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)  February 3, 2009

Datawatch Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware

 (State or Other Jurisdiction of 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 February 5, 2009, Datawatch Corporation (the “Company”) issued a press release regarding its financial results for the first quarter ended December 31, 2008.  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 Directors; Appointment of Principal Officers

On February 3, 2009, the Compensation and Stock Committee of the Board of Directors of the Company approved grants of stock options and restricted stock units to the following named executive officers:

Name and Title	Stock Options Granted	Restricted Stock Units Granted
Ken Bero President and Chief Executive Officer	6,000	2,000
John H. Kitchen Chief Marketing Officer and Senior Vice President	4,000	1,500
Murray Fish Chief Financial Officer and Vice President of Finance	4,000	1,500
Robert Clemens Vice President Worldwide Sales	4,000	1,500
Harvey Gross Vice President Product Management and Development	4,000	1,500
Dan Incropera Corporate Controller and Vice President	1,500	500

Both the stock options and restricted stock units were granted pursuant to the Company’s 2006 Equity Compensation and Incentive Plan, and the awards vest over a period of three years.  The form of the agreement used to grant the restricted stock units is attached hereto as Exhibit 10.1.  The form of agreement used to grant the stock options was previously filed with the Securities and Exchange Commission on the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

Item 9.01     Financial Statements and Exhibits

(d)           Exhibits

The following Exhibits are filed as part of this report:

Exhibit No.                Description

10.1                             Form of Restricted Stock Agreement for Executives and Directors

99.1                             Press Release dated February 5, 2009

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: February 5, 2009	By:	/s/ Kenneth P. Bero
		Name: Kenneth P. Bero
		Title: President and Chief ExecutiveOfficer

EX-10.1

EXHIBIT 10.1

DATAWATCH CORPORATION

Restricted Stock Unit Agreement for Directors and Executives

Datawatch Corporation, a Delaware corporation (the “Company”), hereby grants as of the award date below (“Award Date”) to the director or executive named below (the “Participant”), and the Participant hereby accepts, an award (“Award”) of Restricted Stock Units (“RSU”) that will vest as described in the Vesting Schedule below, such Award to be subject to the terms and conditions specified in the attached Exhibit A.

Participant Name:                                                      

Award Date:                                                      

Number of RSUs:                                                      

Vesting Schedule:

Vesting Date                                                                  Number of RSUs

By signing this Agreement, the Participant acknowledges receipt of a copy of this Agreement and a copy of the 2006 Equity Compensation and Incentive Plan and the Prospectus related thereto.

This Agreement will be effective only upon execution by the Participant and delivery of such signed Agreement to the Company.

IN WITNESS WHEREOF, the Company and the Participant have caused this instrument to be executed as of the Award Date set forth above.

___________________________	DATAWATCH CORPORATION
(Participant Signature)
___________________________
(Street Address)	By:__________________________________
	Name:
___________________________ (City/State/Zip Code)	Title:

Exhibit A

Restricted Stock Unit Agreement for Directors and Executives

Terms and Conditions

1.Award.  The Participant is hereby granted an Award of RSUs, effective as ofthe date set forth on the cover page attached hereto (the “Award Date”), subject to the terms and conditions set forth herein (collectively with the cover page, the “Agreement”), and subject to and governed by the Company’s 2006 Equity Compensation and Incentive Plan (the “Plan”).  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan. Each RSU represents the right to receive one share of the Company’s Common Stock upon the satisfaction of terms and conditions set forth in this Agreement and the Plan.

2.Vesting.  Except as set forth in Section 6 herein, the RSUs will remain restricted and may not be sold, assigned, exchanged, pledged or otherwise transferred by the Participant until the RSUs have become vested pursuant to the terms of this Agreement.  If the Participant has continued to serve the Company in the capacity of a director, or has continued to be an employee of the Company, then the RSUs will vest as provided on the cover page hereto.Each date on which a portion of the Award vestsshall be referred to herein as a “Vesting Date.”Notwithstanding the foregoing, in accordance with and subject to the provisions of the Plan, the Committee may, in its discretion, accelerate the date that any installment of this RSU becomes vested.

