CUI Global, Inc. Reports Re-Classification of more than $20,000,000 in Debt Settlements as Equity Contributions

CUI Global, Inc. (OTCBB:CUGI), a platform company dedicated to the acquisition, development, and commercialization of new, innovative technologies today released the following announcement regarding the recognition of $20,568,834 in debt settlements during 2010 and 2009:

In connection with a review of our December 31, 2010 and 2009 filings by the Securities and Exchange Commission, management and the Company’s Board of Directors have determined that the Company’s previously issued unaudited 2010 and 2009 interim consolidated financial statements for the quarterly periods ended June 30, 2009, September 30, 2009, March 31, 2010, June 30, 2010 and September 30, 2010 which were contained in the Company’s quarterly Reports on Form 10-Q for the periods and its 2009 Annual Report should no longer be relied upon as a result of the treatment of the settlement of debt during 2010 and 2009. As a result of the foregoing, the company expects to restate its previously issued 2010 and 2009 interim consolidated financial statement and 2009 Annual consolidated financial statement in the 2010 form 10-K.

Description of Accounting Re-Statement

On or about December 7, 2010, the company underwent a routine inquiry by the Security and Exchange Commission ("SEC”). As a result of that inquiry, the SEC reviewed the company’s analysis of its reporting obligations under FASB ASC 850 in regard to the debt settlement transactions.

Based primarily on the familial relationship of James McKenzie and Matthew McKenzie, the SEC disagreed with the company’s characterization of the transactions as being with an "Unrelated Party” and opined that James McKenzie was, in fact, a "Related Party.” As such, the SEC advised that the debt reductions should be reported as equity contributions and transferred from the income statement to the balance sheet.

Background

On May 16, 2008, CUI Global Inc., formerly: Waytronx, Inc., entered into two promissory notes with IED, Inc., an Oregon corporation, for the purchase of the assets of CUI, Inc. The two notes in the principal amounts of $14,000,000 and $17,500,000 were scheduled to mature on May 15, 2011. James McKenzie, the founder and former owner of CUI, Inc. is the majority shareholder of IED, Inc.

During the course of the ensuing two years, the company negotiated a reduction/forgiveness of the principal and accrued interest. Resulting from this negotiated settlement, the principal of the $17,500,000 note was reduced to $4,900,000 for which reduction of principal and interest the company recorded a gain of $11,808,513 for the second quarter of 2009

Also during the second quarter of 2009, a gain of $25,542 was recognized on the satisfaction of principal and accrued interest on a $125,000 promissory note and accrued interest for $100,000.

During the second quarter of 2010, the company negotiated satisfaction in full of the balance of principal and accrued interest on the $4,900,000 note in consideration for a principal payment of $50,000 and conversion of $70,000 of principal to 1,000,000 shares of common stock at the conversion rate agreed to in the convertible note. This settlement resulted in our recording a gain totaling $5,630,500.

During the third quarter of 2010, the Company negotiated a settlement of debt and accrued interest on the seller’s note and recorded a related gain of $2,312,792. This gain consisted of a reduction of principal on the seller’s note of $1,588,063 and accrued interest of $724,729.

The total settlement gains recognized in 2010 and 2009 were $7,943,292 and $11,834,055, respectively. Those gains were in relation to reductions of debt and accrued interest totaling $7,943,292 and $12,625,542 in 2010 and 2009, respectively. These amounts will reduce the gain on debt settlement and increase additional paid in capital.

The company analyzed, discussed, and determined its reporting obligations under, among other things, FASB Accounting Standards Codification (ASC) No. 805 Business Combinations; FASB ASC No. 850 Related Party Transactions; FASB ASC 860 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities; EITF Issue No. 96-19 Debtor’s Accounting for Modification or Exchange of Debt Instruments; and EITF Issue No. 06-06 Debtor’s Accounting for a Modification (or Exchange) of Convertible Debt Instruments.

At issue regarding the Company’s determination of the settlements of debt as gains are the conclusions made by management under FASB ASC 850 Related Party Transactions. The gravamen of that standard is "control,” which is defined as follows:

"The possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an enterprise through ownership, by contract, or otherwise." See, FASB ASC No. 850.

