XG Techonology, Inc. : Director's Dealings

xG Technology Inc.

January 17, 2012

xG Technology, Inc.

("xG", "xG Technology" or the"Company")

Director's dealings

xG, the developer of a portfolio of wireless communications technologies, including cognitive radio networks, announces that it was notified today that:

1.	Stormur Holding AB ("Stormur") agreed today to grant an option to the lender to convert a $150,000 loan received by it, together with accrued interest and other good and valuable consideration, into 1,000,000 shares of $0.01 each in the common stock of the Company ("Shares") already held by Stormur. The Company has been notified that Palmi Sigmarsson, a non-executive director of the Company, has an indirect 30.8 per cent.interest in the shares in, and a 67.2 per cent.interest in the voting rights of, Stormur through companies fully or partly owned by him and by virtue of shareholders' agreements; and
2.	two shareholders of Styr ehf ("Styr"), the 100 per cent.parent of Stormur, agreed today to grant an option to the lender to convert loans of $97,500 and a total of $145,900 received by them, together with accrued interest and other good and valuable consideration, into 150,000 and 220,000 Shares already held by the two Styr shareholders respectively. The Company has been notified that Palmi Sigmarsson has a 29.1 per cent.beneficial interest in, and the right to control 71.9 per cent.of the voting rights attaching to, these Shares prior to any conversion.

Such options are to be exercisable once the Company has published its 2011 annual results and the Company is otherwise not in a close period for the purposes of the AIM Rules for Companies. Should the lender exercise the options in full, the Shares transferred to the lender would, in aggregate, represent 0.65 per cent. of the issued and outstanding share capital of the Company.

The Company has been notified that Palmi Sigmarsson currently has a beneficial interest in 15,195,848 Shares, representing approximately 7.2 per cent.of the total issued and outstanding share capital of the Company, comprising the balance of 7,919,037Shares beneficially owned by Stormur; 5,750,923 Shares held by other shareholders of Styr in which, through shareholders' agreements, Palmi Sigmarsson has a 29.1 per cent.beneficial interest and the right to control 71. 9 per cent.of the voting rights; and 1,525,888 Shares held in his own name.

END

Contacts

xG Technology, Inc.
John Coleman, Chief Executive Officer	[phone]
Roger Branton, Chief Financial Officer	[phone]
James Woodyatt, Investor Relations	[phone]
Allenby Capital Limited (Nominated Adviser and Broker)
Nick Naylor	[phone]
Mark Connelly	[phone]
Dan Robinson	[phone]
First Columbus LLP (Joint Broker)
Chris Crawford	[phone]
Fusion PR (Media and Analyst Relations)
Heather Lukens	[phone]

ABOUT XG TECHNOLOGY

xG Technology is a developer of innovative and disruptive communications technologies for wireless networks. Its patented intellectual property portfolio covers a range of applications including cognitive radio networks. The Company has commercialized some of these technologies to create xMax, the World's first carrier-class cognitive radio network.

xMax's standards-based IP architecture minimizes network deployment, management and operational costs while simplifying the delivery of profitable fixed and mobile services. Using field-proven cognitive radio technology, xMax enables the delivery of these mobile services in both licensed and unlicensed bands. In its initial commercial offering, the xMax cognitive radio system enables carriers and other operators to monetize profitably the free unlicensed spectrum in the 900MHz ISM band.

xMax also offers unique capabilities to enterprises, utilities, government agencies and others who require advanced wireless communications to support business operations and mission critical applications.

xG offers turnkey xMax network solutions including base stations, mobile switching centres, network management systems, deployment tools, end-user equipment and customer support.

xG has deployed a 32 square mile xMax network in Fort Lauderdale, Florida to showcase its cognitive radio, mobile VoIP and dynamic interference mitigation capabilities. The Company's xMax products have been successfully tested and trialled by the US Army at two of its US bases. Based in the USA, xG has over 60 US and more than 130 international patents and pending patent applications..