year 2007 results today at 2:00 p.m. (EST). The webcast can be accessed at: http://www.vcall.com/IC/CEPage.asp?ID=122251.  Please register at least 15 minutes early to download any necessary audio software. An archive of the broadcast will be available for 30 days at the same location.

Datawatch will attend the The Wall Street Analyst Forum on Wednesday, November 28, 2007, at The Princeton Club, 15 W. 43^rd St., New York, NY.  Mr. Bero will discuss how the recent wave of BI acquisitions is expected to create future market opportunities for the company.  A live webcast of the event can be accessed at: http://www.wsw.com/webcast/wsaf5/dwch.  Those interested in attending the conference in person are encouraged to visit: www.analyst-conference.com for details.

ABOUT DATAWATCH CORPORATION

Datawatch Corporation, (NASDAQ-CM: DWCH), a leader in Enterprise Information Management, helps companies make better decisions and solve business problems by simplifying access to information. Unique among EIM vendors, Datawatch transforms the massive amounts of data and documents generated inside or outside a company into actionable insight, without any changes needed to existing systems. Datawatch customers benefit from the right information, in the right context, at the right time. More than 20,000 organizations worldwide rely on Datawatch products including its market-leading Monarch report and data mining solutions. Founded in 1985, Datawatch is based in Chelmsford, Mass. with offices in London, Sydney and Manila. For more information, visit www.datawatch.com.

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

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. The factors that could cause actual future results to differ materially from current expectations include the following: risks associated with the uncertainty of the current economic climate; risks associated with fluctuations in quarterly operating results; Datawatch's dependence on its principal products; risks associated with international sales; risks associated with distributor sales; risks associated with acquisitions; an unfavorable result in any litigation; market acceptance of new products; dependence on the introduction of new products and possible delays in those introductions. Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly-available documents, which include, but are not limited to, filings made by Datawatch from time to time with the Securities and Exchange Commission, including but not limited to, those appearing in the Company's Annual Report on Form 10-K for the year ended September 30, 2006 and Quarterly Reports on Form 10-Q for the quarters ended December 31, 2006, March 31, 2007 and June 30, 2007. Any forward-looking statements should be considered in light of those factors.

Datawatch, the Datawatch logo, Monarch, Datawatch|MailManager and BDS|Workflow are trademarks or registered trademarks of Datawatch Corporation in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies.

# # #

Investor Contact:

Datawatch Investor Relations

978-441-2200 ext. 8323

investor@datawatch.com

Media Contacts:

Lisa G. Kilpatrick

Marketing Communications Manager

lisa_kilpatrick@datawatch.com

Phone: (978) 441-2200, ext. 8240

Fax: (978) 453-4443

Susan Willson

Greenough Communications

swillson@greenoughcom.com

Direct: (617) 275-6529

DATAWATCH CORPORATION

Condensed Consolidated Statements of Operations

Amounts in Thousands (except per share data)

(Unaudited)

	Three Months Ended September 30,					Year Ended September 30,
	2007		2006			2007		2006
REVENUE:
Software licenses and subscriptions	$	4,066	$	3,161		$	14,852	$	13,145
Maintenance and services		2,785		2,165			10,407		7,666
Total revenue		6,851		5,326			25,259		20,811
COSTS AND EXPENSES:
Cost of software licenses and subscriptions		681		525			2,468		2,268
Cost of maintenance and services		1,003		1,145			3,941		3,949
Sales and marketing		2,293		2,499			9,293		9,136
Engineering and product development		708		667			2,951		2,094
General and administrative		1,389		991			4,872		3,898
Total costs and expenses		6,074		5,827			23,525		21,345
INCOME (LOSS) FROM OPERATIONS		777		(501	)		1,734		(534	)
Other income (expense), net		110		(8	)		68		15
INCOME (LOSS) BEFORE INCOME TAXES		887		(509	)		1,802		(519	)
Provision for income taxes		58		21			133		36
NET INCOME (LOSS)	$	829	$	(530	)	$	1,669	$	(555	)
Net income (loss) per share - Basic	$	0.15	$	(0.10	)	$	0.30	$	(0.10	)
Net income (loss) per share - Diluted	$	0.14	$	(0.10	)	$	0.28	$	(0.10	)
Weighted Average Shares Outstanding – Basic		5,629		5,512			5,558		5,481
Weighted Average Shares Outstanding – Diluted		6,015		5,512			5,929		5,481

DATAWATCH CORPORATION

Condensed Consolidated Balance Sheets

Amounts in Thousands

	September 30,		September 30,
	2007		2006
	(unaudited)		(unaudited)
Cash and cash equivalents	$	3,841	$	1,862
Accounts receivable, net		4,174		3,786
Inventories		48		37
Prepaid expenses		527		653
Total current assets		8,590		6,338
Property and equipment, net		856		1,129
Intangible and other assets, net		8,891		8,558
	$	18,337	$	16,025
Line of credit	$	—	$	1,000
Accounts payable and accrued expenses		4,054		3,121
Deferred revenue - current portion		4,486		4,468
Accrued cost of acquisition - IDARS business		329		215
Total liabilities		8,869		8,804
Total long-term liabilities		448		266
Total shareholders’ equity		9,020		6,955
	$	18,337	$	16,025