10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

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 000-10560

CTI GROUP (HOLDINGS) INC.

(Exact name of registrant as specified in its charter)

DELAWARE	51-0308583
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

333 North Alabama Street, Suite 240, Indianapolis, IN 46204

(Address of principal executive offices) (Zip Code)

(317) 262-4666

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former 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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ¨  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of August 1, 2013, the number of shares of Class A common stock, par value $.01 per share, outstanding was 29,179,271.

CTI GROUP (HOLDINGS) INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2013

TABLE OF CONTENTS

ITEM NO.	PAGE NO.
Forward Looking Statements		3
PART I – Financial Information
1. Financial Statements—Unaudited
Consolidated Balance Sheets at June 30, 2013 and December 31, 2012		4
Consolidated Statements of Comprehensive Income (Loss) for the six months ended June  30, 2013 and June 30, 2012		5
Consolidated Statements of Comprehensive Income (Loss) for the three months ended June  30, 2013 and June 30, 2012		6
Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and June 30, 2012		7
Notes to Consolidated Financial Statements		8
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
3. Quantitative and Qualitative Disclosures about Market Risk		25
4. Controls and Procedures		26
PART II – Other Information
1. Legal Proceedings		27
1A. Risk Factors		28
2. Unregistered Sales of Equity Securities and Use of Proceeds		28
3. Defaults Upon Senior Securities		28
4. Mine Safety Disclosures		28
5. Other Information		28
6. Exhibits		28
Signatures		29

2

Forward-Looking Statements

This Quarterly Report on Form 10-Q (“Form 10-Q”) contains “forward-looking” statements. Forward-looking statements discuss matters that are not historical facts. Examples of forward-looking statements include, but are not limited to: (a) projections of revenues, capital expenditures, growth, prospects, dividends, capital structure and other financial matters; (b) statements of plans and objectives of the Company or its management or board of directors; (c) statements of future economic performance; (d) statements of assumptions underlying other statements and statements about the Company and its business relating to the future; and (e) any statements using the words “anticipate”, “expect”, “may”, “project”, “intend”, “believe”, or similar expressions.

The Company’s ability to predict projected results or the effect of certain events on the Company’s operating results is inherently uncertain. Therefore, each reader of this Form 10-Q should carefully consider the risk factors stated in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, any or all of which have in the past and could in the future affect the ability of the Company to achieve its anticipated results and could cause actual results to differ materially from those discussed herein, including, but not limited to: economic conditions, risks associated with conducting business outside the U.S., ability to obtain a loan facility or receive additional advances from Fairford Holdings, Limited, a British Virgin Islands Company, who, as of June 30, 2013, owned beneficially 60.7% of the Company’s Class A common stock (“Fairford”), if needed, incurring additional losses, impact of accounting pronouncements, recording additional impairments, ability to maintain an effective system of internal controls over financial reporting and disclosure controls and procedures, ability to attract and retain customers to purchase the Company’s products, ability to develop or launch new software products, technological advances by third parties and competition, ability to protect the Company’s patented technology, and ability to obtain settlements in connection with its patent enforcement activities. You should not place any undue reliance on any forward-looking statements. Except to the extent required by law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions or circumstances or assumptions underlying such statements, or otherwise.

References herein to the Company mean CTI Group (Holdings) Inc. and its subsidiaries unless context otherwise requires.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CTI GROUP (HOLDINGS) INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

	June 30,			December 31,
	2013			2012
ASSETS
Cash and cash equivalents	$	924,123		$	2,345,390
Trade accounts receivable, less allowance for doubtful accounts of $33,601 and $97,704, respectively		3,002,643			3,199,128
Prepaid expenses		339,375			456,957
Other current assets		312,047			248,721
Total current assets		4,578,188			6,250,196
Property, equipment, and software, net		2,027,892			2,026,228
Intangible assets, net		1,494,435			1,833,350
Goodwill		2,769,589			2,769,589
Other assets		228,440			228,515
Total assets	$	11,098,544		$	13,107,878
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	427,713		$	430,162
Accrued expenses		1,127,429			919,518
Accrued wages and other compensation		394,617			482,752
Note payable – short term		39,643			—
Income tax payable		663,316			727,370
Deferred tax liability – short term		215,666			116,482
Deferred revenue		3,165,894			3,886,152
Total current liabilities		6,034,278			6,562,436
Lease incentive – long term		81,314			64,953
Note payable – long term		127,832			—
Deferred revenue – long term		187,118			811,808
Deferred income tax liability – long term		171,688			410,444
Total liabilities		6,602,230			7,849,641
Commitments and contingencies
Stockholders’ equity
Class A common stock, par value $.01 per share; 47,166,666 shares authorized; 29,179,271 issued at June 30, 2013 and 29,178,271 issued at December 31, 2012		291,793			291,783
Additional paid-in capital		26,148,928			26,117,670
Accumulated deficit		(22,246,706	)		(21,343,000	)
Other comprehensive income – foreign currency translation		494,442			383,927
Treasury stock, 140,250 shares, at cost		(192,143	)		(192,143	)
Total stockholders’ equity		4,496,314			5,258,237
Total liabilities and stockholders’ equity	$	11,098,544		$	13,107,878

See accompanying notes to consolidated financial statements.

4

CTI GROUP (HOLDINGS) INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

	Six months ended June 30,
	2013			2012
Revenues:
Software sales, service fee and license fee revenue	$	7,769,302		$	8,823,651
Cost and Expenses:
Cost of products and services, excluding depreciation and amortization		2,051,967			2,302,289
Selling, general and administration		3,779,187			3,620,634
Research and development		1,518,841			1,346,539
Depreciation and amortization		978,172			896,886
Total costs and expenses		8,328,167			8,166,348
Income / (loss) from operations		(558,865	)		657,303
Other (income) / expense
Interest income		(2,370	)		(6,023	)
Total other (income) / expense		(2,370	)		(6,023	)
Income / (loss) before income taxes		(556,495	)		663,326
Tax expense		347,212			279,773
Net income / (loss)		(903,707	)		383,553
Other comprehensive income / (loss)
Foreign currency translation adjustment		110,515			(32,602	)
Comprehensive income / (loss)		($793,192	)	$	350,951
Basic and diluted net income / (loss) per common share	$	(0.03	)	$	0.01
Basic weighted average common shares outstanding		29,038,496			29,038,021
Diluted weighted average common shares outstanding		29,038,496			29,878,396

See accompanying notes to consolidated financial statements

5

CTI GROUP (HOLDINGS) INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

	Three months ended June 30,
	2013			2012
Revenues:
Software sales, service fee and license fee revenue	$	3,883,976		$	4,455,814
Cost and Expenses:
Cost of products and services, excluding depreciation and amortization		1,009,640			1,147,378
Selling, general and administration		1,911,363			1,779,632
Research and development		709,862			753,971
Depreciation and amortization		474,186			451,336
Total costs and expenses		4,105,051			4,132,317
Income / (loss) from operations		(221,075	)		323,497
Other (income) / expense
Interest income		(1,224	)		(3,099	)
Total other (income) / expense		(1,224	)		(3,099	)
Income / (loss) before income taxes		(219,851	)		326,596
Tax expense		131,465			56,573
Net income / (loss)		(351,316	)		270,023
Other comprehensive income / (loss)
Foreign currency translation adjustment		1,604			56,209
Comprehensive income / (loss)	$	(349,712	)	$	326,232
Basic and diluted net income / (loss) per common share	$	(0.01	)	$	0.01
Basic weighted average common shares outstanding		29,038,966			29,038,021
Diluted weighted average common shares outstanding		29,038,966			30,054,248

See accompanying notes to consolidated financial statements

6

CTI GROUP (HOLDINGS) INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six months ended June 30,
	2013			2012
Cash flows from operating activities:
Net income / (loss)	$	(903,707	)	$	383,553
Adjustments to reconcile net income / (loss) to net cash (used in) / provided by operating activities:
Depreciation and amortization		978,172			896,886
Provision for doubtful accounts		(16,126	)		12,171
Deferred income taxes		(107,634	)		(82,510	)
Recognition of rent incentive benefit		44,617			(47,380	)
Stock option grant expense		31,057			20,161
Loss on disposal of property and equipment		—			244
Changes in operating assets and liabilities:
Trade receivables		34,466			778,492
Prepaid expenses		128,332			180,721
Income taxes		(17,450	)		120,511
Other assets		77,329			72,341
Accounts payable		13,712			(74,039	)
Accrued expenses		232,389			(78,424	)
Accrued wages and other compensation		(66,657	)		208,972
Deferred revenue		(1,082,810	)		(1,586,869	)
Cash (used in) / provided by operating activities		(654,310	)		804,830
Cash flows used in investing activities:
Additions to property, equipment, and software		(652,104	)		(531,772	)
Cash used in investing activities		(652,104	)		(531,772	)
Cash flows provided by financing activities:
Exercise of stock options		210			—
Cash provided by financing activities		210			—
Effect of foreign currency exchange rates on cash and cash equivalents		(115,063	)		16,855
(Decrease) / increase in cash and cash equivalents		(1,421,267	)		289,913
Cash and cash equivalents, beginning of period		2,345,390			2,945,182
Cash and cash equivalents, end of period	$	924,123		$	3,235,095

See accompanying notes to consolidated financial statements.

7

CTI GROUP (HOLDINGS) INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1: Business and Basis of Presentation

The Company designs, develops, markets and supports billing and data management software and services. The Company operates in two business segments: Electronic Invoice Management (“EIM”) and Call Accounting Management and Recording (“CAMRA”). The majority of the Company’s business is in Europe and North America.

The Company was originally incorporated in Pennsylvania in 1968 and reincorporated in the State of Delaware in 1988, pursuant to a merger of CTI into a wholly owned subsidiary formed as a Delaware corporation. In November 1995, the Company changed its name to CTI Group (Holdings) Inc.

EIM designs, develops and provides electronic invoice presentment and analysis software that enables internet-based customer self-care for wireline, wireless and convergent providers of telecommunications services. EIM software and services are used primarily by telecommunications services providers to enhance their customer relationships while reducing the providers operational expenses related to paper-based invoice delivery and customer support relating to billing inquiries. CAMRA designs, develops and provides software and services used by enterprise, governmental, institutional end users and managed and hosted customers of service providers to manage their telecommunications service and equipment usage and to analyze voice, video, and data usage, record and monitor communications and perform administrative and back office functions such as cost allocation or client bill back. These applications are commonly available in the market as enterprise-grade products. Customers typically purchase the CAMRA products when upgrading or acquiring a new enterprise communications platform.

The accompanying consolidated financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature.

Certain information in footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), has been condensed or omitted pursuant to the rules and regulations of the SEC, although the Company believes the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2012 and the notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC.

The Company follows accounting standards set by the Financial Accounting Standards Board (“FASB”). The FASB establishes GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants, which the Company is required to follow.

Amortization expense of developed software, which relates to cost of sales, was presented as depreciation and amortization expense. Amortization expense of developed software amounted to $455,856 and $373,957 for the six months ended June 30, 2013 and 2012, respectively. Amortization expense of developed software amounted to $196,358 and $187,079 for the three months ended June 30, 2013 and 2012, respectively.

NOTE 2: Supplemental Schedule of Non-Cash Investing and Financing Activities

The Company paid $0 for current year income tax estimates for the six months ended June 30, 2013 and 2012. The Company paid income taxes of approximately $474,949 and $235,546 during the six months ended June 30, 2013 and 2012, respectively, for prior year taxes.

On May 31, 2013, the Company entered into a financing arrangement agreement with a vendor for $166,600 (the “Payment Plan”) for supporting software. The Company will make twelve quarterly payments of $15,341 beginning on September 1, 2013. The interest rate implicit on the Payment Plan is 6.3%.

NOTE 3: Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, note payable, and other accruals approximate their fair values because of their nature and expected duration.

8

NOTE 4: Debt Obligations and Liquidity

The Company believes that the primary sources of liquidity over the next twelve months will be cash on hand and cash from operations. The Company is also seeking new credit facility and other financing arrangements. If the Company is unable to generate adequate cash from operations, enter into a new credit facility or other financing arrangements, or raise funds through the sale of debt to support operations, the Company may seek additional funds from Fairford Holdings Limited (“Fairford”). There can be no assurance the Company will be successful in such efforts.

NOTE 5: New Accounting Pronouncements

In January 2013, FASB issued Accounting Standards Update (“ASU”) No. 2013-01, Balance Sheet (Topic 210), Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update further clarified the guidance previously issued under ASU No. 2011-11, which required both gross and net presentation of offsetting assets and liabilities. The new requirements were effective retrospectively for fiscal years beginning on or after January 1, 2013, and for interim periods within those fiscal years. As the guidance impacted disclosure requirements only, the Company’s adoption of the guidance on January 1, 2013 did not have an impact on its results of operations, financial position or cash flows.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The guidance was issued in response to ASU No. 2011-05 and required disclosure of the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items of net income, if the amounts reclassified are required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period. For other amounts not required to be reclassified to net income in their entirety in the same reporting period, or when a portion of the amount is reclassified to a balance sheet account instead of directly to income or expense, a cross reference to the related footnote disclosures for additional information should be provided. The new requirements were effective prospectively for fiscal years beginning on or after December 15, 2012, and for interim periods within those fiscal years. As the guidance impacted disclosure requirements only, the Company’s adoption of the guidance on January 1, 2013 did not have an impact on its results of operations, financial position or cash flows.

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. This update provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this update is fixed at the reporting date, except for obligations addressed within existing U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The new requirements are effective for fiscal years that begin on or after December 15, 2013, and for interim periods within those fiscal years. Retrospective presentation for all comparative periods presented is required. The Company expects that the adoption of this guidance will not have a material impact on its results of operations, financial position or cash flows.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This guidance clarifies the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The new requirements are effective prospectively for fiscal years beginning on or after December 15, 2013, and for interim periods within those fiscal years. The Company expects that the adoption of this guidance will not have a material impact on its results of operations, financial position or cash flows.

