Note 6 - Investments

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Investment [Text Block]

6.

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 (

$0.3

million balance at

March 

31,

2019

and

December 31, 2018),

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

5%

per annum, due

June 30, 2019.

The Company recorded

$4

thousand of interest income in both the

three

months ended

March 31, 2019

and

2018.

The interest receivable is 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 is offset against the note receivable quarterly. CUI Global reviewed the note receivable for non-collectability as of

March 

31,

2019

and concluded that

no

allowance was necessary. For more details on this investment see Note

2

- Summary of Significant Accounting policies to CUI Global's financial statements filed in Item

8

of the Company's latest Form

10

-K filed with the SEC on

March 18, 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

2%

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.

On

March 30, 2019,

the Company converted its notes receivable into common 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 liabilities assumed. In return, the Company acquired a

21.4%

ownership share of VPS. 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

21.4%

of the profit or loss of VPS as an addition to or a subtraction from the VPS investment asset. The VPS investment basis at

March 31, 2019

was

$5.3

million as reflected on the condensed consolidated balance sheets.