Datawatch (DWCH) Inactive 10-Q1 Aug 142014 Q3 Quarterly reportFinancial data

Company Profile

Document_And_Entity_Informatio

Document And Entity Information	9 Months Ended
Document And Entity Information	Jun. 30, 2014	Jul. 30, 2014
Document And Entity Information [Abstract]	'	'
Entity Registrant Name	'DATAWATCH CORP	'
Entity Central Index Key	'0000792130	'
Current Fiscal Year End Date	'--09-30	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	10,893,106
Document Type	'10-Q	'
Amendment Flag	'false	'
Document Period End Date	30-Jun-14	'
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2014	'

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $)	Jun. 30, 2014	Sep. 30, 2013
In Thousands, unless otherwise specified	Jun. 30, 2014	Sep. 30, 2013
CURRENT ASSETS:	'	'
Cash and cash equivalents	$50,168	$10,312
Accounts receivable, net of allowance for doubtful accounts and sales returns of $44 and $63 as of June 30, 2014 and September 30, 2013, respectively	7,191	6,622
Inventories	57	45
Prepaid expenses	1,177	939
Total current assets	58,593	17,918
Property and equipment:	'	'
Office furniture and equipment	1,412	1,382
Software	492	492
Leasehold improvements	551	551
Property, plant and equipment, gross	2,455	2,425
Less accumulated depreciation	-2,116	-2,136
Property and equipment, net	339	289
Acquired intellectual property, net	11,752	13,834
Other intangible assets, net	7,394	8,260
Goodwill	28,772	28,772
Other long-term assets	105	248
Total assets	106,955	69,321
CURRENT LIABILITIES:	'	'
Line of credit	'	900
Current portion of debt, net of unamortized debt discount of $157 as of September 30, 2013	'	977
Accounts payable	1,257	1,433
Accrued expenses	2,803	3,481
Deferred revenue	7,205	6,997
Total current liabilities	11,265	13,788
LONG-TERM LIABILITIES:	'	'
Long-term debt, net of unamortized debt discount of $703 as of September 30, 2013	'	2,108
Deferred revenue, long-term	50	214
Deferred tax liability	1,153	1,483
Other long-term liabilities	373	353
Total long-term liabilities	1,576	4,158
Total liabilities	12,841	17,946
COMMITMENTS AND CONTINGENCIES (Note 5)	'	'
SHAREHOLDERS' EQUITY:	'	'
Common stock, par value $0.01; authorized: 20,000,000 shares; issued: 11,185,998 shares and 8,795,023 shares, respectively; outstanding: 10,868,526 shares and 8,477,552 shares, respectively	112	88
Additional paid-in capital	132,924	72,726
Accumulated deficit	-37,530	-20,021
Accumulated other comprehensive loss	-1,252	-1,278
Shareholders' equity before treasury stock	94,254	51,515
Less treasury stock, at cost, 14,246 shares	-140	-140
Total shareholders' equity	94,114	51,375
Total liabilities and shareholders' equity	$106,955	$69,321

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)	Jun. 30, 2014	Sep. 30, 2013
In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Sep. 30, 2013
Allowance for doubtful accounts and sales returns	$44	$63
Commom stock, par value	$0.01	$0.01
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	11,185,998	8,795,023
Common stock, shares outstanding	10,868,526	8,477,552
Treasury shares	14,246	14,246
Short-term Debt [Member]	'	'
Debt unamortized discount	'	157
Long-term Debt [Member]	'	'
Debt unamortized discount	'	$703

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
REVENUE:	'	'	'	'
Software licenses	$5,580,000	$5,007,000	$15,387,000	$13,634,000
Maintenance	3,236,000	2,409,000	9,357,000	7,042,000
Professional services	412,000	411,000	1,293,000	803,000
Total revenues	9,228,000	7,827,000	26,037,000	21,479,000
COSTS AND EXPENSES:	'	'	'	'
Cost of software licenses	999,000	549,000	3,013,000	1,602,000
Cost of maintenance and services	979,000	602,000	2,462,000	1,697,000
Sales and marketing	8,241,000	4,398,000	23,198,000	12,391,000
Engineering and product development	1,942,000	759,000	6,830,000	2,361,000
General and administrative	2,185,000	2,038,000	7,000,000	4,475,000
Total costs and expenses	14,346,000	8,346,000	42,503,000	22,526,000
LOSS FROM OPERATIONS	-5,118,000	-519,000	-16,466,000	-1,047,000
Interest expense	'	-157,000	-406,000	-474,000
Other (expense) income	4,000	'	-755,000	1,000
Foreign currency transaction (loss) gain	10,000	9,000	-152,000	8,000
LOSS FROM OPERATIONS BEFORE INCOME TAXES	-5,104,000	-667,000	-17,779,000	-1,512,000
Benefit (provision) for income taxes	-53,000	1,000	270,000	-2,000
NET LOSS	($5,157,000)	($666,000)	($17,509,000)	($1,514,000)
Net loss per share - basic: (in dollars per share)	($0.48)	($0.10)	($1.81)	($0.24)
Net loss per share - diluted: (in dollars per share)	($0.48)	($0.10)	($1.81)	($0.24)
Weighted-average shares outstanding - basic (in shares)	10,825,910	6,494,599	9,653,760	6,433,599
Weighted-average shares outstanding - diluted (in shares)	10,825,910	6,494,599	9,653,760	6,433,599

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Comprehensive Income [Abstract]	'	'	'	'
Net loss	($5,157)	($666)	($17,509)	($1,514)
Other comprehensive income (loss):	'	'	'	'
Foreign currency translation adjustments	-51	-29	26	-47
Comprehensive loss	($5,208)	($695)	($17,483)	($1,561)

CONDENSED_CONSOLIDATED_STATEME2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	9 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:	'	'
Net loss	($17,509,000)	($1,514,000)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:	'	'
Depreciation and amortization	3,189,000	1,590,000
Share-based compensation expense	6,505,000	1,922,000
Non-cash interest expense - amortization of debt discount	65,000	117,000
Loss on extinguishment of debt	795,000	'
Deferred income taxes	-330,000	'
Amortization of debt issuance costs	122,000	24,000
Changes in operating assets and liabilities:	'	'
Accounts receivable	-516,000	-731,000
Inventories	-12,000	4,000
Prepaid expenses and other assets	-96,000	-221,000
Accounts payable, accrued expenses and other liabilities	-851,000	868,000
Deferred revenue	-10,000	-8,000
Cash (used in) provided by operating activities	-8,648,000	2,051,000
CASH FLOWS FROM INVESTING ACTIVITIES:	'	'
Capitalized software development costs	-250,000	-278,000
Purchases of property and equipment	-162,000	-112,000
Cash used in investing activities	-412,000	-390,000
CASH FLOWS FROM FINANCING ACTIVITIES:	'	'
Proceeds from issuance of common stock, net of issuance costs	53,629,000	'
Proceeds from exercise of stock options	88,000	142,000
Repayments on debt	-3,944,000	'
Repayments on line of credit	-900,000	'
Capitalized debt issuance costs	-5,000	'
Cash provided by financing activities	48,868,000	142,000
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	48,000	-101,000
INCREASE IN CASH AND CASH EQUIVALENTS	39,856,000	1,702,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	10,312,000	8,722,000
CASH AND CASH EQUIVALENTS, END OF PERIOD	50,168,000	10,424,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:	'	'
Interest paid	169,000	334,000
Income taxes paid	$98,000	$9,000

NATURE_OF_BUSINESS_AND_SUMMARY

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Jun. 30, 2014
Nature of Business and Summary of Significant Accounting Policies [Abstract]	'
Nature of Business and Summary of Significant Accounting Policies	'
	NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	Nature of Business and Basis of Presentation

	Datawatch Corporation (the “Company” or “Datawatch”) designs, develops, markets, distributes and supports 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.

	The accompanying unaudited condensed consolidated financial statements include the accounts of Datawatch and its wholly-owned subsidiaries and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2013 filed with the SEC. All intercompany accounts and transactions have been eliminated in consolidation.

	In the opinion of management, the accompanying condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements for the fiscal year ended September 30, 2013, and include all adjustments necessary for fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

	Summary of Significant Accounting Policies

	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 condensed 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, through value added resellers and distributors. Sales to distributors and resellers accounted for approximately 41% and 37% of total sales for the three months ended June 30, 2014 and 2013, respectively, and approximately 46% and 32% of total sales for the nine months ended June 30, 2014 and 2013, respectively. The Company’s software product offerings do not require customization. The Company’s software products 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. VSOE for PCS contracts is generally based on stated renewal rates when the Company has determined that the renewal rate is substantive and falls within the Company’s customary pricing practices. 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’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. Additionally, the Company provides its distributors with stock-balancing rights. 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. Among other things, estimates of potential future returns are made based on the inventory levels at, and the returns history with, the various distributors and resellers, which the Company monitors frequently.

