CTI GROUP HOLDINGS INC - FORM 10-K/A

Attached files

Attached files

CTI GROUP HOLDINGS INC Reports

Also read

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

file	filename
EX-31.1 - EX-31.1 - CTI GROUP HOLDINGS INC	d341591dex311.htm
EX-31.2 - EX-31.2 - CTI GROUP HOLDINGS INC	d341591dex312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

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

For the fiscal year ended December 31, 2011

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

For the transition period from to

Commission File No. 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 St., Suite 240 Indianapolis, IN		46204
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code (317) 262-4666

Securities registered pursuant to Section 12(b) of the Act:


Title of each Class		Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share		n/a

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No

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. x Yes ¨ 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). x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

The aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates based on the closing price of the Class A Common Stock on the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2011) was $469,163.

As of April 22, 2012, there were outstanding 29,178,271 shares (including treasury shares of 140,250) of the registrant’s Class A Common Stock, $0.01 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE

None.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 is to amend the Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2011, as filed with the SEC on March 30, 2012, to include the information required by Items 10, 11, 12, 13 and 14 of Part III of Form 10-K, which CTI Group (Holdings) Inc., referred to as “CTI”, “the Company”, “we”, “us” or “our” in this document, intended to incorporate by reference from CTI’s definitive proxy statement in connection with the 2012 Annual Stockholders’ Meeting. This amendment is not intended to update any other information presented in the annual report as originally filed.

TABLE OF CONTENTS


	Page
PART III

Item 10. Directors, Executive Officers and Corporate Governance		4
Item 11. Executive Compensation		7
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		16
Item 13. Certain Relationships and Related Transactions, and Director Independence		18
Item 14. Principal Accounting Fees and Services		19

PART IV

Item 15. Exhibits, Financial Statement Schedules		20
SIGNATURES		21
EXHIBIT INDEX		22

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

Directors

Our Certificate of Incorporation, as amended (the “Certificate of Incorporation”), divides our board of directors into three classes: Class I, Class II and Class III having staggered terms of office. Directors of each class of our board of directors serve for a term of three years and until their successors have been elected and qualified, except in the event of their earlier resignation or removal.

The following table sets forth information about our directors all of whom continue to serve in such capacity:

Name

Position Held in CTI

Class

Director
Since

Term Expires*

Harold D. Garrison

Director

2001

2009

Salah N. Osseiran

Director

2002

2009

Thomas W. Grein

Director

2001

2011

Bengt Dahl

Director

2005

2011

Michael J. Reinarts

Chairman of the Board of Directors

2009

2010

John Birbeck

President and Chief Executive Officer

III

2001

2010

*	The directors continue to serve as directors since successor directors have not been elected and qualified.

The following table sets forth information regarding the business experience of our current members of the board of directors during the past five years, unless indicated otherwise.


Name and Age ⁽¹⁾		Business Experience During Past Five Years

Michael J. Reinarts (57) Chairman		Mr. Reinarts became our director in June 2009 and was appointed Chairman on June 9, 2011. He served as an advisor to our board of directors from October 2008 until June 2009. Mr. Reinarts began his career at Arthur Andersen & Co in 1976. Since 1999, he has served as Executive Vice President for the Pohlad Companies. Pohlad Companies include large sports franchises, financial companies, commercial real estate companies, entertainment and media development and distribution. Mr. Reinarts is actively involved in acquisition due diligence, financial and management restructuring and credit facilitation. Mr. Reinarts experience with mergers and acquisitions and his industry experience, both from an investment banking perspective and an executive perspective, provides CTI with insight on acquisition and corporate strategies


Name and Age ⁽¹⁾		Business Experience During Past Five Years

John Birbeck (57) President and Chief Executive Officer		Mr. Birbeck served as our Chairman from July 5, 2005 through June 9, 2011. Mr. Birbeck was appointed as our President and Chief Executive Officer on September 13, 2005. Mr. Birbeck, a citizen of the United Kingdom, has served as our director since June, 2001. In 1997, Mr. Birbeck founded Network Achemy Ltd. From 1997 until 2001, Mr. Birbeck served as director of Network Achemy Ltd. From 2000 until 2001, Mr. Birbeck served as director of Avaya Communications. Since 2001, Mr. Birbeck has been working as a consultant advising new technology start-up companies in the United Kingdom. Mr. Birbeck also was a founder of Seer Ltd. in 2000 and serves as its director. Mr. Birbeck’s management experience at CTI and director experience in the technology services industry provides unique insight about the challenges CTI faces due to a rapidly changing competitive marketplace.

Bengt Dahl (63)		Mr. Dahl, a citizen of Sweden, has served as our director since July 2005. He served as an advisor to our board of directors from 2003 until July 2005. Mr. Dahl is also a director of Fairford Holdings Limited, a company which owned approximately 64% of the Company’s Class A common stock as of April 23, 2012. See “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Mr. Dahl also serves as a director of a number of private and public European companies, which are affiliated with Mr. Osseiran, our director and majority stockholder, including Byggelit AB, Safegare Int´l AB, Axel Christiernsson Int´l AB and Skultuna Flexible AB. Mr. Dahl’s international management and investment banking experience provides valuable insight on international capital markets and management oversight. His experience with mergers and acquisitions provides CTI with insight on acquisition and corporate strategies.

Harold D. Garrison (63)		Mr. Garrison became our director in February, 2001 in connection with the merger between Centillion Data Systems, LLC (“Centillion”) and CTI Group (Holdings) Inc. (the “Centillion Merger”). Mr. Garrison served as Chairman of Centillion from 1988 until the Centillion Merger in February 2001. He also has served as Chairman and Chief Executive Officer of HDG Mansur Group, an international real estate company, since 1982 and served as Chairman of Xila Communications, Inc. from 1983 to 1999. Mr. Garrison has served as the Managing Member of Sunset, LLC. Mr. Garrison’s experience in international capital markets and operations brings global management oversight perspective to CTI.

