Cost of software licenses

2,828

3,002

4,013

Cost of maintenance and services

^[1]

2,177

3,122

3,351

Sales and marketing

^[1]

20,783

27,037

31,133

Engineering and product development

^[1]

8,167

8,894

9,074

General and administrative

^[1]

9,636

8,599

9,181

Impairment of goodwill and long-lived assets

32,009

Total costs and expenses

43,591

82,663

56,752

LOSS FROM OPERATIONS

(13,129)

(52,442)

(21,665)

Interest expense

(406)

Other income (expense)

(755)

Foreign currency transaction loss

(74)

(78)

(76)

LOSS FROM OPERATIONS BEFORE INCOME TAXES

(13,159)

(52,511)

(22,902)

Income tax (expense) benefit

(1,473)

2,724

519

NET LOSS

$ (14,632)

$ (49,787)

$ (22,383)

Net loss per share - basic:

$ (1.24)

$ (4.38)

$ (2.24)

Net loss per share - diluted:

$ (1.24)

$ (4.38)

$ (2.24)

Weighted-average shares outstanding - basic

11,758

11,368

9,998

Weighted-average shares outstanding - diluted

11,758

11,368

9,998

Cost of Maintenance and Services [Member]

$ 2,831

$ 4,733

$ 8,446

Selling and Marketing [Member]

143

Engineering and Product Development [Member]

1,028

3,110

5,243

General and Administrative [Member]

359

417

1,585

$ 1,407

$ 1,143

$ 1,475

[1]	(1) Includes share-based compensation as follows:Cost of maintenance and services$ 37$ 63$ 143Sales and marketing 1,028 3,110 5,243Engineering and product development 359 417 1,585General and administrative 1,407 1,143 1,475$ 2,831$ 4,733$ 8,446

XML 24 R5.htm IDEA: XBRL DOCUMENT

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive (Loss) Income [Abstract]
Net loss	$ (14,632)	$ (49,787)	$ (22,383)
Other comprehensive (loss) income:
Foreign currency translation adjustments	109	(355)	(342)
Comprehensive loss	$ (14,523)	$ (50,142)	$ (22,725)

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Nature of Business and Summary of Significant Accounting Policies [Abstract]

XML 25 R6.htm IDEA: XBRL DOCUMENT

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]	Total
BALANCE at Sep. 30, 2013	$ 88	$ 72,726	$ (20,021)	$ (1,278)	$ (140)	$ 51,375
BALANCE (in Shares) at Sep. 30, 2013	8,795,023
BALANCE (in treasury shares) at Sep. 30, 2013					(14,246)
Issuance of common stock	$ 20	53,608				53,628
Issuance of common stock (in Shares)	2,018,250
Exercise of stock options	$ 6	173				$ 179
Exercise of stock options (in Shares)	42,709					42,709
Vesting of restricted stock (in Shares)	433,116
Share-based compensation expense		8,446				$ 8,446
Excess tax benefits from stock-based compensation awards		7				7
Translation adjustments				(342)		(342)
Net loss			(22,383)			(22,383)
BALANCE at Sep. 30, 2014	$ 114	134,960	(42,404)	(1,620)	$ (140)	90,910
BALANCE (in Shares) at Sep. 30, 2014	11,289,098
BALANCE (in treasury shares) at Sep. 30, 2014					(14,246)
Exercise of stock options		52				$ 52
Exercise of stock options (in Shares)	18,000					18,000
Vesting of restricted stock	$ 2					$ 2
Vesting of restricted stock (in Shares)	332,999
Share-based compensation expense		4,733				4,733
Translation adjustments		(13)		(355)		(368)
Net loss			(49,787)			(49,787)
BALANCE at Sep. 30, 2015	$ 116	139,732	(92,191)	(1,975)	$ (140)	$ 45,542
BALANCE (in Shares) at Sep. 30, 2015	11,640,097
BALANCE (in treasury shares) at Sep. 30, 2015					(14,246)	(14,246)
Exercise of stock options		105				$ 105
Exercise of stock options (in Shares)	22,500					22,500
Vesting of restricted stock	$ 3					$ 3
Vesting of restricted stock (in Shares)	275,435
Share-based compensation expense		2,831				2,831
Translation adjustments				109		109
Net loss			(14,632)			(14,632)
BALANCE at Sep. 30, 2016	$ 119	$ 142,668	$ (106,823)	$ (1,866)	$ (140)	$ 33,958
BALANCE (in Shares) at Sep. 30, 2016	11,938,032
BALANCE (in treasury shares) at Sep. 30, 2016					(14,246)	(14,246)

XML 26 R7.htm IDEA: XBRL DOCUMENT

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (14,632)	$ (49,787)	$ (22,383)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	2,548	2,857	4,237
Provision for doubtful accounts	(75)	45
Share-based compensation expense	2,831	4,733	8,446
Non-cash interest expense			187
Loss on extinguishment of debt			795
Deferred income taxes	1,567	(2,667)	(523)
Impairment of goodwill and long-lived assets		32,009
Changes in operating assets and liabilities:
Accounts receivable	92	(207)	(414)
Prepaid expenses and other assets	(293)	(607)	(540)
Accounts payable, accrued expenses and other liabilities	295	456	(1,092)
Deferred revenue	1,398	1,237	295
Cash used in operating activities	(6,269)	(11,931)	(10,992)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized software development costs			(250)
Purchases of property and equipment	(966)	(490)	(276)
Cash used in investing activities	(966)	(490)	(526)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of issuance costs			53,628
Proceeds from exercise of stock options	105	52	179
Repayments of debt			(3,944)
Repayments of line of credit			(900)
Excess tax benefits from stock-based compensation awards			7
Capitalized debt issuance costs			(5)
Cash provided by financing activities	105	52	48,965
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	2	(137)	(91)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(7,128)	(12,506)	37,356
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	35,162	47,668	10,312
CASH AND CASH EQUIVALENTS, END OF PERIOD	28,034	35,162	47,668
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid			169
Income taxes paid	$ 34	$ 39	$ 122

XML 27 R8.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Sep. 30, 2016

Nature of Business and Summary of Significant Accounting Policies

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Datawatch Corporation (the “Company” or “Datawatch”) designs, develops, markets and distributes business computer software products. The Company also provides services, including implementation and support of its software products, as well as training on their use and administration. The Company is subject to a number of risks including dependence on key individuals, competition from substitute products and larger companies and the need for successful ongoing development and marketing of products.

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

These consolidated financial statements include the accounts of Datawatch and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments, which are evaluated on an on-going basis, that affect the amounts and disclosures reported in the Company’s consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The most significant estimates and judgments include those related to revenue recognition, the allowance for doubtful accounts, sales returns reserve, valuation of share-based compensation awards, useful lives of property and equipment, and the valuation of long term assets including goodwill, intellectual property and intangibles, capitalized software development costs and deferred tax assets. Actual results could differ from those estimates and judgments.

Revenue Recognition

Datawatch software products are generally sold in multiple element arrangements which may include software licenses, professional services and post-contract customer support. The Company licenses its software products directly to end-users and indirectly to end-users through value added resellers and distributors. Sales to indirect distribution channels accounted for 35%, 40% and 44% of total sales for the years ended September 30, 2016, 2015 and 2014, respectively. The Company’s software product offerings do not require customization and can be installed and used by customers on their own with little or no configuration required. Multi-user licenses marketed by the Company are sold as a right to use the number of licenses, and the license fee revenue is recognized upon delivery of the software.

Revenue typically consists of software licenses, post-contract support (“PCS”) and professional services. Revenue from the sale of all software products is generally recognized at the time of shipment, provided there are no uncertainties surrounding product acceptance, the fee is fixed or determinable, collectability is reasonably assured, persuasive evidence of the arrangement exists and there are no significant obligations remaining. PCS is typically provided under a maintenance agreement which provides technical support and rights to unspecified software maintenance updates and bug fixes on a when-and-if available basis. Revenue from PCS agreements is deferred and recognized ratably over the term of the agreements, typically one year. Professional services include advanced modeling, application design, implementation and configuration and process optimization with revenue recognized as the services are performed. These services are generally delivered on a time and materials basis, billed on a current basis as the work is performed, and generally do not involve modification or customization of the software or any unusual acceptance clauses or provisions.

For multiple element arrangements, total fees are allocated to each of the undelivered elements based upon vendor specific objective evidence (“VSOE”) of their fair values, with the residual amount recognized as revenue for the delivered elements. The residual method of revenue recognition is used for multi-element arrangements when the VSOE of the fair value does not exist for one of the delivered elements, generally the software license. Under the residual method, the arrangement fee is recognized as follows: (1) the total fair value of the undelivered elements, as supported by VSOE, is deferred and subsequently recognized as such items are delivered or completed and (2) the difference between the total arrangement fee and the amount allocated to the undelivered elements is recognized as revenue related to the delivered elements. The Company has established VSOE of fair value of PCS from either contractually stated renewal rates or using the bell-shaped curve method. Additionally, VSOE of fair value of the professional services is based on the amounts charged for these elements when sold separately. VSOE calculations are routinely updated and reviewed.

The Company also licenses its enterprise software using a subscription model. At the time a customer enters into a binding agreement to purchase a subscription, the customer is invoiced annually in advance and an account receivable and deferred revenue are recorded. Beginning on the date the software is installed at the customer site and available for use by the customer, and provided that all other criteria for revenue recognition are met, the deferred revenue amount is recognized ratably over the period the service is provided. The subscription arrangement includes software, maintenance and unspecified future upgrades including major version upgrades on a when-and-if available basis. The subscription renewal rate is the same as the initial subscription rate.

The Company’s software products are sold under warranty against certain defects in material and workmanship for a period of 30 days from the date of purchase. Revenue from the sale of software products to distributors and resellers is recognized at the time of shipment providing all other revenue recognition criteria are met and (i) the distributor or reseller is unconditionally obligated to pay for the products, including no contingency as to product resale, (ii) the distributor or reseller has independent economic substance apart from the Company, (iii) the Company is not obligated for future performance to bring about product resale, and (iv) the amount of future returns can be reasonably estimated. The Company’s experience and history with its distributors and resellers allows for reasonable estimates of future returns.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The Company analyzes accounts receivable and the composition of the accounts receivable aging, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. Actual results could differ from the allowances recorded, and this difference could have a material effect on the Company’s financial position and results of operations. Receivables are written off against these allowances in the period they are determined to be uncollectible.

For the fiscal years ended September 30, 2016, 2015 and 2014, changes to and ending balances of the allowance for doubtful accounts were as follows:


	September 30,
	2016		2015		2014
	(In thousands)

Allowance for doubtful accounts balance - beginning of year	$	106	$	53	$	43
Additions to the allowance for doubtful accounts		51		111		18
Deductions against the allowance for doubtful accounts		(129)		(58)		(8)
Allowance for doubtful accounts balance - end of year	$	28	$	106	$	53

Sales Returns Reserve

The Company maintains reserves for potential future product returns from distributors. The Company estimates future product returns based on its experience and history with the Company’s various distributors and resellers as well as by monitoring inventory levels at such companies as described above. Adjustments are recorded as increases or decreases in revenue in the period of adjustment. Actual returns have historically been within the range estimated by management. Actual results could differ from the reserve for sales returns recorded, and this difference could have a material effect on the Company’s financial position and results of operations. The Company’s agreement with its sole distributor, Lifeboat, expired during the year ended September 30, 2015, and as a result, the Company determined that a reserve for future returns was no longer necessary.

