<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
_ _ _ SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
_ _ _ SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission file number 0-21059
ACE*COMM CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1283030
- ----------------------------------- ----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
209 Perry Parkway, Gaithersburg, MD 20877
- --------------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
301-258-9850
- ----------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and formal fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
--- ---
Number of shares of Common Stock outstanding as of October 31, 1996: 7,830,755.
<PAGE>
ACE*COMM CORPORATION
INDEX
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1996
(Unaudited) and June 30, 1996 3
Consolidated Statements of Operations (Unaudited) for the
Three Months Ended September 30, 1996 and September 30, 1995 4
Consolidated Statements of Stockholder's Equity as of
September 30, 1996 (Unaudited) and June 30, 1996 5
Consolidated Statements of Cash Flows (Unaudited) for the
Three Months Ended September 30, 1996 and September 30, 1995 6
Notes to Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 8
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
-2-
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
ACE*COMM CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, JUNE 30,
1996 1996
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 9,067,564 $ 369,206
Accounts receivable, less allowance for doubtful
accounts of $10,000 7,852,438 8,643,871
Inventories 2,896,741 1,836,317
Prepaid expenses and other 597,717 283,813
----------- ----------
Total current assets 20,414,460 11,133,207
Property and equipment, net 1,497,148 1,305,844
Capitalized software development costs, net 1,712,423 1,393,067
Other assets 113,192 466,268
----------- -----------
Total assets $23,737,223 $14,298,386
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current borrowings $ 197,108 $ 2,097,178
Accounts payable 1,821,693 3,122,212
Accrued expenses 777,350 1,036,684
Accrued compensation 732,590 1,010,922
Officer loan - 78,572
Deferred revenue 1,190,197 1,890,103
----------- -----------
Total current liabilities 4,718,938 9,235,671
Noncurrent borrowings 308,655 2,951,541
----------- -----------
Total liabilities 5,027,593 12,187,212
----------- -----------
Mandatorily redeemable Class C Preferred Stock, $5.14 par
value, 340,211 shares authorized, issued and outstanding - 2,261,627
----------- -----------
Contingencies
Stockholders' equity (deficit)
Class B Preferred Stock, $1.00 par value, 1,000 shares
authorized, issued and outstanding - 1,000
Common stock, $.01 par value, 45,000,000 shares
authorized, 7,766,500 and 3,590,451 shares issued and
outstanding 77,665 35,905
Additional paid-in capital 18,623,494 343,124
Retained Earnings/(Accumulated deficit) 8,470 (530,482)
----------- -----------
Total stockholders' equity (deficit) 18,709,629 (150,453)
----------- -----------
Total liabilities, mandatorily redeemable preferred stock
and stockholders' equity (deficit) $23,737,223 $14,298,386
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
ACE*COMM CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1995
------ ------
<S> <C> <C>
Revenue - products and services $6,263,903 $3,432,638
Cost of products and services 2,895,907 1,735,591
---------- ----------
Gross margin 3,367,996 1,697,047
Selling, general and administrative 2,376,578 1,362,235
Research and development 398,596 131,732
---------- ----------
Total cost and operating expenses 2,775,174 1,493,967
---------- ----------
Income from operations 592,822 203,080
Interest expense, net 53,867 103,688
---------- ----------
Income before income taxes 538,955 99,392
Income taxes - -
---------- ----------
Net income $ 538,955 $ 99,392
---------- ----------
---------- ----------
Income per share (pro forma in 1996) $ 0.07 $ .02
Shares used in computing income per share 7,321,716 5,603,486
</TABLE>
See accompanying notes to financial statements
-4-
<PAGE>
ACE*COMM CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK RETAINED
--------------- ------------------ ADD'L STOCK EARNINGS
PAR PAR PAID-IN SUBSCRIP. (ACCUM
SHARES VALUE SHARES VALUE CAPITAL RECEIVABLE DEFICIT) TOTAL
------ ----- ------ ----- ------- ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1994 1,000 $1,000 3,261,245 $32,612 $ 446,789 $ $2,508 $ 482,909
Accretion of preferred stock
dividends - - - - (139,894) - - (139,894)
Exercise of common stock
options - - 36,000 360 12,980 (5,900) 7,440
Net loss for the year ended
June 30, 1995 - - - - - - (1,592,646) (1,592,646)
------ ------ --------- -------- ---------- ---------- ----------- -----------
Balance, June 30, 1995 1,000 1,000 3,297,245 32,972 319,875 (5,900) (1,590,138) (1,242,191)
------ ------ --------- -------- ---------- ---------- ----------- -----------
Accretion of preferred stock
dividends - - - - (139,894) - - (139,894)
