Power Solutions International, Inc. (NASDAQ:PSIX) Files An 8-K Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

Item4.02

On April5, 2017, in light of the findings made by the Audit
Committee of the Board of Directors (the Audit Committee) of
Power Solutions International, Inc. (the Company) discussed below
in Item7.01 of this Form 8-K, the Companys senior management, in
consultation with the Audit Committee and Board of Directors,
determined that the Companys previously issued consolidated
financial statements for the fiscal year ended December31, 2014
and first fiscal quarter ended March31, 2015 should be restated
to reflect the impact of certain errors involving revenue
recognition. The foregoing financial statements, managements
report on the effectiveness of disclosure controls and procedures
and internal control over financial reporting for the fiscal year
and related reports of the Companys former independent registered
public accounting firm (which as previously disclosed were
withdrawn) should no longer be relied upon. The Companys chief
financial officer has discussed the determination to restate the
2014 fiscal year and 2015 first fiscal quarter financial
statements with its current independent registered public
accounting firm.

As previously disclosed, the Company concluded that it will
restate its consolidated financial statements for (i)the fiscal
year ended December31, 2015 and the second, third and fourth
fiscal quarters within such fiscal year, and (ii)the fiscal
quarter ended March31, 2016.

The Company continues to assess errors in the timing of revenue
recognition and other potential adjustments in accordance with
generally accepted accounting principles in light of the findings
of the Audit Committee. Based on its current assessment, the
Company expects its restated financial statements for the 2014,
2015 and 2016 fiscal years (and the quarterly periods within such
fiscal years) will reflect adjustments that may (i)result in a
shift of recognized revenues from prior periods to subsequent
periods in the aggregate amount of approximately $48 million to
$74 million for the three year period reflecting an increase in
revenues recognized in certain periods and a decrease in revenues
in other periods and (ii)reflect a determination that recognized
revenues in the aggregate amount of approximately $5 million for
the three year period may be treated as uncollectible accounts
receivable or erroneously recognized revenues from the outset.
While the estimated revenue adjustments reflect the current
assessment of the accounting errors, there can be no assurance
that the final adjustments that are made as part of the
restatements will not differ materially from the estimated
adjustments. Nor can the Company provide assurance that other
errors will not be identified or that prior accounting periods
during the course of the Companys review and restatement will not
be impacted.

On March31, 2017, the Company closed on the transactions governed
by its previously reported Share Purchase Agreement with Weichai
America Corp. (Weichai), dated as of March20, 2017 (the Purchase
Agreement). In accordance with the Purchase Agreement, Gary
Winemaster stepped down as Chairman of the Board effective
April1, 2017, and Shaojun Sun was elected as the new Chairman.

In order to facilitate certain remedial measures adopted by the
Company in connection with the previously announced independent
internal review by the Audit Committee, Gary Winemaster resigned
as chief executive officer and president of the Company effective
April6, 2017, and has transitioned to a new non-executive role as
chief strategy officer focused on developing and facilitating the
Companys relationship with Weichai Power Co., Ltd., an affiliate
of Weichai, under the Strategic Collaboration Agreement that was
entered into in connection with the Purchase Agreement.
Mr.Winemaster also has resigned from the Companys Board of
Directors effective April6, 2017.

On April6, 2017, the Board of Directors appointed Raymond C.
Anderson of Huron Consulting Services LLC, a leading consulting
firm, to serve in an interim role as the Companys chief executive
officer. Mr.Anderson, age 51, has over twenty years of
professional experience in providing consulting services and
acting in a variety of leadership roles. He has been associated
with Huron since 2010. Mr.Anderson has served in a variety of
interim officer and board roles in a wide number of industries at
both public and private entities. His public company experience
includes former service as a board member and chairman of the
audit committee of Youbet.com, Inc., an online gaming company,
and chief financial officer of USA Floral Products, Inc., a
floral products distributer. The Company will pay Huron fees for
Mr.Andersons services based on an hourly rate of $640 per hour.
The Company intends to engage an executive search firm and
consult other sources to conduct a search for a new, permanent
chief executive officer.