For the fiscal years ended September 30, 2015 and 2014, changes to and ending balances of the sales returns reserve were as follows:



	2015		2014


Sales returns reserve balance - beginning of year	$	10	$	20
Additions to the sales returns reserve		-		24
Deductions against the sales returns reserve		(10)		(34)
Sales returns reserve balance - end of year	$	-	$	10

Software Development Costs

The Company capitalizes certain software development costs as well as purchased software upon achieving technological feasibility of the related products. Costs that are incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product. Once technological feasibility is established, software development costs are capitalized until the product is available for general release to customers. Such capitalized costs are amortized to cost of software licenses straight-line over the estimated life of the product, generally nine to 18 months. The Company evaluates the realizability of the assets and the related periods of amortization on a regular basis. Judgment is required in determining when technological feasibility of a product is established as well as its economic life. During fiscal years 2016 and 2015, there were no significant costs incurred during the period after technological feasibility was established and the time in which the product became available for general release. During fiscal year 2014, the Company capitalized $0.3 million of software development costs.

For the fiscal year ended September 30, 2014, amounts related to capitalized and purchased software development costs were as follows:


	September 30,
	2014

Capitalized and purchased software balance - beginning of year	$	350
Capitalized software development costs		250
Amortization of capitalized software development costs		(600)
Capitalized and purchased software balance - end of year	$	-

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash deposited with banks and highly liquid securities consisting of money market investments with original maturities of 90 days or less.

Concentration of Credit Risks and Major Customers

Financial instruments, which potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. The Company’s cash is maintained with what management believes to be a high-credit quality financial institution. At times, deposits held at this bank may exceed the federally insured limits. Management believes that the financial institutions that hold the Company’s deposits are financially sound and have minimal credit risk. Risks associated with cash and cash equivalents are mitigated by the Company’s investment policy, which limits the Company’s investing of excess cash into only money market mutual funds.

The Company licenses its products and services directly to end-users and indirectly to end-users through U.S. and non-U.S. distributors and other software resellers, under customary credit terms. The Company’s agreement with Lifeboat expired in early 2015 and, to manage the transition, the Company has refocused part of its Inside Sales Team to manage and pursue the book of business previously handled by Lifeboat. No customer constituted a significant portion (more than 10%) of revenues or accounts receivable for the years ended September 30, 2016 and 2015. Other than Lifeboat, no other customer constitutes a significant portion of revenues or accounts receivable for the year ended September 30, 2014. Lifeboat, accounted for 15% of total revenue for the year ended September 30, 2014. The Company performs ongoing credit evaluations of its customers and generally does not require collateral.

Deferred Revenue

Deferred revenue consisted of the following at September 30:


	September 30,
	2016		2015
	(In thousands)

Maintenance	$	7,781	$	7,594
License		2,001		981
Other		85		69
Total		9,867		8,644

Less: Long-term portion of deferred revenue		(237)		(192)

Current portion of deferred revenue	$	9,630	$	8,452

Deferred maintenance revenue consists primarily of the unearned portion of customer support services provided by the Company to customers who purchased maintenance agreements for the Company’s products. Maintenance revenues are recognized on a straight-line basis over the term of the maintenance period, generally 12 months. Deferred license revenue consists primarily of the unearned portion of revenue from subscription sales and are recognized on a straight-line basis over the term of the subscription period, generally 12 months.

Other deferred revenue consists of deferred professional services revenue generated from arrangements that are invoiced in accordance with the terms and conditions of the arrangement but do not meet all the criteria for revenue recognition and are, therefore, deferred until all revenue recognition criteria are met.

Property and Equipment

Property and equipment consists of office equipment, furniture and fixtures, software and leasehold improvements, all of which are recorded at cost. Depreciation and amortization are provided using the straight-line method over the lesser of the estimated useful lives of the related assets or term of the related leases. Useful lives and lease terms range from three to seven years. Depreciation and amortization expense related to property and equipment was $0.4. million, $0.3 million and $0.2 million, respectively, for the years ended September 30, 2016, 2015 and 2014.

Long-Lived Assets

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable and an impairment loss is recognized when it is probable that the estimated cash flows are less than the carrying amount of the asset.

During fiscal 2015, as a result of an interim impairment test of goodwill and long-lived assets (see Note 2), the Company recorded an impairment charge of $4.9 million for the intellectual property acquired from Panopticon (now known as Datawatch AB) and $5.4 million for the customer lists acquired from Panopticon.

Long-Lived Assets: Acquired Intellectual Property

Acquired intellectual property consists of software source code acquired through business combinations in prior years. The acquired intellectual property assets are being amortized to cost of software licenses using the straight-line method over the estimated life of the asset, ranging from five to seven and a half years.

Acquired intellectual property, net, were comprised of the following at September 30, 2016 and 2015:


September 30, 2016
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Panopticon intellectual property	7.5	$	3,005	$	(1,859)	$	1,146
Monarch intellectual property	5		8,616		(7,764)		852

Total		$	11,621	$	(9,623)	$	1,998


September 30, 2015
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Panopticon intellectual property	7.5	$	3,005	$	(1,599)	$	1,406
Monarch intellectual property	5		8,616		(6,041)		2,575

Total		$	11,621	$	(7,640)	$	3,981

Amortization expense related to the acquired intellectual property assets for the years ended September 30, 2016, 2015 and 2014, was $2.0 million, $2.2 million and $2.8 million, respectively.

The future amortization expense related to the acquired intellectual property is as follows (in thousands):



Fiscal Years Ending September 30,

2017	$	1,112
2018		260
2019		259
2020		259
2021		108
Total future amortization expense	$	1,998

Long-Lived Assets: Other Intangible Assets

Other intangible assets consist of trade names, patents and customer lists acquired through business combinations in prior years. The values allocated to these intangible assets are amortized using the straight-line method over the estimated useful life of the related asset.

Other intangible assets, net, were comprised of the following at September 30, 2016 and 2015:


September 30, 2016
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Patents	20	$	160	$	(96)	$	64
Customer lists	14		3,574		(2,577)		997
Trade names	3		120		(120)		-

Total		$	3,854	$	(2,793)	$	1,061


September 30, 2015
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Patents	20	$	160	$	(88)	$	72
Customer lists	14		3,574		(2,396)		1,178
Trade names	3		120		(100)		20

Total		$	3,854	$	(2,584)	$	1,270

There was no amortization related to other intangible assets charged to cost of software licenses expense for fiscal 2016 and 2015. Amortization expense related to other intangible assets charged to cost of software licenses totaled $0.6 million for fiscal 2014. Amortization expense related to other intangible assets charged to sales and marketing totaled $0.2 million, $0.3 million and $0.6 million for fiscal 2016, 2015 and 2014, respectively. Amortization expense related to other intangible assets charged to general and administrative expense totaled $20,000 for fiscal 2016 and $48,000 for each of the fiscal years 2015 and 2014. There was no amortization related to other intangible assets charged to interest expense for fiscal 2016 and 2015. Amortization expense related to other intangible asset charged to interest expense totaled $0.1 million for fiscal 2014.

The future amortization expense related to amortizing other intangible assets is as follows (in thousands):



Fiscal Years Ending September 30,

2017	$	92
2018		92
2019		92
2020		92
2021		92
Thereafter		601
Total future amortization expense	$	1,061

Goodwill and Indefinite-Lived Assets

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of acquired businesses. Indefinite-lived intangibles are intangible assets whose useful lives are indefinite in that their lives extend beyond the foreseeable horizon – that is there is no foreseeable limit on the period of time over which they are expected to contribute to the cash flows of the reporting entity. The Company accounts for these items in accordance with FASB’s ASC 350 Intangibles – Goodwill and Other. This requires that goodwill and intangible assets having indefinite lives are not amortized but instead are reviewed annually, or more frequently as a result of an event or change in circumstances, for possible impairment with impaired assets written down to fair value. Goodwill and assembled workforce are considered indefinite-lived intangibles. The Company conducts its annual impairment test for goodwill and indefinite-lived intangible assets during the fourth quarter of each fiscal year. In 2016, the Company conducted its annual goodwill impairment test on July 31, 2016, and concluded that no impairment was indicated. During fiscal year 2015, the Company identified several events, that when combined, were determined to require an interim impairment test. As a result, the Company recognized a non-cash, pre-tax impairment charge of $21.7 million for the impairment of goodwill in fiscal year 2015(see Note 2).

Fair Value Measurements

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and accounts payable. The estimated fair values have been determined through information obtained from market sources and management estimates. The estimated fair value of certain financial instruments including cash equivalents, accounts receivable and account payable, approximate the carrying value due to their short-term maturity.

The fair value of the Company’s financial assets and liabilities are measured using inputs from the three levels of fair value hierarchy which are as follows:

 Level 1 — Quoted prices in active markets for identical assets or liabilities;

 Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company classified its cash equivalents, which primarily include money market mutual funds, of $18.8 million and $25.7 million as of September 30, 2016 and 2015, respectively, within Level 2 of the fair value hierarchy.

As of September 30, 2016 and 2015, the Company’s assets that are measured on a recurring basis include the following (in thousands):



	September 30, 2016						September 30, 2015
	Fair Value Measurement						Fair Value Measurement
	Using Input Types						Using Input Types
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Money market funds	$	-	$	18,771	$	-	$	-	$	25,724	$	-
Total	$	-	$	18,771	$	-	$	-	$	25,724	$	-

Non-financial assets such as goodwill and long-lived assets are also subject to non-recurring fair value measurements if they are deemed to be impaired. The impairment models used for nonfinancial assets depend on the type of asset and are accounted for in accordance with FASB’s guidance on fair value measurement. The fair value measurements for these non-financial assets were calculated using a discounted cash flow approach, which includes unobservable inputs classified as Level 3 within the fair value hierarchy. See Note 2 for additional discussion regarding the fair value methods used for these assets. The amount and timing of future cash flows was based on the Company’s most recent operational forecasts. The Company uses the assistance of an independent consulting firm to develop valuation assumptions. See Note 2 for additional discussion regarding the impairment of goodwill and long-lived assets.

As of September 30, 2016 and 2015, the Company’s assets that are measured on a non-recurring basis include the following (in thousands):


	September 30, 2016						September 30, 2015
	Fair Value Measurement						Fair Value Measurement
	Using Input Types						Using Input Types
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Acquired intellectual property, net	$	-	$	-	$	1,998	$	-	$	-	$	3,981
Other intangible assets, net		-		-		1,061		-		-		1,270
Goodwill and indefinite-lived assets		-		-		6,685		-		-		6,685
Total	$	-	$	-	$	9,744	$	-	$	-	$	11,936

Income Taxes

The provision for income taxes is based on the earnings or losses reported in the consolidated financial statements. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company follows the accounting guidance for uncertain tax positions. This guidance clarifies the accounting for income taxes by prescribing the minimum threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.