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NOTE 6: Basic and Diluted Net Income Per Common Share

Basic earnings per share amounts are computed by dividing reported earnings available to common stockholders by the weighted average shares outstanding for the period. Diluted earnings per share amounts are computed by dividing reported earnings available to common stockholders by weighted average common shares outstanding for the period giving effect to securities considered to be potentially dilutive common shares, such as stock options.

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2013			2012		2013			2012
Net income / (loss)	$	(351,316	)	$	270,023	$	(903,707	)	$	383,553
Weighted average shares of common stock outstanding used to compute basic earnings per share		29,038,966			29,038,021		29,038,496			29,038,021
Additional common shares to be issued assuming exercise of stock options and stock warrants		—			1,016,227		—			840,375
Weighted average shares of common and common equivalent stock outstanding used to compute diluted earnings per share		29,038,966			30,054,248		29,038,496			29,878,396
Basic:
Net income / (loss) per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01
Weighted average common shares outstanding		29,038,966			29,038,021		29,038,496			29,038,021
Diluted:
Net income / (loss) per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01
Weighted average common and common equivalent shares outstanding		29,038,966			30,054,248		29,038,496			29,878,396

For the three and six months ended June 30, 2013, outstanding stock options were excluded from weighted average shares of common and common equivalent shares outstanding due to their anti-dilutive effect as a result of the Company’s net loss.

Note 7: Stock Based Compensation

The Company’s Amended and Restated Stock Option and Restricted Stock Plan (the “Plan”) provides for the issuance of incentive and nonqualified stock options to purchase, and restricted stock grants of, shares of the Company’s Class A common stock. Individuals eligible for participation in the Plan included designated officers and other employees (including employees who also serve as directors), non-employee directors, independent contractors and consultants who perform services for the Company. The terms of each grant under the Plan were determined by the board of directors, or a committee of the board administering the Plan, in accordance with the terms of the Plan. Outstanding stock options become immediately exercisable upon a change of control of the Company as in accordance with the terms of the Plan. Stock options granted under the Plan typically become exercisable over a one to five year period. Generally, the options have various vesting periods, which include immediate and term vesting periods.

In 2002, the Company’s stockholders authorized an additional 2,000,000 shares available for grant under the Plan. In addition, the Company filed a registration statement on Form S-8 with the SEC. Such registration statement also covered certain options granted prior to the merger in 2001, which were not granted under the Plan (“Outside Plan Stock Options”).

On December 8, 2005, the Company’s stockholders ratified the CTI Group (Holdings) Inc. Stock Incentive Plan (the “Stock Incentive Plan”) at the Company’s 2005 Annual Meeting of Stockholders. In addition, the Company filed a registration statement on Form S-8 with the SEC. The Stock Incentive Plan replaced the Plan. No new grants will be granted under the Plan. Grants that were made under the Plan prior to the stockholders’ approval of the Stock Incentive Plan will continue to be administered under the Plan.

The Stock Incentive Plan is administered by the Compensation Committee of the board of directors. Under the Stock Incentive Plan, the Compensation Committee is authorized to grant awards to non-employee directors, executive officers and other employees of, and consultants and advisors to, the Company or any of its subsidiaries and to determine the number and types of such awards and the terms, conditions, vesting and other limitations applicable to each such award. In addition, the Compensation Committee has the power to interpret the Stock Incentive Plan and to adopt such rules and regulations as it considers necessary or appropriate for purposes of administering the Stock Incentive Plan.

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The following types of awards or any combination of awards may be granted under the Stock Incentive Plan: (i) incentive stock options, (ii) non-qualified stock options, (iii) stock grants, and (iv) performance awards.

The maximum number of shares of Class A common stock with respect to which awards may be granted to any individual participant under the Stock Incentive Plan during each of the Company’s fiscal years will not exceed 1,500,000 shares of Class A common stock, subject to certain adjustments described in the Stock Incentive Plan.

The aggregate number of shares of Class A common stock that are reserved for awards, including shares of Class A common stock underlying stock options, to be granted under the Stock Incentive Plan is 6,000,000 shares, subject to adjustments for stock splits, recapitalizations and other specified events. As of June 30, 2013, there were 1,886,400 awards available for grant under the Stock Incentive Plan. If any outstanding award is cancelled, forfeited, or surrendered to the Company, shares of Class A common stock allocable to such award may again be available for awards under the Stock Incentive Plan. Incentive stock options may be granted only to participants who are executive officers and other employees of the Company or any of its subsidiaries on the day of the grant, and non-qualified stock options may be granted to any participant in the Stock Incentive Plan. No stock option granted under the Stock Incentive Plan will be exercisable later than ten years after the date it is granted.

At June 30, 2013, there were options to purchase 5,618,850 shares of Class A common stock outstanding consisting of 5,368,850 Plan and Stock Incentive Plan options and 250,000 Outside Plan Stock Options. There were exercisable options to purchase an aggregate of 4,530,451 shares of Class A common stock under the Plan and Stock Incentive Plan and options to purchase 250,000 shares of Class A common stock that were Outside Plan Stock Options as of June 30, 2013.

Information with respect to options was as follows:

	Options Shares			Exercise Price Range Per Share		Weighted Average Exercise Price
Outstanding, January 1, 2013		5,691,350		$	0.08—$ 0.40	$	0.25
Granted		—			—		—
Exercised		(1,000	)	$	0.21	$	0.21
Expired		(71,500	)	$	0.08—$ 0.225	$	0.12
Outstanding, June 30, 2013		5,618,850		$	0.08—$ 0.40	$	0.26

The future compensation costs related to non-vested options at June 30, 2013 is $119,794. The future costs will be recognized over the weighted average period of approximately 2.25 years.

The following table summarizes options exercisable at June 30, 2013:

	Option Shares		Exercise Price Range Per Share		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Remaining Contractual Term
June 30, 2013		4,780,451	$	0.08—$ 0.40	$	0.27	$	214,843		4.04 years

The following table summarizes non-vested options:

	Option Shares
January 1, 2013		1,050,048
Granted		—
Expired		(15,000	)
Vested		(196,649	)
June 30, 2013		838,399

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The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes-Merton formula) that uses the assumptions noted in the following table:

	2012
Risk-free interest rate		0.38	%
Dividend yield		0.00	%
Volatility factor		239.36	%
Expected lives		5 years

The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes-Merton formula). Expected volatilities are based on implied volatilities from historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from general practices used by other companies in the software industry and estimates by the Company of the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

On February 16, 2007, the Company and Fairford Holdings Scandinavia AB (“Fairford Scandinavia”), a wholly-owned subsidiary of Fairford, entered into the Securities Purchase Agreement (the “Agreement”), dated February 16, 2007. Pursuant to the Agreement, on February 16, 2007, the Company issued to Fairford Scandinavia a Class A common stock Purchase Warrant (the “Original Warrant”) to purchase shares of Class A common stock of the Company in consideration for securing the issuance of a $2.6 million letter of credit (the “Letter of Credit”) from SEB Bank to National City Bank. Due to National City Bank’s receipt of the Letter of Credit, the Company was able to obtain the loan at a favorable cash-backed interest rate. Effective April 14, 2008, the Company entered into a new Securities Purchase Agreement with Fairford Scandinavia and issued an additional warrant to Fairford Scandinavia to purchase shares of Class A common stock based on the interest rate savings (the “Additional Warrant”).

Pursuant to the Original Warrant, Fairford Scandinavia is entitled to purchase 419,495 shares of Class A common stock at the exercise price of $0.34 per share, subject to adjustments as described in the Original Warrant, at any time prior to the 10th anniversary of the date of issuance. Pursuant to the Additional Warrant, Fairford Scandinavia is entitled to purchase 620,675 shares of Class A common stock at the exercise price of $0.22 per share, subject to adjustments as described in the Additional Warrant, at any time prior to the 10th anniversary of the date of issuance. On December 31, 2009, Fairford Scandinavia sold all of its owned Class A shares, or 355,099 shares to Fairford for SEK 2.80362 ($0.39) per share. As of June 30, 2013, Fairford beneficially owned 63.7% of the Company’s outstanding Class A common stock and Fairford Scandinavia owned warrants to purchase 1,040,170 shares of the Company’s Class A common stock. Mr. Osseiran, the majority holder of the Company’s Class A common stock and a director of the Company, is a director of Fairford, the President of Fairford Scandinavia and a grantor and sole beneficiary of a revocable trust which is the sole stockholder of Fairford. Mr. Dahl, a director of the Company, is a director of Fairford and the Chairman of Fairford Scandinavia. The Original Warrant and Additional Warrant vested immediately upon grant.

Included within selling, general and administrative expense for the three months ended June 30, 2013 and June 30, 2012 was $15,528 and $10,080, respectively, of stock-based compensation. Included within selling, general and administrative expense for the six months ended June 30, 2013 and June 30, 2012 was $31,057 and $20,161, respectively, of stock-based compensation. Stock-based compensation expenses are recorded in the Corporate Allocation segment as these amounts are not included in internal measures of segment operating performance.

NOTE 8: Indemnification to Customers

The Company’s agreements with customers generally require the Company to indemnify the customer against claims that the Company’s software infringes third party patent, copyright, trademark or other proprietary rights. Such indemnification obligations are generally limited in a variety of industry-standard provisions including our right to replace the infringing product. As of June 30, 2013, the Company did not experience any material losses related to these indemnification obligations and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations, and consequently, the Company has not established any related accruals.

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NOTE 9: Contingencies

The Company is subject to claims and lawsuits arising primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of any such pending claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

The Company filed a lawsuit for patent infringement under 35 U.S.C. §271 et seq. against Qwest Corporation in the United States District Court for the Southern District of Indiana (“District Court”) on January 12, 2004. The lawsuit seeks treble damages, attorneys’ fees and an injunction for infringement of U.S. Patent No. 5,287,270. On October 30, 2012, the District Court entered an order awarding Qwest Corporation litigation costs in the amount of approximately $250,000. The Company filed a timely notice of appeal on November 13, 2012, and an amended notice of appeal on November 30, 2012. It also was ordered to post a supesedeas bond guaranteeing the payment of costs. The briefing process is ongoing and we anticipate that the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) will issue its opinion in late 2013 or early 2014. As set forth in the appellate brief, filed on February 27, 2013, the Company and legal counsel believe that there are reasonable and persuasive grounds for the appellate court to overturn the District Court’s order granting Qwest Corporation’s motion for summary judgment. The Company and the Company’s legal counsel believe it is more likely than not that the appellate court will overturn the district court’s order granting Qwest Corporation’s motion for summary judgment, which would vitiate the award of costs. As a result, the Company has concluded that it is not probable that it has incurred a loss relating to this matter. The Company believes a range of possible loss, which cannot be reasonably estimated at this time, is between zero and the amount of the judgment. Because the Company believes that this potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter. In the event that the Company’s assumptions used to evaluate this matter as neither probable nor estimable change in future periods, it will be required to record a liability for an adverse outcome.

NOTE 10: Income Taxes

The Company records a valuation allowance against its net deferred tax asset to the extent management believes, it is more likely than not, that the asset will not be realized. As of June 30, 2013, the Company’s valuation allowance related only to net deferred tax assets in the United States. In addition, at June 30, 2013, the Company considered its cumulative earnings related to non-U.S. subsidiaries to be indefinitely reinvested.

The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. As of June 30, 2013 and June 30, 2012, the Company had $125,938 and $104,441 of unrecognized tax benefits, respectively, all of which would favorably affect the Company’s effective tax rate if recognized. The Company and its subsidiaries are subject to U.S. federal and state income taxes as well as foreign income tax in the United Kingdom. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company had no amounts accrued for interest and penalties as of June 30, 2013.

For the six months ended June 30, 2013 and June 30, 2012, the Company had $347,212 and $279,773, respectively, of income tax expense and for the three months ended June 30, 2013 and June 30, 2012, the Company had $131,465 and $56,573 of income tax expense, respectively. The income tax benefit and expense were primarily related to the United Kingdom operations. The difference between the statutory rate and the actual rate is primarily due to the valuation allowance related to the net deferred tax assets in the United States.

NOTE 11: Segment Information

The Company has two reportable segments: EIM and CAMRA. These segments are managed separately because the services provided by each segment require different technology and marketing strategies.

Electronic Invoice Management: EIM designs, develops and provides electronic invoice presentment and analysis software that enables internet-based customer self-care for wireline, wireless and convergent providers of telecommunications services. EIM software and services are used primarily by telecommunications services providers to enhance their customer relationships while reducing the providers operational expenses related to paper-based invoice delivery and customer support relating to billing inquiries.

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Call Accounting Management and Recording: CAMRA designs, develops and provides software and services used by enterprise, governmental, institutional end users and managed and hosted customers of service providers to manage their telecommunications service and equipment usage and to analyze voice, video, and data usage, record and monitor communications and perform administrative and back office functions such as cost allocation or client bill back. These applications are commonly available in the market as enterprise-grade products. Customers typically purchase the CAMRA products when upgrading or acquiring a new enterprise communications platform.

Reconciling items for operating income (loss) in the table below represent corporate expenses, legal costs for patent enforcement and depreciation all of which are in the United States.

The accounting policies for segment reporting are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Summarized financial information concerning the Company’s reportable segments for the six and three months ended June 30, 2013 and 2012 is shown in the following tables.

