The software industry practice of trading warrants for revenue, which recently caught the

attention of the

Securities and Exchange Commission

is nothing new to

Commerce One


. The firm said it's already dealt with the issue in the past.

Peter Pervere, CFO of the B2B software maker, told investors at the

JPMorgan H&Q Technology Conference

that the company did not recognize revenue from a joint venture with

Royal Dutch/Shell


last year because of revenue-for-warrants concerns.

"We have our auditors look at every transaction we do very closely," Pervere told investors at a break-out session here. "Shell is an example of where we did not recognize revenue when the warrant was in place in that instance."

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Last week, B2B auctioneer



said the Securities and Exchange Commission ruled that it couldn't recognize revenue from


(VC) - Get Report

, its largest customer, because it had given the company warrants to purchase its stock as an incentive to do business. The SEC said any money FreeMarkets received from Visteon should be viewed as payment for those warrants, and not as revenue. That situation raised that other B2B companies, including Commerce One, could see some of their own revenue at risk.

Pervere made his comments to reassure investors that the firm has closely looked at the revenue-for-warrants issue, and has acted accordingly to make sure that its revenue is recognized appropriately.

"We have faced this problem before, and we've not recognized revenue while there has been a warrant deal in place," Pervere said later in an interview. He said that in all, there have been two instances where the company has not recognized revenue due to warrants, though he didn't go into detail about the second instance.

In January 2000, Commerce One and Shell announced they would set up an Internet marketplace for the energy industry. As part of that deal, Shell received 4.2 million warrants to purchase Commerce One shares. In exchange, according to a press release at the time, Commerce One would get license fees for its software to power the exchange, as well as an equity stake in the exchange itself.

But ultimately, said Pervere, the offer of the warrants were rescinded, making revenue recognition a moot point. In April 2000, Shell announced that it would go ahead with 13 other energy-industry partners to launch the exchange now known as Trade-Ranger. That exchange is powered by Commerce One.

On the other hand, Pervere said that the company is comfortable with its revenue-recognition practices from


, the big Internet exchange it's helping build for the auto industry. Analysts have said the 14% combined equity stake Commerce One gave



General Motors

as part of its deal to build the exchange could trigger further scrutiny of Commerce One by the SEC.

But Pervere said the company should be OK on that point.

"Given the high visibility of Covisint, we have had our auditors review it and we are very comfortable with the accounting treatment," Pervere said.