4. ACQUISITION

Effective April 1, 2013, CUI Global closed on a share purchase agreement to acquire 100% of the equity interest in Orbital Gas Systems Limited, a company organized under the laws of England and Wales (“Orbital”), from Orbital’s sole shareholder. The purchase price for the acquisition of Orbital was £17,000,000 British pounds sterling (“£”), ($26,205,500), subject to purchase price adjustments, 100% of the purchase price was paid in cash. To secure indemnification obligation, 5.0% of the purchase price, or £850,000, was held in escrow through December 1, 2013.

We funded the consideration paid to the shareholder of Orbital with a portion of the net proceeds received from a public offering of our $0.001 par value common stock that was registered on an SEC Form S-1 registration statement declared effective by the SEC on April 11, 2013. Subsequent to closing on this acquisition, Orbital Gas Systems, Ltd. became a wholly owned subsidiary of CUI Global, Inc.

The acquisition was accounted for using the acquisition method of accounting and the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition.

The allocation of the purchase price is as follows:

Purchase price	$	26,205,500
Cash and cash equivalents		8,495,993
Trade accounts receivable		5,597,361
Unbilled accounts receivable		66,109
Inventory		445,119
Costs in excess of billings		350,943
Other current assets		20,892
Property & equipment		1,562,908
Intangible, customer lists		7,180,307
Intangible, order backlog		3,434,462
Intangible, trade name		1,846,717
Intangible, technology-based asset know how		2,908,811
Intangible, technology-based asset software		630,474
Goodwill		8,799,622
Liabilities assumed		(11,419,029)
Deferred tax liability		(3,715,189)
	$	26,205,500

Key factors that make up the goodwill created by the transaction include knowledge and experience of the acquired workforce and infrastructure and expected synergies from the combination of operations as it pertains to the gas segment of CUI Global.

The table below summarizes the unaudited condensed pro forma information of the results of operations of CUI Global, Inc. for the years ended December 31, 2013 and 2012 as though the acquisition had been completed as of January 1, 2013 and 2012:

	For the years ended December 31, 2013
			Orbital Gas			Adjustments		Pro Forma
	CUI Global		Systems Ltd.			(restated)		(restated)
Gross revenue	$	60,651,665	$	4,569,510		$	-	$	65,221,175
Total expenses		61,594,778		5,383,677	(1)		588,343		67,566,798
Net profit (loss)	$	(943,113)	$	(814,167)				$	(2,345,623)

	For the years ended December 31, 2012
			Orbital Gas			Adjustments		Pro Forma
	CUI Global		Systems Ltd.			(restated)		(restated)
Gross revenue	$	41,084,589	$	23,017,544	(2)	$	2,369,742	$	66,471,875
Total expenses	$	43,610,910	$	18,964,674	(3)	$	4,848,084	$	67,423,668
Net profit (loss)	$	(2,526,321)	$	4,052,870				$	(951,793)

(1)	Adjustment to recognize the amortization expense of $731,345 of acquisition related intangible assets and the provision for tax benefit of $143,001 associated with the deferred tax liability as though the acquisition had occurred at the beginning of the period.

(2)	Adjustment to recognize US GAAP adjustments for percentage of completion revenues of $2,369,742 completed during the period.

(3)

Adjustment for US GAAP recognition of $2,369,984 of cost of revenues on percentage of completion revenues recognized under US GAAP, $3,007,368 of amortization of acquisition related intangible assets, and provision for tax benefit of $614,415 associated with the deferred tax liability as though the acquisition had occurred at the beginning of the period and $85,147 for US GAAP adjustment for accrued compensation.

The above unaudited condensed pro forma information does not purport to represent what the Companies’ combined results of operations would have been if such transactions had occurred at the beginning of the periods presented, and are not indicative of future results.