Thomas W. Grein (60)		Mr. Grein became our director in February 2001 in connection with the Centillion Merger. Mr. Grein served as director of Centillion from October, 1999 until the Centillion Merger. Mr. Grein has been Senior Vice-President and Treasurer of Eli Lilly and Company, a pharmaceutical company, since January, 2000. He served as Executive Director of Investor Relations and Assistant Treasurer from 1994 to 1998 and Executive Director of Finance from 1998 to 2000 in Eli Lilly and Company. Mr. Grein is a member of the board of directors of the Indiana Chamber of Commerce, Walther Cancer Institute, LYNX Capital Corporation, Park Tudor School Board of Trustees, Fuqua School, Health Sector Advisory Board at Duke University and Indianapolis Symphony Investment Committee. Mr. Grein’s financial leadership and international experience provides valuable insight on corporate governance, financial reporting and capital market matters.


Name and Age ⁽¹⁾		Business Experience During Past Five Years

Salah N. Osseiran (56)		Mr. Osseiran, a Lebanese citizen, became our director in February 2001, in connection with the Centillion Merger, and served until his resignation in September 2001. He was a director of Centillion from 1987 until the Centillion Merger. Since September 2002, Mr. Osseiran has served as our director. Mr. Osseiran has been the President and Chief Executive Officer of Business Projects Company (“BPC”), a Lebanese company located in Beirut, since 1995. BPC owns a bottled water company operating in Lebanon and interests in other business activities in the Middle East. Mr. Osseiran has also been since 1995 a director of the holding companies: Salsel Corporation Limited, Hawazen (BVI) Corp. and Fairford Holdings Limited. Mr. Osseiran brings global perspective from his leadership positions and experience in international enterprises and transactions.

⁽¹⁾	As of April 23, 2012.

Non-Director Executive Officer

The following table sets forth information regarding the business experience of our non-director executive officer:


Name and Age ⁽¹⁾		Business Experience During Past Five Years

Manfred Hanuschek (51)		Mr. Hanuschek has been our Chief Financial Officer since June 2000 and our Secretary since February 2002. From April 1999 to July 1999, Mr. Hanuschek was employed by us as Chief Financial Officer. Mr. Hanuschek was Senior Vice-President and Chief Financial Officer of IGI, Inc., from July 1999 to June 2000. Mr. Hanuschek was Chief Financial Officer with ICC Technologies, Inc. from 1994 to 1998.

(1)	As of April 23, 2012.

Audit Committee

We have a separately-designated standing Audit Committee. The audit committee consists of two directors, Messrs. Grein and Reinarts. Mr. Grein serves as our audit committee’s chairman, and the board has determined that Messrs. Grein and Reinarts are audit committee financial experts.

Code of Ethics

The Company’s board of directors adopted the Corporate Code of Ethics that applies to the Company’s directors, officers and employees, including the Company’s Chief Executive Officer (i.e., the principal executive officer), Chief Financial Officer (i.e., the principal financial officer), Principal Accounting Officer, Controller and any other person performing similar functions. A copy of the Code of Ethics is available on the Company’s website at www.ctigroup.com.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (referred to as the “Exchange Act”), requires CTI’s directors, officers and persons who beneficially own more than 10% of CTI’s Class A common stock (collectively referred to as “insiders”) to file reports of ownership and changes in ownership of CTI’s Class A common stock with the SEC. The SEC regulations require insiders to furnish CTI with copies of all Section 16(a) forms filed. Based solely on CTI’s review of the copies of such forms received by CTI, CTI believes that the insiders complied with all applicable Section 16(a) filing requirements for fiscal year 2011, except John Birbeck filed one late Form 4 to report a share purchase transaction .

Item 11.

Executive Compensation

Executive Officers

Summary Compensation Table

The following table sets forth information regarding compensation awarded to, earned by or paid to CTI’s chief executive officer and the other executive officer (collectively referred to as “named executive officers”) whose total compensation for the fiscal year ended December 31, 2011 exceeded $100,000 for all services rendered in all capacities to CTI and our subsidiaries.


Name and Principal Position	Year		Salary ($)		Option Awards ($) (1)		Non-equity Incentive Plan Compensation ($) (2)		All Other Compensation ($) (3)		Total ($)
John Birbeck, Chairman, President and Chief Executive Officer		2011	$	330,776	$	8,560	$	—	$	39,669	$	379,005
		2010	$	321,142	$	—	$	—	$	38,826	$	359,968

Manfred Hanuschek, Chief Financial Officer and Secretary		2011	$	234,816	$	6,125	$	—	$	45,971	$	286,912
Manfred Hanuschek, Chief Financial Officer and Secretary		2010	$	227,977	$	—	$	—	$	42,944	$	270,921

(1)

Represents grant date fair value of options granted in each year in accordance with the Financial Accounting Standards Board’s Accounting Standards Topic 718. See Part II, Item 8—Notes to the Consolidated Financial Statements for the year ended December 31, 2011, Note 8, “Stock Based Compensation” for a description of valuation assumptions used in the calculation of grant date fair value. In fiscal 2011, Mr. Birbeck was granted options to purchase 81,972 shares of CTI’s Class A common stock at an exercise price of $0.10 per share. In fiscal 2011, Mr. Hanuschek was granted options to purchase 58,660 shares of CTI’s Class A common stock at an exercise price of $0.10 per share.

(2)	There were no performance bonuses awarded in fiscal years 2010 and 2011.

(3)

In fiscal 2011, CTI paid the following amounts as 401(k) Plan employer contributions, insurance premiums, annual automobile allowance, club membership dues, temporary housing and personal travel, to Messrs. Birbeck and Hanuschek: Mr. Birbeck—$0, $6,752, $6,947, $0, $15,956, and $10,015, respectively; Mr. Hanuschek—$12,250, $21,402, $6,882, $5,438, $0, and $0, respectively.

Employment Agreements

John Birbeck

On February 1, 2006, we entered into an employment agreement with Mr. Birbeck, effective as of September 13, 2005, pursuant to which Mr. Birbeck serves as our President and Chief Executive Officer and in such other positions as reasonably may be assigned by the Board or the Executive Committee.

The employment agreement with Mr. Birbeck commenced on September 13, 2005 for a term of one year. The agreement renews automatically for additional one-year terms unless either party gives the other party written notice of non-renewal at least 90 days prior to any anniversary date. Mr. Birbeck’s salary will be reviewed at least annually by the Board to determine if an increase is appropriate in its sole discretion. His salary may not be decreased under the terms of the employment agreement, and Mr. Birbeck agreed to waive any fee otherwise payable to him for his services as Chairman or as a Director of the Board.

