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) April 22, 2014

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 1.01 Entry into a Material Definitive Agreement.

On April 22, 2014, the stockholders of Datawatch Corporation (“Datawatch”) approved the adoption of Datawatch’s Second Amended and Restated 2011 Equity Compensation and Incentive Plan (the “Amended 2011 Plan”), which amends the previous Amended and Restated 2011 Equity Compensation and Incentive Plan to increase the shares authorized for issuance under such plan by 700,000 shares to 2,275,392 shares. For a description of the material features of the Amended 2011 Plan, please refer to Datawatch’s Definitive Proxy Statement on Schedule 14A for the Annual Meeting of the Stockholders held on April 22, 2014, a copy of which was filed with the Securities and Exchange Commission on January 28, 2014 (File No. 000-19960) and is incorporated herein by reference.

Item 2.02. Results of Operations and Financial Condition

On April 23, 2014, Datawatch issued a press release reporting its financial results for its quarter ended March 31, 2014. A copy of the press release is attached as Exhibit 99.1 to this report and is incorporated herein by reference.

The information contained in this Item 2.02, including in Exhibit 99.1 attached hereto and incorporated herein by reference, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibits shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Datawatch, whether made before or after the date hereof, regardless of any general incorporation language in such filings.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

Equity Awards

On April 22, 2014, Datawatch granted awards of restricted stock units for shares of Datawatch common stock (“RSUs”) under the Amended 2011 Plan to the named executive officers of Datawatch, as follows:

Name and Position	Number of RSUs
Michael A. Morrison President and Chief Executive Officer	40,000
James Eliason Chief Financial Officer	20,000
Ben Plummer Chief Marketing Officer	20,000

All such RSUs provide for vesting over a three year period.

Item 5.07 Submission of Matters to a Vote of Security Holders

The Annual Meeting of Stockholders of Datawatch was held on April 22, 2014, at which the stockholders voted on the following matters:

1. The election of Richard de J. Osborne, James Wood, Thomas H. Kelly, Terry W. Potter, Christopher T. Cox, David C. Mahoney and Michael A. Morrison, constituting all of the directors of Datawatch, to the Board of Directors to serve for the ensuing year or until their respective successors are duly elected and qualified;

2. The approval of the Amended 2011 Plan; and

3. The ratification of the appointment of McGladrey LLP, Datawatch’s independent registered public accounting firm (“Auditor Ratification”).

Votes were cast as follows:

Director Nominee	Total Votes For	Total Votes Withheld	Broker Non-Votes
Richard de J. Osborne	5,670,526	398,019	2,604,378
James Wood	4,692,313	1,376,232	2,604,378
Thomas H. Kelly	5,602,954	465,591	2,604,378
Terry W. Potter	5,600,175	468,370	2,604,378
Christopher T. Cox	6,058,007	10,538	2,604,378
David C. Mahoney	5,603,286	465,259	2,604,378
Michael A. Morrison	6,055,098	13,447	2,604,378

Proposal	Total Votes For	Total Votes Against	Abstentions	Broker Non-Votes
Amended 2011 Plan	4,449,679	1,596,183	22,683	2,604,378
Auditor Ratification	8,667,682	2,080	3,161	-

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following Exhibit is furnished as part of this report:

Exhibit No.	Description
99.1	Press release issued by Datawatch Corporation, dated April 23, 2014.

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
By:	/s/ James Eliason
Name:	James Eliason
Title:	Chief Financial Officer

Date: April 23, 2014

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release issued by Datawatch Corporation, dated April 23, 2014.

EX-99.1

DATAWATCH ANNOUNCES SECOND QUARTER 2014 FINANCIAL RESULTS

Chelmsford, Mass.—April 23, 2014—Datawatch Corporation (NASDAQ-CM: DWCH), a leading global provider of visual data discovery solutions, today announced that total revenue for its second fiscal quarter ended March 31, 2014 was $8.00 million, an increase of 17% from revenue of $6.83 million in the second quarter a year ago. License revenue for the second quarter of fiscal 2014 was $4.38 million, an increase of 2% from the $4.30 million recorded in the comparable quarter a year ago. Net loss for the second quarter of fiscal 2014 was ($6.74) million, or ($0.70) per diluted share, compared to a net loss of ($626,000), or ($0.10) per diluted share, for the year ago period. Excluding the effects of the non-cash amortization associated with the purchase of certain intellectual property and other intangible assets, non-cash stock compensation costs, and a one-time non-cash charge related to the payoff of debt, the Company’s non–GAAP net loss for its second fiscal quarter of 2014 was ($2.78) million, or ($0.29) per diluted share, compared to net income of $420,000, or $0.06 per diluted share in the second fiscal quarter of 2013.

On April 10, 2014, Datawatch announced preliminary results for the second quarter of 2014, and these final results are consistent with those preliminary expectations.