	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.

	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.

	Capitalized 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 the three months ended June 30, 2014, the Company did not capitalize any software development costs and during the three months ended June 30, 2013, the Company capitalized approximately $168,000 of software development costs. During the nine months ended June 30, 2014 and 2013, the Company capitalized approximately $250,000 and $278,000 of software development costs, respectively.

	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.

	Deferred Revenue

	Deferred 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 twelve 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 approximately $39,000 and $36,000 for the three months ended June 30, 2014 and 2013, respectively, and approximately $108,000 and $103,000 for the nine months ended June 30, 2014 and 2013, respectively.

	Acquired Intellectual Property

	On March 30, 2012, the Company acquired intellectual property which consisted primarily of the source code underlying its Datawatch Modeler (formerly Monarch Professional) and Datawatch Automator (formerly Data Pump) products pursuant to an Option Purchase Agreement dated as of April 29, 2004 by and among the Company, Personics Corporation, Raymond J. Huger and Math Strategies, as amended (the “Option Agreement”). Under the formula contained in the Option Agreement, the purchase price paid for the intellectual property assets was approximately $8,541,000 which was calculated based on a multiple of the aggregate royalties paid to Math Strategies by the Company for the four fiscal quarters preceding the exercise of the option. Additionally, the Company capitalized approximately $75,000 in closing costs and adjustments pursuant to a Supplemental Agreement dated March 30, 2012 between the Company and Raymond J. Huger. In fiscal 2013, the Company acquired additional intellectual property in the Panopticon Software, AB (Panopticon) transaction (Note 2) totaling $7,900,000. 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. Amortization expense related to the acquired intellectual property assets was approximately $694,000 and $431,000, respectively, for the three months ended June 30, 2014 and 2013, and was approximately $2,082,000 and $1,292,000, respectively, for the nine months ended June 30, 2014 and 2013.

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




	Fiscal Years Ending September 30,

Remainder of 2014		$	694
2015			2,777
2016			2,777
2017			1,905
2018			1,053
Thereafter			2,546
Total estimated future amortization expense		$	11,752




Other Intangible Assets

Other intangible assets consist of internally developed software, trade names, patents and customer lists acquired through business combinations. Other intangible assets also include loan acquisition costs. The values allocated to these intangible assets are amortized using the straight-line method over the estimated useful life of the related asset, ranging from nine months to 20 years. The values allocated to internally developed software are amortized using the straight-line method over the estimated useful lives of the related assets, ranging from nine to 18 months. The values allocated to trade names are amortized using the straight-line method over the estimated useful life of the related asset (two and one half years). The values allocated to patents are amortized using the straight-line method over the estimated useful life of the related asset (20 years). The values allocated to customer lists are amortized using the straight-line method over the estimated useful lives of the related assets, ranging from ten to 15 years. Loan acquisition costs are amortized using the straight-line method over the life of the debt, ranging from two to seven years. 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. As of June 30, 2014, the Company does not have any long-lived assets it considers to be impaired.

The intangible asset amounts amortized to cost of software licenses totaled approximately $130,000 and $38,000 for the three months ended June 30, 2014 and 2013, respectively, and totaled approximately $478,000 and $70,000 for the nine months ended June 30, 2014 and 2013, respectively. Intangible asset amounts amortized to sales and marketing expense totaled approximately $161,000 and $42,000 for the three months ended June 30, 2014 and 2013, respectively, and totaled approximately $485,000 and $125,000 for the nine months ended June 30, 2014 and 2013, respectively. Intangible asset amounts amortized to general and administrative expense totaled approximately $12,000 for the three months ended June 30, 2014 and totaled approximately $36,000 for the nine months ended June 30, 2014. There were no intangible assets amortized to general and administrative for the three and nine months ended June 30, 2013. There were no intangible asset amounts amortized to interest expense during the three months ended June 30, 2014. Intangible asset amounts amortized to interest expense totaled approximately $8,000 for the three months ended June 30, 2013, and totaled approximately $122,000 and $24,000 for the nine months ended June 30, 2014 and 2013, respectively.

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




Fiscal Years Ending September 30,

Remaining 2014		$	304
2015			702
2016			605
2017			488
2018			488
Thereafter			4,807
Total estimated future amortization expense		$	7,394



Goodwill

The Company accounts for goodwill in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350 Intangibles – Goodwill and Other. This requires that goodwill be 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. The Company conducts its annual impairment test for goodwill and indefinite-lived intangible assets during the fourth quarter of each fiscal year.

Fair Value Measurements

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and notes 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 approximately $40,260,000 and $2,234,000 as of June 30, 2014 and September 30, 2013, respectively, within Level 2 of the fair value hierarchy because they are valued using amortized cost.

As of June 30, 2014 and September 30, 2013, the Company’s assets that are measured on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands):




		June 30, 2014									September 30, 2013
		Fair Value									Fair Value
		Measurement									Measurement
		Using Input Types									Using Input Types
		Level			Level			Level			Level			Level		Level
		1			2			3			1			2		3

Assets:
Money market funds		$	—		$	40,260		$	—		$	—		$	2,234	$	—
Total		$	—		$	40,260		$	—		$	—		$	2,234	$	—


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, with the exception of its subsidiary in Sweden. The Company has recorded a deferred tax liability relating to the intangible assets at its Swedish subsidiary.

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):




		Three Months Ended						Nine Months Ended
		June 30,						June 30,
		2014			2013			2014			2013

Net loss available to common shareholders		$	(5,157	)	$	(666	)	$	(17,509	)	$	(1,514	)

Weighted-average number of common shares outstanding used in calculation of basic earnings per share			10,825,910			6,494,599			9,653,760			6,433,599
Incremental shares from the assumed exercise of dilutive stock options			—			—			—			—
Weighted-average number of common shares outstanding used in calculating diluted earnings per share			10,825,910			6,494,599			9,653,760			6,433,599



As the Company was in a net loss position for the three and nine months ended June 30, 2014 and 2013, all common stock equivalents in the respective periods were anti-dilutive and 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 losses arising during the three months ended June 30, 2014 were approximately $51,000. Foreign currency translation gains arising during the nine months ended June 30, 2014 were approximately $26,000. Foreign currency translation losses arising during the three and nine months ended June 30, 2013 were approximately $29,000 and $47,000, 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 gains of approximately $10,000 and $9,000 for the three months ended June 30, 2014 and 2013, respectively. A loss of approximately $152,000 was included in the operating results of the Company for the nine months ended June 30, 2014. A gain of approximately $8,000 for the nine months ended June 30, 2013 was included in the operating results of the Company.

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.

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 June 30, 2014 or September 30, 2013.

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 June 30, 2014 or September 30, 2013.

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 June 30, 2014 or September 30, 2013.

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 June 30, 2014 or September 30, 2013.

Reclassifications

Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported net loss.

Recent Accounting Pronouncements

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 is effective for annual reporting periods beginning after December 15, 2016. Early application is not permitted. The Company is currently assessing the impact of this guidance

ACQUISITION

ACQUISITION	9 Months Ended
ACQUISITION	Jun. 30, 2014
Acquisition [Abstract]	'
Acquisition	'
	NOTE 2. ACQUISITION

	The Company acquired all of the outstanding shares of Panopticon Software, AB and subsidiaries (“Panopticon”), a privately held Swedish company specializing in the delivery of real-time visual data discovery solutions, under a stock purchase agreement dated June 14, 2013, which closed on August 28, 2013. As a result of this transaction, the Company has acquired technologies to enable it to expand its product platform and increase its addressable market. The Company accounted for this acquisition in accordance with ASC 805, Business Combinations. The purchase consideration included $175,000 in seller financing pertaining to the Company’s direct acquisition of Panopticon’s U.S. subsidiary, Panopticon Software, Inc. and 1,866,716 Datawatch common shares, with an additional 216,994 shares held back for a period of 15 months to secure indemnification obligations of the Panopticon sellers under the stock purchase agreement. Also, the Company issued 86,231 restricted stock units to certain Panopticon employees, which were fully vested as of February 28, 2014. Total fair value of the consideration issued was valued at approximately $42,644,000 ($23.12 per share) at closing. The Company has allocated the cost to acquire Panopticon to its identifiable tangible and intangible assets and liabilities, with the remaining amount classified as goodwill.