No later than January 31 of each calendar year that Mr. Birbeck is employed by us pursuant to the employment agreement, Mr. Birbeck and the Board must confer and agree on performance targets and goals to be achieved for that calendar year and the amount of a bonus to be paid to Mr. Birbeck depending on the extent of attainment of such targets and goals. The agreement reached by Mr. Birbeck and the Board will be attached as an addendum to the Agreement each calendar year. Since 2006, however, the Board and Mr. Birbeck have historically achieved this result through direct discussions without amending his employment agreement. The parties agree that the amount of bonus payable to Mr. Birbeck for full achievement of all targets and goals in any calendar year will be no less than $250,000 and may exceed that amount if deemed appropriate by the Board in its sole discretion. The Board determined that targets and goals were not achieved and as a result, no bonus was awarded for 2011 and 2010. In the event that Mr. Birbeck’s employment with the Company ends during the course of a calendar year, Mr. Birbeck will be eligible for a pro rata amount of the any bonus he would have received if he had remained employed for the full calendar year.

Mr. Birbeck is entitled to five weeks of paid vacation per year, with no right to carry over vacation to the next year, but unused vacation may be sold back to us. Mr. Birbeck’s employment agreement provides that he will receive a non-accountable automobile allowance of $500 per month, initially, for each full month during the term of the employment agreement. In addition, the employment agreement requires us to reimburse Mr. Birbeck’s life partner for her annual airfare expenses for up to twelve round trips each calendar year from the United States to the United Kingdom and for her health insurance coverage. We must also reimburse Mr. Birbeck for his housing expenses in the United States, not to exceed $1,800 per month without our prior approval, until such time as he obtains permanent housing in the United States. To date, Mr. Birbeck has not obtained permanent housing in the United States. Mr. Birbeck was paid a furnishing and household goods allowance in the amount of $12,000 for his temporary housing. Mr. Birbeck was to be reimbursed up to $80,000 to transport his personal goods from the United Kingdom to the United States once his permanent housing was obtaining which was never utilized.

We were required to grant to Mr. Birbeck an option to purchase 500,000 shares of Class A common stock within 30 days of entering into the agreement, which option immediately vested in full upon grant. We were also required to grant to Mr. Birbeck options to purchase 250,000 shares of Class A common stock on September 13, 2006 and September 13, 2007, which options vested in full on the respective dates of the grants. The exercise price per share for each such option was the fair market value of our Class A common stock on the dates of each of the grants.

Mr. Birbeck is subject to confidentiality restrictions and is not permitted to compete with us during the term of his employment with us and for 90 days thereafter.

Mr. Birbeck may terminate his employment at any time by giving at least 90 days’ advance written notice of his voluntary resignation to the Board. We may terminate Mr. Birbeck’s employment for any reason upon the approval of the Board or the Executive Committee by giving Mr. Birbeck 90 days’ advance written notice. Mr. Birbeck’s employment will be immediately terminated upon his death or disability, as defined in the employment agreement, or upon the mutual agreement of the parties.

If the Board or Executive Committee terminates Mr. Birbeck’s employment, we must pay Mr. Birbeck three months’ salary at Mr. Birbeck’s then current base annual salary and an additional amount of the greater of $62,500 or 25% of the maximum annual bonus. As a condition to receiving such separation pay, Mr. Birbeck must execute a release in a form satisfactory to us.

If Mr. Birbeck’s employment otherwise terminates pursuant to death, disability or a notice of non-renewal sent by either party prior to any anniversary date of the employment agreement, we will pay Mr. Birbeck all accrued and unpaid salary and benefits, as well as all unreimbursed business expenses that may be paid to Mr. Birbeck, through the date of termination of employment.

Manfred Hanuschek

We entered into an employment agreement with Manfred Hanuschek as of May 30, 2000, which was amended as of January 18, 2002. The employment agreement renews for successive periods of one year, subject to termination as described below. The current agreement term automatically renewed on January 18, 2012. Mr. Hanuschek’s base salary is subject to yearly review. In addition to the salary, Mr. Hanuschek may receive cash bonuses, as determined by our president or the Board, in his or its sole discretion. Under the employment agreement, Mr. Hanuschek is entitled to receive an automobile allowance, reimbursement of specified expenses and to participate in any savings, 401(k), pension, group medical and other similar plans.

The employment agreement may be terminated upon notice of termination sent by either party to the agreement at least six months prior to the end of the term. Mr. Hanuschek will be entitled to a severance payment equal to half of his then current annual salary and to continued group medical and dental benefits and an automobile allowance for a six month period following termination of his employment.

Mr. Hanuschek may terminate the employment agreement in the event of a change of control or change of management and, in such an event, would be entitled to a severance payment equal to his then current annual salary, payable over a twelve-month period after the termination date, and group medical and dental benefits during that twelve-month period.

We may terminate Mr. Hanuschek’s employment for cause. Pursuant to the employment agreement, the term “cause” means: materially failing to perform his duties under the agreement, other than the failure due to Mr. Hanuschek’s physical or mental illness; committing an act of dishonesty or breach of trust, or acting in a manner that is inimical or injurious to our business or interests; violating or breaching any of the provisions of the employment agreement, and failing to cure such breach within 30 days after the receipt of written notice identifying the breach; intentionally acting or failing to act, resulting directly in gain to or personal enrichment of Mr. Hanuschek and injury to us; or being indicted for or convicted of a felony or any crime involving larceny, embezzlement or moral turpitude.

Mr. Hanuschek is subject to confidentiality restrictions and is not permitted to compete with us during the term of his employment with us and for 180 days thereafter so long as the Company makes the required severance payment.

Non-Equity Incentive Plan Compensation Awards in 2011

Messrs. Birbeck and Hanuschek were entitled to receive a cash bonus, at the discretion of the Board, if the Company achieved objective financial performance targets based upon the 2011 budget and other accomplishments during fiscal 2011. In considering whether to pay these cash bonuses, and the amount of such payments, our compensation committee had the discretion to award a bonus even if some or all of the objective performance criteria were not met. The compensation committee considered the financial performance of the Company, the significance and nature of the activities of the named executive officer, and the quality of the named executive officer’s performance, during fiscal 2011. Based on the reported 2011 performance of the Company, the compensation committee determined not to award Messrs. Birbeck or Hanuschek a bonus for 2011.

