SecProbe.io

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<TYPE>LETTER
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<FILENAME>filename1.txt
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      December 15, 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
      Form 10-Q for the quarter ended 09/30/2005
      Filed November 14, 2005
	File No. 000-21059

Dear Mr. Delmar:

    We have reviewed your response letter dated November 1, 2005
and
have the following accounting comments 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 1.  Confirm to us
that the liquidating damages in all cases are limited to 9% under
the
amended Securities Purchase Agreement dated November 1, 2005.  If
so,
you now appear to satisfy the conditions in paragraphs 14 through
18
of EITF 00-19 and the warrants would be considered an equity
instrument as of the amendment date.  However, we do not agree
with
certain aspects of your analysis prior to the amendment.
Specifically, we do not agree with factoring in the premium on the
warrants when evaluating whether the liquidating damages represent
an
uneconomic settlement alternative.  Further, we believe that the
Rule
144(k) holding period is two-years (i.e., no requirement to comply
with Rule 144) and only begins upon issuance of the warrants when
they must be cashless exercised.  You also make references to
defense
that you have, however, the probability of an unfavorable outcome
is
not assessed in EITF 00-19 only the possibility. Since the
warrants
will now be considered equity and if they had been considered a
liability, the warrants would be reclassified to equity.  In this
regard, in order to evaluate whether a liability presentation
would
have been material provide us with an analysis of the effects of
recording the warrants as a liability as of June 30, 2005 and
September 30, 2005 (i.e., balance sheet and income statement
effects)
and the effects of reclassifying the warrants to equity on
November
1, 2005.  Indicate whether you believe that the effects would be
material to those financial statements.

2. We note in your response to prior comment number 1 that you
state
that the same registration obligation and liquidating damages for
non-registration exist with respect to the stock sold outright.
Please provide us with your analysis regarding your classification
of
the shares of common stock as permanent equity instead of
temporary
equity.  Your response should address EITF Topic D-98.

Form 10-Q for the Quarterly Period Ended September 30, 2005

Earnings (Loss) Per Share, page 6

3. Tell us why you did not provide the disclosures for calculating
earnings per share as outlined in paragraphs 40 and 41 of SFAS
128.
The disclosure should clearly describe those securities that were
not
included in the earnings per share since they were anti-dilutive
(e.g., warrants, stock options).

Note 7 - Merger And Acquisitions, page 11

4. We note that you amended your agreement to acquire 2helix that
resulted in some consideration being returned in exchange for an
earn-out or contingent consideration.  We also note the pro forma
information that illustrates the effect of this amendment.
Explain
why the adjustment effect "contract rights and technology" instead
of
goodwill only.  See paragraph 35 of SFAS 141.  Tell us why you
believe that the fair value of the intangible asset should be
adjusted as the earn-out is achieved.  That is, explain why the
amendment and the earn-out effects the valuation of the
intangible.
In addition, ensure that your disclosures comply with 51(f) of
SFAS
141.

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
December 15, 2005
page 1

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