It is undisputed that James McKenzie was not a shareholder, owner, manager, or executive of CUI Global, Inc. or CUI, Inc. after the sale of the business. It is also undisputed that James McKenzie had no power as a shareholder, manager, or executive to "direct or cause the direction of the management and policies” of CUI Global, Inc.

It was and is true that James McKenzie’s adult son, Matthew McKenzie, was and is CUI Global, Inc.’s Chief Operating Officer and CUI, Inc.’s President. Pursuant to FASB ASC 850, such a familial relationship can trigger a "Related Party” relationship under the following circumstances:

"Family members whom a principal member or member of management control or influence or by whom they might be controlled or influenced because of the family relationship." See, FASB ASC No. 850.

The company’s analysis of that relationship included, among other things, the fact that: (1) Matthew McKenzie was and is a married, adult, parent, not living in James McKenzie’s household; (2) Mathew McKenzie is recognized as an "industry expert” in the area of electronics design, marketing, and distribution; (3) Matthew McKenzie works under the terms of an employment agreement negotiated and executed after the purchase of CUI, Inc. by CUI Global, Inc.; (4) Matthew McKenzie’s compensation and benefit package is and was subject to an outside third-party review; and (5) Matthew McKenzie’s continued employment is performance based and is subject to review and evaluation by both CUI Global, Inc’s CEO and its Board of Directors.

Out of an abundance of caution and in order to fully disclose and highlight the transactions, the Company fully set forth all of the various factors on which the debt reductions were based and fully and completely disclosed James McKenzie’s participation in those events. Those disclosures, along with the filings, Company analysis, and conclusions were reviewed by Management, the Company’s Audit Committee, and its independent registered public accounting firm, Webb & Company, P.A.

Based on all of these factors, the company originally determined that the negotiated debt reduction was an "Unrelated Party” transaction conducted at "arms length” and, under relevant accounting standards, should be reported as a settlement gain on its income statement.

Accordingly, the Company cautions you that certain information contained in the 2010 and 2009 Quarterly Reports, and the 2009 Annual report and the information derived therefrom, should no longer be relied upon.

Management and the Audit Committee have discussed the matters described herein with Webb & Company, P.A., the Company’s independent registered public accounting firm.

This re-statement does not alter the fact that the company has actually reduced its debt by more than $20,000,000 through these debt settlement agreements; nor does it modify the improvement of the company’s financial condition as a result of those reductions; nor does it change the fact that the company fully expects to report positive cash flow from operations for fiscal year 2010; nor does it evidence any internal control issues.

About CUI Global, Inc.

CUI Global is a publicly traded holding company dedicated to maximizing shareholder value through the acquisition and development of innovative companies and technologies. From its GasPT2 platform targeting the energy sector, to its subsidiary CUI Inc's industry leading digital power platform targeting the networking and telecom industries, CUI Global has built a diversified portfolio of industry leading technologies that touch many markets. As a publicly traded company, shareholders are able to participate in the opportunities, revenues, and profits generated by the products, technologies, and market channels of CUI Global and its subsidiaries. CUI Global prides itself on operating with the same level of integrity, respect, and philanthropic dedication that was put in place by CUI Inc’s founder more than 20 years ago. It is these values that allow the company to make a difference in the lives of their customers, their community, their employees, and their investors. Recently, a move was made to merge and streamline resources with its subsidiary CUI Inc in order to create a unified, international brand that now positions CUI Global for further strategic expansion.

CUI Global also holds 49% of Comex, a Japanese DSP-based hardware and software company that specializes in test and measurement equipment. It focuses on applications that demand high speed multiple channel measurement. The Comex product line ranges from 8 channel to 1032 channel systems. Comex works primarily with research labs, universities, and large companies in Japan to create its custom solutions.

For more information, please visit www.cuiglobal.com and www.cui.com.

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are subject to risks and uncertainties that could cause actual results to vary materially from those projected in the forward-looking statements. The company may experience significant fluctuations in future operating results due to a number of economic, competitive, and other factors, including, among other things, our reliance on third-party manufacturers and suppliers, government agency budgetary and political constraints, new or increased competition, changes in market demand, and the performance or reliability of our products. These factors and others could cause operating results to vary significantly from those in prior periods, and those projected in forward-looking statements. Additional information with respect to these and other factors, which could materially affect the company and its operations, are included in certain forms the company has filed with the Securities and Exchange Commission.