The following table details the derivation of weighted-average shares outstanding used in the calculation of basic and diluted net loss for each period (in thousands, except share data):



	Years Ended
	September 30,
	2016		2015		2014

Net loss	$	(14,632)	$	(49,787)	$	(22,383)
Weighted-average number of common shares outstanding		11,758		11,368		9,998

Net loss per share	$	(1.24)	$	(4.38)	$	(2.24)

As the Company was in a net loss position in fiscal years 2016, 2015 and 2014, all common stock equivalents in the respective periods were anti-dilutive. As a result of being anti-dilutive, 384,312 shares, 259,424 shares and 11,059 shares for the years ended September 30, 2016, 2015 and 2014, respectively, were excluded in the calculation above.

Foreign Currency Translations and Transactions

The Company’s foreign subsidiaries functional currency is their local currency. As a result, assets and liabilities of foreign subsidiaries are translated into U.S. dollars at rates in effect at each balance sheet date. Revenues, expenses and cash flows are translated into U.S. dollars at average rates prevailing during the respective period. The related translation adjustments are reported as a separate component of shareholders’ equity under the heading “Accumulated Other Comprehensive Loss.” Included in comprehensive loss are the foreign currency translation adjustments. Foreign currency translation gains in fiscal year 2016 were $0.1 million Foreign currency translation losses in fiscal years 2015 and 2014 were $0.4 million and $0.3 million, respectively.

Gains and losses resulting from transactions that are denominated in currencies other than the applicable unit’s functional currency are included in the operating results of the Company and were losses of $0.1 million for the years ended September 30, 2016, 2015, and 2014.

Advertising and Promotional Materials

Advertising and promotional costs are expensed as incurred and amounted to $0.6 million, $0.1 million and $0.8 million in fiscal years 2016, 2015 and 2014, respectively.

Share-Based Compensation

The Company recognizes the fair value of share-based awards over the requisite service period of the individual awards, which generally equals the vesting period. All of the Company’s share-based awards are accounted for as equity instruments and there have been no liability awards granted. See additional share-based compensation disclosure in Note 7.

Segment Information and Revenue by Geographic Location

The Company has determined that it has only one reportable segment. The Company’s chief operating decision maker, its Chief Executive Officer, does not manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and operating results. See Note 10 for information about the Company’s revenue by geographic operations.

Guarantees and Indemnifications

The Company’s software products are sold under warranty against certain defects in material and workmanship for a period of 30 days from the date of purchase. The Company has never incurred significant expense under its product or service warranties and does not expect to do so in the future. As a result, the Company believes its exposure related to these warranty agreements is minimal. Accordingly, there are no liabilities recorded for warranty claims as of September 30, 2016 or 2015.

The Company enters into indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company agrees to indemnify, hold harmless, and to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally its customers, in connection with any patent, copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. The term of these indemnification agreements is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes its exposure related to these agreements is minimal. Accordingly, the Company has no liabilities recorded for these potential obligations as of September 30, 2016 or 2015.

Certain of the Company’s agreements also provide for the performance of services at customer sites. These agreements may contain indemnification clauses, whereby the Company will indemnify the customer from any and all damages, losses, judgments, costs and expenses for acts of its employees or subcontractors resulting in bodily injury or property damage. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has general and umbrella insurance policies that would enable it to recover a portion of any amounts paid. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes its exposure related to these agreements is minimal. Accordingly, the Company has no liabilities recorded for these potential obligations as of September 30, 2016 or 2015.

As permitted under Delaware law, the Company has agreements with its directors whereby the Company will indemnify them for certain events or occurrences while the director is, or was, serving at the Company’s request in such capacity. The term of the director indemnification period is for the later of ten years after the date that the director ceases to serve in such capacity or the final termination of proceedings against the director as outlined in the indemnification agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company’s director and officer insurance policy limits the Company’s exposure and would enable it to recover a portion of any future amounts paid. As a result of its insurance policy coverage for directors, the Company believes its exposure related to these indemnification agreements is minimal. The Company has no liabilities recorded for these potential obligations as of September 30, 2016 or 2015.

Research and Development Costs

Research and development costs are expensed as incurred to the extent the costs do not meet the capitalization requirements.

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted. The Company is in the process of evaluating the potential impacts of this new guidance on the Company’s consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to simplify various aspects of how share-based payments are accounted for and presented in financial statements. The standard is effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the effect this standard will have on the Company’s consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize, on the balance sheet, leases with a lease terms of greater than twelve months as a right-of-use asset and a lease liability. The standard is effective for fiscal years beginning after December 15, 2018. The Company is currently evaluating the effect that the standard will have on the Company’s consolidated financial statements and related disclosures.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position to simplify the presentation of deferred income taxes. The standard is effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. As of October 1, 2015, the Company elected to adopt early the pronouncement on a prospective basis. Adoption of this amendment did not have an effect on the Company's financial position or results of operations, and prior periods were not retrospectively adjusted.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU is the result of a joint project by the FASB and the International Accounting Standards Board (“IASB”) to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”) that would: remove inconsistencies and weaknesses, provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices across entities, jurisdictions, industries, and capital markets, improve disclosure requirements and resulting financial statements, and simplify the presentation of financial statements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU was initially effective for annual reporting periods beginning after December 15, 2016. On July 9, 2015, the FASB voted to delay the effective date of the new revenue standard by one year, but to permit entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating the effect that the updated standard will have on the Company’s consolidated financial statements and related disclosures.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.

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IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Sep. 30, 2016

Impairment of Goodwill and Intangible Assets [Abstract]

Impairment of Goodwill and Intangible Assets

NOTE 2. IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of acquired businesses. Indefinite-lived intangibles are intangible assets whose useful lives are indefinite in that their lives extend beyond the foreseeable horizon – that is there is no foreseeable limit on the period of time over which they are expected to contribute to the cash flows of the reporting entity. The Company accounts for these items in accordance with Accounting Standards Codification (“ASC”) 350 Intangibles – Goodwill and Other, which requires that impairment testing for goodwill is performed at least annually at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). The Company has determined that it is comprised of only one reporting unit. The Company performs its annual impairment test as of July 31st. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Examples of these events or circumstances include:

A significant adverse long term outlook;

Unanticipated competition or the introduction of a disruptive technology;

Failure of an anticipated product or product line;

The testing for recoverability under the ASC 360-10 Impairment or Disposal of Long-Lived Assets of a significant asset group;

A loss of key personnel; and

An expectation that a significant portion of the Company will be sold or otherwise disposed of.

The impairment test for goodwill uses a two-step approach. Step one compares the fair value of the reporting unit to its carrying value including goodwill. If the carrying value exceeds the fair value, there is a potential impairment and step two must be performed. Step two compares the carrying value of the reporting unit's goodwill to its implied value (i.e., the fair value of the reporting unit less the fair value of the unit's assets and liabilities, including identifiable intangible assets). If the carrying value of goodwill exceeds its implied value, the excess is recorded as an impairment.

There were no impairment charges recognized during the fiscal year 2016. During the first quarter of fiscal 2015, the Company identified several events, that when combined, were determined to require an interim impairment test. These events consisted of a material decrease in revenue compared to prior year and compared to the prior quarter which resulted in a decision to pre-release earnings information; necessary operational changes within the Sales Organization which drove a shift in our sales approach; and a sustained decrease in share price.

Under Step 1 of the impairment test the Company determined fair value based on discounted cash flows using an income approach with the multi-period excess earnings method which estimates the fair value of the asset by discounting the future projected excess earnings associated with the asset to present value as of the valuation date. Based on the analysis, it was determined that the carrying value of the Company including goodwill exceeded the fair value, requiring the Company to perform Step 2 of the goodwill impairment test to measure the amount of impairment loss, if any.

The Company then performed Step 2 of the impairment test, noting fair value of the long-lived assets (other than goodwill), of $3.0 million, was less than the carrying amount of those assets and, as a result, recorded a non-cash, pre-tax impairment charge of $10.3 million during the first fiscal quarter of 2015. The Company then determined the implied value of goodwill was $6.7 million, which was less than its carrying value and, as a result, the Company recognized a non-cash, pre-tax charge of $21.7 million during the first fiscal quarter of 2015. These impairment charges are included under the caption "Impairment of goodwill and long-lived assets" in our consolidated statements of operations.

The valuation methods utilized to value the long-lived assets and the goodwill discussed above are based on the amount and timing of expected future cash flows and growth rates and include a determination of an appropriate discount rate. The cash flows utilized in the discounted cash flow analyses were based on financial forecasts developed internally by management. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized. Determining the fair value using a discounted cash flow method requires significant estimates and assumptions, including market conditions, discount rates, and long-term projections of cash flows. The Company’s estimates are based upon historical experience, current market trends, projected future volumes and other information. The Company believes that the estimates and assumptions underlying the valuation methodology are reasonable; however, different estimates and assumptions could result in a different estimate of fair value. In estimating future cash flows, the Company relies on internally generated projections for a defined time period for revenue and operating profits, including capital expenditures, changes in net working capital, and adjustments for non-cash items to arrive at the free cash flow available to invested capital. Where applicable, a terminal value utilizing a constant growth rate of cash flows is used to calculate a terminal value after the explicit projection period. The future projected cash flows for the discrete projection period and the terminal value are discounted at a risk adjusted discount rate to determine the fair value of the reporting unit.

The following table presents the changes in the carrying amount of our goodwill (in thousands):



Balance at September 30, 2014	$	28,383
Goodwill impairment		(21,698)
Balance at September 30, 2015		6,685
Goodwill impairment		-
Balance at September 30, 2016	$	6,685

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

Commitments and Contingencies [Abstract]

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ACCRUED EXPENSES

12 Months Ended

Sep. 30, 2016

Accrued Expenses [Abstract]

Accrued Expenses

NOTE 3. ACCRUED EXPENSES

Accrued expenses consisted of the following at September 30, 2016 and 2015:



	September 30,
	2016		2015

Royalties and commissions	$	845	$	999
Payroll and related expenses		609		693
Professional fees and consulting		346		368
Other		519		596
Total	$	2,319	$	2,656

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Sep. 30, 2016

Commitments and Contingencies

NOTE 4. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases various facilities and equipment in the U.S. and overseas under non-cancelable operating leases which expire at various dates through 2022. The lease agreements generally provide for the payment of minimum annual rentals, pro-rata share of taxes and maintenance expenses. Rental expense for all operating leases was $1.1 million for fiscal year 2016 and $1.0 million for both fiscal years 2015 and 2014. At September 30, 2016, deferred rent totaled $0.4 million, which is included under the caption “Other long-term liabilities” in the Company’s consolidated balance sheets, for the year ended September 30, 2016. There was no deferred rent for the year ended September 30, 2015. Certain of the Company's facility leases include options to renew.

