1017526--9/28/2007--ACE_COMM

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{debt, indebtedness, cash}

{operation, international, foreign}

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An inability to move to over-the-counter bulletin board, coupled with our recent delisting from the Nasdaq Capital Market could reduce the marketability of our shares and our ability to raise equity capital could be harmed. We may be unable to repay the notes issued in our recent private placement unless we raise additional funds or satisfy those notes in shares of common stock. We may cease to comply with the restrictive financial covenants in our recent private placement. The anti-dilution rights in our recent private placement may make it difficult for us to raise funds and may result in a significant increase in the number of shares issuable under the notes and warrants. Other provisions from our recent private placement could make it more difficult for us to raise financing in the future. Demand for our Parent Patrol product has not developed as rapidly as expected and overall demand is still uncertain The adverse conditions in the telecommunications industry continue despite improvements in the economy and may continue to do so. Unless we continue to maintain existing strategic alliances and develop new ones, our sales will suffer. Many of our telecommunications customers involve credit risks for us. We are increasingly subject to the risks and costs of international sales, and failure to manage these risks would have an adverse effect on us. Continuing market consolidation may reduce the number of potential customers for our products. Failure to estimate accurately the resources necessary to complete fixed-price contracts would have an adverse effect on our bottom line.

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1017526--9/28/2007--ACE_COMM_CORP