Non-Equity Incentive Plan Compensation Awards in 2010

Messrs. Birbeck and Hanuschek were entitled to receive a cash bonus, at the discretion of the Board, if the Company achieved objective financial performance targets based upon the 2010 budget and other accomplishments during fiscal 2010. In considering whether to pay these cash bonuses, and the amount of such payments, our compensation committee had the discretion to award a bonus even if some or all of the objective performance criteria were not met. The compensation committee considered the financial performance of the Company, the significance and nature of the activities of the named executive officer, and the quality of the named executive officer’s performance, during fiscal 2010. Based on the reported 2010 performance of the Company, the compensation committee determined not to award Messrs. Birbeck or Hanuschek a bonus for 2010.

Terms of Equity Awards

During the fiscal year ended December 31, 2011, Mr. Birbeck was granted an option under the CTI Group (Holdings) Inc. Stock Incentive Plan to purchase 81,972 shares of Class A common stock at an exercise price of $0.10 per share. This option vests in three equal annual installments beginning on the first anniversary of the date of grant. During the fiscal year ended December 31, 2011, Mr. Hanuschek was granted an option under the Stock Incentive Plan to purchase 58,660 shares of Class A common stock, at an exercise price of $0.10 per share. This option vests in three equal annual installments beginning on the first anniversary of the date of grant. All of these options expire 10 years from the date of grant.

No equity awards were made in 2010.

Amended and Restated Stock Option and Restricted Stock Plan

Our stockholders approved the Amended and Restated Stock Option and Restricted Stock Plan at our 2002 Annual Meeting of Stockholders held on May 30, 2002. The option plan provided incentives to our subsidiaries’ designated officers and other employees, members of our Board and independent contractors and consultants who perform services for us. The option plan enabled us to attract and retain personnel and to encourage them to obtain a proprietary interest in us. The option plan has been replaced with the Stock Incentive Plan. No new grants are being made under the option plan. Grants that were made under the option plan prior to date our stockholders approved the stock incentive plan will continue to be administered under the option plan.

The Board or a committee thereof comprised of at least two members administer and interpret the option plan. Each committee member must meet the definition of a “non-employee director” within the meaning of Rule 16b-3(b)(3) of the Exchange Act.

Awards that were eligible to be made under the option plan included:

•

incentive stock options (except that we are no longer permitted to grant incentive stock options under the option plan);

•

nonqualified stock options, including director’s grants, as described below; and

•

restricted stock grants, defined as grants of shares of Class A common stock pursuant to an incentive or long range compensation plan, program or contract approved by the committee.

The option plan provided for special director’s grants of nonqualified stock options to purchase up to 30,000 shares of Class A common stock vesting over a three-year period for each of the non-employee members of the Board who served on the committee. Upon a change of control, a sale or exchange of our assets, or our dissolution, liquidation, merger or consolidation in which we are not the surviving corporation, any vesting restrictions imposed under a director’s grant will immediately lapse.

The maximum number of shares of Class A common stock that was able to be subject to grants awarded to any single individual under the option plan was 4,000,000 shares, except in the case of a director’s grant, which could not exceed 30,000 shares during any three-year period.

If any change is made to the Class A common stock as a result of a merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination of shares, or exchange of shares, or any other change in capital structure without receipt of consideration, and this change does not result in the termination of all outstanding grants, the committee will preserve the value of outstanding grants by adjusting the maximum number and class of shares issuable under the option plan and the number and class of shares, or the exercise price of each outstanding option.

A participant may exercise an option during a period of ten years from the date of the grant, unless a different exercise period was provided for by the committee. However, the exercise period may terminate earlier if we terminate his or her employment relationship with us or if he or she dies or becomes disabled. The aggregate fair market value of Class A common stock, determined as of the date of the grant, with respect to which incentive stock options were exercisable for the first time by the participant during any calendar year under the option plan cannot exceed $100,000.

The board may amend or terminate the option plan at any time. However, amendments that materially increase the benefits accruing to participants under the option plan, increase the aggregate number of shares of Class A common stock that may be issued or transferred under the option plan, modify the requirements as to eligibility for participation in the option plan or modify the provisions for determining the fair market value of a share of Class A common stock require stockholder approval.

In the event of a change of control (as defined in the option plan), a participant may immediately exercise all outstanding stock options, and all restrictions on the transfer of the shares of restricted stock will lapse, provided such shares have not been forfeited. Upon a sale or exchange of all or substantially all of our assets or upon our dissolution, liquidation, merger or consolidation where we are not the surviving corporation, participants will have the right to exercise in full any grants, including director’s grants, not previously exercised, subject to certain conditions.

CTI Group (Holdings) Inc. Stock Incentive Plan

On December 8, 2005, the Company’s stockholders approved the Stock Incentive Plan at the Company’s 2005 Annual Meeting of Stockholders and on May 28, 2008 the Company’s stockholders approved an amendment to the Stock Incentive Plan. The Stock Incentive Plan may be administered by the Compensation Committee of the Board or another committee of the Board appointed from among its members as provided in the Stock Incentive Plan. Presently, however, the Stock Incentive Plan is currently administered by the entire Board. As used throughout this section, the term “Compensation Committee” may also be deemed to refer to the entire Board in its role as administrator of the Stock Incentive Plan.

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. The purpose of the Stock Incentive Plan is to provide incentives to attract, retain, motivate and reward highly competent persons as outside directors, executive officers and other employees, or consultants or advisors to, CTI or any of its subsidiaries by providing them with opportunities to acquire shares of Class A common stock or to receive other awards under the Stock Incentive Plan, as applicable. Furthermore, the Stock Incentive Plan is intended to assist in further aligning the interests of participants in the Stock Incentive Plan with those of its stockholders.

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. 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.

During the year ended December 31, 2011, there were 249,068 options to purchase shares of Class A common stock granted under the Stock Incentive Plan. As of April 23, 2012, options to purchase 5,155,350 shares of Class A common stock had been awarded under the Stock Incentive Plan. Options to purchase 4,489,602 shares of Class A common stock were exercisable as of April 23, 2012.

Awards

The following types of awards or any combination of them 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, subject to certain adjustments.