Exercise of common stock
options - - 293,206 2,933 163,143 (117,232) - 48,844
Payment of stock subscriptions
receivable - - - - - 123,132 - 123,132
Net income for the year ended
June 30, 1996 - - - - - - 1,059,656 1,059,656
------ ------ --------- -------- ---------- ---------- ----------- -----------
Balance, June 30, 1996 1,000 1,000 3,590,451 35,905 343,124 - (530,482) (150,453)
------ ------ --------- -------- ---------- ---------- ----------- ----------
Accretion of preferred stock
dividends (Unaudited) - - - - (17,487) - - (17,487)
Conversion of preferred stock
Class C (Unaudited) - - 1,530,950 15,310 2,263,805 2,279,115
Redempton of preferred stock
Class B (Unaudited) (1,000) (1,000) - - (307,000) - - (308,000)
Issuance of common stock
(Unaudited) - - 2,645,000 26,450 16,341,052 16,367,502
Net income for the period ended
September 30, 1996 (Unaudited) - - - - - - 538,952 538,952
------ ------ --------- -------- ---------- ---------- ----------- -----------
Balance, September 30, 1996
(Unaudited) - $ - 7,766,401 $77,665 $18,623,494 $ - $ 8,470 $18,709,629
------ ------ --------- -------- ---------- ---------- ----------- -----------
------ ------ --------- -------- ---------- ---------- ----------- -----------
</TABLE>
See accompanying notes to financial statements
-5-
<PAGE>
ACE*COMM CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1996 1995
------ ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 538,955 $ 99,391
Adjustments to reconcile net income to net cash (used for)
provided by operating activities
Depreciation 55,443 65,416
Amortization of capitalized software 136,324 176,030
Changes in operating assets and liabilities
Accounts receivable 791,433 494,683
Inventories (1,060,424) 19,659
Other assets 39,172 (54,123)
Accounts payable (1,300,519) (47,302)
Accrued expenses (259,334) (89,432)
Accrued compensation (278,332) 11,801
Deferred revenue (699,906) (400,452)
------------- ---------
Net cash (used for) provided by operating activities (2,037,188) 275,671
------------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (246,747) (41,892)
Additions to capitalized software development costs (455,680) (158,972)
------------- ---------
Net cash used for investing activities (702,427) (200,864)
------------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in line of credit (4,446,563) -
Other borrowings - 55,539
Payments on debt (174,964) (307,677)
Net proceeds from common stock issued 16,367,500 -
Redemption of class B preferred shares (308,000) -
------------- ---------
Net cash provided by (used for) financing activities 11,437,973 (252,138)
------------- ---------
Net increase (decrease) in cash 8,698,358 (177,331)
Cash at beginning of period 369,206 189,903
------------ ---------
Cash at end of period $ 9,067,564 $ 12,572
------------ ---------
------------ ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 120,597 $ 103,088
------------- ---------
------------- ---------
SUPPLEMENTAL SCHEDULE OF NON CASH FINANCING ACTIVITIES:
Accretion of preferred stock dividends $ 17,487 $ 34,974
------------- ---------
------------- ---------
</TABLE>
See accompanying notes to financial statements
-6-
<PAGE>
ACE*COMM CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial information has been prepared
by ACE*COMM Corporation ("ACE*COMM" or the "Company") in accordance with
generally accepted accounting principles for interim financial statements and
pursuant to the rules of the Securities and Exchange Commission for Form
10-Q. Accordingly, certain information and footnotes required by generally
accepted accounting principles for complete financial statements have been
omitted. It is the opinion of management that all adjustments considered
necessary for a fair presentation have been included, and that all such
adjustments are of a normal and recurring nature. Operating results for the
periods presented are not necessarily indicative of the results that may be
expected for any future periods. For further information, refer to the
audited financial statements and footnotes included in the Company's
Registration Statement, Form S-1.
Pro forma income per share is computed using the weighted average
number of shares of common stock, adjusted for the dilutive effect of common
stock equivalent shares of common stock options and warrants and assuming the
conversion of redeemable preferred and common stock as of the beginning of the
period presented. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin No. 83, common stock and common stock equivalent shares
issued by the Company at prices below its initial public offering price
during the twelve month period prior to the initial public offering date
(using the treasury stock method and an offering price of $7.00 per share)
have been included in the calculation of pro forma income per share for the
three months ended September 30, 1996, as if they were outstanding for all of
the period regardless of whether they are dilutive.