As of September 30, 2016, future minimum rental commitments under non-cancelable operating leases are as follows (in thousands):



Years Ending September 30,
2017	$	889
2018		675
2019		675
2020		575
2021		576
Thereafter		733
Total future minimum lease payments	$	4,123

Royalties

Royalty expense included in cost of software licenses was $0.7 million, $0.6 million and $0.4 million for the years ended September 30, 2016, 2015 and 2014, respectively. Minimum royalty obligations were insignificant for fiscal years 2016, 2015 and 2014.

Contingencies

From time to time, the Company is subject to claims and may be party to actions that arise in the normal course of business. The Company is not party to any litigation that management believes will have a material adverse effect on the Company's consolidated financial condition or results of operations.

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RESTRUCTURING CHARGES

12 Months Ended

Sep. 30, 2016

RESTRUCTURING CHARGES [Abstract]

Restructuring Charges

NOTE 5. RESTRUCTURING CHARGES

During fiscal year 2015, the Company undertook restructuring efforts to (i) lower expenses by reducing the investment in legacy solutions and realigning international operations, primarily impacting engineering and product development, and (ii) further reduce the workforce across all functional areas of the Company in an effort to rebalance investments to match the go-to-market model. The restructuring efforts began during the quarter ended December 31, 2014 and continued during the quarter ended March 31, 2015, when the remaining employees impacted by the restructuring were notified. The Company recorded restructuring charges of $1.8 million during fiscal year 2015 including severance and related benefit costs related to workforce reductions. The Company completed all restructuring actions associated with these plans during fiscal year 2015. The Company did not undertake any restructuring efforts during fiscal 2016.

The following table presents the changes in the accrual for restructuring charges, which is included under the caption “Accrued expenses” in our consolidated balance sheets, as of September 30, 2015 (in thousands):


Balance at September 30, 2014	$	-
Charges		1,786
Payments		(1,555)
Balance at September 30, 2015		231
Charges		-
Payments		(231)
Balance at September 30, 2016	$	-

The following table presents restructuring charges included in our consolidated statements of operations, for the year ended September 30, 2015 (in thousands):


Cost of maintenance and services	$	401
Sales and marketing		804
Engineering and product development		345
General and administrative		236
Total	$	1,786

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INCOME TAXES

12 Months Ended

Sep. 30, 2016

Income Taxes [Abstract]

Income Taxes

NOTE 6. INCOME TAXES

Loss from operations before income taxes consists of the following for the years ended September 30:



	2016		2015		2014
	(In thousands)

Domestic	$	(11,227)	$	(45,812)	$	(17,533)
Foreign		(1,932)		(6,699)		(5,369)

Total	$	(13,159)	$	(52,511)	$	(22,902)

The (provision) benefit for income taxes consisted of the following for the years ended September 30:



	2016		2015		2014
	(In thousands)

Current:
Federal	$	66	$	53	$	8
State		12		4		(12)
Foreign		16		-		-
		94		57		(4)

Deferred:
Federal		(4,766)		(5,975)		4,890
State		(397)		(853)		882
Foreign		(861)		3,221		(176)
Change in valuation allowance		4,457		6,274		(5,073)
		(1,567)		2,667		523

Total (provision) benefit	$	(1,473)	$	2,724	$	519

At September 30, 2016, the Company had U.S. federal tax loss carryforwards of $50.2 million, expiring at various dates through 2036, including $0.2 million resulting from an acquisition during 2004 which are subject to additional annual limitations as a result of the changes in ownership, and had $28.5 million in state tax loss carryforwards, which also expire at various dates through 2036. Included in the Federal and state net operating loss carryforwards are $7.6 million of tax deductions from share based compensation, which will be recorded as additional paid-in capital when realized. These loss carryforwards are available to reduce future federal, state and foreign taxable income but are subject to review and possible adjustment by the appropriate taxing authorities. The loss carryforwards, which may be utilized in any future period, may be subject to limitations based upon changes in the ownership of the Company’s stock. An alternative minimum tax credit of $7,000 is available to offset future regular federal taxes. Federal research and development credits of $1.0 million expire beginning in 2021. State research and development credits of $0.1 million expire at various years through 2030. In addition, the Company has the following net operating loss carryforwards: U.K. losses of $9.8 million with no expiration date, Australia losses of $3.5 million with no expiration date, Germany losses of $2.2 million with no expiration date, Singapore losses of $2.9 million with no expiration date, and Sweden losses of $10.6 million with no expiration date.

The components of the Company’s net deferred tax assets are as follows at September 30:



	2016		2015
	(In thousands)

Deferred tax liabilities:
Prepaid expenses	$	(296)	$	(271)
Acquired intangibles		(608)		(688)
		(904)		(959)
Deferred tax assets:
Net operating loss carryforwards		23,134		19,044
Research and development credits		1,316		955
Alternative minimum tax credits		7		7
Accounts and notes receivable reserves		18		52
Depreciation and amortization		2,709		2,538
Deferred rent		138		-
Other		306		265
		27,628		22,861

Total		26,724		21,902

Valuation allowance		(26,724)		(20,337)

Deferred tax asset, net	$	-	$	1,565

The valuation allowance relates to the Company’s U.S. and foreign net operating losses and other deferred tax assets and is recorded based upon the uncertainty surrounding their realizability, as these assets can only be realized via profitable operations in the respective tax jurisdictions. The Company records a deferred tax asset or liability based on the difference between the financial statement and tax basis of assets and liabilities, as measured by enacted tax rates assumed to be in effect when these differences reverse. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence including its past operating results, the existence of cumulative income in the most recent fiscal years, changes in the business in which the Company operates and its forecast of future taxable income. In determining future taxable income, the Company is responsible for assumptions utilized including the amount of federal, state and international pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies.

During the fiscal year ended September 30, 2016, the Company reassessed its valuation allowance assertion with regards to Datawatch AB, the Company’s subsidiary located in Sweden. The Company analyzed forecasted profits, carryback potential, tax planning strategies, and the reversal of existing taxable temporary differences of the same type in the same period. Factors the Company considered were as follows:

History of net operating losses in Sweden;

The Company’s revised forecast indicates that its Sweden subsidiary will not achieve profitability with certainty in the foreseeable future;

Net operating losses have no expiration period;

The Swedish subsidiary has no carryback potential;

The Swedish subsidiary has no tax planning strategies available to recognize its deferred tax assets; and

Reversal temporary differences in Sweden will not allow the Swedish subsidiary to utilize its existing deferred tax assets.

Although the Swedish subsidiary has no expiration on its net operating loss carryovers, the negative evidence noted above outweighs this positive evidence. Accordingly, the Company has recorded a full valuation allowance on its deferred tax assets in Sweden during the fiscal year ended September 30, 2016.

The assumptions underlying the valuation allowance require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage the underlying business. The Company had tax losses in each of the fiscal years 2016, 2015 and 2014. Accordingly, as of September 30, 2016, the Company determined that it is more likely than not that the deferred tax assets will not be realized in all of its jurisdictions and a full valuation allowance has been recorded in the U.S., U.K., Australia, Germany, Singapore, and Sweden.

The following table reconciles the Company’s tax (provision) benefit based on its effective tax rate to its tax benefit based on the federal statutory rate of 34% for the years ended September 30, 2016, 2015 and 2014 (in thousands):



	2016		2015		2014
	(In thousands)

Benefit at federal statutory rate	$	4,470	$	17,853	$	7,757
State, net of federal impact		264		579		474
Foreign income taxes		204		(555)		642
Valuation allowance increase		(6,385)		(6,164)		(5,073)
Return to provision adjustments		345		(621)		(48)
Foreign rate change		-		-		(394)
Stock-based compensation		(545)		(946)		(1,103)
NOL adjustment due to subsidiary liquidation		-		-		(1,345)
Acquisition costs		-		-		(59)
Change in uncertain tax positions		105		67		386
IRS audit adjustments		-		-		(535)
Goodwill and intangible asset impairment		-		(7,377)		-
Other		69		(112)		(183)

Income tax (expense) benefit	$	(1,473)	$	2,724	$	519

Provision for Uncertain Tax Positions

The Company applies the accounting requirements for uncertain tax positions which provide a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. In accordance with these requirements, the Company first determines whether a tax authority would “more likely than not” sustain its tax position if it were to audit the position with full knowledge of all the relevant facts and other information. For those tax positions that meet this threshold, the Company measures the amount of tax benefit based on the largest amount of tax benefit that the Company has a greater than 50 percent chance of realizing in a final settlement with the relevant authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard, or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations.

At September 30, 2015, the Company had a cumulative tax liability of $0.3 million related to federal, state, and foreign tax exposure that could result in cash payments. The Company decreased the tax liability by $0.1 million during the fiscal year ended September 30, 2016. The decrease related to the statute of limitations expiring on U.S. and foreign uncertain tax positions. The Company does not expect its tax liability to change significantly during the next twelve months. The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of income tax expense in its consolidated statements of operations. The Company has not accrued interest or penalties associated with this liability for the fiscal year ended September 30, 2016.

The Company’s unrecognized tax benefits (before consideration of any valuation allowance) represent differences between tax positions taken by the Company in its various consolidated and separate worldwide tax returns and the benefits recognized and measured for uncertain tax positions. This amount also represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods. The change in the unrecognized tax benefits during the fiscal year ended September 30, 2016 was as follows (in thousands):


Balance at September 30, 2014	$	335
Additions/Reductions for prior year tax positions		(66)
Balance at September 30, 2015		269
Reductions for prior year tax positions		(114)
Balance at September 30, 2016	$	155

In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such jurisdictions as the United Kingdom, Germany, Singapore, Australia and the United States, and as a result, files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The fiscal years ended September 30, 2013 through September 30, 2015 are generally still open to examination in the jurisdictions listed above. The Company was under audit by the Internal Revenue Service for the fiscal year ended September 30, 2011. The audit was completed during the fourth quarter ended September 30,2014 and resulted in the reduction of $0.5 million related to research credits, AMT credits, and NOL carryforwards which had a full valuation. The Company did not have to make any cash payments as a result of this audit.

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SHARE-BASED COMPENSATION

12 Months Ended

Sep. 30, 2016

Share-Based Compensation [Abstract]

Share-Based Compensation

NOTE 7. SHARE-BASED COMPENSATION

The Company provides its employees, officers, consultants and directors with stock options, restricted stock units (“RSUs”) and other stock rights for common stock of the Company on a discretionary basis. All option and RSU grants are subject to the terms and conditions determined by the Compensation and Stock Committee of the Board of Directors (the “Committee”), and generally vest over a three-year period and expire either seven or ten years from the date of grant. All awards granted during the year ended September 30, 2016 were granted under the Company’s Second Amended and Restated Equity Compensation and Incentive Plan (the “2011 Plan”). At September 30, 2016, a total of 2,275,392 shares were authorized for issuance under the 2011 Plan and 176,904 shares remained available for future issuance thereunder.