	For Six Months Ended June 30, 2013
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	5,014,097	$	2,755,205		$	—		$	7,769,302
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		4,045,373		1,671,962			—			5,717,335
Depreciation and amortization		715,068		260,854			2,250			978,172
Income (loss) from operations		981,443		(547,051	)		(993,257	)		(558,865	)
Long-lived assets		5,419,620		1,088,975			11,761			6,520,356
	For Six Months Ended June 30, 2012
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	6,065,525	$	2,758,126		$	—		$	8,823,651
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		4,934,138		1,587,224			—			6,521,362
Depreciation and amortization		683,110		211,674			2,102			896,886
Income (loss) from operations		1,784,372		(569,858	)		(557,211	)		657,303
Long-lived assets		6,082,323		823,584			10,366			6,916,273
	For Three Months Ended June 30, 2013
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	2,406,560	$	1,477,416		$	—		$	3,883,976
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		1,940,851		933,485			—			2,874,336
Depreciation and amortization		355,466		117,569			1,151			474,186
Income (loss) from operations		472,029		(107,359	)		(585,745	)		(221,075	)
Long-lived assets		5,419,620		1,088,975			11,761			6,520,356
	For Three Months Ended June 30, 2012
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	3,116,300	$	1,339,514		$	—		$	4,455,814
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		2,584,784		723,652			—			3,308,436
Depreciation and amortization		339,277		110,971			1,088			451,336
Income (loss) from operations		892,203		(317,178	)		(251,528	)		323,497
Long-lived assets		6,082,323		823,584			10,366			6,916,273

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The following table presents net revenues by geographic location.

	For Six Months Ended June 30, 2013
	United States			United Kingdom		Consolidated
Revenues	$	1,757,179		$	6,012,123	$	7,769,302
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		1,175,609			4,541,726		5,717,335
Depreciation and amortization		261,530			716,642		978,172
Income (loss) from operations		(1,491,458	)		932,593		(558,865	)
Long-lived assets		5,567,276			953,080		6,520,356
	For Six Months Ended June 30, 2012
	United States			United Kingdom		Consolidated
Revenues	$	1,820,439		$	7,003,212	$	8,823,651
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		1,204,715			5,316,647		6,521,362
Depreciation and amortization		216,064			680,822		896,886
Income (loss) from operations		(858,494	)		1,515,797		657,303
Long-lived assets		5,864,901			1,051,372		6,916,273
	For Three Months Ended June 30, 2013
	United States			United Kingdom		Consolidated
Revenues	$	965,022		$	2,918,954	$	3,883,976
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		653,907			2,220,429		2,874,336
Depreciation and amortization		117,656			356,530		474,186
Income (loss) from operations		(733,400	)		512,325		(221,075	)
Long-lived assets		5,567,276			953,080		6,520,356
	For Three Months Ended June 30, 2012
	United States			United Kingdom		Consolidated
Revenues	$	827,690		$	3,628,124	$	4,455,814
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		484,540			2,823,896		3,308,436
Depreciation and amortization		111,385			339,951		451,336
Income (loss) from operations		(492,095	)		815,592		323,497
Long-lived assets		5,864,901			1,051,372		6,916,273

NOTE 12 –Related Party Transactions

On March 7, 2013, a proposal (the “Proposal”) was made by Fairford, Michael Reinarts who is the Chairman of the Company’s Board of Directors and John Birbeck who is the Company’s Chief Executive Officer, to purchase all of the outstanding shares of stock of the Company for a cash purchase price of $0.29 per share. On March 8, 2013, the Company’s Board of Directors formed a Special Committee to, among other things, evaluate and determine the Company’s response to the Proposal.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The Company is comprised of two business segments: EIM and CAMRA. EIM designs, develops and provides electronic invoice presentment and analysis software that enables internet-based customer self-care for wireline, wireless and convergent providers of telecommunications services. EIM software and services are used primarily by telecommunications services providers to enhance their customer relationships while reducing the providers operational expenses related to paper-based invoice delivery and customer support relating to billing inquiries. CAMRA designs, develops and provides software and services used by enterprise, governmental, institutional end users and managed and hosted customers of service providers to manage their telecommunications service and equipment usage and to analyze voice, video, and data usage, record and monitor communications and perform administrative and back office functions such as cost allocation or client bill back. These applications are commonly available in the market as enterprise-grade products. Customers typically purchase the CAMRA products when upgrading or acquiring a new enterprise communications platform.

The Company generates its revenues and cash from several sources: software sales, license fees, processing fees, implementation fees, and training and consulting services.

The Company’s software products and services are subject to changing technology and evolving customer needs which require the Company to continually invest in research and development in order to respond to such demands. The limited financial resources available to the Company require the Company to concentrate on those business segments and product lines which the Company believes will provide the greatest returns on investment. The EIM segment, as compared to the other business segment, provides the predominant share of income from operations and cash flow from operations. The majority of CAMRA segment revenues are derived from its United Kingdom operations but the Company believes that most of the growth in the CAMRA segment will occur in the United States.

The Company reported revenue in the EIM segment of $5.0 million and $6.1 million for the six months ended June 30, 2013 and 2012, respectively, and $2.4 million and $3.1 million for the three months ended June 30, 2013 and 2012, respectively. For the CAMRA segment, the Company recorded revenues of $2.8 million and $2.8 million for the six months ended June 30, 2013 and 2012, respectively, and $1.5 million and $1.3 million for the three months ended June 30, 2013 and 2012, respectively.

The Company believes that as voice and data services continue to commoditize, service providers will seek alternative business models to replace revenue lost as a result of pricing pressures. One such business model is the delivery of managed or hosted voice and video services.

Traditionally, organizations that required advanced voice and video services would purchase enabling communications hardware and software, operate and maintain this equipment, and depreciate the associated capital expense over time. This approach had two major disadvantages for such organizations. The first being that organizations would experience significant capital and operational expenditures related to acquiring these advanced services. The second being that the capabilities of the acquired equipment would not materially improve as voice and video service technology evolved.

Service providers recognized these challenges and began, as part of their next generation network (“NGN”) strategies, to deliver managed and hosted service offerings that do not require the customer to purchase expensive equipment up-front and virtually eliminate the operational expenditures associated with managing and maintaining an enterprise-grade communications network. Service providers incrementally improve revenue by enabling competitive voice and video features while reducing costs by delivering these services on high-capacity, low-cost NGNs.

Due to the profitability and average revenue per user advantage possible by delivering such managed and hosted service offerings, providers not only look at acquiring new customers but converting legacy customers onto the NGN platform. The Company believes that this conversion process is significant. Many legacy features and functions are not available on NGN platforms, primarily due to the immaturity of the service delivery model.

The Company’s CAMRA applications will help eliminate customer resistance to conversion to next generation platforms, while creating new revenue opportunities for service providers through the delivery of compelling value added services. In 2007, the Company marketed two applications, emPulse, a web-based communications traffic analysis solution, and SmartRecord^® IP, which enable service providers to selectively intercept communications on behalf of their hosted and managed service customers. These applications also enable managed and hosted service customers of service providers to analyze voice, video, and data usage, record and monitor communications, and perform administration and back office functions such as cost allocation or client bill back. These applications were released as enterprise-grade products. The Company anticipates that customers will purchase these products when upgrading or acquiring a new enterprise communications platform. The Company has taken the business benefits of these enterprise-grade applications and has delivered provider-grade managed and hosted service applications, enabling service providers to create a new recurring revenue stream, while ensuring that enterprise customers have the tools necessary and relevant to their particular line of business or vertical.

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Financial Condition

In the six months ended June 30, 2013, the stockholders’ equity decreased $761,923 from $5,258,237 as of December 31, 2012 to $4,496,314 as of June 30, 2013 primarily as a result of the net loss of $903,707, partially off-set by other comprehensive gain, related to foreign currency translation adjustment, of $110,515, for the six months ended June 30, 2013. The Company realized a decrease in net current assets (current assets, less current liabilities) of $1,143,850 which was primarily attributable to a decrease in cash and accounts receivable in the six months ended June 30, 2013.

At June 30, 2013, cash and cash equivalents were $924,123 compared to $2,345,390 at December 31, 2012, and such decrease was primarily attributable to cash used in operating activities for the six months ended June 30, 2013 of $654,310 along with cash used in investing activities of $652,104. The cash used in operating activities in the six months ended June 30, 2013 of $654,310 was primarily attributable to the net loss of $903,707 and a decrease in deferred revenue of $1,082,810 which was partially offset by depreciation and amortization of $978,172, and a decrease in prepaid expense of $100,857. Cash utilized in investing activities of $652,104 related to additions to property, equipment and software. The Company generates approximately 77.4% of its revenues from operations in the United Kingdom where the functional currency, the United Kingdom pound, has weakened by 6.9% in relation to the United States dollar during the six month period ended June 30, 2013.

Results of Operations (Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012)

Revenues

Revenues from operations for the six months ended June 30, 2013 decreased $1,054,349, or 11.9%, to $7,769,302 as compared to $8,823,651 for the six months ended June 30, 2012. Overall revenues decreased primarily as a result of decreased sales in the EIM segment. Revenues derived from the United Kingdom operations represented 77.4% and 79.4% of total revenues for the six months ended June 30, 2013 and 2012, respectively. The decrease in the percentage of total revenues attributable to United Kingdom operations was primarily related to decreased sales in the United Kingdom EIM segment due to a decrease in professional services revenue from existing customers. The United States revenues decreased by $63,260, or 3.5%, to $1,757,179 for the six months ended June 30, 2013 compared to $1,820,439 for the six months ended June 30, 2012. Such decrease was primarily related to a decrease in revenue in the CAMRA segment sales in the United States due to fewer installations during the first quarter of 2013. The Company has realized an increase in users of SmartRecord^® IP in the second quarter of 2013. The Company earns a substantial portion of its revenue from a single EIM customer in the United Kingdom. That customer represented approximately 19.6% of the total revenues for the six months ended June 30, 2013 and approximately 24.0% for the six months ended June 30, 2012.

Cost of Products and Services Excluding Depreciation and Amortization

Cost of products and services, excluding depreciation and amortization, for the six months ended June 30, 2013, decreased $250,322, or 10.9%, to $2,051,967, as compared to $2,302,289 for the six months ended June 30, 2012. The decrease was primarily related to costs associated with decreased revenue. The cost of products and services, excluding depreciation and amortization, related to the CAMRA segment decreased $87,659 to $1,083,243 for the six months ended June 30, 2013 from $1,170,902 for the six months ended June 30, 2012. The costs of products and services, excluding depreciation and amortization, related to the EIM segment decreased by $162,663 to $968,724 for the six months ended June 30, 2013 compared to $1,131,387 for the six months ended June 30, 2012. The cost of products and services, excluding depreciation and amortization, was 26.4% of revenue for the six months ended June 30, 2013, as compared to 26.1% of revenue for the six months ended June 30, 2012.

Selling, General and Administrative Costs

Selling, general and administrative expenses for the six months ended June 30, 2013 increased $158,553, or 4.4%, to $3,779,187 compared to $3,620,634 for the six months ended June 30, 2012. The increase was primarily due to professional fees incurred related to the evaluation of the Proposal and patent enforcement activities. Selling, general and administrative costs related to the CAMRA segment decreased by $71,208 to $1,285,879 for the six months ended June 30, 2013 compared to $1,357,087 for the six months ended June 30, 2012. Selling, general and administrative costs related to the EIM segment decreased by $206,137 to $1,502,301 for the six months ended June 30, 2013 compared to $1,708,438 for the six months ended June 30, 2012. Selling, general and administrative costs related to the Corporate allocation increased by $435,898 to $991,007 for the six months ended June 30, 2013 compared to $555,109 for the six months ended June 30, 2012 which was primarily due to an increase in professional fees related to the evaluation of the Proposal and patent enforcement activities.

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Research and Development Expense

Research and development expense for the six months ended June 30, 2013 increased $172,302, or 12.8%, to $1,518,841 as compared to $1,346,539 for the six months ended June 30, 2012. Research and development costs related to the CAMRA segment increased $83,964 to $672,280 for the six months ended June 30, 2013 compared to $588,316 for the six months ended June 30, 2012. Research and development expense related to the EIM segment increased $88,338 to $846,561 for the six months ended June 30, 2013 compared to $758,223 for the six months ended June 30, 2012. Research and development costs that were capitalized during the six months ended June 30, 2013 and June 30, 2012 amounted to $487,533 and $442,172, respectively. Research and development costs allocated to cost of goods sold during the six months ended June 30, 2013 and June 30, 2012 amounted to $253,093 and $442,172, respectively.

Depreciation and Amortization

Depreciation and amortization for the six months ended June 30, 2013 increased $81,286 to $978,172 from $896,886 in the six months ended June 30, 2012.

Amortization expense of developed software, which relates to cost of sales, was presented as depreciation and amortization expense. Amortization expense of developed software amounted to $455,856 and $373,957 for the six months ended June 30, 2013 and 2012, respectively.

Other Income and Expense

The Company realized interest income of $2,370 for the six months ended June 30, 2013 compared to interest income of $6,023 for the six months ended June 30, 2012. The reduction in interest income was primarily associated with a decrease in the amount of invested cash.

Taxes

The tax expense for the six months ended June 30, 2013 increased $67,439, or 24.1%, to $347,212 as compared to $279,773 for the six months ended June 30, 2012. The tax expense for the six months ended June 30, 2013 and June 30, 2012 was due to the pre-tax income in the United Kingdom of $934,963 and $1,526,062, respectively. The increase in the effective tax rate in 2013 was caused by a true-up of the prior year’s tax provision related to a book to tax difference on fixed asset depreciation.

The Company records a valuation allowance against its net deferred tax asset to the extent management believes that it is more likely than not that the asset will not be realized. As of June 30, 2013, the Company’s valuation allowance related to the net deferred tax assets in the United States.

Net Income / (Loss)

The Company realized a net loss for the six months ended June 30, 2013 of $903,707 compared to net income of $383,553 for the six months ended June 30, 2012. The change to a net loss was primarily associated with the reduction of revenue of $1,054,349 along with an increase in legal and professional fees for the six months ended June 30, 2013 when compared to the six months ended June 30, 2012.