	The intangible assets, excluding goodwill and assembled workforce, are being amortized on a straight-line basis over their estimated lives as follows (in thousands):





		Fair		Estimated
		Value		Lives
	Customer Relationships	$	7,200	15.0 years
	Developed Technology		7,900	7.5 years
	Trade Name		120	2.5 years
	Total intangible assets	$	15,220

ACCRUED_EXPENSES

ACCRUED EXPENSES	9 Months Ended
ACCRUED EXPENSES	Jun. 30, 2014
Accrued Expenses [Abstract]	'
Accrued Expenses	'
	NOTE 3. ACCRUED EXPENSES

	Accrued expenses consisted of the following at June 30, 2014 and September 30, 2013:




		June 30,		September 30,
		2014		2013


	Royalties and commissions	$	1,056	$	1,483
	Payroll and related expenses		743		944
	Professional fees and consulting		512		417
	Other		492		637
	Total	$	2,803	$	3,481

FINANCING_ARRANGEMENTS

FINANCING ARRANGEMENTS	9 Months Ended
FINANCING ARRANGEMENTS	Jun. 30, 2014
Financing Arrangements [Abstract]	'
Financing Arrangements	'
	NOTE 4. FINANCING ARRANGEMENTS

	Revolving Line of Credit and Term Note

	In connection with the acquisition of intellectual property underlying its Datawatch Modeler and Datawatch Automator products, on March 30, 2012, the Company entered into a $2,000,000 revolving credit facility with Silicon Valley Bank (“SVB”), pursuant to a Loan and Security Agreement with SVB. On March 30, 2012, the Company borrowed $1,500,000 under this revolving credit facility. The revolving line of credit under the SVB facility terminated on March 29, 2014. On that date, the principal amount of all advances then outstanding under the revolving line and all unpaid interest thereon were due and payable. The principal amount outstanding under the revolving line accrued interest at a floating rate per annum equal to 1.5% above the prime rate, with the prime rate having a floor under the SVB agreement of 3.25%. The Company could borrow under the SVB revolving line of credit based on a formula percentage of its accounts receivable balance. Additionally, the SVB facility required that the Company maintain certain net asset and net income ratios. As of June 30, 2014, the Company had paid down all amounts owed under the revolving credit facility and the facility and the SVB agreement had been terminated. The principal amount outstanding under the revolving line of credit at September 30, 2013 was $900,000.

	In connection with the first amendment to the MCRC agreement (discussed in the following section under the caption “Subordinated Note and Warrants”), on August 15, 2013, the Company entered into an amendment to the SVB agreement which provided for an advance (“Term Loan Advance”) of $2,000,000 which was used to reduce the outstanding obligations to MCRC. After repayment, the Term Loan Advance cannot be re-borrowed. On August 15, 2016, the principal amount of the Term Loan Advance outstanding and all unpaid interest thereon would have become due and payable. The principal amount outstanding under the Term Loan Advance accrued interest at a floating per annum rate equal to two and one half percent (2.5%) above the Prime Rate (3.25%) and was payable monthly. The second amendment to the SVB agreement also amended the financial covenants and required that Company maintain certain liquidity ratios and minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”) balances. As of June 30, 2014, the Company had paid down all amounts owed under the term loan advance and the SVB agreement had been terminated. As of September 30, 2013, approximately $1,945,000 remained outstanding and accrued interest on the note as of September 30, 2013 was approximately $9,000.

	Subordinated Note and Warrants

	Also in connection with the intellectual property acquisition on March 30, 2012, the Company entered into a Note and Warrant Purchase Agreement with Massachusetts Capital Resource Company (“MCRC”), the terms of which included a $4,000,000 subordinated note and warrants for 185,000 shares of the Company’s common stock. The subordinated note issued to MCRC had a maturity date of February 28, 2019, with interest due monthly on the unpaid principal amount of the note at the rate of 10% per annum in arrears. The subordinated note also contained interest rate premiums on any optional redemption of principal payments during the first three years of the note agreement. Additionally, beginning on March 31, 2014 and on the last day of each month thereafter until the maturity date, the Company would have made principal payments of $66,667 per month. The Company was also required under the MCRC agreement to maintain certain interest coverage and leverage ratios.

	On August 15, 2013, the Company entered into the first amendment to the MCRC agreement which provided for a one-time redemption of $2,000,000 in principal amount, together with interest, at a rate of 10% per annum, due on the amount redeemed through the date of redemption, and a premium equal to 3% of the principal amount. In addition, this amendment allowed for a reduction in interest from 10% per annum in arrears to 8% per annum in arrears immediately following the one-time redemption. On August 15, 2013, the Company exercised its’ one-time redemption right and made a payment of $2,000,000 to pay-down the principal, plus accrued interest in the amount of approximately $23,000 and premium in the amount of approximately $60,000. As of June 30, 2014, the Company had paid down all amounts owed under the subordinated note and the note and the MCRC agreement had been terminated except with respect to the outstanding warrants.

	The warrants issued to MCRC are exercisable at any time prior to February 28, 2019 at an exercise price per share of $11.54, which is equal to the average closing price of the Company’s common stock for the 45 trading days prior to the issuance of the warrants on March 30, 2012. The number of shares issuable upon exercise of the warrants is subject to adjustment in connection with stock splits and other events impacting the Company’s common stock generally, however, the warrants do not provide the holder with any anti-dilution or price protection. The Company has reviewed the warrant terms and has concluded that pursuant to ASC 480, Distinguishing Liabilities from Equity, the warrants should be classified as equity.

	The Company accounted for the borrowing under the Note and Warrant Purchase Agreement in accordance with the guidance prescribed in ASC 470-20, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”. In accordance with ASC 470-20, the relative fair value of the stock purchase warrants is considered an Original Issue Discount (“OID”) which is required to be amortized over the life of the note as interest expense with a corresponding credit to notes payable. The relative fair value of the warrants on March 30, 2012, as determined under the ASC 820, “Fair Value Measurements and Disclosures”, was approximately $1,096,000 which is included in additional paid-in capital in the Company's accompanying condensed consolidated balance sheets at June 30, 2014 and September 30, 2013, respectively. The Company used the Black-Scholes pricing model to calculate the fair value of the warrants which included the following key assumptions: the expected life of the warrants (7 years), stock price volatility (68.18%), risk-free interest rate (1.61%) and dividend yield (0%).

	There was no interest expense related to the warrants during the three months ended June 30, 2014. Interest expense related to the warrants during the nine months ended June 30, 2014 was approximately $65,000. Interest expense related to the warrants during the three and nine months ended June 30, 2013 was approximately $39,000 and $117,000, respectively.

	During the nine months ended June 30, 2014, as a result of paying down the subordinated note, the Company recorded a loss on extinguishment of debt of approximately $795,000 which represented the unamortized debt discount on the subordinated note and was recorded as other expense within the accompanying consolidated statement of operations.

COMMITMENTS_AND_CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Jun. 30, 2014
Commitments and Contingencies [Abstract]	'
Commitments and Contingencies	'
	NOTE 5. 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 2019. 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 approximately $230,000 and $128,000 for the three months ended June 30, 2014 and 2013, respectively, and approximately $708,000 and $397,000 for the nine months ended June 30, 2014 and 2013, respectively. Certain of the Company's facility leases include options to renew.

	As of June 30, 2014, future minimum rental commitments under non-cancelable operating leases are as follows (in thousands):




	Years Ending September 30,

	Remaining in 2014	$	218
	2015		499
	2016		269
	2017		45
	2018		46
	Thereafter		39
	Total future minimum lease payments	$	1,116

	Royalties

	Royalty expense included in cost of software licenses was approximately $131,000 and $35,000 for the three months ended June 30, 2014 and 2013, respectively, and approximately $288,000 and $102,000 for the nine months ended June 30, 2014 and 2013, respectively. Minimum royalty obligations were insignificant for the three and nine months ended June 30, 2014 and 2013.

	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.

INCOME_TAXES

INCOME TAXES	9 Months Ended
	Jun. 30, 2014
Income Taxes [Abstract]	'
Income Taxes	'
	NOTE 6. INCOME TAXES

	During the three and nine months ended June 30, 2014, the Company recorded a tax provision of approximately $53,000 and a tax benefit of approximately $270,000, respectively, primarily related to the change in the deferred tax liability in Sweden, estimated state taxes, return to provision adjustments, change in uncertain tax positions, and accrued interest and penalties on uncertain tax positions. During the three and nine months ended June 30, 2013, the Company recorded a tax benefit of approximately $1,000 and a tax provision of approximately $2,000, respectively, related to adjustments to estimated federal alternative minimum taxes, estimated state taxes, and uncertain tax positions relative to foreign taxes. During the nine months ended June 30, 2014, the Company recorded $13,000 in tax expense related to uncertain tax positions relative to state income taxes. During the nine months ended June 30, 2013, the Company recorded $2,000 in tax expense related to uncertain tax positions relative to foreign taxes net of these adjustments.