“Our performance in the second fiscal quarter this year is unacceptable in light of our potential, and as we stated a few weeks ago, we have re-dedicated ourselves to effective and improved sales execution,” said Michael A. Morrison, president and chief executive officer of Datawatch. “The efforts we’ve undertaken thus far are already paying off in early results that we expect will enable us to deliver much improved performance in the second half of fiscal 2014. We remain confident that there is a large market opportunity available to us, that our operating plans and business strategy are sound, and that our technology assets are unrivaled. Our sales and marketing teams are singularly focused on sound execution and achieving our business goals.”

Second Quarter Business Highlights

· Datawatch expanded its partner channel in the Big Data ecosystem by entering into new alliance relationships with Cloudera, MongoDB, Teradata, Informatica and Diyotta.

· Datawatch entered into a global OEM agreement with Thomson Reuters to supply real-time visualization solutions on streaming data in motion from the Accelus Risk Manager comprehensive risk management solution.

· Datawatch continued to build out its presence in the Asia Pacific market with new customer wins at CSL Limited in Hong Kong, Employment Provident Fund of Malaysia and HSBC in Singapore, and by expanding its go-to-market channel with the addition of new partners Tridant and Mindmap in Australia, Catena Technologies and Fritz and Macziol in Singapore and HK GTA Data Limited in Greater China.

· The U.S. Naval War College selected the Datawatch visualization solution to support maritime security cooperation and combat readiness through war games analytics. The College trains its students with extensive war-gaming exercises that involve pre- and post-game planning and analytics utilizing rich visualizations of structured and semi-structured data formats.

· Datawatch furthered its strong position in the financial services industry with important wins at highly recognized leaders, including Fidelity, Cowen & Company, Royal Bank of Canada, JPMorgan and Bank of America.

Second Quarter Financial Highlights

· Cash and short-term investments were $53.92 million at March 31, 2014, up 577% from $7.97 million at December 31, 2013 and up 457% from $9.68 million at March 31, 2013. In February 2014, Datawatch raised approximately $57.5 million through an underwritten secondary offering of approximately 2 million shares of common stock. Net proceeds to the Company were approximately $53.6 million, after commissions and other related costs.

· Gross margin (excluding IP amortization expense) for the second fiscal quarter of 2014 was 88%, compared to 87% for the first fiscal quarter of 2014 and 90% for the second fiscal quarter of 2013.

· Days sales outstanding were 57 days at March 31, 2014, compared to 57 days at December 31, 2013 and 57 days at March 31, 2013.

· The percentage of license revenue from partners in the second fiscal quarter of 2014 was 14%, as compared to 10% in the first fiscal quarter of 2014.

· There were 5 six-figure deals in the second fiscal quarter of 2014, as compared to 5 six-figure deals in the second fiscal quarter of 2013

· During the quarter, Datawatch paid off and discharged in full its outstanding indebtedness obligations to both Silicon Valley Bank and Massachusetts Capital Resource Company (“MCRC”), in the aggregate amount of approximately $4.7 million. The Company incurred a “one-time”, non-cash charge of approximately $821,000 at the time of payoff for the unamortized debt discount relating to the warrants previously issued to MCRC under the MCRC Agreement.

Investor Conference Call and Webcast

The senior management of Datawatch will host a conference call and webcast to discuss the second quarter results tomorrow, Thursday, April 24, 2014 at 8:30 am ET.  To access the call, please dial 1-877-407-0782.  Internationally, the call may be accessed by dialing 1-201-689-8567. The conference call will be broadcast live on the Internet at: http://www.investorcalendar.com/IC/CEPage.asp?ID=172343.  It is recommended that listeners register to participate and download any necessary audio software from the website 15 minutes prior to the scheduled call. The webcast will be available as a replay starting one hour after the call is completed at the same location.

ABOUT DATAWATCH CORPORATION

Datawatch Corporation (NASDAQ-CM: DWCH) provides visual data discovery software that optimizes any data – regardless of its variety, volume, or velocity – delivering next generation analytics to reveal valuable insights for improving business. Its unique ability to integrate structured, unstructured, and semi-structured sources like reports, PDF files and EDI streams with real-time streaming data into visually rich analytic applications allows users to dynamically discover key factors that impact any operational aspect of their business. This ability to perform visual discovery against any data sets Datawatch apart in the big data and visualization markets. Organizations of every size, worldwide use Datawatch products, including 99 of the Fortune 100. Datawatch is headquartered in Chelmsford, Massachusetts with offices in New York, London, Munich, Stockholm, Singapore, Sydney and Manila, and with partners and customers in more than 100 countries worldwide. See the Whole Story for yourself by downloading the free trial at www.datawatch.com/trial.