Results of Operations (Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012)

Revenues

Revenues from operations for the three months ended June 30, 2013 decreased $571,838, or 12.8%, to $3,883,976 as compared to $4,455,814 for the three months ended June 30, 2012. Overall revenues decreased primarily as a result of decreased sales in the EIM segment. Revenues derived from the United Kingdom operations represented 75.2% and 81.4% of total revenues for the three months ended June 30, 2013 and 2012, respectively. The decrease in the percentage of total revenues attributable to United Kingdom operations was primarily related to decreased sales in the United Kingdom EIM segment due to a decrease in professional service revenue from existing customers realized in the three months ended June 30, 2013 compared to the three months ended June 30, 2012. The United States revenues increased by $137,332, or 16.6%, to $965,022 for the three months ended June 30, 2013 compared to $827,690 for the three months ended June 30, 2012. Such increase was primarily related to an increase in revenue in the CAMRA segment sales in the United States due to an increase in installations in 2013. The Company earns a substantial portion of its revenue from a single EIM customer in the United Kingdom. That customer represented approximately 19.6% of the total revenues for the three months ended June 30, 2013 and approximately 22.3% for the three months ended June 30, 2012.

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Cost of Products and Services Excluding Depreciation and Amortization

Cost of products and services, excluding depreciation and amortization, for the three months ended June 30, 2013, decreased $137,738, or 12.0%, to $1,009,640, as compared to $1,147,378 for the three months ended June 30, 2012. The decrease was primarily related to costs associated with decreased revenue. The cost of products and services, excluding depreciation and amortization, related to the CAMRA segment decreased $71,931 to $543,931 for the three months ended June 30, 2013 from $615,862 for the three months ended June 30, 2012. The costs of products and services, excluding depreciation and amortization, related to the EIM segment decreased by $65,807 to $465,709 for the three months ended June 30, 2013 compared to $531,516 for the three months ended June 30, 2012. The cost of products and services, excluding depreciation and amortization, was 26.0% of revenue for the three months ended June 30, 2013, as compared to 25.8% of revenue for the three months ended June 30, 2012.

Selling, General and Administrative Costs

Selling, general and administrative expenses for the three months ended June 30, 2013 increased $131,731, or 7.4%, to $1,911,363 compared to $1,779,632 for the three months ended June 30, 2012. The increase was primarily due to professional fees incurred related to the evaluation of the Proposal and patent enforcement activities. Selling, general and administrative costs related to the CAMRA segment increased by $15,233 to $638,171 for the three months ended June 30, 2013 compared to $622,938 for the three months ended June 30, 2012. Selling, general and administrative costs related to the EIM segment decreased by $217,656 to $688,598 for the three months ended June 30, 2013 compared to $906,254 for the three months ended June 30, 2012. Selling, general and administrative costs related to the Corporate allocation increased by $334,154 to $584,594 for the three months ended June 30, 2013 compared to $250,440 for the three months ended June 30, 2012 which was primarily due to an increase in professional fees related to the evaluation of the Proposal and patent enforcement activities.

Research and Development Expense

Research and development expense for the three months ended June 30, 2013 decreased $44,109, or 5.9%, to $709,862 as compared to $753,971 for the three months ended June 30, 2012. Research and development costs related to the CAMRA segment decreased $21,812 to $285,104 for the three months ended June 30, 2013 compared to $306,916 for the three months ended June 30, 2012. Research and development expense related to the EIM segment decreased $22,297 to $424,758 for the three months ended June 30, 2013 compared to $447,055 for the three months ended June 30, 2012. Research and development costs that were capitalized during the three months ended June 30, 2013 and June 30, 2012 amounted to $264,145 and $131,092, respectively. Research and development costs allocated to cost of goods sold during the three months ended June 30, 2013 and June 30, 2012 amounted to $115,651 and $222,206, respectively.

Depreciation and Amortization

Depreciation and amortization for the three months ended June 30, 2013 increased $22,850 to $474,186 from $451,336 in the three months ended June 30, 2012.

Amortization expense of developed software, which relates to cost of sales, was presented as depreciation and amortization expense. Amortization expense of developed software amounted to $196,358 and $187,079 for the three months ended June 30, 2013 and 2012, respectively.

Other Income and Expense

The Company realized interest income of $1,224 for the three months ended June 30, 2013 compared to interest income of $3,099 for the three months ended June 30, 2012. The reduction in interest income was primarily associated with a decrease in the amount of invested cash.

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Taxes

The tax expense for the three months ended June 30, 2013 increased $74,892, or 132.4%, to $131,465 as compared to $56,573 for the three months ended June 30, 2012. The tax expense for the three months ended June 30, 2013 and June 30, 2012 was due to the pre-tax income in the United Kingdom of $513,549 and $818,935, respectively. The increase in the effective tax rate in 2013 was caused by a benefit realized in 2012 due to a decrease in the United Kingdom’s statutory tax rate from 28% to 24%.

The Company records a valuation allowance against its net deferred tax asset to the extent management believes that it is more likely than not that the asset will not be realized. As of June 30, 2013, the Company’s valuation allowance related to the net deferred tax assets in the United States.

Net Income / (Loss)

The Company realized a net loss for the three months ended June 30, 2013 of $351,316 compared to net income of $270,023 for the three months ended June 30, 2012. The change to a net loss was primarily associated with the reduction of revenue of $571,838 along with an increase in professional fees of approximately $284,000 related to patent enforcement activities and the evaluation of the Proposal for the three months ended June 30, 2013 when compared to the three months ended June 30, 2012.

Liquidity and Capital Resources

Historically, the Company’s principal needs for funds have been for operating activities (including costs of products and services, patent enforcement activities, selling, general and administrative expenses, research and development, and working capital needs) and capital expenditures, including software development. Cash flows from operations and existing cash and cash equivalents have been adequate to meet the Company’s business objectives. Cash and cash equivalents decreased $1,421,267 to $924,123 as of June 30, 2013 compared to $2,345,390 as of December 31, 2012. The decrease in cash and cash equivalents, during the six months ended June 30, 2013 was predominately related to cash flows used in operations of $654,310 along with cash spent on property, equipment, and software of $652,104. The effect of foreign currency exchange rates on cash and cash equivalents was a loss of $115,063.

Cash is generated from (or utilized in) the income/(loss) from operations for each segment (see Note 11 to the Consolidated Financial Statements (unaudited) of Part I, Item 1 of this Form 10-Q). The EIM and CAMRA segments represented income / (loss) from operations for the six months ended June 30, 2013 of $981,443 and $(547,051), respectively and for the three months ended June 30, 2013 of $472,029 and $(107,359), respectively. The Corporate Allocation expense was $(993,257) for the six months ended June 30, 2013 and $(585,745) for the three months ended June 30, 2013. The United States location generated a loss from operations for the three and six months ended June 30, 2013 of $(733,400) and $(1,491,458), respectively, which was primarily associated with losses generated in the CAMRA segment and the Corporate Allocations expense. The United Kingdom location generated income from operations for the same periods of $512,325 and $932,593, respectively.

On May 31, 2013, the Company entered into a financing arrangement agreement with a vendor for $166,600 (the “Payment Plan”) for supporting software. The Company will make twelve quarterly payments of $15,341 beginning on September 1, 2013. The interest rate implicit on the Payment Plan is 6.3%.

The Company anticipates that its cash needs will be met during the next twelve months primarily through cash from operations of the Company’s EIM segment and if necessary from the cash balance at June 30, 2013. As of June 30, 2013, the Company did not and as of the date of this Form 10-Q does not have an operating line credit facility in place.

The Company believes that the primary sources of liquidity over the next twelve months will be cash on hand and cash from operations. The Company is also seeking new credit facility and other financing arrangements. If the Company is unable to generate adequate cash from operations, enter into a new credit facility or other financing arrangements, or raise funds through the sale of debt to support operations, the Company may seek additional funds from Fairford. There can be no assurance the Company will be successful in such efforts.

Off-Balance Sheet Arrangements

The Company has no material off-balance sheet arrangements.

Critical Accounting Policies and Estimates

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenue recognition, bad debts, depreciation and amortization, investments, income taxes, capitalized software, goodwill, restructuring costs, accrued compensation, contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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The Company believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the consolidated financial statements. For the description of other critical accounting policies used by the Company, see Item 8. “Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Income Taxes. The Company is required to estimate its income taxes. This process involves estimating the Company’s actual current tax obligations together with assessing differences resulting from different treatment of items for tax and accounting purposes which result in deferred income tax assets and liabilities.

The Company accounts for income taxes using the liability method. Under the liability method, a deferred tax asset or liability is determined based on the difference between the financial statement and tax bases of assets and liabilities, as measured by the enacted tax rates assumed to be in effect when these differences are expected to reverse.

The Company’s deferred tax assets are assessed for each reporting period as to whether it is more likely than not that they will be recovered from future taxable income, including assumptions regarding on-going tax planning strategies. To the extent the Company believes that recovery is uncertain, the Company has established a valuation allowance for assets not expected to be recovered. Changes to the valuation allowance are included as an expense or benefit within the tax provision in the statement of operations. As of June 30, 2013, the Company’s valuation allowance related only to net deferred tax assets in the United States. As a result, the Company’s tax expense relates to the United Kingdom operations and the Company does not anticipate recording significant tax charges or benefits related to operating gains or losses for the Company’s United States operations. In addition, at June 30, 2013, the Company considered its cumulative earnings related to non-U.S. subsidiaries to be indefinitely reinvested.

The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of the state of Indiana and foreign income tax in the United Kingdom. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company did not have any amounts accrued for interest and penalties at June 30, 2013.

The Company’s tax filings are subject periodically to regulatory review and audit.

Research and Development and Software Development Costs. Research and development costs are charged to operations as incurred. Software Development Costs are considered for capitalization when technological feasibility is established. The Company bases its determination of when technological feasibility is established based on the development team’s determination that the Company has completed all planning, designing, coding and testing activities that are necessary to establish that the product can be produced to meet its design specifications including, functions, features, and technical performance requirements.

Goodwill and Intangible Assets. The Company considers the goodwill and related intangible assets related to CTI Billing Solutions Limited to be the premium the Company paid for CTI Billing Solutions Limited. For accounting purposes, these assets are maintained at the corporate level and the Company considers the functional currency with respect to these assets as the United States dollar.

Goodwill is tested for impairment on an annual basis and between annual tests in certain circumstances, and written down when impaired. No impairment was identified in 2012. Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally 3-15 years. Intangible assets consist of patents, purchased technology, trademarks and trade names, and customer lists.

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The Company has allocated goodwill and a significant component of its intangible assets to CTI Billing Solutions Limited, as that entity is considered a separate reporting unit. The Company performed its last annual impairment analysis on goodwill as of October 1, 2012, to coincide with the calendar date set in past years for this analysis. The Company’s analysis considered the projected cash flows of the reporting unit and gave consideration to appropriate factors in determining a discount rate to be applied to these cash flows. The results of this analysis indicated that there was no impairment as of the date of our annual impairment determination and that further impairment analysis was not required.

The Company recognizes that the market for our stock can be below our book value which the Company attributes to a number of factors including very limited trading in the Company’s Class A common stock, a significant portion of the Company’s Class A common stock (approximately 67%) is beneficially owned by a majority stockholder, an overall “flight to quality” by investors in which many “penny stocks” such as CTI’s have been significantly downgraded in terms of pricing and an overall lack of public awareness of its operations. While the Company cannot quantify the impacts of these factors in terms of how they impact the difference between book value and our stock’s “market cap,” the Company does not believe that the market in its Class A common stock is sufficiently sophisticated to make a proper determination of the value of the Company’s Class A common stock.

Because of the Company’s continued relatively low “market cap”, the Company reviewed the assumptions utilized in the impairment determination and again found that there existed no impairment. As of August 7, 2013, the Company’s “market cap” was above the Company’s book value. The Company’s operations of the business unit are primarily based on recurring revenues and have not experienced an adverse change in anticipated performance considered in the impairment analysis. The business unit’s operating performance subsequent to the goodwill impairment analysis has exceeded anticipated performance through the most recent period that information is available. The Company believes that the year-end analysis is sufficiently current and no formal analysis has been performed at June 30, 2013.

The Company believes the year-end analysis is sufficiently current and no formal analysis has been performed at June 30, 2013. If the Company assesses market condition changes in our business, it may be required to reflect additional goodwill impairment in the future.

Long-Lived Assets. The Company reviews the recoverability of the carrying value of its long-lived assets on an annual basis. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. When such events occur, the Company compares the carrying amount of the assets to the undiscounted expected future cash flows. If this comparison indicates there is impairment, the amount of the impairment is typically calculated using discounted expected future cash flows.

Revenue Recognition and Accounts Receivable Reserves. The Company records revenue when it is realized, or realizable, and earned. Revenues from software licenses are recognized upon shipment, delivery or customer acceptance, based on the substance of the arrangement or as defined in the sales agreement provided there are no significant remaining vendor obligations to be fulfilled and collectability is reasonably assured. Software sales revenue is generated from licensing software to new customers and from licensing additional users and new applications to existing customers.

The Company’s sales arrangements typically include services in addition to software. Service revenues are generated from support and maintenance, processing, training, consulting, and customization services. For sales arrangements that include bundled software and services, the Company accounts for any undelivered service offering as a separate element of a multiple-element arrangement. Amounts deferred for services are determined based upon vendor-specific objective evidence of the fair value of the elements. Support and maintenance revenues are recognized on a straight-line basis over the term of the agreement. Revenues from processing, training, consulting, and customization are recognized as provided to customers. If the services are essential to the functionality of the software, revenue from the software component is deferred until the essential service is complete.

If an arrangement to deliver software or a software system, either alone or together with other products or services, requires significant production, modification, or customization of software, the service element does not meet the criteria for separate accounting set forth in the guidance related to software revenue recognition. If the criteria for separate accounting are not met, the entire arrangement is accounted for in conformity with guidance related to contract accounting. The Company carefully evaluates the circumstances surrounding the implementations to determine whether the percentage-of-completion method or the completed-contract method should be used. Most implementations relate to the Company’s Telemanagement products and are completed in less than 30 days once the work begins. The Company uses the completed-contract method on contracts that will be completed within 30 days since it produces a result similar to the percentage-of-completion method. On contracts that will take over 30 days to complete, the Company uses the percentage-of-completion method of contract accounting.

