ACE*COMM Reports 41% Revenue Growth for the Second Quarter of Fiscal 2006; Company Achieves Third Consecutive Quarter of Profita

ACE*COMM Corporation (NASDAQ:ACEC):

   Corporate Highlights for the Quarter:

   --  Reported revenues of $6.7 million for the quarter - a 41%
        increase over same quarter last year and 42% increase over the
        same six month period last year

   --  Posted third consecutive quarter of profitability

   --  Extended relationship with Saudi Telecom for second phase of
        NBI deployment

   --  Signed new contract with world's leading IP carrier for new
        service delivery platform with advanced rating capabilities

   --  Secured contract to provide voice and IP billing mediation to
        leading Greek next-generation service provider, Vivodi

   --  Completed Parent Patrol(TM) lab certification for North
        American regional carrier; market rollout expected in 1st
        quarter of calendar 2006

   --  Received 'Product of the Year' award from Internet Telephony
        Magazine for NetPlus(R) VoIP capabilities

   ACE*COMM Corporation (NASDAQ:ACEC), a global provider of network
business intelligence and advanced operations support systems (OSS)
solutions, today reported financial results for the quarter ended
December 31, 2005, the second quarter of its 2006 fiscal year. The
Company reported revenues of $6.7 million for the quarter, which
compares to $4.8 million for the comparable quarter of fiscal year
2005. Net profit for the quarter was $347 thousand, or $0.02 per
share, compared to a net profit of $176 thousand, or $0.01 per share,
for the same quarter in the prior year.
   For the six months, revenues were $13.4 million which compares to
$9.4 million for the same six months period last year. Net profit for
the six months ended December 31, 2005 was $446 thousand or $0.03 per
share as compared to a net loss of $209 thousand or $0.02 per share in
the same six months last year.
   "ACE*COMM's second quarter performance underscores the successes
we have achieved to date with our reinvigorated growth strategy and
the resilience of our organization," said George T. Jimenez, CEO of
ACE*COMM. "Our Network Business Intelligence(TM) suite is making gains
in the carrier market, with the noteworthy expansion to a second phase
of the contract with Saudi Telecom. As carriers become more aware that
their networks are a major source of business information, we believe
they will increasingly look to experienced companies like ACE*COMM for
solutions that enable operational and business intelligence (BI)
processes, and invest in BI with enterprise-wide initiatives. Our
extensive experience with systems that operate at the edge of the
network places us in an optimal position to capture market share for
the evolving telecom BI market."
   "We are further delighted to have successfully completed customer
site trials and testing for the deployment of our industry-leading
Parent Patrol(TM) service control application that allows parents to
manage children's mobile phone usage. Our pipeline of opportunities
remains strong, and we anticipate rolling out our first deployment of
this patent-pending technology in North America in the near future,"
continued Mr. Jimenez. "Market analysts forecast tremendous potential
for growth in the mobile youth segment once innovative solutions -
like Parent Patrol(TM) - are available to deal with parental concerns.
Looking ahead, we expect market penetration rates for this technology
to accelerate."
   Continued Mr. Jimenez: "Our ability to win significant business
such as our major contract with Northrop Grumman for the US Air Force,
stems from both our technical expertise and our success in joining
forces with large industry players. We will expand this approach to
all areas of our business. We continue to strengthen our relationship
with Northrop Grumman, and other NetPlus(R) channel partners, to
leverage our industry recognition and market success into additional
contract opportunities."
   "Having delivered exceptional top-line growth in the first half of
fiscal 2006 and continued profitability, ACE*COMM is demonstrating the
earnings power of its business model," said Steve Delmar, CFO of
ACE*COMM. "Additionally, we still have opportunities to improve
efficiencies across the Company, and are currently working to hone
these and to more tightly integrate corporate functions."

   Earnings Call

   ACE*COMM will host an earnings teleconference call this evening,
February 8, 2006 at 5:30 pm, Eastern Standard Time, to discuss the
second quarter results. To participate, please call 866-219-5885
(within the United States) or 703-639-1124 (outside the United
States). When prompted, enter the ACE*COMM reservation number 851617.
Internet users can hear a simultaneous live Webcast of the
teleconference at http://acecomm.com or http://www.fulldisclosure.com.
A taped replay of the call will be made available from the ACE*COMM
Corporate Web Site after 8:30 pm, on Wednesday, February 8, 2006.

   About ACE*COMM

   ACE*COMM is a global provider of network business intelligence and
advanced operations support systems (OSS) solutions for telecom
service providers and enterprises. ACE*COMM's solutions are applicable
to a range of legacy through next-generation networks that include
wired, wireless, voice, data, multimedia, and Internet communications
networks. These solutions provide the analytical tools required to
extract data from operating networks and correlate it with business
data to produce business intelligence -- insight customers use for
asset recovery and revenue assurance, cost reduction, improved
operational efficiency, acceleration of time-to-market for new
services, and more effective customer care.
   For over 20 years, ACE*COMM technology has been effectively
deployed for more than 300 customers, spanning over 4000 installations
in 70 countries worldwide. ACE*COMM-installed products are currently
enabling the success of customers and partners such as Alcatel, AT&T,
Cisco, General Dynamics, IBM, Level 3 Communications, Marconi,
Motorola, Northrop Grumman, Siemens, and Unisys. Headquartered in the
Washington, DC area, ACE*COMM has corporate offices in Australia,
Canada, China, and the UK. ACE*COMM is a registered ISO 9001 quality
standard company. For more information, visit www.acecomm.com.