On January 20, 2006, the Company established the Datawatch Corporation 2006 Equity Compensation and Incentive Plan (the “2006 Plan”) which provides for the granting of both incentive stock options and non-qualified options, the award of Company common stock and opportunities to make direct purchases of Company common stock, as determined by the Committee. Options pursuant to this plan were available to be granted through April 26, 2011 and vest as specified by the Committee.

On April 26, 2011, the Company established the 2011 Plan which provides for the granting of both incentive stock options and non-qualified options, the award of restricted stock, RSUs, and any other equity-based interests (collectively, “Stock Rights”), as determined by the Committee. Options pursuant to this plan may be granted through April 25, 2021 and shall vest as specified by the committee.

Under the 2006 Plan and 2011 Plan, stock options are granted at exercise prices not less than the fair market value of the underlying common stock at the date of grant. All of the Company’s share-based awards are accounted for as equity instruments and there have been no liability awards granted. Share-based compensation expense for share-based payment awards, issued to employees and directors, is measured based on the grant-date fair value of the award and recognized on a straight-line basis over the requisite period of the award. Share-based compensation expense for share-based payment awards, issued to non-employees, is revalued each fiscal quarter based on the current fair value of the award and recognized on over the requisite period of the award.

The following table presents share-based compensation expenses included in our audited consolidated statements of operations (in thousands):


	Years Ended
	September 30,
	2016		2015		2014
	(In thousands)
Cost of maintenance and services	$	37	$	63	$	143
Sales and marketing		1,028		3,110		5,243
Engineering and product development		359		417		1,585
General and administrative		1,407		1,143		1,475
Total	$	2,831	$	4,733	$	8,446

Stock Options

The Company estimates the fair value of each share-based award (except RSUs, which are discussed below) using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options, a risk-free interest rate and dividend yield. No options were granted by the Company in the fiscal years 2016 and 2015. The total intrinsic value of options exercised during the years ended September 30, 2016, 2015 and 2014 was $15,000, $0.1 million and $0.7 million, respectively. Total cash received from option exercises during the years ended September 30, 2016, 2015 and 2014 was $0.1 million, $0.1 million and $0.2 million, respectively. There was no tax benefit realized from stock option exercised during the years ended September 30, 2016 and 2015. The tax benefit realized from stock options exercised during the fiscal year 2014 was $24,000. As of September 30, 2016, there was no unrecognized compensation cost related to non-vested stock option arrangements. Many of the assumptions used in the determination of share-based compensation expense are judgmental and highly volatile.

The expected option life is based on historical trends and data. With regard to the expected option life assumption, the Company considers the exercise behavior of past grants and models the pattern of aggregate exercises. Patterns are determined on specific criteria of the aggregate pool of optionees including the reaction to vesting, realizable value and short-time-to-maturity effect. The Company determined the volatility for options granted using the historical volatility of the Company’s common stock. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. Dividend yield of zero is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. Based on the Company’s historical voluntary turnover rates, an annualized estimated forfeiture rate of 10% has been used in calculating the estimated cost. Additional expense will be recorded if the actual forfeiture rate is lower than estimated, and a recovery of prior expense will be recorded if the actual forfeiture rate is higher than estimated.

The following table is a summary of combined stock option activity under the 2006 Plan and the 2011 Plan:



		Weighted-		Weighted-
		Average		Average	Aggregate
		Exercise		Remaining	Intrinsic
	Number of Options	Price Per Share		Life (In years)	Value (In thousands)

Outstanding, September 30, 2013	363,209	$	5.76	4.33	$	8,042
Granted	-		-	-		-
Canceled/Forfeited	-		-	-		-
Exercised	(42,709)		4.18	-		719
Outstanding, September 30, 2014	320,500	$	5.97	3.74	$	1,572
Granted	-		-	-		-
Canceled/Forfeited	-		-	-		-
Exercised	(18,000)		2.91	0.89		71
Outstanding, September 30, 2015	302,500	$	6.15	2.86	$	446
Granted	-		-	-		-
Canceled/Forfeited	(5,000)		3.61	-		7
Exercised	(22,500)		4.73	1.00		15
Outstanding, September 30, 2016	275,000	$	6.31	5.01	$	715
Exercisable, September 30, 2016	275,000	$	6.31	5.01	$	715
Unvested awards expected to vest, September 30, 2016	-	$	-	-	$	-

The following table presents weighted-average price and life information regarding options outstanding and exercisable at September 30, 2016:


Outstanding								Exercisable
				Weighted-						Weighted-
				Average		Weighted-				Average
				Remaining		Average
Exercise		Number of		Contractual		Exercise				Exercise
Prices		Shares		Life (Years)		Price		Shares		Price

	$3.46		150,000		4.37	$	3.46		150,000	$	3.46
	$4.97		50,000		4.57		4.97		50,000		4.97
	$12.92		75,000		6.56		12.92		75,000		12.92

			275,000		5.01	$	6.31		275,000	$	6.31

Restricted Stock Units

The Company periodically grants awards of restricted stock units to its non-employee directors employees on a discretionary basis pursuant to its stock compensation plans. Each RSU entitles the holder to receive, at the end of each vesting period, a specified number of shares of the Company’s common stock. The total number of RSUs unvested at September 30, 2016 was 609,565. Most RSUs vest at the rate of 33.33% on each of the first through third anniversaries of the grant date.

The fair value related to the RSUs was calculated based primarily on the closing stock price of the Company’s common stock on the date of the grant and is being amortized evenly on a pro-rata basis over the vesting period to sales and marketing, engineering and product development, professional services and general and administrative expense. The fair values of the RSUs granted in fiscal years 2016, 2015 and 2014 were $2.7 million (or $5.36 weighted-average fair value per share), $2.0 million (or $7.59 weighted-average fair value per share) and $6.0 million (or $19.98 weighted-average fair value per share), respectively. The Company recorded compensation expense related to RSUs of $2.7 million, $4.5 million and $8.2 million during the years ended September 30, 2016, 2015 and 2014, respectively. These amounts are included in the total share-based compensation expense disclosed above. As of September 30, 2016, there was $3.0 million of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 1.91 years.

The following table presents nonvested RSU information for the fiscal years ended September 30, 2016, 2015 and 2014



	Number of
	RSUs
	Outstanding

Nonvested, September 30, 2014		740,011
Granted		444,068
Canceled/Forfeited		(281,516)
Vested		(332,999)

Nonvested, September 30, 2015		569,564
Granted		506,800
Canceled/Forfeited		(191,364)
Vested		(275,435)
Nonvested, September 30, 2016		609,565

Segment Information and Revenue by Geographic Location [Abstract]

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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-Number Topic 4
-Section E

Reference 15: http://www.xbrl.org/2003/role/presentationRef
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XML 34 R15.htm IDEA: XBRL DOCUMENT

RETIREMENT SAVINGS PLAN	12 Months Ended
RETIREMENT SAVINGS PLAN	Sep. 30, 2016
Retirement Savings Plan [Abstract]
Retirement Savings Plan	Note 8. RETIREMENT SAVINGS PLAN The Company has a 401(k) retirement savings plan covering substantially all of the Company’s full-time U.S. employees. Under the provisions of the plan, employees may contribute a portion of their compensation, subject to certain limitations. The Company, at the discretion of the Board of Directors, may make contributions on behalf of its employees under this plan. Such contributions, if any, become fully vested after five years of continuous service. The Company did not make any contributions to the 401(k) retirement savings plan in fiscal 2016, 2015 or 2014.

XML 35 R16.htm IDEA: XBRL DOCUMENT

ISSUANCE OF COMMON STOCK	12 Months Ended
ISSUANCE OF COMMON STOCK	Sep. 30, 2016
Issuance of Common Stock [Abstract]
Issuance of Common Stock	Note 9. ISSUANCE OF COMMON STOCK On February 19, 2014, the Company completed a public offering of 2,018,250 shares of common stock at a price to the public of $28.50 per share. The number of shares the Company sold included the underwriters’ full exercise of their over-allotment option of 263,250 shares. Net proceeds to the Company from the offering, after underwriting discounts and expenses, were $53.6 million.

XML 36 R17.htm IDEA: XBRL DOCUMENT

SEGMENT INFORMATION AND REVENUE BY GEOGRAPHIC LOCATION

12 Months Ended

Sep. 30, 2016

Segment Information and Revenue by Geographic Location

Note 10. SEGMENT INFORMATION AND REVENUE BY GEOGRAPHIC LOCATION

The Company conducts operations in the U.S. and internationally. The following table presents information about the Company’s geographic operations (in thousands):




	Domestic		International		Total

Total Revenue

Year ended September 30, 2016	$	26,055	$	4,407	$	30,462
Year ended September 30, 2015	$	23,793	$	6,428	$	30,221
Year ended September 30, 2014	$	29,071	$	6,016	$	35,087

Total Operating Loss

Year ended September 30, 2016	$	(9,380)	$	(3,749)	$	(13,129)
Year ended September 30, 2015	$	(45,816)	$	(6,626)	$	(52,442)
Year ended September 30, 2014	$	(15,407)	$	(6,258)	$	(21,665)
				.
Total Long-Lived Assets
At September 30, 2016	$	11,126	$	74	$	11,200
At September 30, 2015	$	14,515	$	160	$	14,675

Nature of Business and Summary of Significant Accounting Policies [Abstract]

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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XML 37 R18.htm IDEA: XBRL DOCUMENT

SUBSEQUENT EVENTS	12 Months Ended
SUBSEQUENT EVENTS	Sep. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	Note 11. SUBSEQUENT EVENTS The Company has evaluated all events and transactions that occurred after the balance sheet date and through the date that the consolidated financial statements were available to be issued noting none that require recognition or disclosure.