	Deferred Taxes

	The Company’s deferred tax assets include net operating loss carry forwards and tax credits that expire at different times through and until 2033. Significant judgment is required in determining the Company’s provision for income taxes, the carrying value of deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets. Factors such as future reversals of deferred tax assets and liabilities, projected future taxable income, changes in enacted tax rates and the period over which the Company’s deferred tax assets will be recoverable are considered in making these determinations. With the exception of Sweden, management does not believe the deferred tax assets are more likely than not to be realized and a full valuation allowance has been provided against the deferred tax assets in the U.S, U.K., Australia, Germany, and Singapore at June 30, 2014 and September 30, 2013. The Company’s Swedish subsidiary has a $1,153,000 deferred tax liability recorded due to acquired intangible assets.

	Provision for Uncertain Tax Positions

	At September 30, 2013, the Company had a cumulative tax liability of $353,000 related to Federal, state, and foreign tax exposure that could result in cash payments. The Company increased the tax liability by $13,000 during the three and nine months ended June 30, 2014. 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 accrued $4,000 and $7,000 of interest and penalties associated with this liability for the three and nine months ended June 30, 2014, respectively. To date, the Company has accrued approximately $21,000 for interest and penalties associated with this liability.

	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 nine months ended June 30, 2014 was as follows (in thousands):





	Balance at September 30, 2013	$	998
	Additions for prior year tax positions		13
	Balance at June 30, 2014	$	1,011


	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, 2010 through September 30, 2012 are generally still open to examination in the jurisdictions listed above. The Company is currently under audit by the Internal Revenue Service for the fiscal year ended September 30, 2011. The Company does not believe any material adjustments will be made as a result of this audit.

SHAREBASED_COMPENSATION

SHARE-BASED COMPENSATION	9 Months Ended
SHARE-BASED COMPENSATION	Jun. 30, 2014
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 and other stock rights for common stock of the Company on a discretionary basis. All option and restricted stock unit grants are subject to the terms and conditions determined by the Compensation and Stock Committee of the Board of Directors, and generally vest over a three-year period beginning three months from the date of grant and expire either seven or ten years from the date of grant depending on the plan. Generally, options and other stock rights are granted at exercise prices not less than the fair market value at the date of grant. Share-based compensation expense for all share-based payment awards is measured based on the grant-date fair value of the award.

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




			Three Months Ended						Nine Months Ended
			June 30,						June 30,
			2014				2013		2014		2013

	Sales and marketing		$	1,204			$	523	$	3,731	$	1,451
	Engineering and product development			136				21		1,493		64
	Professional Services			25				—		91		—
	General and administrative			321				216		1,190		407
	Total		$	1,686			$	760	$	6,505	$	1,922


	Stock Option Plans

	The Company estimates the fair value of each share-based award (except restricted stock units, 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. The Company recognizes share-based compensation expense related to stock options on a straight-line basis over the requisite service period of the award. All of the Company’s stock compensation awards are accounted for as equity instruments and there have been no liability awards granted. No options were granted under the stock option plans for the three or nine month periods ended June 30, 2014 and 2013. The total intrinsic value of options exercised during the three months ended June 30, 2014 and 2013 was approximately $46,000 and $51,000, respectively. The total intrinsic value of options exercised during the nine months ended June 30, 2014 and 2013 was approximately $570,000 and $612,000, respectively. Total cash received from option exercises during the three and nine months ended June 30, 2014 was approximately $23,000 and $88,000, respectively. There was no tax benefit realized from stock options exercised during the three and nine months ended June 30, 2014 and 2013. As of June 30, 2014, there was approximately $310,000 of total unrecognized compensation cost related to non-vested stock option arrangements, which is expected to be recognized over a weighted-average period of 1.82 years. 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 is higher than estimated.

	On April 22, 2014, the stockholders of the Company approved the adoption of the Company’s Second Amended and Restated 2011 Equity Compensation and Incentive Plan (the “Amended 2011 Plan”), which amends the previous Amended and Restated 2011 Equity Compensation and Incentive Plan to increase the shares authorized for issuance under such plan by 700,000 shares to 2,275,392 shares. At June 30, 2014, 632,223 shares were available for future issuance under the 2011 Plan.

	The following table is a summary of combined activity for all of the Company’s stock option plans:




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

	Outstanding, September 30, 2013		363,209		$	5.76		4.33	$	8,042
	Granted		—			—		—		—
	Canceled/Forfeited		—			—		—		—
	Exercised		22,375			3.94		—		—
	Outstanding, June 30, 2014		340,834		$	5.88		3.78	$	3,096

	Expected to vest, June 30, 2014		45,003		$	12.92		5.82	$	92
	Exercisable, June 30, 2014		290,830		$	4.67		3.43	$	2,994




	Restricted Stock Units

	The Company periodically grants awards of restricted stock units (“RSUs”) to each of its non-employee directors and some of its management team and 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 June 30, 2014 was 920,010. Most RSUs vest at the rate of 33.33% on each of the first through third anniversaries of the grant date. Included in the total number of RSUs unvested at June 30, 2014 are certain RSUs that are subject to a further vesting condition that the Company’s common stock must trade at a price greater than the following market prices per share on a national securities exchange for a period of twenty consecutive days on or prior to certain anniversaries of the grant date as follows:




			Number of
			Unvested RSUs

	$10.00 per share prior to five years of the grant date		*	27,839
	$10.00 per share prior to four years of the grant date		*	110,645
	$17.50 per share prior to five years of the grant date		*	30,000
$17.50 per share prior to four years of the grant date		*	64,176
$17.50 per share prior to three years of the grant date		*	106,002
$20.00 per share prior to four years of the grant date		*	4,334
$22.50 per share prior to four years of the grant date		*	7,667
$22.50 per share prior to three years of the grant date		*	184,834
$22.50 per share prior to two and one-half years of the grant date		*	64,674
No further trading vesting condition			319,839
Unvested RSUs, June 30, 2014			920,010



The Company’s common stock has satisfied the per share market price vesting conditions for the grants denoted with an asterisk above totaling 600,171 RSUs. For such RSUs, the Company performed fair value analysis using the Monte Carlo option-pricing model. The fair value related to the RSUs was calculated based primarily on the average 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 the nine months ended June 30, 2014 and 2013 were approximately $5,764,000 (or $20.33 weighted average fair value per share) and approximately $4,620,000 (or $14.77 weighted average fair value per share), respectively. The Company recorded compensation expense related to RSUs of approximately $1,679,000 and $683,000 for the three months ended June 30, 2014 and 2013, respectively, and approximately $6,280,000 and $1,765,000 for the nine months ended June 30, 2014 and 2013, respectively. These amounts are included in the total share-based compensation expense disclosed above. As of June 30, 2014, there was approximately $12,456,000 of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted average period of 1.96 years.

The following table presents nonvested RSU information for the nine months ended June 30, 2014:




		Number of
		RSUs
		Outstanding

Nonvested, September 30, 2013			1,056,696
Granted			283,500
Canceled/Forfeited			(69,834	)
Vested			(350,352	)
Nonvested, June 30, 2014			920,010

ISSUANCE_OF_COMMON_STOCK

ISSUANCE OF COMMON STOCK	9 Months Ended
ISSUANCE OF COMMON STOCK	Jun. 30, 2014
Issuance of Common Stock [Abstract]	'
Issuance of Common Stock	'
	Note 8. 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 includes the underwriters’ full exercise of their over-allotment option of 263,250 shares. Net proceeds to the Company from the offering, after underwriting discounts but before expenses, were approximately $54,069,000.

SEGMENT_INFORMATION

SEGMENT INFORMATION	9 Months Ended
SEGMENT INFORMATION	Jun. 30, 2014
Segment Information [Abstract]	'
Segment Information	'
	Note 9. SEGMENT INFORMATION

	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.

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




								Intercompany
		Domestic			International			Eliminations			Total
	Total Revenue
	Three months ended June 30, 2014	$	7,680		$	2,507		$	(959	)	$	9,228
	Three months ended June 30, 2013	$	7,054		$	984		$	(211	)	$	7,827

	Nine months ended June 30, 2014	$	22,342		$	5,912		$	(2,217	)	$	26,037
	Nine months ended June 30, 2013	$	19,130		$	2,996		$	(647	)	$	21,479

	Total Operating (Loss) Income
	Three months ended June 30, 2014	$	(4,422	)	$	(684	)	$	(12	)	$	(5,118	)
	Three months ended June 30, 2013	$	2		$	(521	)	$	—		$	(519	)

	Nine months ended June 30, 2014	$	(12,577	)	$	(3,873	)	$	(16	)	$	(16,466	)
	Nine months ended June 30, 2013	$	377		$	(1,424	)	$	—		$	(1,047	)

	Total Long-Lived Assets
	At June 30, 2014	$	48,235		$	127		$	—		$	48,362
	At September 30, 2013	$	51,301		$	102		$	—		$	51,403

SUBSEQUENT_EVENTS

SUBSEQUENT EVENTS	9 Months Ended
SUBSEQUENT EVENTS	Jun. 30, 2014
Subsequent Events [Abstract]	'
Subsequent Events	'
	Note 10. SUBSEQUENT EVENTS

	The Company has evaluated all events and transactions that occurred after the balance sheet date and through the date that the condensed consolidated financial statements were available to be issued noting none.

