INVESTMENTS

During the

three

months ended

March 31, 2016,

CUI Global's

8.5%

ownership investment in Test Products International, Inc. ("TPI"), recognized under the cost method, was exchanged for a note receivable from TPI of

$0.4

million, which was the carrying value of the investment, earning interest at

per annum, through maturity. The Company recorded

thousand of interest income in both the

three

months ended

June 30, 2019

and

2018.

The Company recorded

thousand and

thousand of interest income from the note in the

six

months ended

June 30, 2019

and

2018,

respectively. The interest receivable was settled on a quarterly basis via a non-cash offset against the finders-fee royalties earned by TPI on GasPT sales. Any remaining finders-fee royalties balance was offset against the note receivable quarterly. The Company received full payment on the note during the

three

months ended

June 30, 2019.

During

2018,

CUI Global made investments of

$0.7

million in convertible notes receivable with Virtual Power Systems (“VPS”) to support the

two

companies’ continued collaboration and development of industry transforming Software Defined Power technologies. The notes accrued interest at

per annum and the interest was to compound annually. Unless converted into shares earlier, principal and accrued interest was to convert automatically on the maturity date (

October 27, 2019)

into shares of VPS common stock at the then current fair market value.

March 30, 2019,

the Company converted its

$0.7

million in notes receivable into preferred stock of VPS. In addition, the Company contributed

$0.3

million of cash and

$2.5

million of other assets, as well as

$1.8

million of future expenditures recorded as liabilities by the Company, of which

$0.7

million were paid in the

three

months ended

June 30, 2019.

In return, the Company acquired a

21.4%

ownership share of VPS. During the

three

months ended

June 30, 2019,

the Company recorded a

$0.6

million gain based on the fair value of the investment in VPS. During the

three

months ended

June 30, 2019,

the Company's ownership percentage was reduced to

20.61%

following VPS's issuance of additional equity. Based on current accounting guidance, the Company will record its share of VPS's income or loss under the equity method of accounting. Under the equity method of accounting, results will

not

be consolidated, but the Company will record a proportionate percentage of the profit or loss of VPS as an addition to or a subtraction from the VPS investment asset. The VPS investment basis at

June 30, 2019

was

$5.6

million as reflected on the condensed consolidated balance sheets.

A summary of the unaudited financial statements of the affiliate as of

June 30, 2019

is as follows:

Current assets	$	4,052
Non-current assets		4,511
Total Assets	$	8,563

Current liabilities	$	311
Non-current liabilities		—
Stockholders' equity		8,252
Total liabilities and stockholders' equity	$	8,563

Revenues	$	—
Operating loss		(1,667	)
Net loss	$	(1,837	)
Other comprehensive profit (loss):
Foreign currency translation adjustment		—
Comprehensive net loss		(1,837	)
Add back excluded acquisition intangible amortization		111
Adjusted comprehensive loss	$	(1,726	)
Company share of adjusted net loss at 20.61%	$	(356	)
Equity investment in affiliate	$	5,552