XML 38 R19.htm IDEA: XBRL DOCUMENT

QUARTERLY RESULTS

12 Months Ended

Sep. 30, 2016

Quarterly Results [Abstract]

Quarterly Results

Note 12. QUARTERLY RESULTS (UNAUDITED)

Supplementary Information:


	First		Second		Third		Fourth
	(In thousands, except per share amounts)

Year Ended September 30, 2016:
Software license revenue	$	3,147	$	3,645	$	3,669	$	4,758
Maintenance revenue		3,602		3,480		3,335		3,498
Professional services revenue		306		299		372		351
Cost of software licenses		689		499		879		761
Cost of maintenance and services		598		610		499		470
Expenses		9,809		9,792		9,562		9,423
Loss from operations		(4,041)		(3,477)		(3,564)		(2,047)
Net loss		(3,964)		(3,362)		(5,374)		(1,932)

Net loss per share – basic	$	(0.34)	$	(0.29)	$	(0.45)	$	(0.16)
Net loss per share – diluted	$	(0.34)	$	(0.29)	$	(0.45)	$	(0.16)

Year Ended September 30, 2015:
Software license revenue	$	3,175	$	3,911	$	4,117	$	4,101
Maintenance revenue		3,409		3,296		3,311		3,513
Professional services revenue		377		255		348		408
Cost of software licenses		861		721		697		723
Cost of maintenance and services		892		1,084		557		589
Expenses		44,661		11,423		10,705		9,750
Loss from operations		(39,453)		(5,766)		(4,183)		(3,040)
Net loss		(36,876)		(5,809)		(4,123)		(2,979)

Net loss per share – basic	$	(3.31)	$	(0.51)	$	(0.36)	$	(0.26)
Net loss per share – diluted	$	(3.31)	$	(0.51)	$	(0.36)	$	(0.26)

Year Ended September 30, 2014:
Software license revenue	$	5,433	$	4,375	$	5,580	$	5,239
Maintenance revenue		2,993		3,127		3,236		3,489
Professional services revenue		383		498		412		322
Cost of software licenses		990		1,024		999		1,000
Cost of maintenance and services		849		634		979		889
Expenses		12,427		12,233		12,368		12,360
Loss from operations		(5,457)		(5,891)		(5,118)		(5,199)
Net loss		(5,614)		(6,737)		(5,157)		(4,875)

Net loss per share – basic	$	(0.66)	$	(0.70)	$	(0.48)	$	(0.40)
Net loss per share – diluted	$	(0.66)	$	(0.70)	$	(0.48)	$	(0.40)

XML 39 R20.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy)

12 Months Ended

Sep. 30, 2016

Basis of Presentation and Principles of Consolidation

These consolidated financial statements include the accounts of Datawatch and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

Revenue Recognition

Allowance for Doubtful Accounts

For the fiscal years ended September 30, 2016, 2015 and 2014, changes to and ending balances of the allowance for doubtful accounts were as follows:


	September 30,
	2016		2015		2014
	(In thousands)

Allowance for doubtful accounts balance - beginning of year	$	106	$	53	$	43
Additions to the allowance for doubtful accounts		51		111		18
Deductions against the allowance for doubtful accounts		(129)		(58)		(8)
Allowance for doubtful accounts balance - end of year	$	28	$	106	$	53

Sales Returns Reserve

For the fiscal years ended September 30, 2015 and 2014, changes to and ending balances of the sales returns reserve were as follows:



	2015		2014


Sales returns reserve balance - beginning of year	$	10	$	20
Additions to the sales returns reserve		-		24
Deductions against the sales returns reserve		(10)		(34)
Sales returns reserve balance - end of year	$	-	$	10

Software Development Costs

For the fiscal year ended September 30, 2014, amounts related to capitalized and purchased software development costs were as follows:


	September 30,
	2014

Capitalized and purchased software balance - beginning of year	$	350
Capitalized software development costs		250
Amortization of capitalized software development costs		(600)
Capitalized and purchased software balance - end of year	$	-

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash deposited with banks and highly liquid securities consisting of money market investments with original maturities of 90 days or less.

Concentration of Credit Risks and Major Customers

Deferred Revenue

Deferred revenue consisted of the following at September 30:


	September 30,
	2016		2015
	(In thousands)

Maintenance	$	7,781	$	7,594
License		2,001		981
Other		85		69
Total		9,867		8,644

Less: Long-term portion of deferred revenue		(237)		(192)

Current portion of deferred revenue	$	9,630	$	8,452

Property and Equipment

Long-Lived Assets

Long-Lived Assets: Acquired Intellectual Property

Acquired intellectual property, net, were comprised of the following at September 30, 2016 and 2015:


September 30, 2016
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Panopticon intellectual property	7.5	$	3,005	$	(1,859)	$	1,146
Monarch intellectual property	5		8,616		(7,764)		852

Total		$	11,621	$	(9,623)	$	1,998


September 30, 2015
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Panopticon intellectual property	7.5	$	3,005	$	(1,599)	$	1,406
Monarch intellectual property	5		8,616		(6,041)		2,575

Total		$	11,621	$	(7,640)	$	3,981

Amortization expense related to the acquired intellectual property assets for the years ended September 30, 2016, 2015 and 2014, was $2.0 million, $2.2 million and $2.8 million, respectively.

The future amortization expense related to the acquired intellectual property is as follows (in thousands):



Fiscal Years Ending September 30,

2017	$	1,112
2018		260
2019		259
2020		259
2021		108
Total future amortization expense	$	1,998

Long-Lived Assets: Other Intangible Assets

Other intangible assets, net, were comprised of the following at September 30, 2016 and 2015:


September 30, 2016
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Patents	20	$	160	$	(96)	$	64
Customer lists	14		3,574		(2,577)		997
Trade names	3		120		(120)		-

Total		$	3,854	$	(2,793)	$	1,061


September 30, 2015
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Patents	20	$	160	$	(88)	$	72
Customer lists	14		3,574		(2,396)		1,178
Trade names	3		120		(100)		20

Total		$	3,854	$	(2,584)	$	1,270

The future amortization expense related to amortizing other intangible assets is as follows (in thousands):



Fiscal Years Ending September 30,

2017	$	92
2018		92
2019		92
2020		92
2021		92
Thereafter		601
Total future amortization expense	$	1,061

Goodwill and Indefinite-Lived Assets

Fair Value Measurements

The fair value of the Company’s financial assets and liabilities are measured using inputs from the three levels of fair value hierarchy which are as follows:

 Level 1 — Quoted prices in active markets for identical assets or liabilities;

 Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of September 30, 2016 and 2015, the Company’s assets that are measured on a recurring basis include the following (in thousands):



	September 30, 2016						September 30, 2015
	Fair Value Measurement						Fair Value Measurement
	Using Input Types						Using Input Types
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Money market funds	$	-	$	18,771	$	-	$	-	$	25,724	$	-
Total	$	-	$	18,771	$	-	$	-	$	25,724	$	-

As of September 30, 2016 and 2015, the Company’s assets that are measured on a non-recurring basis include the following (in thousands):


	September 30, 2016						September 30, 2015
	Fair Value Measurement						Fair Value Measurement
	Using Input Types						Using Input Types
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Acquired intellectual property, net	$	-	$	-	$	1,998	$	-	$	-	$	3,981
Other intangible assets, net		-		-		1,061		-		-		1,270
Goodwill and indefinite-lived assets		-		-		6,685		-		-		6,685
Total	$	-	$	-	$	9,744	$	-	$	-	$	11,936

Income Taxes

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.

The following table details the derivation of weighted-average shares outstanding used in the calculation of basic and diluted net loss for each period (in thousands, except share data):



	Years Ended
	September 30,
	2016		2015		2014

Net loss	$	(14,632)	$	(49,787)	$	(22,383)
Weighted-average number of common shares outstanding		11,758		11,368		9,998

Net loss per share	$	(1.24)	$	(4.38)	$	(2.24)

Foreign Currency Translations and Transactions

Advertising and Promotional Materials

Advertising and promotional costs are expensed as incurred and amounted to $0.6 million, $0.1 million and $0.8 million in fiscal years 2016, 2015 and 2014, respectively.

Share-Based Compensation

Segment Information and Revenue by Geographic Location

Guarantees and Indemnifications

Research and Development Costs

Research and development costs are expensed as incurred to the extent the costs do not meet the capitalization requirements.

Recent Accounting Pronouncements

XML 40 R21.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Sep. 30, 2016

Schedule of Allowance for Doubtful Accounts Receivable

For the fiscal years ended September 30, 2016, 2015 and 2014, changes to and ending balances of the allowance for doubtful accounts were as follows:


	September 30,
	2016		2015		2014
	(In thousands)

Allowance for doubtful accounts balance - beginning of year	$	106	$	53	$	43
Additions to the allowance for doubtful accounts		51		111		18
Deductions against the allowance for doubtful accounts		(129)		(58)		(8)
Allowance for doubtful accounts balance - end of year	$	28	$	106	$	53

Schedule of Sales Returns Reserve

For the fiscal years ended September 30, 2015 and 2014, changes to and ending balances of the sales returns reserve were as follows:



	2015		2014


Sales returns reserve balance - beginning of year	$	10	$	20
Additions to the sales returns reserve		-		24
Deductions against the sales returns reserve		(10)		(34)
Sales returns reserve balance - end of year	$	-	$	10

Schedule of Capitalized and Purchased Software Development Costs

For the fiscal year ended September 30, 2014, amounts related to capitalized and purchased software development costs were as follows:


	September 30,
	2014

Capitalized and purchased software balance - beginning of year	$	350
Capitalized software development costs		250
Amortization of capitalized software development costs		(600)
Capitalized and purchased software balance - end of year	$	-

Schedule of Deferred Revenue

Deferred revenue consisted of the following at September 30:


	September 30,
	2016		2015
	(In thousands)

Maintenance	$	7,781	$	7,594
License		2,001		981
Other		85		69
Total		9,867		8,644

Less: Long-term portion of deferred revenue		(237)		(192)

Current portion of deferred revenue	$	9,630	$	8,452

Schedule of Acquired Intellectual Property, Net

Acquired intellectual property, net, were comprised of the following at September 30, 2016 and 2015:


September 30, 2016
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Panopticon intellectual property	7.5	$	3,005	$	(1,859)	$	1,146
Monarch intellectual property	5		8,616		(7,764)		852

Total		$	11,621	$	(9,623)	$	1,998


September 30, 2015
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Panopticon intellectual property	7.5	$	3,005	$	(1,599)	$	1,406
Monarch intellectual property	5		8,616		(6,041)		2,575

Total		$	11,621	$	(7,640)	$	3,981

Schedule of Other Intangible Assets, Net

Other intangible assets, net, were comprised of the following at September 30, 2016 and 2015:


September 30, 2016
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Patents	20	$	160	$	(96)	$	64
Customer lists	14		3,574		(2,577)		997
Trade names	3		120		(120)		-

Total		$	3,854	$	(2,793)	$	1,061


September 30, 2015
Identified	Weighted		Gross
Intangible	Average		Carrying		Accumulated		Net Carrying
Asset	Useful Life		Amount		Amortization		Amount
	(In years)

Patents	20	$	160	$	(88)	$	72
Customer lists	14		3,574		(2,396)		1,178
Trade names	3		120		(100)		20

Total		$	3,854	$	(2,584)	$	1,270

Schedule of Fair Value, Assets and Liabilities Measured on Non Recurring Basis

As of September 30, 2016 and 2015, the Company’s assets that are measured on a non-recurring basis include the following (in thousands):


	September 30, 2016						September 30, 2015
	Fair Value Measurement						Fair Value Measurement
	Using Input Types						Using Input Types
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Acquired intellectual property, net	$	-	$	-	$	1,998	$	-	$	-	$	3,981
Other intangible assets, net		-		-		1,061		-		-		1,270
Goodwill and indefinite-lived assets		-		-		6,685		-		-		6,685
Total	$	-	$	-	$	9,744	$	-	$	-	$	11,936

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

As of September 30, 2016 and 2015, the Company’s assets that are measured on a recurring basis include the following (in thousands):