   ACE*COMM, and the ACE*COMM logo are registered trademarks, and
ACE*COMM Network Business Intelligence and Parent Patrol are
trademarks of ACE*COMM Corporation.

   Except for historical information, the matters discussed in this
news release include forward-looking statements that are subject to
certain risks and uncertainties that could cause the actual results to
differ materially from those projected, including, but not limited to:
the failure of anticipated demand to materialize, delays or
cancellations of orders due to various factors, including business and
economic conditions in the U.S. and foreign countries; industry-wide
slowdowns, any limitations on customers' financial resources, the
continued convergence of voice and data networks, the continuing
success of the Company's strategic alliances for product development
and marketing, customer purchasing and budgetary patterns or lack
thereof; pricing pressures and the impact of competitive products; the
timely development and acceptance of new products; the Company's
ability to adequately support its operations, and other risks detailed
from time to time in the Company's Report on Form 10-Q and other
reports filed with the Securities Exchange Commission.
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                         ACE*COMM CORPORATION
                      CONSOLIDATED BALANCE SHEETS
           (in thousands except share and per share amounts)

                                             December 31,   June 30,
                                                 2005         2005
                                             ------------ ------------
                                             (Unaudited)
                   Assets

Current assets:
   Cash and cash equivalents                        $991       $2,683
   Accounts receivable, net                        6,769        4,870
   Inventories, net                                  915          532
   Deferred contract costs                            25           85
   Prepaid expenses and other                        755          601
                                             ------------ ------------
        Total current assets                       9,455        8,771
Property and equipment, net                          671          636
Goodwill                                             522        1,681
Acquired intangibles, net                          1,156        2,001
Other non-current assets                             932          478
                                             ------------ ------------
        Total assets                             $12,736      $13,567
                                             ============ ============

    Liabilities and Stockholders' Equity

Current liabilities:
   Borrowings                                     $2,862       $2,332
   Accounts payable                                  984        1,379
   Accrued expenses                                1,764        1,940
   Accrued compensation                              724        1,013
   Deferred revenue                                1,029        1,454
                                             ------------ ------------
        Total current liabilities                  7,363        8,118
Long-term notes payable                               34           72
                                             ------------ ------------
            Total liabilities                      7,397        8,190
                                             ------------ ------------

Commitments and contingencies

Stockholders' equity:
   Preferred stock, $.01 par value,
    5,000,000 shares authorized,
    none issued and outstanding                        -            -
   Common stock, $.01 par value, 45,000,000
    shares authorized, 17,439,029 and 
    16,694,330 shares issued and outstanding         174          167
  Deferred compensation on restricted shares        (374)           -
  Additional paid-in capital                      34,797       34,808
  Other accumulated comprehensive loss              (137)         (32)
  Accumulated deficit                            (29,121)     (29,566)
                                             ------------ ------------
     Total stockholders' equity                    5,339        5,377
                                             ------------ ------------

     Total liabilities and stockholders'
      equity                                     $12,736      $13,567
                                             ============ ============



                         ACE*COMM CORPORATION
                 CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)

                           For the three            For the six
                            months ended            months ended
                            December 31,            December 31,
                       ----------------------- -----------------------
                          2005        2004        2005        2004
                       (Unaudited) (Unaudited) (Unaudited) (Unaudited)
                       ----------- ----------- ----------- -----------

Revenue
   Licenses and
    hardware               $3,196      $1,879      $6,651      $4,147
   Services                 3,541       2,899       6,771       5,290
                       ----------- ----------- ----------- -----------
        Total revenue       6,737       4,778      13,422       9,437

Cost of licenses and
 hardware revenue             413         551       1,483       1,450
Cost of services
 revenue                    1,688       1,421       3,300       2,667
                       ----------- ----------- ----------- -----------
   Total cost of
    revenue                 2,101       1,972       4,783       4,117

   Gross profit             4,636       2,806       8,639       5,320

Selling, general, and
 administrative             3,341       2,279       6,158       4,621
Research and
 development                  914         570       1,951       1,114
                       ----------- ----------- ----------- -----------

   Income (loss) from
    operations                381         (43)        530        (415)

Interest expense               33           7          83           7
Gain from settlement
 of debt obligation             -         228           -         228
                       ----------- ----------- ----------- -----------

   Income (loss)
    before income
    taxes                     348         178         447        (194)
Income tax expense              1           2           1          15
                       ----------- ----------- ----------- -----------

   Net income (loss)         $347        $176        $446       $(209)
                       =========== =========== =========== ===========


Basic net income
 (loss) per share            $.02        $.01        $.03       $(.02)
                       =========== =========== =========== ===========

Diluted net income
 (loss) per share            $.02        $.01        $.03       $(.02)
                       =========== =========== =========== ===========

Shares used in
 computing net income
 (loss) per share:

    Basic                  16,886      13,787      16,814      13,777
                       =========== =========== =========== ===========

    Diluted                17,440      14,025      17,273      13,777
                       =========== =========== =========== ===========
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