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, including but not limited to those relating to results of operations, 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 continuing weak global economy; risks associated with fluctuations in quarterly operating results due, among other factors, to the size and timing of large customer orders; risks associated with acquisitions, including the acquisition of intellectual property from Math Strategies and the acquisition of Panopticon; the volatility of Datawatch’s stock price; limitations on the effectiveness of internal controls; rapid technological change; Datawatch’s dependence on the introduction of new products and possible delays in those introductions; competition in the software industry generally, and in the markets for next generation analytics in particular; Datawatch's dependence on its principal products, proprietary software technology and software licensed from third parties; risks associated with international sales and operations; risks associated with indirect distribution channels and co-marketing arrangements, many of which were only recently established; the adequacy of Datawatch’s sales returns reserve; risks associated with a subscription sales model; Datawatch’s dependence on its ability to hire and retain skilled personnel; disruption or failure of Datawatch’s technology systems that may result from a natural disaster, cyber-attack or other catastrophic event; and uncertainty and additional costs that may result from evolving regulation of corporate governance and public disclosure. 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, 2013 and quarterly report on Form-10Q for the quarter ended December 31, 2014. Any forward-looking statements should be considered in light of those factors.

# # #

Investor Contact:

Datawatch Investor Relations

investor@datawatch.com

Phone: (978) 441-2200 ext. 8323

Media Contact:

Sarah Bernardi

Datawatch Corporation

Sarah_Bernardi@datawatch.com

Phone: (978) 441-2200 ext. 8387

Twitter: @datawatch

© 2014 Datawatch Corporation. Datawatch and the Datawatch logo 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						Six Months Ended
	March 31,						March 31,
	2014			2013			2014			2013
REVENUE:
Software licenses	$	4,375		$	4,297		$	9,807		$	8,627
Maintenance		3,127			2,300			6,121			4,633
Professional services		498			234			881			392
Total revenue		8,000			6,831			16,809			13,652
COSTS AND EXPENSES:
Cost of software licenses		1,024			531			2,014			1,052
Cost of maintenance and services		634			565			1,483			1,095
Sales and marketing		7,573			4,218			14,957			7,994
Engineering and product development		2,513			749			4,888			1,602
General and administrative		2,147			1,246			4,816			2,437
Total costs and expenses		13,891			7,309			28,158			14,180
(LOSS) INCOME FROM OPERATIONS		(5,891	)		(478	)		(11,349	)		(528	)
Other expense		(1,169	)		(154	)		(1,326	)		(317	)
(LOSS) INCOME BEFORE INCOME TAXES		(7,060	)		(632	)		(12,675	)		(845	)
Income tax (benefit) provision		(323	)		(6	)		(323	)		3
NET (LOSS) INCOME	$	(6,737	)	$	(626	)	$	(12,352	)	$	(848	)
Net (loss) income per share - Basic	$	(0.70	)	$	(0.10	)	$	(1.37	)	$	(0.13	)
Net (loss) income per share - Diluted	$	(0.70	)	$	(0.10	)	$	(1.37	)	$	(0.13	)
Weighted Average Shares Outstanding - Basic		9,565			6,428			9,041			6,403
Weighted Average Shares Outstanding - Diluted		9,565			6,428			9,041			6,403
Non-GAAP Disclosure - Reconciliation of Net (Loss) Income to Net Income Excluding the Effects of Certain Items:
GAAP Net (Loss) Income	$	(6,737	)	$	(626	)	$	(12,352	)	$	(848	)
Add-back Amortization of Intangibles & IP		870			431			1,740			862
Add-back Share-Based Compensation		2,100			585			4,818			1,162
Add-back Severance & unamorized debt discount		983			30			1,003			78
Subtotal of additions		3,953			1,046			7,561			2,102
Net income (non-GAAP)	$	(2,784	)	$	420		$	(4,791	)	$	1,254
Net income per share - Basic	$	(0.29	)	$	0.07		$	(0.53	)	$	0.20
Net income per share - Diluted	$	(0.29	)	$	0.06		$	(0.53	)	$	0.18
Weighted Average Shares Outstanding - Basic		9,565			6,428			9,041			6,403
Weighted Average Shares Outstanding - Diluted		9,565			6,841			9,041			6,869

  DATAWATCH CORPORATION

Condensed Consolidated Balance Sheets

Amounts in Thousands  

(Unaudited)  

	March 31,		September 30,
	2014		2013
Cash and cash equivalents	$	53,920	$	10,312
Accounts receivable, net		5,027		6,622
Prepaid expenses and other current assets		1,412		984
Total current assets		60,359		17,918
Property and equipment, net		322		289
Intangible and other assets, net		49,012		51,114
	$	109,693	$	69,321
Current portion of long-term debt	$	-	$	900
Current portion of note payable		-		977
Accounts payable and accrued expenses		3,760		4,914
Deferred revenue - current portion		6,749		6,997
Total current liabilities		10,509		13,788
Note payable		-		2,108
Other long-term liabilities		1,570		2,050
Total long-term liabilities		1,570		4,158
Total shareholders' equity		97,614		51,375
	$	109,693	$	69,321