INITIAL PUBLIC OFFERING
On August 13, 1996, in connection with the Company's initial public
offering, 2,875,000 shares of Common Stock, 2,645,000 of which were offered
by the Company, were sold at $7.00 per share. The net proceeds raised by the
Company totaled $17,218,950.
The Mandatorily Redeemable Class C Preferred Stock was automatically
converted into Common Stock upon the completion of the Company's public
offering. No dividends were payable with respect to the converted shares.
On August 28, 1996, the Company redeemed the Class B Preferred Stock
for $308,000 in accordance with such terms requiring redemption upon transfer
of substantially all assets or of majority control of the Company.
Funds generated by the Company's initial public stock offering
afforded the opportunity to reduce bank and other debt obligations by $5.3
million.
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
ACE*COMM Corporation ("ACE*COMM" or the "Company") develops, markets
and services operations support systems ("OSS") products for networks
deployed by telecommunications service providers, such as telephone
companies, other public carriers and large enterprises operating data and
voice networks. The Company's products perform such functions as billing
data collection, network surveillance, alarm processing and network
management for some of the largest carriers and enterprises in the world.
The Company sells its products through direct channels and through its
strategic alliance partners, for delivery to end users in the United States
and internationally. Since June 1994, the Company, consistent with its
strategic emphasis, has derived most of its revenue from sales of its carrier
network products. The Company expects such sales to increase as a percentage
of its revenue for at least the next several years. The balance of the
Company's revenue is derived from the sale of network management products to
enterprise customers, including the armed forces and agencies of the U.S.
government.
Substantially all of the Company's revenue derives from
dollar-denominated sales and, although the Company in its most recent fiscal
years has had significant sales to foreign end users, it does not have
significant foreign operations. The Company maintains no inventory abroad,
shipping all products from the United States pursuant to terms of orders
issued by customers.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain
items on the Company's statement of operations as a percentage of revenue:
For the three months ended
September 30,
--------------------------
1995 1996
-------- --------
Revenue - products and services 100.0% 100.0%
Costs and operating expenses:
Cost of products and services 50.6% 46.2%
Selling, general and administrative 39.7% 37.9%
Research and development 3.8% 6.4%
------ ------
Income from operations 5.9% 9.5%
------ ------
------ ------
REVENUES
Revenues for the quarter ended September 30, 1996 were $6.3 million,
an increase of $2.8 million, or 82.5%, over the comparable quarter in fiscal
1996. The increase is primarily attributable to sales of the Company's
carrier network products to Telefonos de Mexico S.A. de C.V. ("TELMEX"), which
represented 46.6% of total quarterly revenue. Carrier network revenues grew
142.4% over the September 1995 quarter and represented 77.8% of total
quarterly revenue, up from 58.6% for the same period in fiscal 1996. Revenues
from sales of products to foreign end users comprised primarily of sales to
TELMEX, grew 103.4% over the same quarter of fiscal 1996, representing 72.5%
of current quarter revenues, up from 65.0% in the September 1995 quarter.
COST OF PRODUCTS AND SERVICES
Cost of products and services was $2.9 million, or 46.2% of revenue,
for the quarter ended September 30, 1996 compared to $1.7 million, or 50.6%
of revenue, for the same quarter in fiscal 1996. The increase in costs is
primarily attributable to increased purchases of hardware incorporated into
product shipped to TELMEX and to increased personnel costs that resulted from
the Company's decision to make strategic hires to supplement its delivery and
support functions. Gross margins were 53.8% and 49.4% for the quarters ended
September 1996 and 1995, respectively. The improvement in gross margins is
attributable to increased software revenue and improved margins on hardware
sales.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses were $2.4 million, or
37.9% of revenues, for the quarter ended September 30, 1996 as compared to
$1.4 million, or 39.7% of revenues, for the quarter ended September 30, 1995.
The increase in these expenses is attributable primarily to selling costs
associated with the TELMEX contract, to costs associated with the continued
expansion of the Company's marketing efforts and to costs of hiring
additional personnel to manage the Company's growth.
-8-
<PAGE>
RESEARCH AND DEVELOPMENT
Research and development expenses were $399,000, or 6.4% of
revenue, for the quarter ended September 30, 1996 as compared to $132,000, or
3.8.% of revenue, for the quarter ended September 30, 1995. This increase is
attributable to the addition of software engineers and support personnel to
support the continued development and enhancement of the Company's products.