Stock Options

Stock Options granted under the Stock Incentive Plan may be either Incentive Stock Options (within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)) or Non-Qualified Stock Options that do not qualify as Incentive Stock Options.

The Compensation Committee determines the exercise price at which shares underlying a Stock Option may be purchased, whether an Incentive Stock Option or a Non-Qualified Stock Option. However, the exercise price of a Stock Option may not be less than the fair market value of the shares of common stock on the date the Stock Option is granted. No Stock Option will be exercisable later than ten years after the date it is granted. Stock Options granted under the Stock Incentive Plan are exercisable at such times as specified in the Stock Incentive Plan and the award agreement. A participant in the Stock Incentive Plan must pay the option exercise price in cash.

Incentive Stock Options may be granted only to executive officers and other employees of CTI or any of its subsidiaries. The aggregate market value (determined as of the date of grant) of Class A common stock with respect to which Incentive Stock Options are exercisable for the first time by a participant during any calendar year may not exceed $100,000. Furthermore, Incentive Stock Options may not be granted to any participant who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all outstanding classes of stock of CTI or any of its subsidiaries, unless the exercise price is fixed at not less than 110% of the fair market value of the Class A common stock on the date of grant, and such an Incentive Stock Option cannot be exercised more than five years after the date of grant.

Stock Grants

Stock Grant may be granted to executive officers and other employees of, or consultants or advisors to, CTI or any of its subsidiaries. A Stock Grant may include restrictions on the sale or other disposition of the shares covered by the award, and CTI may have the right to reacquire such shares for no consideration upon termination of the participant’s employment within specified periods. The award agreement will specify whether the participant will have, with respect to the shares of common stock subject to a Stock Grant, all of the rights of a holder of shares of Class A common stock, including the right to receive dividends, if any, and to vote the shares.

Performance Awards

Performance Awards may be granted to executive officers and other employees of CTI or any of its subsidiaries. The Compensation Committee will set performance targets at its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Awards that will be paid out to the participants and may attach to such Performance Awards one or more restrictions. Performance targets may be based upon company-wide, business unit and/or individual performance.

Payment of earned Performance Awards may be made in shares of Class A common stock or in cash and will be made in accordance with the terms and conditions prescribed or authorized by the Compensation Committee. The participant may elect to defer, or the Compensation Committee may require or permit the deferral of, the receipt of Performance Awards upon such terms as the Compensation Committee deems appropriate.

Effect of Change in Control

The Stock Incentive Plan provides for the acceleration of certain benefits in the event of a “Change in Control” of CTI. The meaning of a “Change in Control” is either defined in the participant’s employment agreement or change-in-control agreement, if one exists, or by the Stock Incentive Plan. The Stock Incentive Plan definition includes, among other things, such events as the sale of all assets of CTI, any person becoming the beneficial owner of more than 50% of CTI voting stock, and a merger of CTI where CTI stockholders own less than 51% of the voting stock of the surviving entity.

All unvested awards granted under the Stock Incentive Plan will become fully vested immediately upon the occurrence of the Change in Control and such vested awards will be paid out or settled, as applicable, within 60 days upon the occurrence of the Change in Control, subject to requirements of applicable laws and regulations. The Compensation Committee may determine that upon the occurrence of a Change in Control, each Stock Option outstanding will terminate and the holder will receive, within 60 days upon the occurrence of the Change in Control, an amount equal to the excess of the fair market value of the shares underlying the award immediately prior to the occurrence of such Change in Control over the exercise price per share of such award. This cashout amount is payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or in a combination thereof.

Adjustments to Awards Due to Changes in CTI’s Capital Structure

In the event of any change in the shares of Class A common stock by reason of a merger, consolidation, reorganization, recapitalization, stock split, stock dividend, exchange of shares, or other similar change in the corporate structure or distribution to stockholders, each outstanding Stock Option will be adjusted. The adjustments will make each award exercisable thereafter for the securities, cash and/or other property as would have been received in respect of the Class A common stock subject to such award had the Stock Option been exercised in full immediately prior to the change or distribution. Furthermore, in the event of any such change or distribution, in order to prevent dilution or enlargement of participants’ rights under the Stock Incentive Plan, the Compensation Committee has the authority to make equitable adjustments to, among other things, the number and kind of shares subject to outstanding awards and exercise price of outstanding awards.

Termination of Employment

If a participant’s employment is terminated due to death or disability, then the participant’s unvested Stock Grants and unexercisable Stock Options become vested or exercisable, as applicable, immediately as of the date of the termination of the participant’s employment. All Stock Options that were or became exercisable as of the date of the participant’s death or termination of employment, will remain exercisable until the earlier of (i) the end of the one-year period following the date of the participant’s death or the date of the termination of his or her employment, as the case may be, or (ii) the date the Stock Option would otherwise expire. All unearned or unvested Performance Awards held by the participant on the date of the participant’s death or the date of the termination of his or her employment, as the case may be, will immediately become earned or vested as of such date and will be paid out or settled based on the participant’s performance immediately prior to the date of the participant’s death or the date of the termination of his or her employment on a pro-rated basis with a minimum of at least one year into a performance period.

A participant whose employment is terminated for cause, as defined in the Stock Incentive Plan, forfeits all awards, whether or not vested, exercisable or earned, granted to the participant. A participant whose employment is terminated for any reason, other than for cause, death or disability, including, without limitation, retirement, forfeits all unvested, unexercisable and unearned awards granted to the participant. All exercisable Stock Options held by the participant on the date of the termination of his or her employment for any reason other than for cause, death or disability will remain exercisable until the earlier of (i) the end of the 90-day period following the date of the termination of the participant’s employment, or (ii) the date the Stock Option would otherwise expire. The Stock Incentive Plan’s provisions relating to termination of employment may be modified in the discretion of the Compensation Committee.

Outstanding Equity Awards at Fiscal Year-End 2011

The following table sets forth information concerning unexercised options outstanding as of December 31, 2011 for each named executive officer.


