ACE*COMM Reports Results for the Third Quarter of Fiscal 2007

  
    
  
  
    
      ACE*COMM Corporation (NASDAQ:ACEC), 
      a global provider of value-added services and advanced operations 
      support systems (OSS) solutions, today reported financial results for 
      the quarter ended March 31, 2007, the third quarter of its 2007 fiscal 
      year. The company reported revenue of $3.1 million for the quarter, 
      which compares to $6.7 million for the comparable quarter of fiscal year 
      2006. Net loss for the quarter was $2.6 million, or $0.14 per share, 
      compared to a profit of $365,000, or $0.02 per share, for the same 
      quarter of the prior year.
    
    
      For the nine months ended March 31, 2007, revenue was $9.3 million 
      compared to $20.1 million for the same nine months of fiscal year 2006. 
      Net loss for the nine months was $7.9 million, or $0.44 per share, 
      compared to a net income of $800,000, or $0.05 per share, for the same 
      nine months of the prior year.
    
    
      “Third-quarter revenues were derived primarily 
      from backlog and maintenance contracts,” said 
      ACE*COMM CEO Jim Greenwell. “However, we see 
      this trend reversing and for the first time in 18 months, bookings for 
      the quarter exceeded revenues, increasing our backlog to $15 million. We 
      have, in addition, resolved or are in the process of resolving issues 
      that have led to project delays over the past year. These are 
      significant reversals that we believe reflect an improved direction for 
      the company.”
    
    
      Continued Mr. Greenwell, “We are also finding 
      and continuing to capitalize on opportunities in the wireless mobility 
      space. Interest in our products continues to grow, as illustrated by our 
      selection in April by Cincinnati Bell Wireless, who we understand will 
      launch both Parent Patrol® and Enterprise 
      Patrol™ under its own brand later this year. 
      In addition, we are implementing a hosted Patrol Suite solution for a 
      third carrier through one of our channel partners. Finally, we signed a 
      Memorandum of Understanding and are in final contract negotiations for 
      an innovative Advanced Revenue Management solution for a customer 
      operating one of the largest mobile transaction networks delivering 
      mobile services and content to operators around the world.”
    
    
      Steve Delmar, CFO, added, “We are engaged in 
      raising over $4 million of additional financing for the company. 
      Combined with the cost reductions already in place, this new financing 
      will have a strong positive impact on our financial position and cash 
      resources. The new funding, which we expect to close in the next few 
      weeks, will provide the capital we need to invest in our value-added 
      services business. Also, this quarter was the first quarter in over a 
      year in which our sales bookings exceeded our revenue, increasing our 
      backlog.”
    
    
      Mr. Greenwell concluded, “The changes made in 
      our leadership and organizational structure – 
      particularly when combined with the new financing and a more streamlined 
      budget – will make ACE*COMM a stronger and 
      more focused company. In the coming months, we believe we can execute 
      effectively on our strategy to return our traditional businesses to 
      profitability and to expand our presence in the fast growing value-added 
      services market.”
    
    
      ACE*COMM will host an earnings teleconference call on Tuesday, May 15 at 
      5:30 pm ET to discuss the third quarter fiscal year 2007 results. To 
      participate, please call 866-847-7859 (within the United States) or 
      703-639-1426 (outside the United States). When prompted, enter the 
      ACE*COMM reservation number 1086753. Internet users can hear a 
      simultaneous live webcast of the teleconference at http://acecomm.com 
      or http://www.fulldisclosure.com. 
      An audio replay of the call is available from 8:30 p.m. ET on May 15, 
      2007, through 11:59 p.m. ET on May 23, 2007. To listen to the audio 
      replay, please call 888-266-2081 (within the United States) or 
      703-925-2533 (outside the United States); the passcode is: 1086753
    
    
      About ACE*COMM
    
    
      ACE*COMM is a global provider of value-added services, mobile content 
      delivery applications and advanced operations support systems (OSS) 
      solutions for telecommunications 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 software applications that enable new 
      carrier services offerings and the analytical tools required to extract 
      knowledge from operating networks—knowledge 
      customers use for 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-Lucent, AT&T, 
      Cisco, General Dynamics, IBM, Level 3 Communications, Marconi, Motorola, 
      Northrop Grumman, and Siemens. Headquartered in the Washington, DC area, 
      ACE*COMM has corporate offices in Australia, Canada and the UK. ACE*COMM 
      is an ISO 9001 compliant company. For more information, visit www.acecomm.com.
    