INTEREST EXPENSE
Net interest expense for the quarter ended September 30, 1996 was
$54,000 compared to $104,000 for the quarter ended September 30, 1995. The
decrease in net interest expense is a direct result of the Company's initial
public stock offering in the first quarter of fiscal 1997 which enabled the
Company to repay bank debt and provided interest income.
PROVISION FOR INCOME TAXES
No income tax provision was recorded for the quarters ended
September 30, 1995 and 1996, respectively, since any provision was offset by
a similar decrease in the valuation allowance. Due to the availability of
operating loss carryforwards and tax credits, the Company expects that it
will not begin to pay taxes until late in the fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, the Company had $9.1 million in cash and cash
equivalents and $15.7 million in working capital. These values represent
increases of $8.7 million in cash and cash equivalents and $13.8 million in
working capital over the year ending June 30, 1996. These increases are
primarily the result of the Company's initial public offering of common
stock in which the Company raised net proceeds of $17,218,950.
During the quarter ended September 30, 1996, the Company's
operations used $2.0 million of cash. The decrease in cash was comprised
primarily of a $1.1 million increase in inventories as the Company positioned
itself to support second quarter orders for its products, a $1.3 million
decrease in accounts payable, and a decrease in deferred revenues of
$700,000, offset by a $790,000 decrease in accounts receivable. Accounts
receivable days outstanding were 97 at September 30, 1996, down from 120 days
at June 30, 1996.
Cash used for investing activities during the quarter ended
September 30, 1996 include $247,000 for capital expenditures and $456,000 for
capitalized software development activities which reflect purchases of
computers and related equipment necessary to accommodate the Company's growth
and development costs primarily attributable to the development of new switch
interfaces for carrier network products targeted for sale in South Korea and
other foreign end users.
Funds generated by the Company's initial public stock offering
afforded the opportunity to reduce bank and other debt obligations by $5.3
million. Currently, the Company has two lines of credit with Citizens Bank
of Maryland, totaling $3.5 million, both of which expire on November 30,
1997. At September 30, 1996, no amounts were outstanding under the two
credit facilities.
The Company believes that existing cash balances, cash flow from
operations and available bank lines will be sufficient to support its working
capital requirements for at least the next 12 months. To the extent that the
Company's existing resources, together with future earnings, are insufficient
to fund the Company's future activities, the Company may need to raise
additional funds through public or private financings.
-9-
<PAGE>
Part II: OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 5, 1996, the Registrant held its 1996 Annual Meeting of
Stockholders. At the meeting, the following directors were elected to serve
until the date indicated or until his successor is duly elected and qualifies:
George T. Jimenez (Class III director, term: 1999 Annual Meeting of
Stockholders)
Paul G. Casner, Jr. (Class II director, term: 1998 Annual
Meeting of Stockholders)
Gary P. Golding(Class I director, term: 1997 Annual Meeting of Stockholders)
Gilbert A. Wetzel(Class I director, term: 1997 Annual Meeting of
Stockholders)
At the meeting, the stockholders also took the following actions:
(i) approval of the Articles of Amendment and the Articles of Amendment and
Restatement that were filed on August 6, 1996, and August 19, 1996,
respectively
(ii) ratification of the selection of Price Waterhouse LLP as the
independent auditors of the Registrant for the 1997 fiscal year
(iii) approval of the Registrant's Amended and Restated Omnibus Stock Plan.
Each of these actions, including the election of each of the directors,
was taken unanimously. There were no abstentions or votes against or votes
withheld with respect to any of the nominees.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
NUMBER DESCRIPTION
3 Articles Supplementary filed on October 15, 1996
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACE*COMM CORPORATION
DATE_______________ By:_______________________________________
George T. Jimenez
President and Chief Executive Officer
________________________________________
Jeffrey S. Simpson, Vice President -- Finance
(Principal Financial Officer)
-11-
<PAGE>
ACE*COMM CORPORATION
ARTICLES SUPPLEMENTARY
ACE*COMM Corporation, a Maryland corporation having its principal office in
Gaithersburg, Maryland, (the"Company") hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: These Articles Supplementary are filed in accordance with Section
3-603(c)(4) of the Maryland General Corporation Law (the "MGCL"), to the extent
required to evidence the election of the Company to be included within the
provisions of Section 3-602 of the MGCL. Notwithstanding the filing of these
Articles, the Company's election so to be governed is qualified and limited to
the extent set forth in the resolutions set forth below.