Audit Committee Independent Internal Review

2

As previously disclosed, the Audit Committee has been overseeing
an independent internal review relating to allegations made by a
former employee concerning the Companys financial reporting and
standards for revenue recognition. The Audit Committee has
substantially completed and finalized its principal findings with
respect to its review. The principal findings include a
determination that certain practices of the Companys sales and
accounting functions resulted in revenue recognition not in
accordance with generally accepted accounting principles; that
there was not an appropriate tone at the top; that senior sales
management did not sufficiently supervise sales staff; and that
management did not elevate revenue recognition practice concerns
to the Audit Committee.

The Audit Committee has made a number of recommendations, which
were communicated to management and are in the process of
implementation or, in certain cases, have been implemented. These
include, in addition to the recommendations of the Audit
Committee discussed above, among other things:

The Board of Directors and senior management have agreed to and
are working diligently to implement the Audit Committees
recommendations.

Performance Update

For the full 2017 fiscal year, the Company budgeted product
shipments of $375 million, of which the total of first quarter
product shipments and firm order shipment backlog for the balance
of 2017 totals approximately $219 million, or 58% of budgeted
product shipments. The Companys product shipments for the quarter
ended March31, 2017 quarter are approximately $84.3 million. The
Company believes the product shipment backlog of customer orders
is at the highest level since the Company has been in business.

Caution Regarding Forward-Looking
Statements

This Form 8-K includes information that constitutes
forward-looking statements. Forward-looking statements often
address our expected future business and financial performance,
and often contain words such as believe, expect, anticipate,
intend, plan, or will. By their nature, forward-looking
statements address matters that are subject to risks and
uncertainties. Any such forward-looking statements may involve
risk and uncertainties that could cause actual results to differ
materially from any future results encompassed within the
forward-looking statements. Factors that could cause or
contribute to such differences include: the final results of the
Audit Committees internal review as it impacts the Companys
accounting, accounting policies and internal control over
financial reporting; the reasons giving rise to the resignation
of the Companys prior independent registered public accounting
firm; the time and effort required to complete the restatement of
the affected financial statements and amend the related Form 10-K
and Form 10-Q filings; the inability to file delinquent periodic
reports within the deadlines imposed by Nasdaq and the potential
delisting of the Companys common stock from Nasdaq and any
adverse effects resulting therefrom; the subsequent discovery of
additional adjustments to the Companys previously issued
financial statements; the timing of completion of necessary
re-audits, interim reviews and audits by the new independent
registered public accounting firm; the timing of completion of
steps to address and the inability to address and remedy,
material weaknesses; the identification of additional material
weaknesses or significant deficiencies; variances in
non-recurring expenses; risks relating to the substantial costs
and diversion of personnels attention and resources deployed to
address the financial reporting and internal control matters and
related class action litigation; the impact of the resignation of
the Companys former independent registered public accounting firm
on the Company relationship with its lender and trade creditors
and the potential for defaults and exercise of creditor remedies
and the implications of the same for its strategic alternatives
process; the impact of the previously disclosed investigation
initiated by the SEC and any related or additional governmental
investigative or enforcement proceedings; the impact of the
resignation of the Companys CEO; managements ability to
successfully implement the recommendations of the Audit Committee
described herein and the backlog will result in actual orders.
Actual events or results may differ materially from the Companys
expectations. The Companys forward-looking statements are
presented as of the date hereof. Except as required by law, the
Company expressly disclaims any intention or obligation to revise
or update any forward-looking statements, whether as a result of
new information, future events or otherwise.

3

About Power Solutions International, Inc. (NASDAQ:PSIX)

Power Solutions International, Inc. is a producer and distributor of a range of low-emission power systems that run on non-diesel fuels, such as natural gas, propane and gasoline. The Company’s industrial power systems are used by original equipment manufacturers (OEMs) in a range of industries with a diversified set of applications, including stationary electricity generators, oil and gas equipment, forklifts, aerial work platforms, industrial sweepers, arbor equipment, agricultural and turf equipment, aircraft ground support equipment, construction and irrigation equipment, and other industrial equipment. The Company provides alternative fuel power systems for OEMs of off-highway industrial equipment and on-road medium trucks and busses. In addition to its emission-certified power systems, the Company produces and distributes non-emission-certified power systems for industrial OEMs for particular applications in markets without emission standards.

Power Solutions International, Inc. (NASDAQ:PSIX) Recent Trading Information

Power Solutions International, Inc. (NASDAQ:PSIX) closed its last trading session down -0.49 at 9.35 with 108,162 shares trading hands.