    
      ACE*COMM, NetPlus, the ACE*COMM logo, and N*VISION are registered 
      trademarks, and Convergent Mediation 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.
    
    
      
        
          
            ACE*COMM CORPORATION
          
          
            CONSOLIDATED BALANCE SHEETS
          
          
            (in thousands except share and per share amounts)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          March 31, 

          
            2007
          
        
        
        
        
          June 30,

          
            2006
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Assets
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $
        
        
          902 
        
        
        
        
          $
        
        
          946 
        
      
      
        
          Accounts receivable, net
        
        
        
        
        
        
          4,379 
        
        
        
        
        
        
          10,981 
        
      
      
        
          Inventories, net
        
        
        
        
        
        
          904 
        
        
        
        
        
        
          838 
        
      
      
        
          Deferred contract costs
        
        
        
        
        
        
          - 
        
        
        
        
        
        
          18 
        
      
      
        
          Prepaid expenses and other
        
        
        
        
           
        
        
          551 
        
        
        
        
           
        
        
          571 
        
      
      
        
          Total current assets
        
        
        
        
        
        
          6,736 
        
        
        
        
        
        
          13,354 
        
      
      
        
          Property and equipment, net
        
        
        
        
        
        
          763 
        
        
        
        
        
        
          787 
        
      
      
        
          Goodwill
        
        
        
        
        
        
          386 
        
        
        
        
        
        
          522 
        
      
      
        
          Acquired intangibles, net
        
        
        
        
        
        
          620 
        
        
        
        
        
        
          1,041 
        
      
      
        
          Other non-current assets
        
        
        
        
           
        
        
          342 
        
        
        
        
           
        
        
          657 
        
      
      
        
          Total assets
        
        
        
        
          $
        
        
          8,847 
        
        
        
        
          $
        
        
          16,361 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Liabilities and Stockholders' Equity
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Borrowings
        
        
        
        
          $
        
        
          1,197 
        
        
        
        
          $
        
        
          2,970 
        
      
      
        
          Accounts payable
        
        
        
        
        
        
          770 
        
        
        
        
        
        
          1,114 
        
      
      
        
          Accrued expenses
        
        
        
        
        
        
          1,404 
        
        
        
        
        
        
          1,661 
        
      
      
        
          Accrued compensation
        
        
        
        
        
        
          719 
        
        
        
        
        
        
          885 
        
      
      
        
          Deferred revenue
        
        
        
        
           
        
        
          4,327 
        
        
        
        
           
        
        
          3,617 
        
      
      
        
          Total current liabilities
        
        
        
        
        
        
          8,417 
        
        
        
        
        
        
          10,247 
        
      
      
        
          Long-term notes payable
        
        
        
        
           
        
        
          - 
        
        
        
        
           
        
        
          17 
        
      
      
        
          Total liabilities
        
        
        
        
           
        
        
          8,417 
        
        
        
        
           
        
        
          10,264 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          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, 
          18,615,350 and 17,788,032 shares issued and outstanding
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          186 
        
        
        
        
        
        
          178 
        
      
      
        
          Additional paid-in capital
        
        
        
        
        
        
          37,405 
        
        
        
        
        
        
          35,257 
        
      
      
        
          Other accumulated comprehensive loss
        
        
        
        
        
        
          (27)
        
        
        
        
        
        
          (91)
        
      
      
        
          Accumulated deficit
        
        
        
        
           
        
        
          (37,134)
        
        
        
        
           
        
        
          (29,247)
        
      
      
        
          Total stockholders' equity
        
        
        
        
           
        
        
          430 
        
        
        
        
           
        
        
          6,097 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities and stockholders' equity
        
        
        
        
          $
        
        
          8,847 
        
        
        
        
          $
        
        
          16,361 
        
      
    
    
      
        
          
            ACE*COMM CORPORATION
          
          
            CONSOLIDATED STATEMENTS OF OPERATIONS
          
          
            (in thousands, except per share amounts)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          For the three months ended
        
        
          
             
          
        
        
          
            For the nine months ended
          
        
      
      
        
        
        
        
        
          March 31,
        
        
          
             
          
        
        
          
            March 31,
          
        
      
      
        
        
        
        
        
          2007 
        
        
        
        
          2006 
        
        
        