3.Acceleration of Vesting Upon Change of Control.  Notwithstanding Section 2 hereof, in the event of a Change in Control (as defined below) of the Company while this RSU is in effect, this RSU shall, immediately prior to the consummation of such Change in Control, become fully vested and all shares subject to this RSU shall be delivered to the Participant; provided, however, that the Board, in its sole discretion, may require that the Participant’s rights under this Section 3 shall be conditioned on approval by the stockholders of the Company in accordance with Section 280G(b)5(B) of the Code and regulations thereunder.  For purposes of this Agreement, a “Change in Control” means the occurrence of any of the following events:

(a)The Company is merged or consolidated or reorganized into or with another corporation or other legal person, and as a result of such merger, consolidation or reorganization less than a majority of the combined voting power of the then-outstanding securities of such surviving, resulting or reorganized corporation or person immediately after such transaction is held in the aggregate by the holders of the then-outstanding securities entitled to vote generally in the election of directors of the Company ("Voting Stock") immediately prior to such transaction;

(b)The Company sells or otherwise transfers all or substantially all of its assets to any other corporation or other legal person, and as a result of such sale or transfer less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such sale or transfer is held in the aggregate by the holders of Voting Stock of the Company immediately prior to such sale or transfer;

(c)There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), disclosing that any "person" (as such term is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the "beneficial owner" (as such term is used in Rule 13d-3 under the Exchange Act) of securities representing 50% or more of the Voting Stock of the Company;

(d)The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has occurred; or

(e)If during any period of two consecutive years, individuals who at the beginning of any such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company’s stockholders, of each director of the Company first elected during such period was approved by a vote of at least a majority of the directors then still in office who were directors of the Company at the beginning of any such period;

provided, however, that a “Change in Control” shall not be deemed to have occurred for purposes of this Agreement solely because (x) the Company, (y) an entity in which the Company directly or indirectly beneficially owns 50% or more of the voting securities, or (z) any Company-sponsored employee stock ownership plan or any other employee benefit plan of the Company, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report) under the Exchange Act, disclosing beneficial ownership by it of shares of Voting Stock or because the Company reports that a change in control of the Company has occurred by reason of such beneficial ownership.

4.Distribution of the Award; Dividend Equivalents.  As soon as reasonably practicable following each Vesting Date, the Company will release the portion of the Award that has become vested as of such Vesting Date in the form of shares of the Company’s Common Stock.  The Company shall provide the Participant with at least seven (7) days written notice prior to the Vesting Date; such notice to specify the amount that the Participant is required to pay to satisfy any applicable withholding Taxes (as hereinafter below). The Participant may deposit with the Company an amount of cash equal to the amount determined by the Company, utilizing a tax rate determined by the Company in its reasonable discretion, to be required with respect to any withholding taxes, FICA contributions, or the like under any national, federal, state, local or other statute, ordinance, rule, or regulation in connection with the award or settlement of the restricted stock units (the “Taxes”).  Alternatively, if the Company does not receive such amount from the Participant at least two (2) days prior to the Vesting Date, the Company will withhold a number of shares (rounded up to the nearest whole share) of the Company’s Common Stock with a market value determined as of the close of business on the business day immediately preceding the Vesting Date) equal to the amount of such Taxes associated with the vesting or settlement of the Award; provided, however, that the Company shall not be liable for determining the exact number of shares.

The Participant shall have the right to receive dividend equivalent payments with respect to the Common Stock subject to the Award as provided in this paragraph.  Upon each Vesting Date, Participant shall be entitled to receive a dividend equivalent payment in respect of the shares of Common Stock covered by the Award that are not vested on the record date for each dividend payment, if any, made by the Company on its Common Stock for which the record date occurred (i) on or after the Award Date or the immediately preceding Vesting Date, as the case may be, and (ii) prior to the applicable Vesting Date, in an amount in cash equal to the amount of any dividend which otherwise would have been paid to the Participant if such unvested shares had been issued for the benefit of the Participant on the record dates for such dividend payments, subject to any applicable withholding for Taxes.  Such dividend equivalent payments may be settled by the Company subject to such other conditions or terms that the Committee may establish. Except for dividend equivalent payments, the Participant shall have no rights as a stockholder, including voting rights, with respect to the RSUs.