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The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company continuously monitors collections and payments from its customers and the allowance for doubtful accounts is based on historical experience and any specific customer collection issues that the Company has identified. If the financial condition of its customers were to deteriorate resulting in an impairment of their ability to make payments, additional allowances may be required. Where an allowance for doubtful accounts has been established with respect to customer receivables, as payments are made on such receivables or if the customer goes out of business with no chance of collection, the allowances will decrease with a corresponding adjustment to accounts receivable as deemed appropriate.

Stock Based Compensation. The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options and restricted stock, based on the fair value of those awards at the date of grant. The Company uses the Black-Scholes-Merton formula to calculate the fair value of the stock options.

The Company recognizes compensation cost net of a forfeiture rate and recognizes the compensation cost for only those awards expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term. The Company estimated the forfeiture rate based on its historical experience and its expectations about future forfeitures.

Included within selling, general and administrative expense for the three months ended June 30, 2013 and June 30, 2012 was $15,528 and $10,080, respectively, of stock-based compensation. Included within selling, general and administrative expense for the six months ended June 30, 2013 and June 30, 2012 was $31,057 and $20,161, respectively, of stock-based compensation. Stock-based compensation expenses are recorded in the Corporate Allocation segment as these amounts are not included in internal measures of segment operating performance.

The Company estimates it will recognize approximately $61,000, $59,000, $31,000 and $0 for the fiscal years ending December 31, 2013, 2014, 2015 and 2016, respectively, of compensation costs for non-vested stock options previously granted to employees.

New Accounting Pronouncements

In January 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-01, Balance Sheet (Topic 210), Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update further clarified the guidance previously issued under ASU No. 2011-11, which required both gross and net presentation of offsetting assets and liabilities. The new requirements were effective retrospectively for fiscal years beginning on or after January 1, 2013, and for interim periods within those fiscal years. As the guidance impacted disclosure requirements only, the Company’s adoption of the guidance on January 1, 2013 did not have an impact on its results of operations, financial position or cash flows.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The guidance was issued in response to ASU No. 2011-05 and required disclosure of the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items of net income, if the amounts reclassified are required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period. For other amounts not required to be reclassified to net income in their entirety in the same reporting period, or when a portion of the amount is reclassified to a balance sheet account instead of directly to income or expense, a cross reference to the related footnote disclosures for additional information should be provided. The new requirements were effective prospectively for fiscal years beginning on or after December 15, 2012, and for interim periods within those fiscal years. As the guidance impacted disclosure requirements only, the Company’s adoption of the guidance on January 1, 2013 did not have an impact on its results of operations, financial position or cash flows.

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In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. This update provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this update is fixed at the reporting date, except for obligations addressed within existing U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The new requirements are effective for fiscal years that begin on or after December 15, 2013, and for interim periods within those fiscal years. Retrospective presentation for all comparative periods presented is required. The Company expects that the adoption of this guidance will not have a material impact on its results of operations, financial position or cash flows.

In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-05, Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This guidance clarifies the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The new requirements are effective prospectively for fiscal years beginning on or after December 15, 2013, and for interim periods within those fiscal years. The Company expects that the adoption of this guidance will not have a material impact on its results of operations, financial position or cash flows.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not Applicable.

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Item 4. Controls and Procedures.

The Company, under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on this evaluation, the principal executive officer and principal financial officer concluded that as of June 30, 2013, the Company’s disclosure controls and procedures were effective in reaching a reasonable level of assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

The Company’s principal executive officer and principal financial officer also conducted an evaluation of internal control over financial reporting (“Internal Control”) to determine whether any changes in Internal Control occurred during the quarter covered by this report that have materially affected or which are reasonably likely to materially affect Internal Control. Based on that evaluation, there has been no such change during the quarter covered by this Form 10-Q.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Company conducts periodic evaluations to enhance, where necessary, its procedures and controls.

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PART II—OTHER INFORMATION

Item 1 – Legal Proceedings.

The Company is from time to time subject to claims and administrative proceedings that are filed in the ordinary course of business and are unrelated to Patent Enforcement.

Qwest Corporation

The Company previously disclosed that on May 11, 2004, an action was brought against the Company in the United States District Court for the Western District of Washington by Qwest Corporation seeking a declaratory judgment of non-infringement and invalidity of the Company’s Patent No. 5,287,270. An amended complaint was filed on July 13, 2004 adding Qwest Communications Corporation to that action. The Company filed a motion with the United States District Court for the Western District of Washington seeking to dismiss that action or, in the alternative, to transfer it to the United States District Court for the Southern District of Indiana.

On November 12, 2004, the United States District Court for the Western District of Washington granted the Company’s motion to the extent of transferring the action to the United States District Court for the Southern District of Indiana. The Company asserted counterclaims alleging patent infringement and the United States District Court for the Southern District of Indiana then consolidated the transferred action with the pending patent infringement lawsuit previously disclosed under “BellSouth Corporation et al.”

On January 9, 2008, the United States District Court for the Southern District of Indiana issued its claim construction for U.S. Patent No. 5,287,270. On January 18, 2008, the Qwest entities filed a motion for stay and a summary judgment motion of invalidity based on the construction of one of the claim terms. The motions were fully briefed on an expedited basis and on February 26, 2008, the court denied the motions. Fact discovery closed on December 23, 2008. Expert discovery was completed on April 1, 2009. On April 15, 2009, the parties filed various summary judgment motions related to patent infringement and invalidity and immunity from suit concerning the Networx government contracts. On September 22, 2009, the Court granted the Qwest entities’ motion for summary judgment of immunity from suit concerning the Networx government contracts, thereby requiring the Company to sue the Government in the Court of Federal Claims. On October 29, 2009, the Court ruled on the parties’ patent invalidity and noninfringement summary judgment motions. The Court held that the Company’s U.S. Patent No. 5,287,270 was not invalid due to certain prior art but not infringed by the Qwest entities. In November 2009, the Company filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit (Federal Circuit). The Qwest entities subsequently cross appealed. Briefing before the Federal Circuit was completed, and, on January 20, 2011, the Federal Circuit reversed the district court’s decision. On February 22, 2011, the Qwest entities filed a Petition for a Rehearing en banc. The Federal Circuit denied the petition on April 25, 2011, and remanded the case to the district court. The district court subsequently allowed the parties to file new motions for summary judgment directed to infringement issues not presented to the Federal Circuit. The parties filed cross-motions for summary judgment on September 16, 2011, and completed the briefing process on November 21, 2011.

The district court subsequently allowed the parties to file new motions for summary judgment directed to infringement issues not presented to the Federal Circuit. The parties filed cross-motions for summary judgment on September 16, 2011, and completed the briefing process on November 21, 2011. The district court issued its order ruling on the cross-motions on October 15, 2012, granting Qwest’s motion for summary judgment of non-infringement. On October 30, 2012, the district court entered an order awarding Qwest litigation costs in the amount of approximately $250,000. Centillion filed a timely notice of appeal on November 13, 2012, and an amended notice of appeal on November 30, 2012. It also was ordered to post a supesedeas bond guaranteeing the payment of costs. The briefing process is ongoing and we anticipate that the Federal Circuit will issue its opinion in late 2013 or early 2014. As set forth in the appellate brief, filed on February 27, 2013, the Company and legal counsel believe that there are reasonable and persuasive grounds for the appellate court to overturn the district court’s order granting Qwest’s motion for summary judgment. The Company and the Company’s legal counsel believe it is more likely than not that the appellate court will overturn the district court’s order granting Qwest’s motion for summary judgment, which would vitiate the award of costs.

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Item 1A – Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 which could materially affect the Company’s business, financial condition or future results. The risk factors in the Company’s Annual Report on Form 10-K have not materially changed. The risks in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3 – Defaults Upon Senior Securities.

None.

Item 4 – Mine Safety Disclosure

Not applicable.

Item 5 – Other Information.

None.

Item 6 – Exhibits.

Exhibit 11.1	Statement re computation of per share earnings, incorporated by reference to Note 6 to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q
Exhibit 31.1-	Chief Executive Officer Certification pursuant to Securities Exchange Act Rule 13a-14(a) / 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2-	Chief Financial Officer Certification pursuant to Securities Exchange Act Rule 13a-14(a) / 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1-	Section 1350 Certification of the Chief Executive Officer
Exhibit 32.2-	Section 1350 Certification of the Chief Financial Officer
Exhibit 101-	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012, (ii) Consolidated Statements of Operations for each of the six and three months ended June 30, 2013 and 2012, (iii) Consolidated Statements of Cash Flows for each of the six months ended June 30, 2013 and 2012, and (iv) Notes to Consolidated Financial Statements.*

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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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.

CTI Group (Holdings) Inc.
/s/ John Birbeck
John Birbeck	Date: August 14, 2013
Chief Executive Officer
(Principal Executive Officer)
/s/ Manfred Hanuschek
Manfred Hanuschek	Date: August 14, 2013
Chief Financial Officer
(Principal Financial Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, John Birbeck, certify that:

1. I have reviewed this Form 10-Q of CTI Group (Holdings) Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and;

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2013

/s/ John Birbeck

John Birbeck

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Manfred Hanuschek, certify that:

1. I have reviewed this Form 10-Q of CTI Group (Holdings) Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and;

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2013

/s/ Manfred Hanuschek

Manfred Hanuschek

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of CTI Group (Holdings) Inc. (the “Company”) does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2013 (the “Report”) that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2013	/s/ John Birbeck
	John Birbeck
	Chief Executive Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of CTI Group (Holdings) Inc. (the “Company”) does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2013 (the “Report”) that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2013	/s/ Manfred Hanuschek
	Manfred Hanuschek
	Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.

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Related Party Transactions

6 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 12 –Related Party Transactions

On March 7, 2013, a proposal (the “Proposal”) was made by Fairford, Michael Reinarts who is the Chairman of the Company’s Board of Directors and John Birbeck who is the Company’s Chief Executive Officer, to purchase all of the outstanding shares of stock of the Company for a cash purchase price of $0.29 per share. On March 8, 2013, the Company’s Board of Directors formed a Special Committee to, among other things, evaluate and determine the Company’s response to the Proposal.

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Consolidated Statements of Comprehensive Income (Loss) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenues:
Software sales, service fee and license fee revenue	$ 3,883,976	$ 4,455,814	$ 7,769,302	$ 8,823,651
Cost and Expenses:
Cost of products and services, excluding depreciation and amortization	1,009,640	1,147,378	2,051,967	2,302,289
Selling, general and administration	1,911,363	1,779,632	3,779,187	3,620,634
Research and development	709,862	753,971	1,518,841	1,346,539
Depreciation and amortization	474,186	451,336	978,172	896,886
Total costs and expenses	4,105,051	4,132,317	8,328,167	8,166,348
Income / (loss) from operations	(221,075)	323,497	(558,865)	657,303
Other (income) / expense
Interest income	(1,224)	(3,099)	(2,370)	(6,023)
Total other (income) / expense	(1,224)	(3,099)	(2,370)	(6,023)
Income / (loss) before income taxes	(219,851)	326,596	(556,495)	663,326
Tax expense	131,465	56,573	347,212	279,773
Net income / (loss)	(351,316)	270,023	(903,707)	383,553
Other comprehensive income / (loss)
Foreign currency translation adjustment	1,604	56,209	110,515	(32,602)
Comprehensive income / (loss)	$ (349,712)	$ 326,232	$ (793,192)	$ 350,951
Basic and diluted net income / (loss) per common share	$ (0.01)	$ 0.01	$ (0.03)	$ 0.01
Basic weighted average common shares outstanding	29,038,966	29,038,021	29,038,496	29,038,021
Diluted weighted average common shares outstanding	29,038,966	30,054,248	29,038,496	29,878,396

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New Accounting Pronouncements

6 Months Ended

Jun. 30, 2013

Accounting Changes And Error Corrections [Abstract]

New Accounting Pronouncements

NOTE 5: New Accounting Pronouncements

In January 2013, FASB issued Accounting Standards Update (“ASU”) No. 2013-01, Balance Sheet (Topic 210), Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update further clarified the guidance previously issued under ASU No. 2011-11, which required both gross and net presentation of offsetting assets and liabilities. The new requirements were effective retrospectively for fiscal years beginning on or after January 1, 2013, and for interim periods within those fiscal years. As the guidance impacted disclosure requirements only, the Company’s adoption of the guidance on January 1, 2013 did not have an impact on its results of operations, financial position or cash flows.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The guidance was issued in response to ASU No. 2011-05 and required disclosure of the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items of net income, if the amounts reclassified are required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period. For other amounts not required to be reclassified to net income in their entirety in the same reporting period, or when a portion of the amount is reclassified to a balance sheet account instead of directly to income or expense, a cross reference to the related footnote disclosures for additional information should be provided. The new requirements were effective prospectively for fiscal years beginning on or after December 15, 2012, and for interim periods within those fiscal years. As the guidance impacted disclosure requirements only, the Company’s adoption of the guidance on January 1, 2013 did not have an impact on its results of operations, financial position or cash flows.

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. This update provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this update is fixed at the reporting date, except for obligations addressed within existing U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The new requirements are effective for fiscal years that begin on or after December 15, 2013, and for interim periods within those fiscal years. Retrospective presentation for all comparative periods presented is required. The Company expects that the adoption of this guidance will not have a material impact on its results of operations, financial position or cash flows.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This guidance clarifies the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The new requirements are effective prospectively for fiscal years beginning on or after December 15, 2013, and for interim periods within those fiscal years. The Company expects that the adoption of this guidance will not have a material impact on its results of operations, financial position or cash flows.