	Option Awards
Name	Number of Securities Underlying Unexercised Options # Exercisable		Number of Securities Underlying Unexercised Options # Unexercisable			Option Exercise Price ($)		Option Expiration Date
John Birbeck⁽¹⁾		18,750		—		$	0.25		9/4/2012
		6,250		—		$	0.21		11/5/2013
		500,000		—		$	0.40		9/29/2015
		250,000		—		$	0.31		10/9/2016
		100,000		—		$	0.34		2/16/2017
		340,782		—		$	0.35		6/12/2017
		250,000		—		$	0.31		10/9/2017
		33,333		16,667	(1)	$	0.09		10/9/2019
		—		81,972	(1)	$	0.10		9/8/2021
Manfred Hanuschek⁽²⁾		50,000		—		$	0.49		2/28/2012
		25,000		—		$	0.25		9/4/2012
		25,000		—		$	0.21		11/5/2013
		100,000		—		$	0.39		10/11/2015
		300,000		—		$	0.34		2/16/2017
		133,333		66,667	(2)	$	0.08		7/10/2019
		—		58,660	(2)	$	0.10		9/8/2021

(1)	Mr. Birbeck’s options vest as follows:

(a)

an option to purchase 18,750 shares of CTI’s Class A common stock granted on September 4, 2002 vested in four equal annual installments beginning on the first anniversary of the grant date.

(b)

an option to purchase 6,250 shares of CTI’s Class A common stock granted on November 5, 2003 vested in four equal annual installments beginning on the first anniversary of the grant date.

(c)

an option to purchase 500,000 shares of CTI’s Class A common stock granted on September 29, 2005 vested immediately upon grant.

(d)

an option to purchase 250,000 shares of CTI’s Class A common stock granted on October 9, 2006 vested immediately upon grant.

(e)

an option to purchase 100,000 shares of CTI’s Class A common stock granted on February 16, 2007 vested in three equal annual installments beginning on the first anniversary of the grant date.

(f)

an option to purchase 340,782 shares of CTI’s Class A common stock granted on June 12, 2007 vested immediately upon grant.

(g)

an option to purchase 250,000 shares of CTI’s Class A common stock granted on October 9, 2007 vested immediately upon grant.

(h)

an option to purchase 50,000 shares of CTI’s Class A common stock granted on October 9, 2009 vests in three equal annual installments beginning on the first anniversary of the grant date.

(i)

an option to purchase 81,972 shares of CTI’s Class A common stock granted on September 8, 2011 vests in three equal annual installments beginning on the first anniversary of the grant date.

(2)	Mr. Hanuschek’s options vest as follows:

(a)

an option to purchase 50,000 shares of CTI’s Class A common stock granted on February 28, 2002 vested in four equal annual installments beginning on the first anniversary of the grant date. These options expired on February 28, 2012.

(b)

an option to purchase 25,000 shares of CTI’s Class A common stock granted on September 4, 2002 vested in four equal annual installments beginning on the first anniversary of the grant date.

(c)

an option to purchase 25,000 shares of CTI’s Class A common stock granted on November 5, 2003 vested in four equal annual installments beginning on the first anniversary of the grant date.

(d)

an option to purchase 100,000 shares of CTI’s Class A common stock granted on October 11, 2005 with 50% vesting immediately upon grant, 25% vesting on the first anniversary of the grant date, and 25% vesting on the second anniversary of the grant date.

(e)

an option to purchase 300,000 shares of CTI’s Class A common stock granted on February 16, 2007 vesting in three equal annual installments beginning on the first anniversary of the grant date.

(f)

an option to purchase 200,000 shares of CTI’s Class A common stock granted on July 10, 2009 vests in three equal annual installments beginning on the first anniversary of the grant date.

(g)

an option to purchase 58,660 shares of CTI’s Class A common stock granted on September 8, 2011 vests in three equal annual installments beginning on the first anniversary of the grant date.

Retirement Plans and Arrangements

We have established a 401(k) plan for our US employees and a defined contribution plan benefit for our UK employees. The employees may participate through salary deductions and contributions. Under the terms of the plans, we may make employer contributions to a participant’s plan account. Such contributions under the plan applicable to the US employees are, for 2011, equal to 100% of the first 5% of each participant’s compensation during the year. All employee contributions are vested immediately. US participants are vested in employer contributions over a three-year period pursuant to a graduated vesting schedule and subject to annual deferral limitations under the Code. UK participants are vested in employer contributions immediately and are not subject to deferral limitations. UK senior management are entitled to employer contributions of the first 10% of each participant’s contributions to a participant’s plan account.

Termination and Change in Control Arrangements

We do not have any contracts, arrangements, agreements or plans providing for payments to a named executive officer at, following or in connection with the resignation, retirement or other termination of a named executive officer, or in connection with a change in control of the Company, other than:

•

as described above in “ – Employment Agreements” with respect to each named executive officer’s employment agreement; and

•

as described above in “ – Amended and Restated Stock Option and Restricted Stock Plan” and as described in “CTI Group (Holdings) Inc. Stock Incentive Plan” with respect to awards that have been granted to each named executive officer under those plans.

Director Compensation

The following table sets forth information concerning the compensation earned by non-employee directors during the fiscal year ended December 31, 2011. Mr. Birbeck, our President, and Chief Executive Officer, does not receive any compensation for his services as our director. The Board appointed Michael Reinarts as Chairman in June 2011.


Name	Fees Earned or Paid in Cash		Total ($)
Bengt Dahl⁽¹⁾	$	8,000	$	8,000
Harold Garrison⁽²⁾	$	4,000	$	4,000
Thomas Grein⁽³⁾	$	4,000	$	4,000
Salah Osseiran⁽⁴⁾	$	8,000	$	8,000
Michael Reinarts⁽⁵⁾	$	24,000	$	24,000

(1)	As of December 31, 2011, Mr. Dahl held options to purchase 225,000 shares of CTI’s Class A common stock.

(2)	As of December 31, 2011, Mr. Garrison held options to purchase 300,000 shares of CTI’s Class A common stock.

(3)	As of December 31, 2011, Mr. Grein held options to purchase 175,000 shares of CTI’s Class A common stock.

(4)	As of December 31, 2011 Mr. Osseiran held options to purchase 175,000 shares of CTI’s Class A common stock.

(5)	As of December 31, 2011 Mr. Reinarts held options to purchase 50,000 shares of CTI’s Class A common stock.

The Board agreed to compensate Mr. Reinarts $2,000 a month upon his appointment as Chairman of the Board in June 2011 for his duties as Chairman. Mr. Reinarts also continues to receive fees for his attendance of board or committee meetings as described below.

