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    CTI Group

    333 North Alabama Street

    Indianapolis, IN  46204
317.262.4666
www.ctigroup.com

October 21, 2005

Kathleen Collins

Accounting Branch Chief

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

              Re:

    CTI Group (Holdings) Inc.

Form 10-KSB for Fiscal Year Ended December 31, 2004

Form 10-QSB for Fiscal Quarters Ended

March 31, 2005 and June 30, 2005

File No. 0-10560

Dear Ms. Collins:

     CTI Group (Holdings) Inc. (the “Company”) submits the following responses to comments raised
in your letter (the “Comment Letter”) addressed to John Birbeck, President and Chief Executive
Officer of the Company, dated September 27, 2005. In order to facilitate your review, each of the
Staff’s comments is followed by the Company’s response below, and the responses are numbered to
correspond to the comment numbers in the Comment Letter.

     For the reasons stated below, the Company does not believe that any additional or modified
disclosure is necessary in the Company’s Form 10-KSB for the fiscal year ended December 31, 2004 or
the Company’s Form 10-QSB for the fiscal quarters ended March 31, 2005 and June 30, 2005.

Form 10-KSB for the Fiscal Year Ended December 31, 2004

Consolidated Statements of Operations, page 31

    1.

    Tell us why you have not classified the amortization expense of capitalized software
development costs and related impairment charges as cost of products and services. Tell us
how you considered FASB Staff Implementation Guide, Question 17 of Statement 86.

    Response

    FASB Staff Implementation Guide, Question 17 of Statement 86 states that “since the
amortization relates to a software product that is marketed to others, the

    expense would be charged to cost of sales or a similar expense category.” The Company does not provide a
gross margin calculation and categorizes all operating costs under the same expense
category, Costs and Expenses, on the face of the Consolidated Statement of Operations which
includes depreciation, amortization, and impairment.

    The Company believes that this position complies with FASB Staff Implementation Guide,
Question 17 of Statement 86 since the amortization expense related to capitalized software
costs is included in the “similar expense category” as cost of sales from which operating
income is derived. Please note that in accordance with Staff Accounting Bulletin Topic
11B, the Company specifically states on the face of the Consolidated Statement of
Operations that costs of products and services exclude depreciation and amortization.

Note 1: Description of Business and Summary of Significant Accounting Policies — Revenue Recognition, page 35

    2.

    You indicate that “if the services are essential to the functionality of the software,
revenue from the software component is deferred until the essential service is complete.”
Tell us how you considered paragraphs 64 and 65 of SOP 97-2 and clarify if you have applied
contract accounting to the entire arrangement. If so, explain why you believe it is
appropriate to apply the completed-contract method of accounting. Refer to paragraphs 21-33
of SOP 81-1.

    Response

    In accordance with paragraphs 64 and 65 of SOP 97-2, services that are essential to the
functionality of the software element of the arrangement are accounted for by applying
contract accounting for both the software and service elements included in the arrangement.
Revenues utilizing completed contract method are predominately from sales of the Company’s
Telemanagement segment’s “Proteus Corporate” and “Trader” products which account for
approximately $3 million in revenues for 2004.

    The services provided by the Company, as set forth in the sales agreements entered into by
the Company, are predominantly services related to the installation of software, and the
Company deems such services essential to the functionality of the software. Generally,
installations are completed within 1-30 days once scheduled with the customer. The
majority of the installations are completed within 2 days. It may take up to 30 days to
complete an installation that involves multiple sites, and it is very rare for an
installation to take longer than 30 days to be completed. Due to the short period from the
beginning of the installation to the completion of the installation, the completed contract
method is used as it produces a result similar to the percentage-of-completion method as required in
paragraph 31 of SOP 81-1.

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Note 1: Description of Business and Summary of Significant Accounting Policies — Basic & Diluted Income/(Loss) per Common Shares, page 37

    3.

    We note your net income per share presentation and earning per share disclosure in Note 1.
Tell us how your net income per share calculation considers the guidance in paragraphs 60 and
61 of SFAS 128. Explain why you have not presented earnings per share for all classes of your
common stock following paragraph 61(d) of SFAS 128.