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Basic and Diluted Net Income Per Common Share - Calculation of Basic and Diluted Earnings (Loss) Per Share (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Net income / (loss)	$ (351,316)	$ 270,023	$ (903,707)	$ 383,553
Weighted average shares of common stock outstanding used to compute basic earnings per share	29,038,966	29,038,021	29,038,496	29,038,021
Additional common shares to be issued assuming exercise of stock options and stock warrants		1,016,227		840,375
Weighted average shares of common and common equivalent stock outstanding used to compute diluted earnings per share	29,038,966	30,054,248	29,038,496	29,878,396
Basic:
Net income / (loss) per share	$ (0.01)	$ 0.01	$ (0.03)	$ 0.01
Weighted average common shares outstanding	29,038,966	29,038,021	29,038,496	29,038,021
Diluted:
Net income / (loss) per share	$ (0.01)	$ 0.01	$ (0.03)	$ 0.01
Weighted average common and common equivalent shares outstanding	29,038,966	30,054,248	29,038,496	29,878,396

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New Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Changes And Error Corrections [Abstract]

Disclosures about Offsetting Assets and Liabilities

In January 2013, FASB issued Accounting Standards Update (“ASU”) No. 2013-01, Balance Sheet (Topic 210), Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update further clarified the guidance previously issued under ASU No. 2011-11, which required both gross and net presentation of offsetting assets and liabilities. The new requirements were effective retrospectively for fiscal years beginning on or after January 1, 2013, and for interim periods within those fiscal years. As the guidance impacted disclosure requirements only, the Company’s adoption of the guidance on January 1, 2013 did not have an impact on its results of operations, financial position or cash flows.

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The guidance was issued in response to ASU No. 2011-05 and required disclosure of the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items of net income, if the amounts reclassified are required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period. For other amounts not required to be reclassified to net income in their entirety in the same reporting period, or when a portion of the amount is reclassified to a balance sheet account instead of directly to income or expense, a cross reference to the related footnote disclosures for additional information should be provided. The new requirements were effective prospectively for fiscal years beginning on or after December 15, 2012, and for interim periods within those fiscal years. As the guidance impacted disclosure requirements only, the Company’s adoption of the guidance on January 1, 2013 did not have an impact on its results of operations, financial position or cash flows.

Obligations Resulting from Joint and Several Liability Arrangements

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. This update provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this update is fixed at the reporting date, except for obligations addressed within existing U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The new requirements are effective for fiscal years that begin on or after December 15, 2013, and for interim periods within those fiscal years. Retrospective presentation for all comparative periods presented is required. The Company expects that the adoption of this guidance will not have a material impact on its results of operations, financial position or cash flows.

Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This guidance clarifies the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The new requirements are effective prospectively for fiscal years beginning on or after December 15, 2013, and for interim periods within those fiscal years. The Company expects that the adoption of this guidance will not have a material impact on its results of operations, financial position or cash flows.

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Stock Based Compensation - Summary of Options Exercisable (Detail) (USD $)	6 Months Ended
	Jun. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Option Shares	4,780,451
Exercise Price Range Per Share, Lower range limit	$ 0.08
Exercise Price Range Per Share, Upper range limit	$ 0.40
Weighted Average Exercise Price	$ 0.27
Aggregate Intrinsic Value	$ 214,843
Weighted Remaining Contractual Term	4 years 15 days

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Stock Based Compensation - Information with Respect to Options (Detail) (USD $)	6 Months Ended
	Jun. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Options Shares, Outstanding, Beginning balance	5,691,350
Options Shares, Granted
Options Shares, Exercised	(1,000)
Options Shares, Expired	(71,500)
Options Shares, Outstanding, Ending balance	5,618,850
Exercise Price Range Per Share, Lower range limit, Outstanding, Beginning balance	$ 0.08
Exercise Price Range Per Share, Lower range limit, Granted
Exercise Price Range Per Share, Lower range limit, Exercised
Exercise Price Range Per Share, Lower range limit, Expired	$ 0.08
Exercise Price Range Per Share, Lower range limit, Outstanding, Ending balance	$ 0.08
Exercise Price Range Per Share, Upper range limit, Outstanding, Beginning balance	$ 0.40
Exercise Price Range Per Share, Upper range limit, Granted
Exercise Price Range Per Share, Upper range limit, Exercised	$ 0.21
Exercise Price Range Per Share, Upper range limit, Expired	$ 0.225
Exercise Price Range Per Share, Upper range limit, Outstanding, Ending balance	$ 0.40
Weighted Average Exercise Price, Outstanding, Beginning balance	$ 0.25
Weighted Average Exercise Price, Granted
Weighted Average Exercise Price, Exercised	$ 0.21
Weighted Average Exercise Price, Expired	$ 0.12
Weighted Average Exercise Price, Outstanding, Ending balance	$ 0.26

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Segment Information - Net Revenues by Geographic Location (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Segment Reporting Information [Line Items]
Revenues	$ 3,883,976	$ 4,455,814	$ 7,769,302	$ 8,823,651
Gross profit (Revenues less cost of products, excluding depreciation and amortization)	2,874,336	3,308,436	5,717,335	6,521,362
Depreciation and amortization	474,186	451,336	978,172	896,886
Income (loss) from operations	(221,075)	323,497	(558,865)	657,303
Long-lived assets	6,520,356	6,916,273	6,520,356	6,916,273
United States [Member]
Segment Reporting Information [Line Items]
Revenues	965,022	827,690	1,757,179	1,820,439
Gross profit (Revenues less cost of products, excluding depreciation and amortization)	653,907	484,540	1,175,609	1,204,715
Depreciation and amortization	117,656	111,385	261,530	216,064
Income (loss) from operations	(733,400)	(492,095)	(1,491,458)	(858,494)
Long-lived assets	5,567,276	5,864,901	5,567,276	5,864,901
United Kingdom [Member]
Segment Reporting Information [Line Items]
Revenues	2,918,954	3,628,124	6,012,123	7,003,212
Gross profit (Revenues less cost of products, excluding depreciation and amortization)	2,220,429	2,823,896	4,541,726	5,316,647
Depreciation and amortization	356,530	339,951	716,642	680,822
Income (loss) from operations	512,325	815,592	932,593	1,515,797
Long-lived assets	$ 953,080	$ 1,051,372	$ 953,080	$ 1,051,372

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Tax Disclosure [Abstract]
Unrecognized tax benefit	$ 125,938	$ 104,441	$ 125,938	$ 104,441
Amounts accrued for interest and penalties	0		0
Income tax expenses	$ 131,465	$ 56,573	$ 347,212	$ 279,773

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Stock Based Compensation - Additional Information (Detail)	3 Months Ended		6 Months Ended		12 Months Ended				1 Months Ended			6 Months Ended				6 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Dec. 31, 2002	Dec. 31, 2012	Jun. 30, 2013 Plan and Stock Incentive Plan Options [Member]	Jun. 30, 2013 Outside Plan Stock Options [Member]	Dec. 31, 2009 Fairford Holdings Limited [Member] USD ($)	Jun. 30, 2013 Fairford Holdings Limited [Member]	Dec. 31, 2009 Fairford Holdings Limited [Member] SEK	Jun. 30, 2013 Common Class A [Member] USD ($)	Jun. 30, 2013 Common Class A [Member] Plan and Stock Incentive Plan Options [Member]	Jun. 30, 2013 Common Class A [Member] Outside Plan Stock Options [Member]	Jun. 30, 2013 Common Class A [Member] Original Warrant [Member]	Jun. 30, 2013 Common Class A [Member] Fairford Scandinavia [Member]	Jun. 30, 2013 Minimum [Member]	Jun. 30, 2013 Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise period of stock options granted under the Plan																	1 year	5 years
Additional shares granted					2,000,000
Maximum number of share granted under Stock Incentive Plan												1,500,000
Share reserved for award granted												6,000,000
Share available for grant	1,886,400		1,886,400
Minimum period after which no stock option granted under the Stock Incentive Plan			later than ten years
Options outstanding to purchase common stock	5,618,850		5,618,850			5,691,350	5,368,850	250,000				5,618,850
Options exercisable to purchase common stock	4,780,451		4,780,451										4,530,451	250,000
Future compensation costs related to non-vested options			$ 119,794
Future costs recognized weighted average			2 years 3 months
Consideration for Securing Issuance			2,600,000
Number of shares under warrant												419,495
Exercise price of warrants															0.34
Additional warrant purchase												620,675
Exercise price of additional warrant												$ 0.22
Securities sold									355,099
Price of securities sold									$ 0.39000		2.80362
Percentage of Company's outstanding Class A common stock beneficially owned by Fairford										63.70%
Number of warrants to purchase common stock																1,040,170
Portion of stock-based compensation included in selling, general and administrative expense	$ 15,528	$ 10,080	$ 31,057	$ 20,161

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Business and Basis of Presentation

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Business and Basis of Presentation

NOTE 1: Business and Basis of Presentation

The Company designs, develops, markets and supports billing and data management software and services. The Company operates in two business segments: Electronic Invoice Management (“EIM”) and Call Accounting Management and Recording (“CAMRA”). The majority of the Company’s business is in Europe and North America.

The Company was originally incorporated in Pennsylvania in 1968 and reincorporated in the State of Delaware in 1988, pursuant to a merger of CTI into a wholly owned subsidiary formed as a Delaware corporation. In November 1995, the Company changed its name to CTI Group (Holdings) Inc.

EIM designs, develops and provides electronic invoice presentment and analysis software that enables internet-based customer self-care for wireline, wireless and convergent providers of telecommunications services. EIM software and services are used primarily by telecommunications services providers to enhance their customer relationships while reducing the providers operational expenses related to paper-based invoice delivery and customer support relating to billing inquiries. CAMRA designs, develops and provides software and services used by enterprise, governmental, institutional end users and managed and hosted customers of service providers to manage their telecommunications service and equipment usage and to analyze voice, video, and data usage, record and monitor communications and perform administrative and back office functions such as cost allocation or client bill back. These applications are commonly available in the market as enterprise-grade products. Customers typically purchase the CAMRA products when upgrading or acquiring a new enterprise communications platform.

The accompanying consolidated financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature.

Certain information in footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), has been condensed or omitted pursuant to the rules and regulations of the SEC, although the Company believes the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2012 and the notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC.

The Company follows accounting standards set by the Financial Accounting Standards Board (“FASB”). The FASB establishes GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants, which the Company is required to follow.

Amortization expense of developed software, which relates to cost of sales, was presented as depreciation and amortization expense. Amortization expense of developed software amounted to $455,856 and $373,957 for the six months ended June 30, 2013 and 2012, respectively. Amortization expense of developed software amounted to $196,358 and $187,079 for the three months ended June 30, 2013 and 2012, respectively.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

NOTE 3: Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, note payable, and other accruals approximate their fair values because of their nature and expected duration.

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Basic and Diluted Net Income Per Common Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Basic and Diluted Net Income Per Common Share

NOTE 6: Basic and Diluted Net Income Per Common Share

Basic earnings per share amounts are computed by dividing reported earnings available to common stockholders by the weighted average shares outstanding for the period. Diluted earnings per share amounts are computed by dividing reported earnings available to common stockholders by weighted average common shares outstanding for the period giving effect to securities considered to be potentially dilutive common shares, such as stock options.

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2013			2012		2013			2012
Net income / (loss)	$	(351,316	)	$	270,023	$	(903,707	)	$	383,553
Weighted average shares of common stock outstanding used to compute basic earnings per share		29,038,966			29,038,021		29,038,496			29,038,021
Additional common shares to be issued assuming exercise of stock options and stock warrants		—			1,016,227		—			840,375
Weighted average shares of common and common equivalent stock outstanding used to compute diluted earnings per share		29,038,966			30,054,248		29,038,496			29,878,396
Basic:
Net income / (loss) per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01
Weighted average common shares outstanding		29,038,966			29,038,021		29,038,496			29,038,021
Diluted:
Net income / (loss) per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01
Weighted average common and common equivalent shares outstanding		29,038,966			30,054,248		29,038,496			29,878,396

For the three and six months ended June 30, 2013, outstanding stock options were excluded from weighted average shares of common and common equivalent shares outstanding due to their anti-dilutive effect as a result of the Company’s net loss.

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Debt Obligations and Liquidity

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Debt Obligations and Liquidity

NOTE 4: Debt Obligations and Liquidity

The Company believes that the primary sources of liquidity over the next twelve months will be cash on hand and cash from operations. The Company is also seeking new credit facility and other financing arrangements. If the Company is unable to generate adequate cash from operations, enter into a new credit facility or other financing arrangements, or raise funds through the sale of debt to support operations, the Company may seek additional funds from Fairford Holdings Limited (“Fairford”). There can be no assurance the Company will be successful in such efforts.

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Stock Based Compensation - Summary of Non-Vested Options (Detail)	6 Months Ended
	Jun. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Outstanding, January 1, 2013	1,050,048
Granted
Expired	(15,000)
Vested	(196,649)
Outstanding, June 30, 2013	838,399

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Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2013 Segment
Segment Reporting [Abstract]
Number of reportable business segments	2

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts for trade accounts receivable	$ 33,601	$ 97,704
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	47,166,666	47,166,666
Common stock, shares issued	29,179,271	29,178,271
Treasury stock, shares	140,250	140,250

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Contingencies

6 Months Ended

Jun. 30, 2013

Commitments And Contingencies Disclosure [Abstract]

Contingencies

NOTE 9: Contingencies

The Company is subject to claims and lawsuits arising primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of any such pending claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

The Company filed a lawsuit for patent infringement under 35 U.S.C. §271 et seq. against Qwest Corporation in the United States District Court for the Southern District of Indiana (“District Court”) on January 12, 2004. The lawsuit seeks treble damages, attorneys’ fees and an injunction for infringement of U.S. Patent No. 5,287,270. On October 30, 2012, the District Court entered an order awarding Qwest Corporation litigation costs in the amount of approximately $250,000. The Company filed a timely notice of appeal on November 13, 2012, and an amended notice of appeal on November 30, 2012. It also was ordered to post a supesedeas bond guaranteeing the payment of costs. The briefing process is ongoing and we anticipate that the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) will issue its opinion in late 2013 or early 2014. As set forth in the appellate brief, filed on February 27, 2013, the Company and legal counsel believe that there are reasonable and persuasive grounds for the appellate court to overturn the District Court’s order granting Qwest Corporation’s motion for summary judgment. The Company and the Company’s legal counsel believe it is more likely than not that the appellate court will overturn the district court’s order granting Qwest Corporation’s motion for summary judgment, which would vitiate the award of costs. As a result, the Company has concluded that it is not probable that it has incurred a loss relating to this matter. The Company believes a range of possible loss, which cannot be reasonably estimated at this time, is between zero and the amount of the judgment. Because the Company believes that this potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter. In the event that the Company’s assumptions used to evaluate this matter as neither probable nor estimable change in future periods, it will be required to record a liability for an adverse outcome.