NATURE_OF_BUSINESS_AND_SUMMARY1

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

9 Months Ended

Jun. 30, 2014

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

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 condensed 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, through value added resellers and distributors. Sales to distributors and resellers accounted for approximately 41% and 37% of total sales for the three months ended June 30, 2014 and 2013, respectively, and approximately 46% and 32% of total sales for the nine months ended June 30, 2014 and 2013, respectively. The Company’s software product offerings do not require customization. The Company’s software products 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. VSOE for PCS contracts is generally based on stated renewal rates when the Company has determined that the renewal rate is substantive and falls within the Company’s customary pricing practices. 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’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. Additionally, the Company provides its distributors with stock-balancing rights. 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. Among other things, estimates of potential future returns are made based on the inventory levels at, and the returns history with, the various distributors and resellers, which the Company monitors frequently.

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.

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.

Capitalized 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 the three months ended June 30, 2014, the Company did not capitalize any software development costs and during the three months ended June 30, 2013, the Company capitalized approximately $168,000 of software development costs. During the nine months ended June 30, 2014 and 2013, the Company capitalized approximately $250,000 and $278,000 of software development costs, respectively.

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.

Deferred Revenue

Deferred 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 twelve 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 approximately $39,000 and $36,000 for the three months ended June 30, 2014 and 2013, respectively, and approximately $108,000 and $103,000 for the nine months ended June 30, 2014 and 2013, respectively.

Acquired Intellectual Property

On March 30, 2012, the Company acquired intellectual property which consisted primarily of the source code underlying its Datawatch Modeler (formerly Monarch Professional) and Datawatch Automator (formerly Data Pump) products pursuant to an Option Purchase Agreement dated as of April 29, 2004 by and among the Company, Personics Corporation, Raymond J. Huger and Math Strategies, as amended (the “Option Agreement”). Under the formula contained in the Option Agreement, the purchase price paid for the intellectual property assets was approximately $8,541,000 which was calculated based on a multiple of the aggregate royalties paid to Math Strategies by the Company for the four fiscal quarters preceding the exercise of the option. Additionally, the Company capitalized approximately $75,000 in closing costs and adjustments pursuant to a Supplemental Agreement dated March 30, 2012 between the Company and Raymond J. Huger. In fiscal 2013, the Company acquired additional intellectual property in the Panopticon Software, AB (Panopticon) transaction (Note 2) totaling $7,900,000. 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. Amortization expense related to the acquired intellectual property assets was approximately $694,000 and $431,000, respectively, for the three months ended June 30, 2014 and 2013, and was approximately $2,082,000 and $1,292,000, respectively, for the nine months ended June 30, 2014 and 2013.

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

Fiscal Years Ending September 30,

Remainder of 2014

694

2015

2,777

2016

2,777

2017

1,905

2018

1,053

Thereafter

2,546

Total estimated future amortization expense

11,752

Other Intangible Assets

Other intangible assets consist of internally developed software, trade names, patents and customer lists acquired through business combinations. Other intangible assets also include loan acquisition costs. The values allocated to these intangible assets are amortized using the straight-line method over the estimated useful life of the related asset, ranging from nine months to 20 years. The values allocated to internally developed software are amortized using the straight-line method over the estimated useful lives of the related assets, ranging from nine to 18 months. The values allocated to trade names are amortized using the straight-line method over the estimated useful life of the related asset (two and one half years). The values allocated to patents are amortized using the straight-line method over the estimated useful life of the related asset (20 years). The values allocated to customer lists are amortized using the straight-line method over the estimated useful lives of the related assets, ranging from ten to 15 years. Loan acquisition costs are amortized using the straight-line method over the life of the debt, ranging from two to seven years. 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. As of June 30, 2014, the Company does not have any long-lived assets it considers to be impaired.

The intangible asset amounts amortized to cost of software licenses totaled approximately $130,000 and $38,000 for the three months ended June 30, 2014 and 2013, respectively, and totaled approximately $478,000 and $70,000 for the nine months ended June 30, 2014 and 2013, respectively. Intangible asset amounts amortized to sales and marketing expense totaled approximately $161,000 and $42,000 for the three months ended June 30, 2014 and 2013, respectively, and totaled approximately $485,000 and $125,000 for the nine months ended June 30, 2014 and 2013, respectively. Intangible asset amounts amortized to general and administrative expense totaled approximately $12,000 for the three months ended June 30, 2014 and totaled approximately $36,000 for the nine months ended June 30, 2014. There were no intangible assets amortized to general and administrative for the three and nine months ended June 30, 2013. There were no intangible asset amounts amortized to interest expense during the three months ended June 30, 2014. Intangible asset amounts amortized to interest expense totaled approximately $8,000 for the three months ended June 30, 2013, and totaled approximately $122,000 and $24,000 for the nine months ended June 30, 2014 and 2013, respectively.

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

Fiscal Years Ending September 30,

Remaining 2014

304

2015

702

2016

605

2017

488

2018

488

Thereafter

4,807

Total estimated future amortization expense

7,394

Goodwill

The Company accounts for goodwill in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350 Intangibles – Goodwill and Other. This requires that goodwill be 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. The Company conducts its annual impairment test for goodwill and indefinite-lived intangible assets during the fourth quarter of each fiscal year.

Fair Value Measurements

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and notes 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 approximately $40,260,000 and $2,234,000 as of June 30, 2014 and September 30, 2013, respectively, within Level 2 of the fair value hierarchy because they are valued using amortized cost.

As of June 30, 2014 and September 30, 2013, the Company’s assets that are measured on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands):

June 30, 2014

September 30, 2013

Fair Value

Measurement

Using Input Types

Level

Assets:

Money market funds

—

40,260

—

2,234

—

Total

—

40,260

—

2,234

—

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, with the exception of its subsidiary in Sweden. The Company has recorded a deferred tax liability relating to the intangible assets at its Swedish subsidiary.

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):

Three Months Ended

Nine Months Ended

June 30,

2014

2013

2014

2013

Net loss available to common shareholders

(5,157

)

(666

)

(17,509

)

(1,514

)

Weighted-average number of common shares outstanding used in calculation of basic earnings per share

10,825,910

6,494,599

9,653,760

6,433,599

Incremental shares from the assumed exercise of dilutive stock options

—

Weighted-average number of common shares outstanding used in calculating diluted earnings per share

10,825,910

6,494,599

9,653,760

6,433,599

As the Company was in a net loss position for the three and nine months ended June 30, 2014 and 2013, all common stock equivalents in the respective periods were anti-dilutive and 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 losses arising during the three months ended June 30, 2014 were approximately $51,000. Foreign currency translation gains arising during the nine months ended June 30, 2014 were approximately $26,000. Foreign currency translation losses arising during the three and nine months ended June 30, 2013 were approximately $29,000 and $47,000, 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 gains of approximately $10,000 and $9,000 for the three months ended June 30, 2014 and 2013, respectively. A loss of approximately $152,000 was included in the operating results of the Company for the nine months ended June 30, 2014. A gain of approximately $8,000 for the nine months ended June 30, 2013 was included in the operating results of the Company.

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.

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 June 30, 2014 or September 30, 2013.

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 June 30, 2014 or September 30, 2013.

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 June 30, 2014 or September 30, 2013.

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 June 30, 2014 or September 30, 2013.

Reclassifications

Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported net loss.

