ACEC Ace Comm Corp (MM)

Company Highlights for the Quarter: Made progress in transitioning business to value-added services model Signed contract with VeriSign to offer Parent Patrol� to its customers in a managed services arrangement Ranked as a leading developer of parental controls solutions for the mobile youth market by iGR Research Published results of survey indicating 75% of US parents agree that mobile service should offer parental controls feature for children with cell phones Added Movilnet to customer base for advanced mediation solution 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 September 30, 2006, the first quarter of its 2007 fiscal year. The Company reported revenues of $3.0 million for the quarter, which compares to $6.7 million for the comparable quarter of fiscal year 2006. Net loss for the quarter was $2.7 million, or $0.16 per share, compared to a net profit of $99 thousand, or $0.01 per share, for same quarter of the prior year. �Consistent with our preliminary review, first quarter results were clearly affected by some of our customers and prospects who delayed or postponed large projects,� said George T. Jimenez, CEO of ACE*COMM. �While we continue to see the relevant use and value of our traditional products within these customer groups, and anticipate that the second half of the fiscal year will show significant improvement over the first half, we are still faced with uncertainty into the timing of these larger transactions. This dependence on large orders has been one of the continuing challenges of our traditional business model � a situation that we believe will be mitigated as we reposition into the recurring revenue model of a value-added services approach.� Added Mr. Jimenez: �We continue to make progress on our market penetration efforts around Parent Patrol�, the first of our Patrol suite of value-added services. Most significantly, we signed a contract with VeriSign that will make our Patrol suite available to VeriSign�s service provider customers in a managed services arrangement. With more that 250 mobile service provider customers and over 600 million accessible mobile subscribers1 globally, we believe that VeriSign has the infrastructure and sales organization to help drive the market penetration for these products more quickly.� �During the quarter, we continued our market research efforts to substantiate the benefits of our Parent Patrol� suite of value-added services,� concluded Mr. Jimenez. �We commissioned independent survey specialists, ITracks, to poll 1,000 U.S. parents on their attitudes on youth mobile issues. Seventy five percent of the parents polled felt service providers should offer parental controls options for wireless teens, and 59 percent indicated they would provide a cell phone to a child under the age of 12 if their cell phone provider offered easy-to-use parental control capabilities. We were also pleased to be identified as leaders in the parental controls space by third party research firm, iGR.� The Company reiterated its guidance for the second quarter of fiscal 2007, announced on October 10, 2006, which called for revenue to be in the range of $4.0 million to $5.0 million. Annual Shareholder�s Meeting The Company has scheduled its Annual Shareholder�s Meeting for Friday, December 1, 10:00 AM, Eastern Standard Time, at Corporate Headquarters, Gaithersburg, MD. Earnings Call ACE*COMM will host an earnings teleconference call this evening, Thursday, October 26, 2006 at 5:30 pm, Eastern Standard Time, to discuss the first quarter results. To participate, please call 866-837-9780. When prompted, enter the ACE*COMM reservation number 986238. 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 Thursday, October 26, 2006. 1 Source: �VeriSign Communications Services� Presentation, May 25, 2006, VeriSign Analyst Day 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 knowledge from operating networks�knowledge 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 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) � September 30, 2006 June 30,2006 � Assets � Current assets: Cash and cash equivalents $ 699� $ 946� Accounts receivable, net 9,768� 10,981� Inventories, net 799� 838� Deferred contract costs 85� 18� Prepaid expenses and other 616� 571� Total current assets 11,967� 13,354� Property and equipment, net 736� 787� Goodwill 386� 522� Acquired intangibles, net 897� 1,041� Other non-current assets 598� 657� Total assets $ 14,584� $ 16,361� � Liabilities and Stockholders' Equity � Current liabilities: Borrowings $ 2,483� $ 2,970� Accounts payable 949� 1,114� Accrued expenses 1,568� 1,661� Accrued compensation 946� 885� Deferred revenue 3,265� 3,617� Total current liabilities 9,211� 10,247� Long-term notes payable 12� 17� Total liabilities 9,223� 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, 18,654,083 and 17,788,032 shares issued and outstanding 187� 178� Additional paid-in capital 37,225� 35,257� Other accumulated comprehensive loss (59) (91) Accumulated deficit (31,992) (29,247) Total stockholders' equity 5,361� 6,097� � Total liabilities and stockholders' equity $ 14,584� $ 16,361� ACE*COMM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) � For the three months ended September 30, 2006� 2005� (Unaudited) (Unaudited) � Revenue Licenses and hardware $ 458� $ 3,455� Services 2,564� 3,230� Total revenue 3,022� 6,685� � Cost of licenses and hardware revenue 303� 1,070� Cost of services revenue 1,773� 1,612� Total cost of revenue 2,076� 2,682� � Gross profit 946� 4,003� � Selling, general, and administrative 2,832� 2,817� Research and development 780� 1,037� Income (loss) from operations (2,666) 149� � Interest expense 79� 51� Income (loss) before income taxes (2,745) 98� Income tax (benefits) expense -� (1) � Net income (loss) $ (2,745) $ 99� � Basic net income (loss) per share $ (0.16) $ 0.01� � Diluted net income (loss) per share $ (0.16) $ 0.01� � Shares used in computing net income (loss) per share: Basic 17,441� 16,741� � Diluted 17,441� 17,160� Company Highlights for the Quarter: -- Made progress in transitioning business to value-added services model -- Signed contract with VeriSign to offer Parent Patrol(TM) to its customers in a managed services arrangement -- Ranked as a leading developer of parental controls solutions for the mobile