    Response

    The Company considers SFAS 128 and EITF 03-06 when determining the method of calculating
earnings per share. EITF 03-06 states that convertible, participating securities (as
defined in paragraph 60(a) of SFAS 128) should be included in the computation of basic
earnings per share using the “two class” method of computing earnings per share. SFAS 128
paragraph 60(a) defines participating securities as “securities that participate in
dividends with common stock according to a predetermined formula.”

    The Company’s capital stock consists of Class A common stock and Class B common stock which
is convertible into Class A common stock upon the occurrence of certain events. The effect
of this conversion could be dilutive. Holders of Class A and Class B common stock can
receive a dividend but not according to a predetermined formula. Rather, dividends, if any,
are determined at the discretion of the Board of Directors of the Company. Therefore,
Class B common stock does not meet the definition of a participating security and, as a
result, it does not fall under guidance provided in EITF 03-06. Class B common stock also
does not fall under the guidance required for the “two-class” method identified in SFAS
128, paragraph 61 since it is a convertible, nonparticipating security; as a result,
disclosure required for each class of common stock utilizing the “two-class” method by
paragraph 61(d) of SFAS 128 is not applicable.

    Under paragraph 61 of SFAS 128, the Company uses the if-converted method. The Company
believes that the number of shares of Class A common stock into which shares of Class B
common stock can be converted cannot be estimated. See response to comment 4 below.

    4.

    We note that you issued 2,833,334 shares of Class B common stock and these shares are
convertible to Class A common shares based on the value of Tracking LLC, a wholly owned
subsidiary. We further note that you exclude the dilutive impact of these convertible shares
in the computation of basis and diluted earnings per share “due to inability of the Company to
estimate the ultimate number of shares to be issued.” Tell us why you are unable to estimate
the number of shares to be issued. In this regard, you indicate in Note 2 that
conversion can be determined by dividing the value of Tracking LLC by the fair value of
Class A common stock, which appear to be determinable amounts.

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    Response

    The conversion of 2,833,334 shares of Class B common stock into shares of Class A common
stock is calculated by the quotient of: (i) the value of Tracking LLC, a wholly owned
subsidiary, at time of conversion divided by (ii) the value of a share of the Company’s
Class A common stock at time of conversion.

    The value associated with the value of Tracking LLC, which includes U.S. Patent Nos.
5,287,270 and 5,325,290 (collectively, the “Patents”), depends on a broad variety of
factors which have an impact on the value of the Patents and ability to reasonably
calculate such value. For example, due to the speculative nature of patent enforcement
matters, including, but not limited to, the enforceability of the Patents against certain
target companies and the various legal strategies that target companies can employ, the
Company has not been able to reasonably estimate or determine the value of Tracking LLC.

    Due to the relatively low market price of the Company’s Class A common stock, the Company
believes, as noted in Note 2 to the consolidated financial statements for the year ended
December 31, 2004, that the conversion of Class B common stock into Class A common stock
will result in a material dilution to holders of Class A common stock.

Note 2: Merger, Acquisition and Discontinued Operations — Discontinued Operations, page 40

    5.

    We note that you issued 1,140,564 shares of Class A common stock in connection with the sale
of Xila’s assets. Tell us how you accounted for these shares and how you determined that gain
recognition of $370,268 was appropriate. Provide the specific guidance you are relying upon
for your accounting treatment of this transaction.

    Response

    In connection with the CDS Agreement, the Company recorded the acquired net assets (the
“Assets”) of CDS Holdings, LLC (“CDS”), which included CDS’ membership interest in Xila
Communications, LLC (“Xila”), at their carrying value and restated prior results related to
the acquisition of the Assets since the Company and CDS were under common control. In
accordance with SFAS 141, the financial statements of CDS and the Company have been
combined on an “as if” pooling basis and no step-up in value or goodwill was created.

    Approximately 86% of the ownership of CDS belonged to the Company’s controlling
shareholder. An additional 9% of the ownership belonged to directors
and employees of both entities. The remaining 5% belonged to former directors or employees
of both entities.

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    The Company considered a step-up for the element of Xila that was not under common control
but ultimately decided against this because the goodwill created by a step-up would not
have been supportable as of the date of the CDS Agreement primarily as a result of historic
losses and declining revenue base.

