SecProbe.io

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      May 26, 2005

via U.S. mail

Steven R. Delmar
Chief Financial Officer
ACE*COMM Corporation
704 Quince Orchard Road
Gaithersburg, MD 20878

Re:	ACE*COMM Corporation
	Registration Statement on Form S-3
	Filed April 26, 2005
	File No. 333-124351

	Form 10-K for the fiscal year ended 6/30/2004, as amended
	Forms 10-Q for the quarterly periods ended 9/30/2004,
12/31/2004
and 3/31/2004
	File No. 0-21059

Dear Mr. Delmar:

	We have limited our review of the above filings to the issues
addressed in the following comments.  Where indicated, we think
you
should revise your filings in response to these comments.  If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary.  Please be as detailed
as
necessary in your explanation.  In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure.  After reviewing this information, we may or may not
raise additional comments.  You should respond to the comments to
your Exchange Act filings as soon as possible and not later than
June
6, 2005.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form S-3
General
1. It appears you are attempting to register resales of shares of
your common stock underlying securities that are issuable upon
exercise of additional investment rights.   Specifically, the "B"
warrants that you issued as part of the March 31, 2005 financing
appear to be exerciseable for not only shares of your common stock
but also "C" warrants.  These "B" warrants, or "additional
investment
rights," as you refer to them in your registration statement, were
part of a unified, unregistered offering in which common stock and
warrants were sold pursuant to the securities purchase agreement
dated March 31, 2005.  Based on our review of the exhibits you
filed,
each investor in this unregistered offering appears to have
discretion to exercise all, a portion, or none of their additional
investment rights over a period from March 31, 2005 through and
including the 180th day following the effective date of your
registration statement.  Because the offer and sale of the
additional
investment rights in the form of "B" warrants included an offer of
the "C" warrants underlying those rights and noting that, as
confirmed by your counsel, Hogan & Hartson on May 24, 2005, none
of
the additional investment rights had been exercised when you filed
this resale registration statement, we do not understand why it is
appropriate to register resales of the shares underlying the
additional investment rights.  The offering of the shares
underlying
the additional investment rights commenced outside the
registration
process and that offering was not completed before the resale
registration statement was filed.  On what basis do you believe
the
issuance and resale transactions are not a unified transaction?
We
note that your proposed transaction is not analogous to an offer
of
shares underlying outstanding warrants.  In particular, resales of
some of the securities you propose to register for resale can only
occur after a holder elects to both exercise the additional
investment rights and thereafter exercises the underlying warrants
through a further investment decision.  In responding to this
comment, please refer to Interpretation 3S of the Securities Act
portion of the March 1999 supplement to the manual of publicly
available CF telephone interpretations for guidance.
2. Please give appropriate consideration to the consequences of
filing a resale registration statement for the public offering of
securities underlying the additional investment rights, thereby
engaging in a public offering of those securities, when the sales
of
the securities to the investors had not been consummated.  Under
these circumstances, why do you believe that the offering of
securities pursuant to the March 2005 unregistered transaction did
not involve a public offering?  Please provide a detailed factual
and
legal analysis as to how the offers of securities underlying the
additional investment rights as well as any sales of those
securities
during the pendency of your registration statement would be
consistent with the requirements of Section 5 of the Securities
Act.
3. In your response letter, please identify the transaction
requirement of Form S-3 that you rely upon.  Also tell us why you
believe that transaction requirement is available.  In this
respect,
it does not appear that shares underlying warrants that have not
yet
been purchased are "outstanding" for the purpose of transaction
requirement I.B.3.  Explain to us why the holders of the
additional
investment rights are not acting as underwriters within the
meaning
of Section 2(11) with respect to the shares.