Recent Accounting Pronouncements

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 is effective for annual reporting periods beginning after December 15, 2016. Early application is not permitted. The Company is currently assessing the impact of this guidance

NATURE_OF_BUSINESS_AND_SUMMARY2

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Jun. 30, 2014
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	'
	As of June 30, 2014 and September 30, 2013, the Company’s assets that are measured on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands):




		June 30, 2014									September 30, 2013
		Fair Value									Fair Value
		Measurement									Measurement
		Using Input Types									Using Input Types
		Level			Level			Level			Level			Level		Level
		1			2			3			1			2		3

	Assets:
	Money market funds	$	—		$	40,260		$	—		$	—		$	2,234	$	—
	Total	$	—		$	40,260		$	—		$	—		$	2,234	$	—


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):




		Three Months Ended						Nine Months Ended
		June 30,						June 30,
		2014			2013			2014			2013

	Net loss available to common shareholders	$	(5,157	)	$	(666	)	$	(17,509	)	$	(1,514	)

	Weighted-average number of common shares outstanding used in calculation of basic earnings per share		10,825,910			6,494,599			9,653,760			6,433,599
	Incremental shares from the assumed exercise of dilutive stock options		—			—			—			—
	Weighted-average number of common shares outstanding used in calculating diluted earnings per share		10,825,910			6,494,599			9,653,760			6,433,599


Intellectual Property [Member]	'
Schedule of Estimated Future Amortization Expense	'
	The estimated future amortization expense related to the acquired intellectual property is as follows (in thousands):




	Fiscal Years Ending September 30,

	Remainder of 2014	$	694
	2015		2,777
	2016		2,777
	2017		1,905
	2018		1,053
	Thereafter		2,546
	Total estimated future amortization expense	$	11,752


Other Intangible Assets [Member]	'
Schedule of Estimated Future Amortization Expense	'
	The estimated future amortization expense related to amortizing intangible assets is as follows (in thousands):




	Fiscal Years Ending September 30,

	Remaining 2014	$	304
	2015		702
	2016		605
	2017		488
	2018		488
	Thereafter		4,807
	Total estimated future amortization expense	$	7,394

ACQUISITION_Tables

ACQUISITION (Tables)	9 Months Ended
ACQUISITION (Tables)	Jun. 30, 2014
Acquisition [Abstract]	'
Schedule of Intangible Assets	'
	The intangible assets, excluding goodwill and assembled workforce, are being amortized on a straight-line basis over their estimated lives as follows (in thousands):





		Fair		Estimated
		Value		Lives
	Customer Relationships	$	7,200	15.0 years
	Developed Technology		7,900	7.5 years
	Trade Name		120	2.5 years
	Total intangible assets	$	15,220

ACCRUED_EXPENSES_Tables

ACCRUED EXPENSES (Tables)	9 Months Ended
ACCRUED EXPENSES (Tables)	Jun. 30, 2014
Accrued Expenses [Abstract]	'
Schedule of Accrued Expenses	'
	Accrued expenses consisted of the following at June 30, 2014 and September 30, 2013:




		June 30,		September 30,
		2014		2013


	Royalties and commissions	$	1,056	$	1,483
	Payroll and related expenses		743		944
	Professional fees and consulting		512		417
	Other		492		637
	Total	$	2,803	$	3,481

COMMITMENTS_AND_CONTINGENCIES_

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
COMMITMENTS AND CONTINGENCIES (Tables)	Jun. 30, 2014
Commitments and Contingencies [Abstract]	'
Schedule of Future Minimum Rental Payments for Operating Leases	'
	As of June 30, 2014, future minimum rental commitments under non-cancelable operating leases are as follows (in thousands):




	Years Ending September 30,

	Remaining in 2014	$	218
	2015		499
	2016		269
	2017		45
	2018		46
	Thereafter		39
	Total future minimum lease payments	$	1,116

INCOME_TAXES_Tables

INCOME TAXES (Tables)	9 Months Ended
	Jun. 30, 2014
Income Taxes [Abstract]	'
Schedule of Unrecognized Tax Benefits	'
	The change in the unrecognized tax benefits during the nine months ended June 30, 2014 was as follows (in thousands):





	Balance at September 30, 2013	$	998
	Additions for prior year tax positions		13
	Balance at June 30, 2014	$	1,011

SHAREBASED_COMPENSATION_Tables

SHARE-BASED COMPENSATION (Tables)	9 Months Ended
SHARE-BASED COMPENSATION (Tables)	Jun. 30, 2014
Share-Based Compensation [Abstract]	'
Schedule of Share Based Expense Categories	'
	The following table presents share-based employee compensation expenses included in our unaudited condensed consolidated statements of operations (in thousands):




		Three Months Ended						Nine Months Ended
		June 30,						June 30,
		2014				2013		2014		2013

	Sales and marketing	$	1,204			$	523	$	3,731	$	1,451
	Engineering and product development		136				21		1,493		64
	Professional Services		25				—		91		—
	General and administrative		321				216		1,190		407
	Total	$	1,686			$	760	$	6,505	$	1,922


Schedule of Stock Option Activity	'
	The following table is a summary of combined activity for all of the Company’s stock option plans:




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

	Outstanding, September 30, 2013	363,209		$	5.76		4.33	$	8,042
	Granted	—			—		—		—
	Canceled/Forfeited	—			—		—		—
	Exercised	22,375			3.94		—		—
	Outstanding, June 30, 2014	340,834		$	5.88		3.78	$	3,096

	Expected to vest, June 30, 2014	45,003		$	12.92		5.82	$	92
	Exercisable, June 30, 2014	290,830		$	4.67		3.43	$	2,994


Schedule of Nonvested Restricted Stock Units Activity	'
	Included in the total number of RSUs unvested at June 30, 2014 are certain RSUs that are subject to a further vesting condition that the Company’s common stock must trade at a price greater than the following market prices per share on a national securities exchange for a period of twenty consecutive days on or prior to certain anniversaries of the grant date as follows:




		Number of
		Unvested RSUs

	$10.00 per share prior to five years of the grant date	*	27,839
	$10.00 per share prior to four years of the grant date	*	110,645
	$17.50 per share prior to five years of the grant date	*	30,000
	$17.50 per share prior to four years of the grant date	*	64,176
	$17.50 per share prior to three years of the grant date	*	106,002
	$20.00 per share prior to four years of the grant date	*	4,334
	$22.50 per share prior to four years of the grant date	*	7,667
	$22.50 per share prior to three years of the grant date	*	184,834
	$22.50 per share prior to two and one-half years of the grant date	*	64,674
	No further trading vesting condition		319,839
	Unvested RSUs, June 30, 2014		920,010


Schedule of Nonvested RSU Information	'
	The following table presents nonvested RSU information for the nine months ended June 30, 2014:




		Number of
		RSUs
		Outstanding

	Nonvested, September 30, 2013		1,056,696
	Granted		283,500
	Canceled/Forfeited		(69,834	)
	Vested		(350,352	)
	Nonvested, June 30, 2014		920,010

SEGMENT_INFORMATION_Tables

SEGMENT INFORMATION (Tables)	9 Months Ended
SEGMENT INFORMATION (Tables)	Jun. 30, 2014
Segment Information [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):




								Intercompany
		Domestic			International			Eliminations			Total
	Total Revenue
	Three months ended June 30, 2014	$	7,680		$	2,507		$	(959	)	$	9,228
	Three months ended June 30, 2013	$	7,054		$	984		$	(211	)	$	7,827

	Nine months ended June 30, 2014	$	22,342		$	5,912		$	(2,217	)	$	26,037
	Nine months ended June 30, 2013	$	19,130		$	2,996		$	(647	)	$	21,479

	Total Operating (Loss) Income
	Three months ended June 30, 2014	$	(4,422	)	$	(684	)	$	(12	)	$	(5,118	)
	Three months ended June 30, 2013	$	2		$	(521	)	$	—		$	(519	)

	Nine months ended June 30, 2014	$	(12,577	)	$	(3,873	)	$	(16	)	$	(16,466	)
	Nine months ended June 30, 2013	$	377		$	(1,424	)	$	—		$	(1,047	)

	Total Long-Lived Assets
	At June 30, 2014	$	48,235		$	127		$	—		$	48,362
	At September 30, 2013	$	51,301		$	102		$	—		$	51,403