In fiscal 2011, fees were paid to directors based on attendance of board or committee (other than audit committee) meetings in person or attendees at audit committee meetings either in person or by means of remote communications (e.g. video conferencing, teleconferencing or internet conferencing) plus reasonable expenses, as follows:

(i)	$2,000 for in person attendance at board and committee meetings;

(iii)

$2,000 for in person or remote attendance at audit committee meetings; and

(iv)	$0 for attendance at stockholders’ meetings.

During the fiscal year ended December 31, 2011, Messrs. Dahl, Garrison, Grein, Osseiran, and Reinarts earned non-employee 2011 director fees for their services on the board of directors and committees of the board of directors as applicable, of $8,000, $4,000, $4,000, $8,000 and $24,000, respectively, plus expenses. Total cash reimbursed out of pocket director expenses amounted in the aggregate to approximately $9,282 in the fiscal year ended December 31, 2011.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information as of April 23, 2012 with respect to the beneficial ownership of CTI’s Class A common stock by: (i) each person who is known to us to be the beneficial owner of more than five percent of CTI’s outstanding Class A common stock, (ii) each of CTI’s directors, (iii) each of CTI’s named executive officers, and (iv) all of CTI’s directors and executive officers as a group. As of April 23, 2012, 29,178,271 shares of CTI’s Class A common stock were outstanding, which excludes 140,250 shares of treasury stock.

The securities “beneficially owned” by an individual, as shown in the table below, are determined in accordance with the definition of “beneficial ownership” set forth in the SEC’s regulations. Accordingly, beneficially-owned securities may include securities to which the individual or entity has or shares voting or investment power or has the right to acquire under outstanding stock options, warrants or other convertible securities or rights within 60 days after April 23, 2012. Shares subject to stock options, warrants or other convertible securities or rights, which an individual has the right to acquire within 60 days after April 23, 2012, are deemed to be outstanding for the purpose of computing the percentage of outstanding shares of the class owned only by such individual or any group including such individual. The same shares may be beneficially owned by more than one person, and beneficial ownership may be disclaimed as to any or all of a person’s securities.


Name and Address of Beneficial Owner**	Amount and Nature of Beneficial Ownership of Class A Common Stock			Percent of Class
John Birbeck, President, and Chief Executive Officer		2,078,715	⁽¹⁾		6.8	%
Bengt Dahl, Director		208,333	⁽²⁾		*
Harold D. Garrison, Director		283,333	⁽³⁾		1.0	%
Thomas W. Grein, Director		158,333	⁽⁴⁾		*
Salah N. Osseiran, Director		19,374,908	⁽⁵⁾		66.6	%
Michael J. Reinarts, Chairman		2,762,978	⁽⁶⁾		9.5	%
Manfred Hanuschek, Chief Financial Officer and Secretary		583,333	⁽⁷⁾		2.0	%
All directors and executive officers as a group (7 persons)		25,449,933	⁽⁸⁾		77.1	%
Fairford Holdings Limited		19,171,575	⁽⁵⁾		63.7	%

*	Less than 1%.

**	The business address of CTI’s directors and executive officers is CTI Group (Holdings) Inc., 333 North Alabama Street, Suite 240, Indianapolis, Indiana 46204.

(1)	Represents 579,600 shares of Class A common stock held by Mr. Birbeck directly and exercisable options to purchase 1,499,115 shares of CTI’s Class A common stock.

(2)	Represents exercisable options to purchase 208,333 shares of CTI’s Class A common stock.

(3)	Represents exercisable options to purchase 283,333 shares of CTI’s Class A common stock.

(4)	Represents exercisable options to purchase 158,333 shares of CTI’s Class A common stock.

(5)

Represents 45,000 shares of CTI’s Class A common stock owned by Salsel Corporation Limited, 17,776,306 shares of CTI’s Class A common stock owned by Fairford Holdings Limited, 355,099 shares of Class A common stock and 1,040,170 shares of Class A common stock issuable upon the exercise of warrants owned by Fairford Scandinavia, and exercisable options to purchase 158,333 shares of CTI’s Class A common stock. Salah N. Osseiran Trust, a revocable trust, of which Mr. Osseiran is the grantor and sole beneficiary, is the sole stockholder of Salsel Corporation Limited and Fairford Holdings Limited. Mr. Osseiran is the managing director of Salsel Corporation Limited, a director of Fairford Holdings Limited and the President of Fairford Scandinavia. Bengt Dahl is a director of Fairford Holdings Limited and the chairman of Fairford Scandinavia. However, Mr. Dahl does not have, or share, the voting or investment power over the shares of CTI’s Class A common stock owned by Fairford Holdings Limited or Fairford Scandinavia. The address of the principal office of Fairford Holdings Limited is Ground Floor, Sir Walter Raleigh House, 48/50 Esplanade, St. Helier, Jersey, Channel Islands JE1 4HH. The Fairford Scandinavia address is A.B. Box 40. 831 21 Ostersund, Sweden.

(6)	Represents 2,729,645 shares of Class A common stock held by Mr. Reinarts directly and exercisable options to purchase 33,333 shares of CTI’s Class A common stock.

(7)	Represents exercisable options to purchase 583,333 shares of CTI’s Class A common stock.

(8)	Includes exercisable options to purchase 2,924,113 shares of CTI’s Class A common stock and warrants to purchase 1,040,170 shares of Class A common stock.

Equity Compensation Plan Information

The following table details information regarding CTI’s equity compensation plans as of December 31, 2011:


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders⁽¹⁾		4,905,350	$	0.26		2,350,900
Equity compensation plans not approved by security holders⁽²⁾		1,290,170	$	0.28		—

Total		6,195,520	$	0.27		2,350,900

(1) Of the 4,905,350, 1,415,500 of outstanding options were issued under the Amended and Restated Stock Option and Restricted Stock Plan and 3,489,850 were issued under the new CTI Group (Holdings) Inc. Stock Incentive Plan, which replaced the Amended and Restated Stock Option and Restricted Stock Plan as of December 8, 2005.