5.Termination of Relationship with the Company.  If the Participant ceases to be a director of the Company, or the Participant ceases to be an employee of the Company, for any reason, any portion of the Award that has not become vested on or prior to the date of such cessation shall immediately be forfeited.

6.Award Not Transferable.  The Award will not be assignable or transferable by the Participant, except by operation of law, or by will or the laws of descent and distribution.

7.Transferability of Award Shares.  Until registered under the Securities Act of 1933, as amended, or any successor statute (the “Securities Act”), the shares of Common Stock represented by the RSUs will be of an illiquid nature and will be deemed to be “restricted securities” for purposes of the Securities Act.  Accordingly, such shares must be sold in compliance with the registration requirements of the Securities Act or an exemption therefrom.  The Company reserves the right to place restrictions required by law on any shares of the Company’s Common Stock received by the Participant pursuant to the Award.

8.Conformity with the Plan.  The Award is intended to conform in all respects with, and is subject to applicable provisions of, the Plan. To the extent that any provision of this Agreement conflicts with the express terms of the Plan, it is hereby acknowledged and agreed that the terms of the Plan shall control and, if necessary, the applicable provisions of this Agreement shall be deemed to be amended so as to carry out the purpose and intent of the Plan. By the Participant’s acceptance of this Agreement, the Participant agrees to be bound by all of the terms of this Agreement and the Plan.  Notwithstanding any other provision of this Section 8, in the event that the provisions of this Agreement are subject to Section 409A of the Internal Revenue Code of

1986, as amended, and the Treasury Regulations promulgated thereunder (“Section 409A”), the provisions of this Agreement shall comply with, and shall be interpreted in a manner consistent with, Section 409A.

9.No Rights to Continued Board Service or Employment.  Nothing in this Agreement confers any right on the Participant to continue as a director of the Company, or confers any right on the Participant to continue employment at the Company or affects in any way the right of any of the Company to terminate any such relationship of the Participant to the Company.

10.Miscellaneous.

(a)           Notices.  All notices hereunder shall be in writing and shall be deemed given when sent by certified or registered mail, postage prepaid, return receipt requested, if to the Participant, to the address set forth above or at the address shown on the records of the Company, and if to the Company, to the Company’s principal executive offices, attention of the Chief Financial Officer.

(b)           Entire Agreement; Modification.  This Agreement, together with the Plan, constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Agreement.  The Company may amend, suspend or terminate the Plan, this Agreement and the Award granted hereunder at any time; provided, however, that no such amendment, suspension or termination may materially impair any Award without the Participant’s written consent.

(c)           Fractional Shares.  If the shares under this Award become issuable for a fraction of a share because of the adjustment provisions contained in the Plan, such fraction shall be rounded down to the nearest whole share.

(d)           Severability.  The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision.

(e)Successors and Assigns.  Except as provided herein, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, subject to the limitations set forth in Section 6 hereof.

(f)           Governing Law.  This Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to the principles of the conflicts of laws thereof.

(g)           Data Protection Waiver.  The Participant understands and consent to the Company or its agents or independent contractors appointed to administer the Plan obtaining certain of the Participant’s personal employment information required for the effective administration of the Plan and that such information may be transmitted outside of the country of the Participant’s employment and/or residence.

[Remainder of Page Intentionally Left Blank]

EX-99.1

EXHIBIT 99.1

Datawatch Corporation Reports Results for First Quarter 2009

Chelmsford, MA – February 5, 2009 - Datawatch Corporation (NASDAQ-CM: DWCH), a leader in Enterprise Information Management (EIM), today announced results for its first quarter ended December 31, 2008.

Revenues for the quarter ended December 31, 2008 were $5,202,000, down by 14 percent when compared to $6,067,000 for the quarter ended December 31, 2007. Net income for the first quarter of fiscal 2008 was $385,000, or $0.06 per diluted share, compared to a net income of $247,000, or $0.04 per diluted share, for the first quarter of fiscal 2007.

As of December 31, 2008, the Company had $4,920,000 in net cash and cash equivalents, an increase of $1,087,000, or 28 percent, compared to December 31, 2007.