	September 30, 2016						September 30, 2015
	Fair Value Measurement						Fair Value Measurement
	Using Input Types						Using Input Types
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Money market funds	$	-	$	18,771	$	-	$	-	$	25,724	$	-
Total	$	-	$	18,771	$	-	$	-	$	25,724	$	-

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table details the derivation of weighted-average shares outstanding used in the calculation of basic and diluted net loss for each period (in thousands, except share data):



	Years Ended
	September 30,
	2016		2015		2014

Net loss	$	(14,632)	$	(49,787)	$	(22,383)
Weighted-average number of common shares outstanding		11,758		11,368		9,998

Net loss per share	$	(1.24)	$	(4.38)	$	(2.24)

Intellectual Property [Member]

Schedule of Estimated Future Amortization Expense

The future amortization expense related to the acquired intellectual property is as follows (in thousands):



Fiscal Years Ending September 30,

2017	$	1,112
2018		260
2019		259
2020		259
2021		108
Total future amortization expense	$	1,998

Other Intangible Assets [Member]

Schedule of Estimated Future Amortization Expense

The future amortization expense related to amortizing other intangible assets is as follows (in thousands):



Fiscal Years Ending September 30,

2017	$	92
2018		92
2019		92
2020		92
2021		92
Thereafter		601
Total future amortization expense	$	1,061

XML 41 R22.htm IDEA: XBRL DOCUMENT

IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Sep. 30, 2016

Impairment of Goodwill and Intangible Assets [Abstract]

Schedule of Impaired Intangible Assets

The following table presents the changes in the carrying amount of our goodwill (in thousands):



Balance at September 30, 2014	$	28,383
Goodwill impairment		(21,698)
Balance at September 30, 2015		6,685
Goodwill impairment		-
Balance at September 30, 2016	$	6,685

XML 42 R23.htm IDEA: XBRL DOCUMENT

ACCRUED EXPENSES (Tables)

12 Months Ended

Sep. 30, 2016

Accrued Expenses [Abstract]

Schedule of Accrued Expenses

Accrued expenses consisted of the following at September 30, 2016 and 2015:



	September 30,
	2016		2015

Royalties and commissions	$	845	$	999
Payroll and related expenses		609		693
Professional fees and consulting		346		368
Other		519		596
Total	$	2,319	$	2,656

XML 43 R24.htm IDEA: XBRL DOCUMENT

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Sep. 30, 2016

Commitments and Contingencies [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

As of September 30, 2016, future minimum rental commitments under non-cancelable operating leases are as follows (in thousands):



Years Ending September 30,
2017	$	889
2018		675
2019		675
2020		575
2021		576
Thereafter		733
Total future minimum lease payments	$	4,123

XML 44 R25.htm IDEA: XBRL DOCUMENT

RESTRUCTURING CHARGES (Tables)

12 Months Ended

Sep. 30, 2016

RESTRUCTURING CHARGES [Abstract]

Schedule of Accrual for Restructuring


Balance at September 30, 2014	$	-
Charges		1,786
Payments		(1,555)
Balance at September 30, 2015		231
Charges		-
Payments		(231)
Balance at September 30, 2016	$	-

Schedule of Restructuring Charges

The following table presents restructuring charges included in our consolidated statements of operations, for the year ended September 30, 2015 (in thousands):


Cost of maintenance and services	$	401
Sales and marketing		804
Engineering and product development		345
General and administrative		236
Total	$	1,786

XML 45 R26.htm IDEA: XBRL DOCUMENT

INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2016

Income Taxes [Abstract]

Schedule of (Loss) Income from Operations Before Income Taxes

Loss from operations before income taxes consists of the following for the years ended September 30:



	2016		2015		2014
	(In thousands)

Domestic	$	(11,227)	$	(45,812)	$	(17,533)
Foreign		(1,932)		(6,699)		(5,369)

Total	$	(13,159)	$	(52,511)	$	(22,902)

Schedule of (Benefit) Provision for Income Taxes

The (provision) benefit for income taxes consisted of the following for the years ended September 30:



	2016		2015		2014
	(In thousands)

Current:
Federal	$	66	$	53	$	8
State		12		4		(12)
Foreign		16		-		-
		94		57		(4)

Deferred:
Federal		(4,766)		(5,975)		4,890
State		(397)		(853)		882
Foreign		(861)		3,221		(176)
Change in valuation allowance		4,457		6,274		(5,073)
		(1,567)		2,667		523

Total (provision) benefit	$	(1,473)	$	2,724	$	519

Components of the Company's Net Deferred Tax Assets

The components of the Company’s net deferred tax assets are as follows at September 30:



	2016		2015
	(In thousands)

Deferred tax liabilities:
Prepaid expenses	$	(296)	$	(271)
Acquired intangibles		(608)		(688)
		(904)		(959)
Deferred tax assets:
Net operating loss carryforwards		23,134		19,044
Research and development credits		1,316		955
Alternative minimum tax credits		7		7
Accounts and notes receivable reserves		18		52
Depreciation and amortization		2,709		2,538
Deferred rent		138		-
Other		306		265
		27,628		22,861

Total		26,724		21,902

Valuation allowance		(26,724)		(20,337)

Deferred tax asset, net	$	-	$	1,565

Reconciliation of the Company's Tax Provision Based on its Effective Tax Rate to its Tax Provision



	2016		2015		2014
	(In thousands)

Benefit at federal statutory rate	$	4,470	$	17,853	$	7,757
State, net of federal impact		264		579		474
Foreign income taxes		204		(555)		642
Valuation allowance increase		(6,385)		(6,164)		(5,073)
Return to provision adjustments		345		(621)		(48)
Foreign rate change		-		-		(394)
Stock-based compensation		(545)		(946)		(1,103)
NOL adjustment due to subsidiary liquidation		-		-		(1,345)
Acquisition costs		-		-		(59)
Change in uncertain tax positions		105		67		386
IRS audit adjustments		-		-		(535)
Goodwill and intangible asset impairment		-		(7,377)		-
Other		69		(112)		(183)

Income tax (expense) benefit	$	(1,473)	$	2,724	$	519

Schedule of Unrecognized Tax Benefits

The change in the unrecognized tax benefits during the fiscal year ended September 30, 2016 was as follows (in thousands):


Balance at September 30, 2014	$	335
Additions/Reductions for prior year tax positions		(66)
Balance at September 30, 2015		269
Reductions for prior year tax positions		(114)
Balance at September 30, 2016	$	155

XML 46 R27.htm IDEA: XBRL DOCUMENT

SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Sep. 30, 2016

Share-Based Compensation [Abstract]

Schedule of Share Based Expense Categories

The following table presents share-based compensation expenses included in our audited consolidated statements of operations (in thousands):


	Years Ended
	September 30,
	2016		2015		2014
	(In thousands)
Cost of maintenance and services	$	37	$	63	$	143
Sales and marketing		1,028		3,110		5,243
Engineering and product development		359		417		1,585
General and administrative		1,407		1,143		1,475
Total	$	2,831	$	4,733	$	8,446

Schedule of Stock Option Activity

The following table is a summary of combined stock option activity under the 2006 Plan and the 2011 Plan:



		Weighted-		Weighted-
		Average		Average	Aggregate
		Exercise		Remaining	Intrinsic
	Number of Options	Price Per Share		Life (In years)	Value (In thousands)

Outstanding, September 30, 2013	363,209	$	5.76	4.33	$	8,042
Granted	-		-	-		-
Canceled/Forfeited	-		-	-		-
Exercised	(42,709)		4.18	-		719
Outstanding, September 30, 2014	320,500	$	5.97	3.74	$	1,572
Granted	-		-	-		-
Canceled/Forfeited	-		-	-		-
Exercised	(18,000)		2.91	0.89		71
Outstanding, September 30, 2015	302,500	$	6.15	2.86	$	446
Granted	-		-	-		-
Canceled/Forfeited	(5,000)		3.61	-		7
Exercised	(22,500)		4.73	1.00		15
Outstanding, September 30, 2016	275,000	$	6.31	5.01	$	715
Exercisable, September 30, 2016	275,000	$	6.31	5.01	$	715
Unvested awards expected to vest, September 30, 2016	-	$	-	-	$	-

Schedule of Weighted-Average Price and Life Information Regarding Options Outstanding and Exercisable

The following table presents weighted-average price and life information regarding options outstanding and exercisable at September 30, 2016:


Outstanding								Exercisable
				Weighted-						Weighted-
				Average		Weighted-				Average
				Remaining		Average
Exercise		Number of		Contractual		Exercise				Exercise
Prices		Shares		Life (Years)		Price		Shares		Price

	$3.46		150,000		4.37	$	3.46		150,000	$	3.46
	$4.97		50,000		4.57		4.97		50,000		4.97
	$12.92		75,000		6.56		12.92		75,000		12.92

			275,000		5.01	$	6.31		275,000	$	6.31

Schedule of Nonvested RSU Information

The following table presents nonvested RSU information for the fiscal years ended September 30, 2016, 2015 and 2014



	Number of
	RSUs
	Outstanding

Nonvested, September 30, 2014		740,011
Granted		444,068
Canceled/Forfeited		(281,516)
Vested		(332,999)

Nonvested, September 30, 2015		569,564
Granted		506,800
Canceled/Forfeited		(191,364)
Vested		(275,435)
Nonvested, September 30, 2016		609,565

XML 47 R28.htm IDEA: XBRL DOCUMENT

SEGMENT INFORMATION AND REVENUE BY GEOGRAPHIC LOCATION (Tables)

12 Months Ended

Sep. 30, 2016

Segment Information and Revenue by Geographic Location [Abstract]

Schedule of Segment Reporting Information, by Segment

The Company conducts operations in the U.S. and internationally. The following table presents information about the Company’s geographic operations (in thousands):




	Domestic		International		Total

Total Revenue

Year ended September 30, 2016	$	26,055	$	4,407	$	30,462
Year ended September 30, 2015	$	23,793	$	6,428	$	30,221
Year ended September 30, 2014	$	29,071	$	6,016	$	35,087

Total Operating Loss

Year ended September 30, 2016	$	(9,380)	$	(3,749)	$	(13,129)
Year ended September 30, 2015	$	(45,816)	$	(6,626)	$	(52,442)
Year ended September 30, 2014	$	(15,407)	$	(6,258)	$	(21,665)
				.
Total Long-Lived Assets
At September 30, 2016	$	11,126	$	74	$	11,200
At September 30, 2015	$	14,515	$	160	$	14,675

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QUARTERLY RESULTS (Tables)

12 Months Ended

Sep. 30, 2016

Quarterly Results [Abstract]

Schedule of Quarterly Financial Information

Supplementary Information:


	First		Second		Third		Fourth
	(In thousands, except per share amounts)

Year Ended September 30, 2016:
Software license revenue	$	3,147	$	3,645	$	3,669	$	4,758
Maintenance revenue		3,602		3,480		3,335		3,498
Professional services revenue		306		299		372		351
Cost of software licenses		689		499		879		761
Cost of maintenance and services		598		610		499		470
Expenses		9,809		9,792		9,562		9,423
Loss from operations		(4,041)		(3,477)		(3,564)		(2,047)
Net loss		(3,964)		(3,362)		(5,374)		(1,932)