(2) The equity compensation plans not approved by security holders are represented by options granted pursuant to individual compensation arrangements (referred to as “outside plan stock options”). Outside plan stock options to purchase 250,000 shares of Class A common stock at an exercise price of $0.31 per share were granted to Mr. Birbeck in 2007. This option expires in 2017. Outside plan warrants to purchase in the aggregate 419,495 shares of Class A common stock at an exercise price of $0.34 per share were granted to Fairford Holdings Scandinavia in 2007. This warrant expires in 2017. Outside plan warrants to purchase 620,675 shares of CTI’s Class A common stock at an exercise price of $0.22 per share, subject to adjustments, were granted to Fairford Holdings Scandinavia in 2008. This warrant expires in 2018. As of December 31, 2011, all of the foregoing outside plan stock options were fully vested.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Mr. Osseiran, the majority holder of the Company’s Class A common stock and a director of the Company guarantees all of the Company’s debt. As of December 31, 2010, Mr. Osseiran guaranteed $825,000 of our indebtedness. The Company incurred a non-cash charge $2,675 related to his guarantee for the year ended December 31, 2010. As of the date of filing this Form 10-K/A, Mr. Osseiran does not guarantee any amount of our indebtedness.

The Company incurred $54,000 in fees and $9,282 in expenses associated with the Board of Directors meetings in 2011.

During the fiscal year ended December 31, 2011, options to purchase 81,972 shares of the Company’s Class A common stock were granted at an exercise price of $0.10 per share to Mr. Birbeck, the Company’s Chief Executive Officer. During the fiscal year ended December 31, 2011, options to purchase 58,660 shares of the Company’s Class A common stock were granted at an exercise price of $0.10 per share to Mr. Hanuschek, the Company’s Chief Financial Officer. All of the options granted vest ratably over three years on the anniversary date of the grant.

In October 2010, in order to supplement the Company’s liquidity, Fairford advanced $500,000 to the Company. Subsequent to the advancement, the Company issued to Fairford a demand note, in the aggregate principal amount of $500,000 bearing interest at LIBOR plus 4%. On January 3, 2011, in order to supplement the Company’s liquidity which enabled the Company to repay the revolving loan facility with PNC, Fairford advanced $825,000 to the Company. As of December 31, 2011, Fairford beneficially owned 63.7% of the Company’s outstanding Class A common stock. Mr. Osserian is the primary owner of Fairford. On January 20, 2011, the board of directors approved the terms of Fairford’s advancement and the form of demand note. Subsequent to the advancement and approval by the board of directors, the Company issued to Fairford a demand note, in the aggregate principal amount of $825,000 bearing interest at LIBOR plus 4%. The demand notes had no term and were due on demand. The advances from Fairford of $1,325,000 documented in the form of two demand promissory notes were repaid and cancelled on May 10, 2011. Accumulated interest under the promissory notes amounted to $23,919.

Independence of the Board of Directors

CTI is not a “listed issuer” as such term is defined in Rule 10A-3 under the Exchange Act. CTI uses the definition of independence of The NASDAQ Stock Market LLC. As required under applicable NASDAQ listing standards, a majority of the members of a company’s board of directors must qualify as “independent” unless CTI is a controlled company. A controlled company is a company in which more than 50% of the voting power is held by an individual, group or other company. CTI is a controlled company because Mr. Osseiran beneficially holds more than 50% of the voting power of CTI Class A common stock and CTI as such is not required to have a majority of the members of the board be independent.

The board has three standing committees: an Audit Committee, a Compensation Committee and a Nominating Committee. The current members of the Compensation Committee are Mr. Reinarts and Mr. Dahl. The current members of the Audit Committee and the Nominating Committee are Mr. Reinarts and Mr. Grein. The board has determined that each current member of the Audit Committee and the Nominating Committee is independent and meets the applicable rules and regulations regarding independence for such committee, including those set forth in pertinent NASDAQ listing standards, and that each member is free of any relationship that would interfere with his individual exercise of independent judgment but Mr. Dahl of the Compensation Committee fails to meet the independence standards.

Consistent with these considerations, after review of all relevant transactions and relationships between each director or any of his family members, and our senior management, our independent registered public accounting firm and us, the board has determined that Messrs. Reinarts and Grein are independent directors within the meaning of the applicable NASDAQ listing standards and Messrs. Birbeck, Osseiran, Dahl, and Garrison fail to meet the independence standards.

Item 14.

Principal Accounting Fees and Services

Crowe Horwath LLP served as our independent public accountants and conducted the audit of our consolidated financial statements for each of the fiscal years ended December 31, 2011 and 2010


Category	2011		2010
Audit Fees	$	188,220	$	180,667
Audit-Related Fees		—		—
Tax Fees		15,200		14,216
All Other Fees		—		—

Total	$	203,420	$	194,883

Audit Fees. The foregoing table presents the aggregate fees billed by Crowe Horwath LLP of $188,320 for the audit of CTI’s annual financial statements and review of financial statements included in CTI’s Forms 10-Q for the fiscal year ended December 31, 2011. The foregoing table presents the aggregate fees billed by Crowe Horwath LLP of $180,667 for the audit of CTI’s annual financial statements and review of financial statements included in CTI’s Forms 10-Q for the fiscal year ended December 31, 2010.

Audit-Related Fees. There were no audit related fees in 2011 or 2010.

Tax Fees. The aggregate fees billed by Crowe Horwath LLP in the fiscal years ended December 31, 2011 and December 31, 2010 for professional services rendered to CTI’s UK subsidiaries for tax compliance, tax advice and tax planning were $15,200 and $14,216, respectively. We use another accountant for U.S. corporate income tax compliance, advice and planning.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit and permissible non-audit services provided by Crowe Horwath LLP in fiscal 2011 and 2010. The Audit Committee had authorized the Chief Financial Officer to engage Crowe Horwath LLP at his discretion for additional audit-related and non audit-related services of up to $25,000 for 2011 and 2010. None of the services pre-approved by the Audit Committee during 2011 and 2010 utilized the de minimis exception to pre-approval.

PART IV

Item 15.

Exhibits, Financial Statement Schedules

(b) Exhibits



31.1		Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Exchange Act.

31.2		Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Exchange Act.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


CTI Group (Holdings) Inc.

By:		/s/ John Birbeck
Name:		John Birbeck
Title:		President and Chief Executive Officer
Date:		April 30, 2012

Exhibit Index



31.1		Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Exchange Act.

31.2		Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company