NATURE_OF_BUSINESS_AND_SUMMARY3

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $)	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2012	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Sep. 30, 2013
License sales to distributors and resellers as percentage of total revenue	'	41.00%	37.00%	46.00%	32.00%	'
Product warranty period	'	'	'	'30 days	'	'
Depreciation and amortization expense	'	$39,000	$36,000	$108,000	$103,000	'
Foreign currency translation gains (losses)	'	-51,000	-29,000	26,000	-47,000	'
Conversion gains and (losses) on foreign investments	'	10,000	9,000	-152,000	8,000	'
Capitalized software development costs	'	0	168,000	250,000	278,000	'
Amortization of intangible assets	'	130,000	38,000	478,000	70,000	'
Purchase price for intellectual property assets	'	'	'	15,220,000	'	'
Capitalized closing costs and adjustments	75,000	'	'	'	'	'
Intellectual Property [Member]	'	'	'	'	'	'
Amortization of intangible assets	'	694,000	431,000	2,082,000	1,292,000	'
Purchase price for intellectual property assets	8,541,000	'	'	'	'	7,900,000
Patents [Member]	'	'	'	'	'	'
Useful life	'	'	'	'20 years	'	'
Selling and Marketing [Member]	'	'	'	'	'	'
Amortization of intangible assets	'	161,000	42,000	485,000	125,000	'
General and Administrative [Member]	'	'	'	'	'	'
Amortization of intangible assets	'	12,000	0	36,000	0	'
Interest Expense [Member]	'	'	'	'	'	'
Amortization of intangible assets	'	'	8,000	122,000	24,000	'
Software Licenses [Member]	'	'	'	'	'	'
Product warranty period	'	'	'	'30 days	'	'
Trade Names [Member]	'	'	'	'	'	'
Useful life	'	'	'	'2 years 6 months	'	'
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	'	'
Minimum [Member] \| Customer Lists [Member]	'	'	'	'	'	'
Useful life	'	'	'	'10 years	'	'
Minimum [Member] \| Loan Acquisition Costs [Member]	'	'	'	'	'	'
Useful life	'	'	'	'2 years	'	'
Minimum [Member] \| Software Licenses [Member]	'	'	'	'	'	'
Useful life	'	'	'	'9 months	'	'
Minimum [Member] \| Other Intangible Assets [Member]	'	'	'	'	'	'
Useful life	'	'	'	'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	'	'
Maximum [Member] \| Customer Lists [Member]	'	'	'	'	'	'
Useful life	'	'	'	'15 years	'	'
Maximum [Member] \| Loan Acquisition Costs [Member]	'	'	'	'	'	'
Useful life	'	'	'	'7 years	'	'
Maximum [Member] \| Software Licenses [Member]	'	'	'	'	'	'
Useful life	'	'	'	'18 months	'	'
Maximum [Member] \| Other Intangible Assets [Member]	'	'	'	'	'	'
Useful life	'	'	'	'20 years	'	'
Money Market Funds [Member]	'	'	'	'	'	'
Total assets at fair value	'	$40,260,000	'	$40,260,000	'	$2,234,000

NATURE_OF_BUSINESS_AND_SUMMARY4

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Estimated Future Amortization Expense Related to the Acquired Intellectual Property) (Details) (Intellectual Property [Member], USD $)	Jun. 30, 2014
In Thousands, unless otherwise specified	Jun. 30, 2014
Intellectual Property [Member]	'
Remainder of 2014	$694
2015	2,777
2016	2,777
2017	1,905
2018	1,053
Thereafter	2,546
Total estimated future amortization expense	$11,752

NATURE_OF_BUSINESS_AND_SUMMARY5

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Estimated Future Amortization Expense) (Details) (USD $)	Jun. 30, 2014	Sep. 30, 2013
In Thousands, unless otherwise specified	Jun. 30, 2014	Sep. 30, 2013
Total estimated future amortization expense	$7,394	$8,260
Other Intangible Assets [Member]	'	'
Remaining 2014	304	'
2015	702	'
2016	605	'
2017	488	'
2018	488	'
Thereafter	4,807	'
Total estimated future amortization expense	$7,394	'

NATURE_OF_BUSINESS_AND_SUMMARY6

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) (USD $)	Jun. 30, 2014	Sep. 30, 2013
Money Market Funds [Member]	'	'
Total assets at fair value	$40,260,000	$2,234,000
Fair Value, Inputs, Level 2 [Member]	'	'
Total assets at fair value	40,260,000	2,234,000
Fair Value, Inputs, Level 2 [Member] \| Money Market Funds [Member]	'	'
Total assets at fair value	$40,260,000	$2,234,000

NATURE_OF_BUSINESS_AND_SUMMARY7

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Nature of Business and Summary of Significant Accounting Policies [Abstract]	'	'	'	'
Net loss available to common shareholders	($5,157)	($666)	($17,509)	($1,514)
Weighted-average number of common shares outstanding used in calculation of basic earnings per share	10,825,910	6,494,599	9,653,760	6,433,599
Incremental shares from the assumed exercise of dilutive stock options	'	'	'	'
Weighted-average number of common shares outstanding used in calculating diluted earnings per share	10,825,910	6,494,599	9,653,760	6,433,599

ACQUISITION_Narrative_Details

ACQUISITION (Narrative) (Details) (Panopticon [Member], USD $)	3 Months Ended	9 Months Ended
	Aug. 28, 2013	Jun. 30, 2014
Purchase consideration, seller financing	175,000	'
Business acquisition, fair value of consideration issued	42,644,000	'
Business acquisition, share price of consideration issued	23.12	'
Common Stock [Member]	'	'
Purchase consideration, common shares issued	1,866,716	'
Business acquisition, shares held back for indemnification obligations	216,994	'
Business acquisition, period for shares held back for indemnification obligations	'	'15 months
Restricted Stock Units (RSUs) [Member]	'	'
Business acquisition, restricted stock issued to employees	86,231	'

ACQUISITION_Schedule_of_Intang

ACQUISITION (Schedule of Intangible Assets) (Details) (USD $)	9 Months Ended
	Jun. 30, 2014
Intangible assets	$15,220,000
Customer Relationships [Member]	'
Intangible assets	7,200,000
Estimated Lives	'15 years
Developed Technology Rights [Member]	'
Intangible assets	7,900,000
Estimated Lives	'7 years 6 months
Trade Names [Member]	'
Intangible assets	$120,000
Estimated Lives	'2 years 6 months

ACCRUED_EXPENSES_Details

ACCRUED EXPENSES (Details) (USD $)	Jun. 30, 2014	Sep. 30, 2013
In Thousands, unless otherwise specified	Jun. 30, 2014	Sep. 30, 2013
Accrued Expenses [Abstract]	'	'
Royalties and commissions	$1,056	$1,483
Payroll and related expenses	743	944
Professional fees and consulting	512	417
Other	492	637
Total	$2,803	$3,481

FINANCING_ARRANGEMENTS_Narrati

FINANCING ARRANGEMENTS (Narrative) (Details) (USD $)

0 Months Ended

3 Months Ended

9 Months Ended

22 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

4 Months Ended

24 Months Ended

3 Months Ended

9 Months Ended

Aug. 15, 2013

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Feb. 19, 2014

Sep. 30, 2013

Jun. 30, 2014

Aug. 15, 2013

Jun. 30, 2014

Aug. 15, 2013

Mar. 30, 2012

Aug. 14, 2013

Mar. 29, 2014

Sep. 30, 2013

Mar. 30, 2012

Mar. 29, 2014

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Sep. 30, 2013

Jun. 30, 2014

Mar. 30, 2012

Amendment to SVB Agreement [Member]

Massachusetts Capital Resource Company ("MCRC") [Member]

Subordinated Debt [Member]

Revolving Credit Facility [Member]

Note Warrant [Member]

Prime Rate [Member]

Amendment To MCRC Agreement [Member]

Massachusetts Capital Resource Company ("MCRC") [Member]

Silicon Valley Bank [Member]

Massachusetts Capital Resource Company ("MCRC") [Member]

Arrears [Member]

Prime Rate [Member]

Debt Instrument [Line Items]

Line of credit, maximum borrowing capacity

$2,000,000

Line of credit outstanding

900,000

1,500,000

Basis spread on variable interest rate

2.50%

1.50%

Interest rate minimum

3.25%

Interest rate maximum

10.00%

Interest rate

3.25%

8.00%

10.00%

Term loan advance outstanding

1,945,000

Accrued interest

9,000

Debt face amount

4,000,000

Warrants

185,000

Debt instrument maturity date

28-Feb-19

Original period of loan subject to interest rate premiums on optional redemption of principal payments

'3 years

Monthly principal payments

66,667

Debt terms

'The subordinated note issued to MCRC had a maturity date of February 28, 2019, with interest due monthly on the unpaid principal amount of the note at the rate of 10% per annum in arrears. The subordinated note also contained interest rate premiums on any optional redemption of principal payments during the first three years of the note agreement. Additionally, beginning on March 31, 2014 and on the last day of each month thereafter until the maturity date, the Company would have made principal payments of $66,667 per month. The Company was also required under the MCRC agreement to maintain certain interest coverage and leverage ratios.

