SEC Comment Letter for ACE COMM CORP (CIK 0001017526) — Oct 11, 2005
ACE COMM CORP (CIK 0001017526)
Date: Oct. 11, 2005 · CIK: 0001017526 · Accession: 0000000000-05-051938
AI Filing Summary & Sentiment
File numbers found in text: 000-21059
Referenced dates: September 28, 2005
Letter
October 11, 2005 Steven R. Delmar Chief Financial Officer ACE*COMM Corporation 704 Quince Orchard Road Gaithersburg, MD 20878
Re: ACE*COMM Corporation Form 10-K for the fiscal year ended 6/30/2005 Filed August 31, 2005 File No. 000-21059
Dear Mr. Delmar:
We have reviewed your response letter dated September 28, 2005 and have the following accounting comment on your financial statements.
Form 10-K for the Fiscal Year Ended June 30, 2005
Financial Statements
Notes to Consolidated Financial Statements
Note 10 - Stockholders` Equity, page F-15
1. We note your response to prior comment number 3. You indicate that the warrants were treated as equity since there is no provision in the contract that would require net cash settlement and your obligation to register the shares underlying the warrants is required only on a best efforts basis. However, we note section 6.1(d) of the Securities Purchase Agreement (included as Exhibit 4.1 to your Form 8-K filed on April 4, 2005) which indicates that you are required to pay liquidated damages if you do not meet certain requirements with regard to the registration statement, including maintaining effectiveness. We further note your requirement to also pay liquidated damages in the event that your common stock is not listed. As such, it appears that the contract does not meet the conditions in paragraphs 14 through 18 of EITF 00-19. Further explain why equity classification of the warrants is appropriate. In addition, as previously requested, tell us the basis for your accounting for the investors` additional investment right to acquire common stock and warrants. Explain how you considered the guidance in SFAS 133 and EITF 00-19 in determining whether these financial instruments should have an equity classification or liability classification.
You may contact Morgan Youngwood, Staff Accountant, at (202) 551- or Stephen Krikorian, Accounting Branch Chief at (202) 551-3730 if you have questions regarding comments on the financial statements and related matters.
Sincerely,
Stephen Krikorian
Accounting Branch Chief
Show Raw Text
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<TEXT>
October 11, 2005
Steven R. Delmar
Chief Financial Officer
ACE*COMM Corporation
704 Quince Orchard Road
Gaithersburg, MD 20878
Re: ACE*COMM Corporation
Form 10-K for the fiscal year ended 6/30/2005
Filed August 31, 2005
File No. 000-21059
Dear Mr. Delmar:
We have reviewed your response letter dated September 28, 2005
and have the following accounting comment on your financial
statements.
Form 10-K for the Fiscal Year Ended June 30, 2005
Financial Statements
Notes to Consolidated Financial Statements
Note 10 - Stockholders` Equity, page F-15
1. We note your response to prior comment number 3. You indicate
that the warrants were treated as equity since there is no
provision
in the contract that would require net cash settlement and your
obligation to register the shares underlying the warrants is
required
only on a best efforts basis. However, we note section 6.1(d) of
the
Securities Purchase Agreement (included as Exhibit 4.1 to your
Form
8-K filed on April 4, 2005) which indicates that you are required
to
pay liquidated damages if you do not meet certain requirements
with
regard to the registration statement, including maintaining
effectiveness. We further note your requirement to also pay
liquidated damages in the event that your common stock is not
listed.
As such, it appears that the contract does not meet the conditions
in
paragraphs 14 through 18 of EITF 00-19. Further explain why
equity
classification of the warrants is appropriate. In addition, as
previously requested, tell us the basis for your accounting for
the
investors` additional investment right to acquire common stock and
warrants. Explain how you considered the guidance in SFAS 133 and
EITF 00-19 in determining whether these financial instruments
should
have an equity classification or liability classification.
You may contact Morgan Youngwood, Staff Accountant, at (202) 551-
3497
or Stephen Krikorian, Accounting Branch Chief at (202) 551-3730 if
you have questions regarding comments on the financial statements
and
related matters.
Sincerely,
Stephen Krikorian
Accounting Branch Chief
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Steven R. Delmar
ACE*COMM Corporation
October 11, 2005
page 1
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