Net loss per share – basic	$	(0.34)	$	(0.29)	$	(0.45)	$	(0.16)
Net loss per share – diluted	$	(0.34)	$	(0.29)	$	(0.45)	$	(0.16)

Year Ended September 30, 2015:
Software license revenue	$	3,175	$	3,911	$	4,117	$	4,101
Maintenance revenue		3,409		3,296		3,311		3,513
Professional services revenue		377		255		348		408
Cost of software licenses		861		721		697		723
Cost of maintenance and services		892		1,084		557		589
Expenses		44,661		11,423		10,705		9,750
Loss from operations		(39,453)		(5,766)		(4,183)		(3,040)
Net loss		(36,876)		(5,809)		(4,123)		(2,979)

Net loss per share – basic	$	(3.31)	$	(0.51)	$	(0.36)	$	(0.26)
Net loss per share – diluted	$	(3.31)	$	(0.51)	$	(0.36)	$	(0.26)

Year Ended September 30, 2014:
Software license revenue	$	5,433	$	4,375	$	5,580	$	5,239
Maintenance revenue		2,993		3,127		3,236		3,489
Professional services revenue		383		498		412		322
Cost of software licenses		990		1,024		999		1,000
Cost of maintenance and services		849		634		979		889
Expenses		12,427		12,233		12,368		12,360
Loss from operations		(5,457)		(5,891)		(5,118)		(5,199)
Net loss		(5,614)		(6,737)		(5,157)		(4,875)

Net loss per share – basic	$	(0.66)	$	(0.70)	$	(0.48)	$	(0.40)
Net loss per share – diluted	$	(0.66)	$	(0.70)	$	(0.48)	$	(0.40)

XML 49 R30.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details)	12 Months Ended
	Sep. 30, 2016 USD ($) customer shares	Sep. 30, 2015 USD ($) customer shares	Sep. 30, 2014 USD ($) shares
License sales to distributors and resellers as percentage of total revenue	35.00%	40.00%	44.00%
Warranty liabilities	$ 0	$ 0
Depreciation and amortization expense	400,000	300,000	$ 200,000
Conversion gains and (losses) on foreign investments	$ (100,000)	$ (100,000)	(100,000)
Capitalized software development costs			$ 250,000
Number of major customers \| customer	0	0
Impairment charge		$ 32,009,000
Goodwill impairment		$ 21,698,000
Antidilutive shares \| shares	384,312	259,424	11,059
Foreign currency translation gain	$ 100,000
Foreign currency translation losses		$ 400,000	$ 300,000
Advertising expense	600,000	100,000	800,000
Indemnification Agreement [Member]
Loss liability	0	0
Intellectual Property [Member]
Amortization of intangible assets	$ 2,000,000	2,200,000	2,800,000
Impairment charge		$ 4,900,000
Capitalized Software [Member]
Capitalized software development costs			300,000
Patents [Member]
Useful life	20 years	20 years
Customer Lists [Member]
Useful life	14 years	14 years
Impairment charge		$ 5,400,000
Selling and Marketing [Member]
Amortization of intangible assets	$ 200,000	300,000	600,000
General and Administrative [Member]
Amortization of intangible assets	20,000	48,000	48,000
Interest Expense [Member]
Amortization of intangible assets	$ 0	0	100,000
Software Licenses [Member]
Product warranty period	30 days
Amortization of intangible assets	$ 0	0	$ 600,000
Minimum [Member]
Property and equipment useful lives	3 years
Minimum [Member] \| Intellectual Property [Member]
Useful life	5 years
Minimum [Member] \| Capitalized Software [Member]
Capitalized computer software amortization period	9 months
Maximum [Member]
Property and equipment useful lives	7 years
Maximum [Member] \| Intellectual Property [Member]
Useful life	7 years 6 months
Maximum [Member] \| Capitalized Software [Member]
Capitalized computer software amortization period	18 months
Money Market Funds [Member]
Total assets at fair value	$ 18,800,000	$ 25,700,000
Lifeboat Distribution [Member] \| Sales Revenue, Net [Member]
Concentration risk, percentage			15.00%

XML 50 R31.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule Of Allowance For Doubtful Accounts Receivable) (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2014
Nature of Business and Summary of Significant Accounting Policies [Abstract]
Allowance for doubtful accounts balance - beginning of year	$ 106	$ 53	$ 43
Additions to the allowance for doubtful accounts	51	111	18
Deductions against the allowance for doubtful accounts	(129)	(58)	(8)
Allowance for doubtful accounts balance - end of year	$ 28	$ 106	$ 53

XML 51 R32.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule Of Sales Returns Reserve) (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Nature of Business and Summary of Significant Accounting Policies [Abstract]
Sales returns reserve balance - beginning of year	$ 10	$ 20
Additions to the sales returns reserve		24
Deductions against the sales returns reserve	$ (10)	(34)
Sales returns reserve balance - end of year		$ 10

XML 52 R33.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Capitalized and Purchased Software Development Costs) (Details) $ in Thousands	12 Months Ended
	Sep. 30, 2014 USD ($)
Nature of Business and Summary of Significant Accounting Policies [Abstract]
Capitalized and purchased software balance - beginning of year	$ 350
Capitalized software development costs	250
Amortization of capitalized software development costs	(600)
Capitalized and purchased software balance - end of year

XML 53 R34.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Deferred Revenue) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
Deferred revenue	$ 9,867	$ 8,644
Less: Long-term portion of deferred maintenance	(237)	(192)
Current portion of deferred revenue	9,630	8,452
Maintenance Revenue [Member]
Deferred revenue	7,781	7,594
License [Member]
Deferred revenue	2,001	981
Other Revenue [Member]
Deferred revenue	$ 85	$ 69

XML 54 R35.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Estimated Future Amortization Expense Related to the Acquired Intellectual Property) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
Total estimated future amortization expense	$ 1,061	$ 1,270
Intellectual Property [Member]
2017	1,112
2018	260
2019	259
2020	259
2021	108
Total estimated future amortization expense	$ 1,998	$ 3,981

XML 55 R36.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Other Intangible Assets, Net) (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Gross Carrying Amount	$ 3,854	$ 3,854
Accumulated Amortization	(2,793)	(2,584)
Net Carrying Amount	1,061	1,270
Intellectual Property [Member]
Gross Carrying Amount	11,621	11,621
Accumulated Amortization	(9,623)	(7,640)
Net Carrying Amount	$ 1,998	$ 3,981
Patents [Member]
Useful life	20 years	20 years
Gross Carrying Amount	$ 160	$ 160
Accumulated Amortization	(96)	(88)
Net Carrying Amount	$ 64	$ 72
Customer Lists [Member]
Useful life	14 years	14 years
Gross Carrying Amount	$ 3,574	$ 3,574
Accumulated Amortization	(2,577)	(2,396)
Net Carrying Amount	$ 997	$ 1,178
Trade Names [Member]
Useful life	3 years	3 years
Gross Carrying Amount	$ 120	$ 120
Accumulated Amortization	$ (120)	(100)
Net Carrying Amount		$ 20
Panopticon [Member] \| Intellectual Property [Member]
Useful life	7 years 6 months	7 years 6 months
Gross Carrying Amount	$ 3,005	$ 3,005
Accumulated Amortization	(1,859)	(1,599)
Net Carrying Amount	$ 1,146	$ 1,406
Monarch [Member] \| Intellectual Property [Member]
Useful life	5 years	5 years
Gross Carrying Amount	$ 8,616	$ 8,616
Accumulated Amortization	(7,764)	(6,041)
Net Carrying Amount	$ 852	$ 2,575

XML 56 R37.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Estimated Future Amortization Expense) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
Total estimated future amortization expense	$ 1,061	$ 1,270
Other Intangible Assets [Member]
2017	92
2018	92
2019	92
2020	92
2021	92
Thereafter	601
Total estimated future amortization expense	$ 1,061

XML 57 R38.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Fair Value, Assets and Liabilities Measured) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
Goodwill and indefinite lived assets at fair value	$ 6,685	$ 6,685
Money Market Funds [Member]
Total assets at fair value	18,800	25,700
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Measurements, Recurring [Member]
Total assets at fair value
Fair Value, Inputs, Level 1 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Goodwill and indefinite lived assets at fair value
Total assets at fair value
Fair Value, Inputs, Level 1 [Member] \| Money Market Funds [Member] \| Fair Value, Measurements, Recurring [Member]
Total assets at fair value
Fair Value, Inputs, Level 2 [Member] \| Fair Value, Measurements, Recurring [Member]
Total assets at fair value	18,771	25,724
Fair Value, Inputs, Level 2 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Goodwill and indefinite lived assets at fair value
Total assets at fair value
Fair Value, Inputs, Level 2 [Member] \| Money Market Funds [Member] \| Fair Value, Measurements, Recurring [Member]
Total assets at fair value	18,771	25,724
Fair Value, Inputs, Level 3 [Member] \| Fair Value, Measurements, Recurring [Member]
Total assets at fair value
Fair Value, Inputs, Level 3 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Goodwill and indefinite lived assets at fair value	6,685	6,685
Total assets at fair value	9,744	11,936
Fair Value, Inputs, Level 3 [Member] \| Money Market Funds [Member] \| Fair Value, Measurements, Recurring [Member]
Total assets at fair value
Intellectual Property [Member] \| Fair Value, Inputs, Level 1 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Intangible assets at fair value
Intellectual Property [Member] \| Fair Value, Inputs, Level 2 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Intangible assets at fair value
Intellectual Property [Member] \| Fair Value, Inputs, Level 3 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Intangible assets at fair value	1,998	3,981
Other Intangible Assets [Member] \| Fair Value, Inputs, Level 1 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Intangible assets at fair value
Other Intangible Assets [Member] \| Fair Value, Inputs, Level 2 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Intangible assets at fair value
Other Intangible Assets [Member] \| Fair Value, Inputs, Level 3 [Member] \| Fair Value, Measurements, Nonrecurring [Member]
Intangible assets at fair value	$ 1,061	$ 1,270

XML 58 R39.htm IDEA: XBRL DOCUMENT

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended												12 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2014
Nature of Business and Summary of Significant Accounting Policies [Abstract]
Net loss	$ (1,932)	$ (5,374)	$ (3,362)	$ (3,964)	$ (2,979)	$ (4,123)	$ (5,809)	$ (36,876)	$ (4,875)	$ (5,157)	$ (6,737)	$ (5,614)	$ (14,632)	$ (49,787)	$ (22,383)
Weighted-average number of common shares outstanding													11,758	11,368	9,998
Net loss per share	$ (0.16)	$ (0.45)	$ (0.29)	$ (0.34)	$ (0.26)	$ (0.36)	$ (0.51)	$ (3.31)	$ (0.40)	$ (0.48)	$ (0.70)	$ (0.66)	$ (1.24)	$ (4.38)	$ (2.24)

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.