Debt redemption face amount

2,000,000

Debt repaid

2,000,000

Interest rate premium on principal payments

3.00%

Debt interest payment

23,000

Payment of debt instrument discount (premium)

-60,000

Warrant exercise price

11.54

Period of average common stock price used for warrant exercise price

'45 days

Warrants fair value

1,096,000

Share Price

$28.50

Expected life (years)

'7 years

Expected volatility

68.18%

Risk-free interest rate

1.61%

Dividend yield

0.00%

Interest expense

157,000

406,000

474,000

39,000

65,000

117,000

Loss on extinguishment of debt

($795,000)

COMMITMENTS_AND_CONTINGENCIES_1

COMMITMENTS AND CONTINGENCIES (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) (USD $)	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Commitments and Contingencies [Abstract]	'	'	'	'
Rental expense for operating leases	$230,000	$128,000	$708,000	$397,000
Royalty expense	$131,000	$35,000	$288,000	$102,000

COMMITMENTS_AND_CONTINGENCIES_2

COMMITMENTS AND CONTINGENCIES (Future Minimum Rental Commitments for Operating Leases) (Details) (USD $)	Jun. 30, 2014
In Thousands, unless otherwise specified	Jun. 30, 2014
Commitments and Contingencies [Abstract]	'
Remaining in 2014	$218
2015	499
2016	269
2017	45
2018	46
Thereafter	39
Total future minimum lease payments	$1,116

INCOME_TAXES_Narrative_Details

INCOME TAXES (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended
INCOME TAXES (Narrative) (Details) (USD $)	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Sep. 30, 2013
Income Taxes [Abstract]	'	'	'	'	'
Interest and penalties accrued	$21,000	'	$21,000	'	'
Accrued interest and penalties in the period	4,000	'	7,000	'	'
Tax liability increase (decrease) for uncertain tax positions	13,000	'	13,000	'	'
Deferred tax liability, net	1,153,000	'	1,153,000	'	'
Potential cash payment for tax liability	'	'	'	'	353,000
Tax expense (benefit)	53,000	-1,000	-270,000	2,000	'
State tax expense (benefit)	'	'	13,000	'	'
Foreign tax expense (benefit)	'	'	'	$2,000	'

INCOME_TAXES_Changes_in_Unreco

INCOME TAXES (Changes in Unrecognized Tax Benefits) (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014
Income Taxes [Abstract]	'
Balance at September 30, 2013	$998
Additions for prior year tax positions	13
Balance at June 30, 2014	$1,011

SHAREBASED_COMPENSATION_Narrat

SHARE-BASED COMPENSATION (Narrative) (Details) (USD $)

3 Months Ended

9 Months Ended

0 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Apr. 22, 2014

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

2011 Plan [Member]

Minimum [Member]

Maximum [Member]

Restricted Stock Units (RSUs) [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Award vesting period

'3 years

Award expiration period

'7 years

'10 years

Stock options granted

Intrinsic value of options exercised

$46,000

$51,000

$570,000

$612,000

Proceeds from exercise of stock options

23,000

88,000

142,000

Tax benefit realized from stock options exercised

Unrecognized compensation cost from non-vested stock options

310,000

Unrecognized compensation cost from non-vested awards, weighted-average period

'1 year 9 months 26 days

'1 year 11 months 16 days

Dividend yield

0.00%

Estimated forfeiture rate

10.00%

Additional shares authorized for plan

700,000

Shares authorized for equity compensation plan

2,275,392

Shares available for future issuance under plan

632,223

Number of unvested units

920,010

Annual unit vesting rate

33.33%

Restricted stock units for which the vesting conditions have been fulfilled

600,171

Fair value of awards granted

5,764,000

4,620,000

Weighted average share price of awards granted

$20.33

$14.77

Compensation expense for awards

1,679,000

683,000

6,280,000

1,765,000

Unrecognized compensation costs related to awards

$12,456,000

SHAREBASED_COMPENSATION_ShareB

SHARE-BASED COMPENSATION (Share-Based Employee Compensation Expenses) (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Share-based compensation expense	$1,686	$760	$6,505	$1,922
Selling and Marketing [Member]	'	'	'	'
Share-based compensation expense	1,204	523	3,731	1,451
Engineering and Product Development [Member]	'	'	'	'
Share-based compensation expense	136	21	1,493	64
Professional Services [Member]	'	'	'	'
Share-based compensation expense	25	'	91	'
General and Administrative [Member]	'	'	'	'
Share-based compensation expense	$321	$216	$1,190	$407

SHAREBASED_COMPENSATION_Stock_

SHARE-BASED COMPENSATION (Stock Option Plan Activity) (Details) (USD $)	9 Months Ended	12 Months Ended
In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Sep. 30, 2013
Share-Based Compensation [Abstract]	'	'
Number of options outstanding, beginning balance	363,209	'
Number of options outstanding, exercised	22,375	'
Number of options outstanding, ending balance	340,834	363,209
Number of options outstanding, expected to vest	45,003	'
Number of options outstanding, exercisable	290,830	'
Weighted - average exercise price, beginning balance	$5.76	'
Weighted - average exercise price, exercised	$3.94	'
Weighted - average exercise price, ending balance	$5.88	$5.76
Weighted - average exercise price, expected to vest	$12.92	'
Weighted - average exercise price, exercisable	$4.67	'
Weighted - average remaining contractual life (years)	'3 years 9 months 11 days	'4 years 3 months 29 days
Weighted - average remaining contractual term, expected to vest	'5 years 9 months 26 days	'
Weighted - average remaining contractual term, exercisable	'3 years 5 months 5 days	'
Aggregate intrinsic value, beginning balance	$8,042	'
Aggregate intrinsic value, expected to vest	92	'
Aggregate intrinsic value, exercisable	2,994	'
Aggregate intrinsic value, ending balance	$3,096	$8,042

SHAREBASED_COMPENSATION_Schedu

SHARE-BASED COMPENSATION (Schedule of Restricted Stock Units) (Details) (Restricted Stock Units (RSUs) [Member], USD $)	9 Months Ended
	Jun. 30, 2014
Number of restricted stock units subject to vesting conditions	920,010
Five Years [Member] \| Ten Dollar Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	27,839
Trading vesting conditions, restricted stock unit	10
Five Years [Member] \| Seventeen Dollars And Fifty Cents Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	30,000
Trading vesting conditions, restricted stock unit	17.5
Four Years [Member] \| Ten Dollar Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	110,645
Trading vesting conditions, restricted stock unit	10
Four Years [Member] \| Seventeen Dollars And Fifty Cents Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	64,176
Trading vesting conditions, restricted stock unit	17.5
Four Years [Member] \| Twenty Dollar Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	4,334
Trading vesting conditions, restricted stock unit	20
Four Years [Member] \| Twenty Two Dollars And Fifty Cents Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	7,667
Trading vesting conditions, restricted stock unit	22.5
Three Years [Member] \| Seventeen Dollars And Fifty Cents Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	106,002
Trading vesting conditions, restricted stock unit	17.5
Three Years [Member] \| Twenty Two Dollars And Fifty Cents Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	184,834
Trading vesting conditions, restricted stock unit	22.5
Two and One Half Years [Member] \| Twenty Two Dollars And Fifty Cents Per Share Market Price [Member]	'
Number of restricted stock units subject to vesting conditions	64,674
Trading vesting conditions, restricted stock unit	22.5
No vesting [Member]	'
Number of restricted stock units subject to vesting conditions	319,839

SHAREBASED_COMPENSATION_Nonves

SHARE-BASED COMPENSATION (Nonvested RSU Information) (Details) (Restricted Stock Units (RSUs) [Member])	9 Months Ended
	Jun. 30, 2014
Restricted Stock Units (RSUs) [Member]	'
Number of RSUs outstanding, nonvested, beginning balance	1,056,696
Number of RSUs outstanding, granted	283,500
Number of RSUs outstanding, canceled/forfeited	-69,834
Number of RSUs outstanding, vested	-350,352
Number of RSUs outstanding, nonvested, ending balance	920,010

ISSUANCE_OF_COMMON_STOCK_Narra

ISSUANCE OF COMMON STOCK (Narrative) (Details) (USD $)	0 Months Ended
ISSUANCE OF COMMON STOCK (Narrative) (Details) (USD $)	Feb. 19, 2014
Issuance of Common Stock [Abstract]	'
Shares issued in public offering	2,018,250
Share price	$28.50
Underwriters' over-allotment options	263,250
Proceeds from public offering	$54,069,000

SEGMENT_INFORMATION_Details

SEGMENT INFORMATION (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Sep. 30, 2013
	Jun. 30, 2014	Jun. 30, 2013	segment	Jun. 30, 2013	Sep. 30, 2013
Number of reportable segments	'	'	1	'	'
Revenue	$9,228	$7,827	$26,037	$21,479	'
Operating income (loss)	-5,118	-519	-16,466	-1,047	'
Long-lived assets	48,362	'	48,362	'	51,403
Domestic [Member]	'	'	'	'	'
Revenue	7,680	7,054	22,342	19,130	'
Operating income (loss)	-4,422	2	-12,577	377	'
Long-lived assets	48,235	'	48,235	'	51,301
International [Member]	'	'	'	'	'
Revenue	2,507	984	5,912	2,996	'
Operating income (loss)	-684	-521	-3,873	-1,424	'
Long-lived assets	127	'	127	'	102
Intercompany Eliminations [Member]	'	'	'	'	'
Revenue	-959	-211	-2,217	-647	'
Operating income (loss)	($12)	'	($16)	'	'