SECOND: The Board of Directors of the Company duly adopted the following
resolutions at a meeting held on June 23, 1996:
RESOLVED, that, to the extent and only to the extent set forth in this
Resolution, the Company elects that it shall be subject to the
provisions of Subtitle 6 of Title 3 of the Maryland General
Corporation Law (sometimes known as the Maryland Business Combination
Law, or the "MBCL" herein), including the provisions of Section 3-602
thereof, with respect to business combinations with any person who
first becomes an interested stockholders after the date of this
Resolution (or with any affiliate of such interested stockholders)
subject to the terms, conditions, exceptions and limitations set forth
below.
(1) Nothing contained herein shall deprive the Company or
any person of any exemption or exception provided for in the
MBCL, and (without limiting the foregoing) the ability of the
Company by resolution of its Board of Directors to approve or
exempt any business combination pursuant to Section 3-603(c) of
the MBCL is expressly preserved.
<PAGE>
(2) The provisions of Section 3-602 of the MBCL shall not
apply to a business combination with any person who is an
interested stockholder of the Company or an affiliate thereof on
the date of this Resolution or who becomes an interested
stockholder of the Company or an affiliate thereof as of the time
the Company first has 100 beneficial owners or who was an
interested stockholder or an affiliate at any time prior thereto
(each such interested stockholder being referred to herein as an
"Excluded Person"), PROVIDED that this exception for Excluded
Persons shall not preclude the application of the MBCL to any
business combination by the Company with any other person who
becomes an interested stockholder and who is deemed a beneficial
owner of securities beneficially owned by any Excluded Person if
such interested stockholder would be an interested stockholder
without being deemed a beneficial owner of securities
beneficially owned by an Excluded Person.
(3) To the extent that terms used in this resolution are
defined in the MBCL they shall have the meanings ascribed to them
in the MBCL.
(4) This Resolution constitutes, to the extent and only to
the extent provided above, a limited and qualified election by
the Board of Directors of the Company, pursuant to Section
3-603(d) of the MBCL, to be subject to the provisions of the
MBCL, including Section 3-602 thereof, with respect to future
interested stockholders and their affiliates. This Resolution
may be added to or supplemented by resolution of the Board of
Directors (without a vote of stockholders) to the maximum extent
permitted by law. In the event that the MBCL shall be amended in
the future, the Company retains, to the maximum extent that shall
be permitted by law, the power to make such additional
provisions, by resolution of the Board of Directors (without a
vote of stockholders) as the Board of Directors shall deem
appropriate to carry out the intent of this Resolution in view of
any such amendment.
(5) The date of this Resolution is June 24, 1996.
FURTHER RESOLVED, that the appropriate officers of the Company be and
they hereby are directed to execute and file with the Maryland State
Department of Assessments and Taxation any appropriate documents
required to effect the intent of the foregoing resolutions.
IN WITNESS WHEREOF, ACE*COMM Corporation has caused these presents to be
signed in its name and on its behalf by its President or one of its Vice
Presidents and its corporate seal to be hereunto affixed attested by its
secretary this 14th day of
----
<PAGE>
August, 1996, and the undersigned officers acknowledge that these Articles
Supplementary are the act of the Corporation, that to the best of their
knowledge, information and belief all matters and facts set forth herein
relating to the authorization and approval of these Articles are true in all
material respects, and that this statement is made under the penalties of
perjury.
ATTEST: ACE*COMM Corporation
/s/ LORETTA RIVERS By: /s/ GEORGE T. JIMENEZ
- ------------------------- ----------------------------
Loretta Rivers, Secretary George T. Jimenez, President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACE*COMM
CORPORATION'S UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,068
<SECURITIES> 0
<RECEIVABLES> 7,862
<ALLOWANCES> 10
<INVENTORY> 2,897
<CURRENT-ASSETS> 20,414
<PP&E> 2,520
<DEPRECIATION> 1,023
<TOTAL-ASSETS> 23,737
<CURRENT-LIABILITIES> 4,719
<BONDS> 309
0
0
<COMMON> 78
<OTHER-SE> 18,632
<TOTAL-LIABILITY-AND-EQUITY> 23,737
<SALES> 6,264
<TOTAL-REVENUES> 6,264
<CGS> 2,896
<TOTAL-COSTS> 2,896
<OTHER-EXPENSES> 2,775
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> 539
<INCOME-TAX> 0
<INCOME-CONTINUING> 539
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 539
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0
</TABLE>