        
          2007 
        
        
        
        
          2006 
        
      
      
        
        
        
        
        
          (Unaudited)
        
        
        
        
          (Unaudited)
        
        
           
        
        
          (Unaudited)
        
        
        
        
          (Unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenue
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Licenses and hardware
        
        
        
        
          $
        
        
          845 
        
        
        
        
          $
        
        
          3,509 
        
        
        
        
          $
        
        
          2,308 
        
        
        
        
          $
        
        
          10,161 
        
      
      
        
          Services
        
        
        
        
           
        
        
          2,261 
        
        
        
        
           
        
        
          3,194 
        
        
           
        
        
           
        
        
          6,966 
        
        
        
        
           
        
        
          9,966 
        
      
      
        
          Total revenue
        
        
        
        
        
        
          3,106 
        
        
        
        
        
        
          6,703 
        
        
        
        
        
        
          9,274 
        
        
        
        
        
        
          20,127 
        
      
      
        
          Cost of licenses and hardware revenue
        
        
        
        
        
        
          625 
        
        
        
        
        
        
          323 
        
        
        
        
        
        
          1,430 
        
        
        
        
        
        
          1,805 
        
      
      
        
          Cost of services revenue
        
        
        
        
           
        
        
          1,929 
        
        
        
        
           
        
        
          1,972 
        
        
           
        
        
           
        
        
          5,430 
        
        
        
        
           
        
        
          5,272 
        
      
      
        
          Total cost of revenue
        
        
        
        
        
        
          2,554 
        
        
        
        
        
        
          2,295 
        
        
        
        
        
        
          6,860 
        
        
        
        
        
        
          7,077 
        
      
      
        
          Gross profit
        
        
        
        
        
        
          552 
        
        
        
        
        
        
          4,408 
        
        
        
        
        
        
          2,414 
        
        
        
        
        
        
          13,050 
        
      
      
        
          Selling, general, and administrative
        
        
        
        
        
        
          2,752 
        
        
        
        
        
        
          3,080 
        
        
        
        
        
        
          8,314 
        
        
        
        
        
        
          9,237 
        
      
      
        
          Research and development
        
        
        
        
           
        
        
          398 
        
        
        
        
           
        
        
          872 
        
        
           
        
        
           
        
        
          1,854 
        
        
        
        
           
        
        
          2,826 
        
      
      
        
          Income (loss) from operations
        
        
        
        
        
        
          (2,598)
        
        
        
        
        
        
          456 
        
        
        
        
        
        
          (7,754)
        
        
        
        
        
        
          987 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest expense
        
        
        
        
           
        
        
          6 
        
        
        
        
           
        
        
          91 
        
        
           
        
        
           
        
        
          132 
        
        
        
        
           
        
        
          174 
        
      
      
        
          Income (loss) before income taxes
        
        
        
        
        
        
          (2,604)
        
        
        
        
        
        
          365 
        
        
        
        
        
        
          (7,886)
        
        
        
        
        
        
          813 
        
      
      
        
          Income tax (benefits) expense
        
        
        
        
           
        
        
          - 
        
        
        
        
           
        
        
          - 
        
        
           
        
        
           
        
        
          1 
        
        
        
        
           
        
        
          1 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $
        
        
          (2,604)
        
        
        
        
          $
        
        
          365 
        
        
           
        
        
          $
        
        
          (7,887)
        
        
        
        
          $
        
        
          812 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic net income (loss) per share
        
        
        
        
          $
        
        
          (0.14)
        
        
        
        
          $
        
        
          0.02 
        
        
           
        
        
          $
        
        
          (0.44)
        
        
        
        
          $
        
        
          0.05 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted net income (loss) per share
        
        
        
        
          $
        
        
          (0.14)
        
        
        
        
          $
        
        
          0.02 
        
        
           
        
        
          $
        
        
          (0.44)
        
        
        
        
          $
        
        
          0.05 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Shares used in computing net income (loss) per share:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
           
        
        
          17,996 
        
        
        
        
           
        
        
          16,889 
        
        
           
        
        
           
        
        
          17,813 
        
        
        
        
           
        
        
          16,838 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted
        
        
        
        
           
        
        
          17,996 
        
        
        
        
           
        
        
          17,679 
        
        
           
        
        
           
        
        
          17,813 
        
        
        
        
           
        
        
          17,351