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Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income / (loss)	$ (903,707)	$ 383,553
Adjustments to reconcile net income / (loss) to net cash (used in) / provided by operating activities:
Depreciation and amortization	978,172	896,886
Provision for doubtful accounts	(16,126)	12,171
Deferred income taxes	(107,634)	(82,510)
Recognition of rent incentive benefit	44,617	(47,380)
Stock option grant expense	31,057	20,161
Loss on disposal of property and equipment		244
Changes in operating assets and liabilities:
Trade receivables	34,466	778,492
Prepaid expenses	128,332	180,721
Income taxes	(17,450)	120,511
Other assets	77,329	72,341
Accounts payable	13,712	(74,039)
Accrued expenses	232,389	(78,424)
Accrued wages and other compensation	(66,657)	208,972
Deferred revenue	(1,082,810)	(1,586,869)
Cash (used in) / provided by operating activities	(654,310)	804,830
Cash flows used in investing activities:
Additions to property, equipment, and software	(652,104)	(531,772)
Cash used in investing activities	(652,104)	(531,772)
Cash flows provided by financing activities:
Exercise of stock options	210
Cash provided by financing activities	210
Effect of foreign currency exchange rates on cash and cash equivalents	(115,063)	16,855
(Decrease) / increase in cash and cash equivalents	(1,421,267)	289,913
Cash and cash equivalents, beginning of period	2,345,390	2,945,182
Cash and cash equivalents, end of period	$ 924,123	$ 3,235,095

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Consolidated Balance Sheets (USD $)	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 924,123	$ 2,345,390
Trade accounts receivable, less allowance for doubtful accounts of $33,601 and $97,704, respectively	3,002,643	3,199,128
Prepaid expenses	339,375	456,957
Other current assets	312,047	248,721
Total current assets	4,578,188	6,250,196
Property, equipment, and software, net	2,027,892	2,026,228
Intangible assets, net	1,494,435	1,833,350
Goodwill	2,769,589	2,769,589
Other assets	228,440	228,515
Total assets	11,098,544	13,107,878
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	427,713	430,162
Accrued expenses	1,127,429	919,518
Accrued wages and other compensation	394,617	482,752
Note payable - short term	39,643
Income tax payable	663,316	727,370
Deferred tax liability - short term	215,666	116,482
Deferred revenue	3,165,894	3,886,152
Total current liabilities	6,034,278	6,562,436
Lease incentive - long term	81,314	64,953
Note payable - long term	127,832
Deferred revenue - long term	187,118	811,808
Deferred income tax liability - long term	171,688	410,444
Total liabilities	6,602,230	7,849,641
Commitments and contingencies
Stockholders' equity
Class A common stock, par value $.01 per share; 47,166,666 shares authorized; 29,179,271 issued at June 30, 2013 and 29,178,271 issued at December 31, 2012	291,793	291,783
Additional paid-in capital	26,148,928	26,117,670
Accumulated deficit	(22,246,706)	(21,343,000)
Other comprehensive income - foreign currency translation	494,442	383,927
Treasury stock, 140,250 shares, at cost	(192,143)	(192,143)
Total stockholders' equity	4,496,314	5,258,237
Total liabilities and stockholders' equity	$ 11,098,544	$ 13,107,878

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Stock Based Compensation - Option Valuation Model Assumptions (Detail)	12 Months Ended
	Dec. 31, 2012
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Risk-free interest rate	0.38%
Dividend yield	0.00%
Volatility factor	239.36%
Expected lives	5 years

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Supplemental Schedule of Non-Cash Investing and Financing Activities - Additional Information (Detail) (USD $)	1 Months Ended	6 Months Ended
	May 31, 2013	Jun. 30, 2013	Jun. 30, 2012
Supplemental Cash Flow Elements [Abstract]
Current year tax paid		$ 0	$ 0
Prior period income tax paid		474,949	235,546
Payment plan agreement	166,600
Quarterly payments	Twelve quarterly payments
Amount of payments	$ 15,341
Date of payments	Sep. 01, 2013
Interest rate on payment plan	6.30%

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Related Party Transactions - Additional Information (Detail) (USD $)	Mar. 07, 2013
Related Party Transactions [Abstract]
Cash purchase price payable under proposal made by Related party to purchase common stock	$ 0.29

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Indemnification to Customers

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Indemnification to Customers

NOTE 8: Indemnification to Customers

The Company’s agreements with customers generally require the Company to indemnify the customer against claims that the Company’s software infringes third party patent, copyright, trademark or other proprietary rights. Such indemnification obligations are generally limited in a variety of industry-standard provisions including our right to replace the infringing product. As of June 30, 2013, the Company did not experience any material losses related to these indemnification obligations and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations, and consequently, the Company has not established any related accruals.

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Contingencies - Additional Information (Detail) (USD $)	1 Months Ended	6 Months Ended
	Oct. 30, 2012	Jun. 30, 2013
Commitments And Contingencies Disclosure [Abstract]
Litigation cost payable to Quest Corporation	$ 250,000
Estimated possible loss		The Company believes a range of possible loss, which cannot be reasonably estimated at this time, is between zero and the amount of the judgment.

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Segment Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Information

NOTE 11: Segment Information

The Company has two reportable segments: EIM and CAMRA. These segments are managed separately because the services provided by each segment require different technology and marketing strategies.

Electronic Invoice Management: EIM designs, develops and provides electronic invoice presentment and analysis software that enables internet-based customer self-care for wireline, wireless and convergent providers of telecommunications services. EIM software and services are used primarily by telecommunications services providers to enhance their customer relationships while reducing the providers operational expenses related to paper-based invoice delivery and customer support relating to billing inquiries.

Call Accounting Management and Recording: CAMRA designs, develops and provides software and services used by enterprise, governmental, institutional end users and managed and hosted customers of service providers to manage their telecommunications service and equipment usage and to analyze voice, video, and data usage, record and monitor communications and perform administrative and back office functions such as cost allocation or client bill back. These applications are commonly available in the market as enterprise-grade products. Customers typically purchase the CAMRA products when upgrading or acquiring a new enterprise communications platform.

Reconciling items for operating income (loss) in the table below represent corporate expenses, legal costs for patent enforcement and depreciation all of which are in the United States.

The accounting policies for segment reporting are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Summarized financial information concerning the Company’s reportable segments for the six and three months ended June 30, 2013 and 2012 is shown in the following tables.

	For Six Months Ended June 30, 2013
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	5,014,097	$	2,755,205		$	—		$	7,769,302
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		4,045,373		1,671,962			—			5,717,335
Depreciation and amortization		715,068		260,854			2,250			978,172
Income (loss) from operations		981,443		(547,051	)		(993,257	)		(558,865	)
Long-lived assets		5,419,620		1,088,975			11,761			6,520,356
	For Six Months Ended June 30, 2012
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	6,065,525	$	2,758,126		$	—		$	8,823,651
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		4,934,138		1,587,224			—			6,521,362
Depreciation and amortization		683,110		211,674			2,102			896,886
Income (loss) from operations		1,784,372		(569,858	)		(557,211	)		657,303
Long-lived assets		6,082,323		823,584			10,366			6,916,273
	For Three Months Ended June 30, 2013
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	2,406,560	$	1,477,416		$	—		$	3,883,976
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		1,940,851		933,485			—			2,874,336
Depreciation and amortization		355,466		117,569			1,151			474,186
Income (loss) from operations		472,029		(107,359	)		(585,745	)		(221,075	)
Long-lived assets		5,419,620		1,088,975			11,761			6,520,356
	For Three Months Ended June 30, 2012
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	3,116,300	$	1,339,514		$	—		$	4,455,814
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		2,584,784		723,652			—			3,308,436
Depreciation and amortization		339,277		110,971			1,088			451,336
Income (loss) from operations		892,203		(317,178	)		(251,528	)		323,497
Long-lived assets		6,082,323		823,584			10,366			6,916,273

The following table presents net revenues by geographic location.

	For Six Months Ended June 30, 2013
	United States			United Kingdom		Consolidated
Revenues	$	1,757,179		$	6,012,123	$	7,769,302
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		1,175,609			4,541,726		5,717,335
Depreciation and amortization		261,530			716,642		978,172
Income (loss) from operations		(1,491,458	)		932,593		(558,865	)
Long-lived assets		5,567,276			953,080		6,520,356
	For Six Months Ended June 30, 2012
	United States			United Kingdom		Consolidated
Revenues	$	1,820,439		$	7,003,212	$	8,823,651
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		1,204,715			5,316,647		6,521,362
Depreciation and amortization		216,064			680,822		896,886
Income (loss) from operations		(858,494	)		1,515,797		657,303
Long-lived assets		5,864,901			1,051,372		6,916,273
	For Three Months Ended June 30, 2013
	United States			United Kingdom		Consolidated
Revenues	$	965,022		$	2,918,954	$	3,883,976
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		653,907			2,220,429		2,874,336
Depreciation and amortization		117,656			356,530		474,186
Income (loss) from operations		(733,400	)		512,325		(221,075	)
Long-lived assets		5,567,276			953,080		6,520,356
	For Three Months Ended June 30, 2012
	United States			United Kingdom		Consolidated
Revenues	$	827,690		$	3,628,124	$	4,455,814
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		484,540			2,823,896		3,308,436
Depreciation and amortization		111,385			339,951		451,336
Income (loss) from operations		(492,095	)		815,592		323,497
Long-lived assets		5,864,901			1,051,372		6,916,273

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Stock Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation

Note 7: Stock Based Compensation

The Company’s Amended and Restated Stock Option and Restricted Stock Plan (the “Plan”) provides for the issuance of incentive and nonqualified stock options to purchase, and restricted stock grants of, shares of the Company’s Class A common stock. Individuals eligible for participation in the Plan included designated officers and other employees (including employees who also serve as directors), non-employee directors, independent contractors and consultants who perform services for the Company. The terms of each grant under the Plan were determined by the board of directors, or a committee of the board administering the Plan, in accordance with the terms of the Plan. Outstanding stock options become immediately exercisable upon a change of control of the Company as in accordance with the terms of the Plan. Stock options granted under the Plan typically become exercisable over a one to five year period. Generally, the options have various vesting periods, which include immediate and term vesting periods.

In 2002, the Company’s stockholders authorized an additional 2,000,000 shares available for grant under the Plan. In addition, the Company filed a registration statement on Form S-8 with the SEC. Such registration statement also covered certain options granted prior to the merger in 2001, which were not granted under the Plan (“Outside Plan Stock Options”).

On December 8, 2005, the Company’s stockholders ratified the CTI Group (Holdings) Inc. Stock Incentive Plan (the “Stock Incentive Plan”) at the Company’s 2005 Annual Meeting of Stockholders. In addition, the Company filed a registration statement on Form S-8 with the SEC. The Stock Incentive Plan replaced the Plan. No new grants will be granted under the Plan. Grants that were made under the Plan prior to the stockholders’ approval of the Stock Incentive Plan will continue to be administered under the Plan.

The Stock Incentive Plan is administered by the Compensation Committee of the board of directors. Under the Stock Incentive Plan, the Compensation Committee is authorized to grant awards to non-employee directors, executive officers and other employees of, and consultants and advisors to, the Company or any of its subsidiaries and to determine the number and types of such awards and the terms, conditions, vesting and other limitations applicable to each such award. In addition, the Compensation Committee has the power to interpret the Stock Incentive Plan and to adopt such rules and regulations as it considers necessary or appropriate for purposes of administering the Stock Incentive Plan.

The following types of awards or any combination of awards may be granted under the Stock Incentive Plan: (i) incentive stock options, (ii) non-qualified stock options, (iii) stock grants, and (iv) performance awards.

The maximum number of shares of Class A common stock with respect to which awards may be granted to any individual participant under the Stock Incentive Plan during each of the Company’s fiscal years will not exceed 1,500,000 shares of Class A common stock, subject to certain adjustments described in the Stock Incentive Plan.

The aggregate number of shares of Class A common stock that are reserved for awards, including shares of Class A common stock underlying stock options, to be granted under the Stock Incentive Plan is 6,000,000 shares, subject to adjustments for stock splits, recapitalizations and other specified events. As of June 30, 2013, there were 1,886,400 awards available for grant under the Stock Incentive Plan. If any outstanding award is cancelled, forfeited, or surrendered to the Company, shares of Class A common stock allocable to such award may again be available for awards under the Stock Incentive Plan. Incentive stock options may be granted only to participants who are executive officers and other employees of the Company or any of its subsidiaries on the day of the grant, and non-qualified stock options may be granted to any participant in the Stock Incentive Plan. No stock option granted under the Stock Incentive Plan will be exercisable later than ten years after the date it is granted.

At June 30, 2013, there were options to purchase 5,618,850 shares of Class A common stock outstanding consisting of 5,368,850 Plan and Stock Incentive Plan options and 250,000 Outside Plan Stock Options. There were exercisable options to purchase an aggregate of 4,530,451 shares of Class A common stock under the Plan and Stock Incentive Plan and options to purchase 250,000 shares of Class A common stock that were Outside Plan Stock Options as of June 30, 2013.