Selling Stockholders, page 8

4. Please disclose the natural persons who exercise voting and/or
dispositive powers with respect to the securities to be offered
for
resale by Harborview Master Fund.  See Interpretation I.60 of the
July 1997 manual of publicly available CF telephone
interpretations,
as well as interpretation 4S of the Regulation S-K portion of the
March 1999 supplement to the CF telephone interpretation manual.
Form 10-K/A

Business, page 4

      Geographic Markets, page 7
5. We note that you have significant customers in the Middle East,
however, these particular countries are not disclosed in your
filings.   Please identify each country in the Middle East where
your
customers are located.  We may have more comments.
Management Discussion and Analysis..., page 24

      Results of Operations, page 27
6. We note instances where two or more sources of a material
change
have been identified without the dollar amounts for each source
that
contributed to the change disclosed.  The use of the term
"primarily"
does not adequately quantify these changes.  Also, ensure that
your
disclosure indicates the amount of any significant offsetting
factors
that impact the fluctuations.  For example, your disclosures
indicate
that revenues from the sale to network service providers decreased
primarily as a result of the decline in revenues in China offset
by
an increase in revenues in the Middle East.  In addition, tell us
how
you considered the need for additional disclosure regarding
whether
these changes represented an identified known trend or uncertainty
that has had or will have a material favorable or unfavorable
impact
on the results from operations.  See Section III. D of SEC Release
33-6835.

Financial Statements

      Consolidated Statements of Operations-page F-5
7. We note that the net revenues and cost of revenues are
presented
in the consolidated statements of operations on an aggregated
basis.
Tell us what consideration you gave to presenting the components
of
net revenue and cost of revenue on a disaggregated basis (i.e.,
present license revenue separate from service revenue). See Rule
5-
03(b) of Regulation S-X.

      Note 2 - Summary of Significant Accounting Policies, page F-
8
8. You disclose in the first paragraph of the revenue recognition
policy that the Company "typically" enters into arrangements that
require significant modification or customization.  However, in
the
second paragraph of the policy, you disclose that "more
frequently"
the Company enters into arrangements that do not require
significant
modification or customization of the related software.  Please
clarify to which facts or circumstances are more prevalent.
9. You disclose within your filing that there are multiple element
arrangements, and revenues have been allocated to each element of
an
arrangement based on objective evidence of the element`s fair
value
determined by internal price listings developed by the Company.
Tell
us how you have established objective evidence of each element`s
fair
value.  Indicate why the internal price listing represents fair
value.  Tell us if you separately sell each elements included in
the
multiple element arrangements.  We refer you to paragraphs 10-12
of
SOP 97-2.
10. You disclose within your filing that hardware is unbundled on
contracts accounted for on a percentage of completion basis. Tell
us
why you believe it is appropriate to unbundle the hardware on
these
contracts.  That is, indicate why the hardware is a separate unit
of
accounting.  Your response should address footnote 4 of EITF 00-21
and EITF 03-05.
11. We note that fixed-fee contracts involving significant
modification or customizing are being accounted for using the
percentage of completion method.  Describe in detail how you
estimate
the stage of completion of the individual contracts (i.e., cost or
level effort basis).  Indicate why the estimates utilized properly
measure progress under the contract.  Describe how you apply
paragraph 82 of SOP 97-2 to your contracts that include hardware
and
other deliverables.  In your response letter, describe your
process
of assessing whether an anticipated loss should be recognized as
soon
as the loss becomes evident.
12.
We noted that there are instances of extended payment terms in
your
disclosure.  Tell us why you have offered extended payment terms
and
whether this is a customary practice.  Do any customers other than
the one in the Middle East have extended payment terms?
Furthermore, in your response letter explain what types of
contract
costs are being deferred and the amount of those costs at each
balance sheet date.
      Note 12 - Mergers and Acquisitions, page F-17
13. We note that you have accounted for the i3 Mobile acquisition
as
a transferred set of assets not constituting a business
combination.
Provide us in your response letter a detailed analysis of your
conclusion that the acquisition should not be treated as a
business
combination based on applicable guidance in SFAS 141 and EITF 98-
3.
Furthermore, tell us why in your statement of cash flows that you
have classified this as a financing activity.  Refer to SFAS 95.
14. Describe the actual purchase price and the amount of assets
acquired regarding the i3 Mobile acquisition.  Indicate how you
determined the net proceeds from common stock issued in the i3
Mobile
transaction as presented in your statement of cash flows.  Tell us
how any related liabilities have been recorded.  Provide us with a
detailed accounting of all transactions related to the i3 Mobile
acquisition.  In addition, indicate how you accounted for options
and
warrants issued in this acquisition (see your Form S-4 filed on
October 7, 2003).  Tell us whether these options and warrants are
disclosed in Note 11 - Stockholders` Equity.
15. Tell us why financial statements and pro forma financial
information were not provided for Intasys within a Form 8-K upon
consummation of this acquisition.  Please provide us with the
significance test for the acquisition of Intasys.  Under Rule 3-05
and Rule 11-01 of Regulation S-X, financial statements and pro
forma
financial information of an acquired business may be required
depending on the level of significance in accordance with Rule
1(w)
of Regulation S-X.   Additionally, tell us what consideration you
gave to including the financial statements of Intasys in the Form
S-3
filed on April 26, 2005.
16.
We note that you have allocated $1.6 million of the purchase price
to
IPR&D.  Tell us what consideration you gave to disclosing the
following:
* Specific nature and fair value of each significant in-process
research and development project acquired
* Completeness, complexity and uniqueness of the projects at the
acquisition date
* Nature, timing and estimated costs of the efforts necessary to
complete the projects, and the anticipated completion dates
* Risks and uncertainties associated with completing development
on
schedule, and consequences if it is not completed timely
* Appraisal method used to value projects
* Significant appraisal assumptions, such as the period in which
material net cash inflows from significant projects are expected
to
commence, material anticipated changes from historical pricing,
margins and expense levels, and the risk adjusted discount rate
applied to the project`s cash flows.