Commenting on the first quarter results, President and CEO Ken Bero said, "While Q1 was challenging because of the general economic slowdown, Datawatch’s bottom line performance was solidly in the black.  We significantly improved our cash position as compared to a year ago and have no debt on our balance sheet.  We also proactively managed our expenses, reducing our costs by over $900,000 or 16 percent vs. Q1 of fiscal year 2008.  In addition to the softening economy, our business was also negatively impacted due to the weakening British Pound vs. the US Dollar.  The UK is our second largest market worldwide and the Pound has fallen some 22 percent to 28 percent when compared to rates a year ago."

"While the economic situation is difficult, we are seeing emerging market trends that play to our product strengths,” added Bero.  “Companies are looking to ‘do more with less.’ For Business Intelligence and Content Management solutions this equates to products that install easily, require less support and training, leverage existing IT systems and provide a much faster ROI.  Datawatch’s suite of desktop and enterprise solutions meet these requirements."

The recent releases of Monarch BI Server in August of 2008 and Monarch Version 10 in October of 2008 are two examples of Datawatch responding to customer needs.  Monarch BI Server was specifically designed as a cost effective, server based BI solution for the small to medium sized business (SMB) market.  It can be easily installed by the customer and produces actionable results in a single day.  Monarch Version 10, the latest release of Datawatch’s world-leading report mining and BI desktop software, provides access to new data sources, enhanced Excel integration and easier model building.

As previously announced, Datawatch will host a live webcast to discuss its first quarter 2009 results today at 2:00 p.m. (EST). The webcast can be accessed at: http://www.investorcalendar.com/IC/CEPage.asp?ID=139733. 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.

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 35,000 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, 2008. Any forward-looking statements should be considered in light of those factors.

# # #

Investor Contact:

Datawatch Investor Relations

978-441-2200 ext. 8323

investor@datawatch.com

Media Contacts:

Susan Willson

Greenough Communications

swillson@greenoughcom.com

Phone: (617) 275-6529

Mobile: (617) 767-6901

Lisa G. Kilpatrick

Manager, Marketing Communications and Public Relations

lisa_kilpatrick@datawatch.com

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

Fax: (978) 453-4443

Datawatch, the Datawatch logo, and Monarch 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.

 DATAWATCH CORPORATION

 Condensed Consolidated Statements of Operations

 Amounts in Thousands (except per share data)

 (Unaudited)

	Three Months Ended
	December 31,
	2008		2007
REVENUE:
Software licenses and subscriptions	$	2,840	$	3,333
Maintenance and services		2,362		2,734
Total revenue		5,202		6,067
COSTS AND EXPENSES:
Cost of software licenses and subscriptions		530		572
Cost of maintenance and services		873		1,120
Sales and marketing		1,661		2,220
Engineering and product development		713		749
General and administrative		1,166		1,206
Total costs and expenses		4,943		5,867
INCOME FROM OPERATIONS		259		200
Other income, net of expenses		170		96
INCOME BEFORE INCOME TAXES		429		296
Provision for income taxes		44		49
NET INCOME	$	385	$	247
Net income per share - Basic	$	0.07	$	0.04
Net income per share - Diluted	$	0.06	$	0.04
Weighted Average Shares Outstanding - Basic		5,914		5,654
Weighted Average Shares Outstanding - Diluted		5,943		5,910

 DATAWATCH CORPORATION

 Condensed Consolidated Balance Sheets

 Amounts in Thousands

 (Unaudited)

	December 31,		September 30,
	2008		2008
Cash and cash equivalents	$	4,920	$	4,885
Accounts receivable, net		3,212		3,287
Prepaid expenses and other current assets		495		418
Total current assets		8,627		8,590
Property and equipment, net		656		737
Intangible and other assets, net		8,896		8,842
	$	18,179	$	18,169
Accounts payable and accrued expenses	$	2,835	$	3,413
Deferred revenue - current portion		4,456		4,047
Total current liabilities		7,291		7,460
Total long-term liabilities		689		627
Total shareholders' equity		10,199		10,082
	$	18,179	$	18,169