Information with respect to options was as follows:

	Options Shares			Exercise Price Range Per Share		Weighted Average Exercise Price
Outstanding, January 1, 2013		5,691,350		$	0.08—$ 0.40	$	0.25
Granted		—			—		—
Exercised		(1,000	)	$	0.21	$	0.21
Expired		(71,500	)	$	0.08—$ 0.225	$	0.12
Outstanding, June 30, 2013		5,618,850		$	0.08—$ 0.40	$	0.26

The future compensation costs related to non-vested options at June 30, 2013 is $119,794. The future costs will be recognized over the weighted average period of approximately 2.25 years.

The following table summarizes options exercisable at June 30, 2013:

	Option Shares		Exercise Price Range Per Share		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Remaining Contractual Term
June 30, 2013		4,780,451	$	0.08—$ 0.40	$	0.27	$	214,843		4.04 years

The following table summarizes non-vested options:

	Option Shares
January 1, 2013		1,050,048
Granted		—
Expired		(15,000	)
Vested		(196,649	)
June 30, 2013		838,399

The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes-Merton formula) that uses the assumptions noted in the following table:

	2012
Risk-free interest rate		0.38	%
Dividend yield		0.00	%
Volatility factor		239.36	%
Expected lives		5 years

The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes-Merton formula). Expected volatilities are based on implied volatilities from historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from general practices used by other companies in the software industry and estimates by the Company of the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

On February 16, 2007, the Company and Fairford Holdings Scandinavia AB (“Fairford Scandinavia”), a wholly-owned subsidiary of Fairford, entered into the Securities Purchase Agreement (the “Agreement”), dated February 16, 2007. Pursuant to the Agreement, on February 16, 2007, the Company issued to Fairford Scandinavia a Class A common stock Purchase Warrant (the “Original Warrant”) to purchase shares of Class A common stock of the Company in consideration for securing the issuance of a $2.6 million letter of credit (the “Letter of Credit”) from SEB Bank to National City Bank. Due to National City Bank’s receipt of the Letter of Credit, the Company was able to obtain the loan at a favorable cash-backed interest rate. Effective April 14, 2008, the Company entered into a new Securities Purchase Agreement with Fairford Scandinavia and issued an additional warrant to Fairford Scandinavia to purchase shares of Class A common stock based on the interest rate savings (the “Additional Warrant”).

Pursuant to the Original Warrant, Fairford Scandinavia is entitled to purchase 419,495 shares of Class A common stock at the exercise price of $0.34 per share, subject to adjustments as described in the Original Warrant, at any time prior to the 10th anniversary of the date of issuance. Pursuant to the Additional Warrant, Fairford Scandinavia is entitled to purchase 620,675 shares of Class A common stock at the exercise price of $0.22 per share, subject to adjustments as described in the Additional Warrant, at any time prior to the 10th anniversary of the date of issuance. On December 31, 2009, Fairford Scandinavia sold all of its owned Class A shares, or 355,099 shares to Fairford for SEK 2.80362 ($0.39) per share. As of June 30, 2013, Fairford beneficially owned 63.7% of the Company’s outstanding Class A common stock and Fairford Scandinavia owned warrants to purchase 1,040,170 shares of the Company’s Class A common stock. Mr. Osseiran, the majority holder of the Company’s Class A common stock and a director of the Company, is a director of Fairford, the President of Fairford Scandinavia and a grantor and sole beneficiary of a revocable trust which is the sole stockholder of Fairford. Mr. Dahl, a director of the Company, is a director of Fairford and the Chairman of Fairford Scandinavia. The Original Warrant and Additional Warrant vested immediately upon grant.

Included within selling, general and administrative expense for the three months ended June 30, 2013 and June 30, 2012 was $15,528 and $10,080, respectively, of stock-based compensation. Included within selling, general and administrative expense for the six months ended June 30, 2013 and June 30, 2012 was $31,057 and $20,161, respectively, of stock-based compensation. Stock-based compensation expenses are recorded in the Corporate Allocation segment as these amounts are not included in internal measures of segment operating performance.

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Supplemental Schedule of Non-Cash Investing and Financing Activities

6 Months Ended

Jun. 30, 2013

Supplemental Cash Flow Elements [Abstract]

Supplemental Schedule of Non-Cash Investing and Financing Activities

NOTE 2: Supplemental Schedule of Non-Cash Investing and Financing Activities

The Company paid $0 for current year income tax estimates for the six months ended June 30, 2013 and 2012. The Company paid income taxes of approximately $474,949 and $235,546 during the six months ended June 30, 2013 and 2012, respectively, for prior year taxes.

On May 31, 2013, the Company entered into a financing arrangement agreement with a vendor for $166,600 (the “Payment Plan”) for supporting software. The Company will make twelve quarterly payments of $15,341 beginning on September 1, 2013. The interest rate implicit on the Payment Plan is 6.3%.

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Segment Information - Financial Information Summarizing Reportable Segments (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Segment Reporting Information [Line Items]
Revenues	$ 3,883,976	$ 4,455,814	$ 7,769,302	$ 8,823,651
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization	2,874,336	3,308,436	5,717,335	6,521,362
Depreciation and amortization	474,186	451,336	978,172	896,886
Income (loss) from operations	(221,075)	323,497	(558,865)	657,303
Long-lived assets	6,520,356	6,916,273	6,520,356	6,916,273
Electronic Invoice Management [Member]
Segment Reporting Information [Line Items]
Revenues	2,406,560	3,116,300	5,014,097	6,065,525
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization	1,940,851	2,584,784	4,045,373	4,934,138
Depreciation and amortization	355,466	339,277	715,068	683,110
Income (loss) from operations	472,029	892,203	981,443	1,784,372
Long-lived assets	5,419,620	6,082,323	5,419,620	6,082,323
Call Accounting Management and Recording [Member]
Segment Reporting Information [Line Items]
Revenues	1,477,416	1,339,514	2,755,205	2,758,126
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization	933,485	723,652	1,671,962	1,587,224
Depreciation and amortization	117,569	110,971	260,854	211,674
Income (loss) from operations	(107,359)	(317,178)	(547,051)	(569,858)
Long-lived assets	1,088,975	823,584	1,088,975	823,584
Corporate Allocation [Member]
Segment Reporting Information [Line Items]
Depreciation and amortization	1,151	1,088	2,250	2,102
Income (loss) from operations	(585,745)	(251,528)	(993,257)	(557,211)
Long-lived assets	$ 11,761	$ 10,366	$ 11,761	$ 10,366

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Basic and Diluted Net Income Per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Earnings (Loss) Per Share

Diluted earnings per share amounts are computed by dividing reported earnings available to common stockholders by weighted average common shares outstanding for the period giving effect to securities considered to be potentially dilutive common shares, such as stock options.

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2013			2012		2013			2012
Net income / (loss)	$	(351,316	)	$	270,023	$	(903,707	)	$	383,553
Weighted average shares of common stock outstanding used to compute basic earnings per share		29,038,966			29,038,021		29,038,496			29,038,021
Additional common shares to be issued assuming exercise of stock options and stock warrants		—			1,016,227		—			840,375
Weighted average shares of common and common equivalent stock outstanding used to compute diluted earnings per share		29,038,966			30,054,248		29,038,496			29,878,396
Basic:
Net income / (loss) per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01
Weighted average common shares outstanding		29,038,966			29,038,021		29,038,496			29,038,021
Diluted:
Net income / (loss) per share	$	(0.01	)	$	0.01	$	(0.03	)	$	0.01
Weighted average common and common equivalent shares outstanding		29,038,966			30,054,248		29,038,496			29,878,396

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 10: Income Taxes

The Company records a valuation allowance against its net deferred tax asset to the extent management believes, it is more likely than not, that the asset will not be realized. As of June 30, 2013, the Company’s valuation allowance related only to net deferred tax assets in the United States. In addition, at June 30, 2013, the Company considered its cumulative earnings related to non-U.S. subsidiaries to be indefinitely reinvested.

The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. As of June 30, 2013 and June 30, 2012, the Company had $125,938 and $104,441 of unrecognized tax benefits, respectively, all of which would favorably affect the Company’s effective tax rate if recognized. The Company and its subsidiaries are subject to U.S. federal and state income taxes as well as foreign income tax in the United Kingdom. The Company does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company had no amounts accrued for interest and penalties as of June 30, 2013.

For the six months ended June 30, 2013 and June 30, 2012, the Company had $347,212 and $279,773, respectively, of income tax expense and for the three months ended June 30, 2013 and June 30, 2012, the Company had $131,465 and $56,573 of income tax expense, respectively. The income tax benefit and expense were primarily related to the United Kingdom operations. The difference between the statutory rate and the actual rate is primarily due to the valuation allowance related to the net deferred tax assets in the United States.

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Business and Basis of Presentation - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Segment	Jun. 30, 2012
Organization Consolidation And Presentation Of Financial Statements [Abstract]
No. of business segment			2
Amortization expense of developed software	$ 196,358	$ 187,079	$ 455,856	$ 373,957

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Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Information with Respect to Options

Information with respect to options was as follows:

	Options Shares			Exercise Price Range Per Share		Weighted Average Exercise Price
Outstanding, January 1, 2013		5,691,350		$	0.08—$ 0.40	$	0.25
Granted		—			—		—
Exercised		(1,000	)	$	0.21	$	0.21
Expired		(71,500	)	$	0.08—$ 0.225	$	0.12
Outstanding, June 30, 2013		5,618,850		$	0.08—$ 0.40	$	0.26

Summary of Options Exercisable

The following table summarizes options exercisable at June 30, 2013:

	Option Shares		Exercise Price Range Per Share		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Remaining Contractual Term
June 30, 2013		4,780,451	$	0.08—$ 0.40	$	0.27	$	214,843		4.04 years

Summary of Non-Vested Options

The following table summarizes non-vested options:

	Option Shares
January 1, 2013		1,050,048
Granted		—
Expired		(15,000	)
Vested		(196,649	)
June 30, 2013		838,399

Option Valuation Model Assumptions

The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes-Merton formula) that uses the assumptions noted in the following table:

	2012
Risk-free interest rate		0.38	%
Dividend yield		0.00	%
Volatility factor		239.36	%
Expected lives		5 years

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 01, 2013
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Entity Registrant Name	CTI GROUP HOLDINGS INC
Entity Central Index Key	0000355627
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		29,179,271

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Financial Information Summarizing Reportable Segments

Summarized financial information concerning the Company’s reportable segments for the six and three months ended June 30, 2013 and 2012 is shown in the following tables.

	For Six Months Ended June 30, 2013
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	5,014,097	$	2,755,205		$	—		$	7,769,302
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		4,045,373		1,671,962			—			5,717,335
Depreciation and amortization		715,068		260,854			2,250			978,172
Income (loss) from operations		981,443		(547,051	)		(993,257	)		(558,865	)
Long-lived assets		5,419,620		1,088,975			11,761			6,520,356
	For Six Months Ended June 30, 2012
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	6,065,525	$	2,758,126		$	—		$	8,823,651
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		4,934,138		1,587,224			—			6,521,362
Depreciation and amortization		683,110		211,674			2,102			896,886
Income (loss) from operations		1,784,372		(569,858	)		(557,211	)		657,303
Long-lived assets		6,082,323		823,584			10,366			6,916,273
	For Three Months Ended June 30, 2013
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	2,406,560	$	1,477,416		$	—		$	3,883,976
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		1,940,851		933,485			—			2,874,336
Depreciation and amortization		355,466		117,569			1,151			474,186
Income (loss) from operations		472,029		(107,359	)		(585,745	)		(221,075	)
Long-lived assets		5,419,620		1,088,975			11,761			6,520,356
	For Three Months Ended June 30, 2012
	Electronic Invoice Management		Call Accounting Management and Recording			Corporate Allocation			Consolidated
Revenues	$	3,116,300	$	1,339,514		$	—		$	4,455,814
Gross profit (loss) Revenues less cost of products, excluding depreciation and amortization		2,584,784		723,652			—			3,308,436
Depreciation and amortization		339,277		110,971			1,088			451,336
Income (loss) from operations		892,203		(317,178	)		(251,528	)		323,497
Long-lived assets		6,082,323		823,584			10,366			6,916,273

Net Revenues by Geographic Location

The following table presents net revenues by geographic location.

	For Six Months Ended June 30, 2013
	United States			United Kingdom		Consolidated
Revenues	$	1,757,179		$	6,012,123	$	7,769,302
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		1,175,609			4,541,726		5,717,335
Depreciation and amortization		261,530			716,642		978,172
Income (loss) from operations		(1,491,458	)		932,593		(558,865	)
Long-lived assets		5,567,276			953,080		6,520,356
	For Six Months Ended June 30, 2012
	United States			United Kingdom		Consolidated
Revenues	$	1,820,439		$	7,003,212	$	8,823,651
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		1,204,715			5,316,647		6,521,362
Depreciation and amortization		216,064			680,822		896,886
Income (loss) from operations		(858,494	)		1,515,797		657,303
Long-lived assets		5,864,901			1,051,372		6,916,273
	For Three Months Ended June 30, 2013
	United States			United Kingdom		Consolidated
Revenues	$	965,022		$	2,918,954	$	3,883,976
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		653,907			2,220,429		2,874,336
Depreciation and amortization		117,656			356,530		474,186
Income (loss) from operations		(733,400	)		512,325		(221,075	)
Long-lived assets		5,567,276			953,080		6,520,356
	For Three Months Ended June 30, 2012
	United States			United Kingdom		Consolidated
Revenues	$	827,690		$	3,628,124	$	4,455,814
Gross profit (Revenues less cost of products, excluding depreciation and amortization)		484,540			2,823,896		3,308,436
Depreciation and amortization		111,385			339,951		451,336
Income (loss) from operations		(492,095	)		815,592		323,497
Long-lived assets		5,864,901			1,051,372		6,916,273