youth market by iGR Research -- Published results of survey indicating 75% of US parents agree that mobile service should offer parental controls feature for children with cell phones -- Added Movilnet to customer base for advanced mediation solution 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 September 30, 2006, the first quarter of its 2007 fiscal year. The Company reported revenues of $3.0 million for the quarter, which compares to $6.7 million for the comparable quarter of fiscal year 2006. Net loss for the quarter was $2.7 million, or $0.16 per share, compared to a net profit of $99 thousand, or $0.01 per share, for same quarter of the prior year. "Consistent with our preliminary review, first quarter results were clearly affected by some of our customers and prospects who delayed or postponed large projects," said George T. Jimenez, CEO of ACE*COMM. "While we continue to see the relevant use and value of our traditional products within these customer groups, and anticipate that the second half of the fiscal year will show significant improvement over the first half, we are still faced with uncertainty into the timing of these larger transactions. This dependence on large orders has been one of the continuing challenges of our traditional business model - a situation that we believe will be mitigated as we reposition into the recurring revenue model of a value-added services approach." Added Mr. Jimenez: "We continue to make progress on our market penetration efforts around Parent Patrol(TM), the first of our Patrol suite of value-added services. Most significantly, we signed a contract with VeriSign that will make our Patrol suite available to VeriSign's service provider customers in a managed services arrangement. With more that 250 mobile service provider customers and over 600 million accessible mobile subscribers(1) globally, we believe that VeriSign has the infrastructure and sales organization to help drive the market penetration for these products more quickly." "During the quarter, we continued our market research efforts to substantiate the benefits of our Parent Patrol(TM) suite of value-added services," concluded Mr. Jimenez. "We commissioned independent survey specialists, ITracks, to poll 1,000 U.S. parents on their attitudes on youth mobile issues. Seventy five percent of the parents polled felt service providers should offer parental controls options for wireless teens, and 59 percent indicated they would provide a cell phone to a child under the age of 12 if their cell phone provider offered easy-to-use parental control capabilities. We were also pleased to be identified as leaders in the parental controls space by third party research firm, iGR." The Company reiterated its guidance for the second quarter of fiscal 2007, announced on October 10, 2006, which called for revenue to be in the range of $4.0 million to $5.0 million. Annual Shareholder's Meeting The Company has scheduled its Annual Shareholder's Meeting for Friday, December 1, 10:00 AM, Eastern Standard Time, at Corporate Headquarters, Gaithersburg, MD. Earnings Call ACE*COMM will host an earnings teleconference call this evening, Thursday, October 26, 2006 at 5:30 pm, Eastern Standard Time, to discuss the first quarter results. To participate, please call 866-837-9780. When prompted, enter the ACE*COMM reservation number 986238. 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 Thursday, October 26, 2006. (1) Source: "VeriSign Communications Services" Presentation, May 25, 2006, VeriSign Analyst Day 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 knowledge from operating networks--knowledge 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 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. -0- *T ACE*COMM CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands except share and per share amounts) September 30, June 30, 2006 2006 --------------- -------------- Assets Current assets: Cash and cash equivalents $699 $946 Accounts receivable, net 9,768 10,981 Inventories, net 799 838 Deferred contract costs 85 18 Prepaid expenses and other 616 571 --------------- -------------- Total current assets 11,967 13,354 Property and equipment, net 736 787 Goodwill 386 522 Acquired intangibles, net 897 1,041 Other non-current assets 598 657 --------------- -------------- Total assets $14,584 $16,361 =============== ============== Liabilities and Stockholders' Equity Current liabilities: Borrowings $2,483 $2,970 Accounts payable 949 1,114 Accrued expenses 1,568 1,661 Accrued compensation 946 885 Deferred revenue 3,265 3,617 --------------- -------------- Total current liabilities 9,211 10,247 Long-term notes payable 12 17 --------------- -------------- Total liabilities 9,223 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, 18,654,083 and 17,788,032 shares issued and outstanding 187 178 Additional paid-in capital 37,225 35,257 Other accumulated comprehensive loss (59) (91) Accumulated deficit (31,992) (29,247) --------------- -------------- Total stockholders' equity 5,361 6,097 --------------- -------------- Total liabilities and stockholders' equity $14,584 $16,361 =============== ============== *T -0- *T ACE*COMM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the three months ended September 30, -------------------------- 2006 2005 (Unaudited) (Unaudited) ------------- ------------ Revenue Licenses and hardware $458 $3,455 Services 2,564 3,230 ------------- ------------ Total revenue 3,022 6,685 Cost of licenses and hardware revenue 303 1,070 Cost of services revenue 1,773 1,612 ------------- ------------ Total cost of revenue 2,076 2,682 Gross profit 946 4,003 Selling, general, and administrative 2,832 2,817 Research and development 780 1,037 ------------- ------------ Income (loss) from operations (2,666) 149 Interest expense 79 51 ------------- ------------ Income (loss) before income taxes (2,745) 98 Income tax (benefits) expense - (1) ------------- ------------ Net income (loss) $(2,745) $99 ============= ============ Basic net income (loss) per share $(0.16) $0.01 ============= ============ Diluted net income (loss) per share $(0.16) $0.01 ============= ============ Shares used in computing net income (loss) per share: Basic 17,441 16,741 ============= ============ Diluted 17,441 17,160 ============= ============ *T