    Upon the acquisition of Xila under the CDS Agreement, the Company assumed the risks and
rewards of the operations of Xila. In accordance with SFAS 141, paragraph D16, the
Company recorded losses from the operations including those of Xila which amounted to
$487,167 and $144,799 in the twelve months ended December 31, 2002 and 2003, respectively.
The gain on the sale of Xila was attributable to significant steps taken by the Company to
create value in Xila after Xila was purchased by the Company on December 31, 2003. Once
the Company gained management control, significant operating changes were implemented,
which transformed Xila from a loss generating enterprise to a profit generating enterprise.
Operating changes included, amongst other steps, significant cost cutting measures which
ultimately resulted in $24,314 income from discontinued operations being reported on the
Company’s Consolidated Statement of Operations for the year ended December 31, 2004. The
operating changes instituted by the Company increased the value of Xila and made it
attractive to potential buyers. Prior to the Company acquiring Xila, the former owner, CDS,
tried but was unable to attract a potential buyer for Xila. Had CDS found an unrelated
party to sell to, CDS would have recorded a gain which would have been included in the
historical results of operations combined with the Company on an “as if” pooling basis
since the entities were under common control.

    The Company sold Xila’s assets to eGix, Inc. (“eGix”), an unrelated entity, on January 21,
2005, which resolved a contingent purchase consideration element under the CDS Agreement.
The Company issued 1,140,564 shares of Class A common stock to the previous owners of Xila
(which primarily represented the same control group as that of the Company), in accordance
with the terms of the CDS Agreement.

    The Company recorded a gain on the sale of Xila’s assets of $370,268 which was the
consideration received for Xila (net of direct costs to transact a sale) less net assets of
Xila. The Company followed SFAS 144 in recognition of the gain.

    In connection with the sale of Xila, the issuance of shares of Class A common stock was
credited at par value (1,140,564 x $0.01) and APIC was debited for the same amount in the
first quarter of 2005.

    The Company believes that the sale of Xila is properly classified as a gain on the sale of
discontinued operations due to the following:

    1)

         Xila was purchased from an entity under common control and the Company
recorded the assets and liabilities at carrying value in accordance

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    with SFAS 141, paragraphs D1-D18 and no goodwill was recognized at the time of the purchase.

    2)

         The Company assumed the risk and rewards associated with Xila after the
acquisition and was able to build value in Xila through operational changes and
support. The gain/loss was recognized upon the sale of the assets to eGix, an
unrelated third party.

    3)

         In accordance with SFAS 144, Xila’s underlying assets and results were
categorized as discontinued operations.

    Had the purchase of Xila on December 31, 2003 been for a fixed price, shares would have
been issued as an equity-only entry; although the net assets of Xila which amounted to
$11,000 at that time, would not been afforded a step-up in value or goodwill since the
entities were under common control. Subsequently, the operation of Xila would have been
reported in consolidated operations as discontinued with a gain recognized on the ultimate
sale. This accounting treatment should yield the same result as a business combination with
a contingent purchase component.

Form 10-QSB for Fiscal Quarter Ended June 30, 2005

Item 3: Controls and Procedures, page 22

    6.

    We note your disclosure that your Principal Officers “concluded that the Company’s disclosure
controls and procedures are 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 is recorded, processed, summarized and reported
within the time periods specified by the Securities and Exchange Commission’s rules and
forms.” Tell us how your Officers considered Exchange Act Rule 13a-15(e) concluding that your
disclosure controls and procedures are also effective to ensure that information required to
be disclosed in the reports that you file or submit under the Exchange Act is accumulated and
communicated to your management, including your chief executive officer and chief financial
officer, to allow timely decisions regarding required disclosure.

    Response

    In October 2002, the Company established a disclosure committee (the “Disclosure
Committee”) which is responsible for ensuring, in accordance with Rule 13a-15(e) under the
Securities and Exchange Act of 1934, that information required to be disclosed by the
Company in reports that it files under the Exchange Act is properly (i) recorded,
processed, summarized and reported within the time periods specified under the rules
promulgated by the Securities Exchange Commission and (ii) accumulated and communicated to
senior management, including the Chief Executive Officer and Chief Financial Officer of the
Company, as appropriate to allow timely decisions regarding required

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    disclosure. The Disclosure Committee is comprised primarily of senior managers representing various
departments and business segments of the Company.

    The Disclosure Committee identifies and considers disclosure issues in connection with the
preparation of periodic and current re