In periods after a significant write-off, discuss the status of
efforts to complete the projects, and the impact of any delays on
your expected investment return, results of operations and
financial
condition.
Form 10-K/A and Forms 10-Q
Disclosure of Controls and Procedures, page 32 (of Form 10-K/A)
17. Your disclosure regarding your disclosure controls and
procedures
indicates that your CEO and CFO concluded that your disclosure
controls and procedures "are effective in timely alerting
[management] to any material information relating to [you] and
[y]our
subsidiaries required to be included in [y]our Exchange Act
filings."
This conclusion appears narrower than the disclosure called for by
Item 307 of Regulation S-K.  In your response letter, please tell
us
whether your CEO and CFO concluded that the disclosure controls
and
procedures, as that term is defined in Rule 13a-15(e), were
"effective."  Also confirm that you will consider this comment in
preparing future periodic reports.  See Item 307 of Regulation S-K
and Release 33-8238.
18. In each of your Forms 10-Q and Form 10-K, your disclosure
regarding your internal controls over financial reporting
indicates
that there have been "no significant changes" in your "internal
controls over financial reporting during [the last fiscal quarter]
that has materially affected, or is reasonably likely to
materially
affect, [y]our internal control over financial reporting."
Consistent with the requirements of Item 308(c) of Regulation S-K,
please tell us in your response letter, whether there has been any
change in your internal controls that occurred during the
applicable
fiscal quarter that has materially affected or is reasonably
likely
to materially affect your internal control over financial
reporting.
Also confirm that you will consider this comment in preparing
future
filings.  See Item 308(c) of Regulation S-K and Release 33-8238.
Form 10-Q for the quarter ended March 31, 2005

Financial Statements, page 3

      Note 6 - Mergers and Acquisitions, page 10
19. Tell us why you did not include the financial statements and
related pro forma financial information for the Double Helix
acquisition in your registration statement.  Since it appears that
the level of significance is greater than 50% for this
acquisition,
such financial information is required.   See Rule 3-05 (2) (b)
(iv)
and (4)(i) of Regulation S-X.  Under Rule 3-05 of Regulation S-X,
financial statements of an acquired business are required in a
registration statement if the level of significance is at a 50% or
greater level even though it has been less than 75 days after the
acquisition and no financial statements are yet required to be
filed
under the Securities Exchange Act.
20. We note that you valued the shares issued to acquire Double
Helix
using a ten day volume weighted average price of ACE*COMM common
stock.  Indicate how this valuation complies with EITF 99-12 that
requires a period of a few days before and after the date of
announcement (i.e., two days before and after the announcement
date).
Additionally, indicate what consideration you gave to disclosing
this
acquisition as a non-cash activity within the statements of cash
flows.  See paragraph 32 of SFAS 95.
21. Tell us why a large part of the purchase price was allocated
to
IPR&D and indicate whether the allocation is preliminary.  Tell us
what consideration you gave to disclosing the following regarding
IPR&D:
*