Power Solutions International, Inc. (NASDAQ:PSIX) Files An 8-K Changes in Registrant’s Certifying Accountant
Item4.01.
| Changes in Registrants Certifying Accountant |
By letter dated (and received) January27, 2017, RSM US LLP (RSM)
notified the Audit Committee of the Board of Directors (the Audit
Committee) of Power Solutions International, Inc. (the Company)
of its resignation as the Companys independent registered public
accounting firm.
The previously issued reports of RSM on the Companys consolidated
financial statements for the fiscal years ended December31, 2015
and 2014 contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope
or accounting principles.
During the fiscal years ended December31, 2015 and 2014, and the
subsequent period through January27, 2017, the date of RSMs
resignation, there were no disagreements with RSM on any matter
of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of RSM, would have caused RSM
to make reference to the subject matter of the disagreements in
their reports.
In its letter to the Audit Committee in which it resigned as our
independent registered public accounting firm, RSM communicated
that it had identified the following reportable events (as
defined in 304(a)(1)(v) of Regulation S-K) based on information
provided to RSM by the Audit Committee in connection with its
ongoing independent investigation concerning the Companys
financial reporting: (i)there are material weaknesses in the
Companys internal control over revenue recognition and, more
broadly, in its overall control environment and (ii)RSM can no
longer rely on management representations.
The Audit Committee discussed with RSM the reasons for its
resignation and authorized RSM to respond fully to all inquiries
from the Companys successor independent registered public
accounting firm.
The Company is in the process of considering and implementing
remedial measures, with a view toward improving internal control
practices and overall environment.The Company is committed to
making changes needed to enhance and maintain an effective
control environment.
In accordance with Item304(a)(3) of Regulation S-K, the Company
provided RSM with a copy of the statements set forth in this
Item4.01 prior to the filing of this Report. The Company
requested that RSM furnish the Company with a letter addressed to
the SEC stating whether RSM agrees with the above statements in
this Item4.01 as required by SEC rules. RSM has furnished the
requested letter, and it is attached as an Exhibit 16.1 to this
Report. The Audit Committee is currently seeking a new
independent registered public accounting firm.
| Item4.02. |
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. |
The Information contained in Item4.01 of this Report is
incorporated herein by reference.
The Company previously reported in its Form 8-K Current Report
filed on January5, 2017 that the Companys senior management in
consultation with the Audit Committee and Board of Directors,
determined that the Companys previously issued 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
should be restated to reflect the impact of certain errors
involving revenue recognition and, accordingly, should no longer
be relied upon. The Company also reported that managements report
on the effectiveness of disclosure controls and procedures and
internal control over financial reporting, in each case for the
relevant periods, and the related reports of RSM should no longer
be relied upon.
RSM has separately notified the Company in its letter dated
January27, 2017 that it has recalled RSMs previously issued audit
reports on the Companys consolidated financial statements and
internal control over financial reporting for the fiscal years
ended December31, 2014 and 2015.
RSM has advised the Company that, based on information it
received from the Audit Committee in connection with the
aforementioned independent investigation, it determined that
there are material weaknesses in the Companys internal control
over revenue recognition and overall control environment and that
it could no longer rely on management representations. As such,
RSM determined that its 2014 audit report and its interim review
of the first quarter of 2015 could no longer be relied upon.
Therefore, the Companys previously issued consolidated financial
statements for (i)the fiscal year ended December31, 2014 and
(ii)the fiscal quarter ended March31, 2015 should no longer be
relied upon. In addition, managements report on the effectiveness
of disclosure controls and procedures and internal control over
financial reporting, in each case for the foregoing relevant
periods, should no longer be relied upon.
As of January27, 2017, RSM had not completed an interim review of
the Companys financial statements for the quarters ended June30
and September30, 2016, nor had RSM performed audit procedures or
issued any reports on the Companys financial statements for the
fiscal year ended December31, 2016.
The Companys Audit Committee discussed the matters described in
this Item4.02 with representatives of RSM. In accordance with
Item4.02(c) of Form 8-K, the Company provided RSM with a copy of
the statements set forth in this Item4.02 prior to the filing of
this Report with the SEC. The Company requested that RSM furnish
the Company with a letter addressed to the SEC stating whether
RSM agrees with the above statements in this Item4.02 as required
by SEC rules. RSM has furnished the requested letter, and it is
attached as an Exhibit 16.1 to this Report.
As disclosed in its prior filings with the SEC, the Audit
Committee has been overseeing an independent internal review
concerning the Companys financial reporting. This internal review
is being conducted with the assistance of independent counsel and
forensic accounting professionals engaged by the Audit Committee
and is ongoing. There can be no assurance that the Company will
not identify other accounting errors or additional deficiencies
in internal controls as a result of the Audit Committees ongoing
internal review or otherwise, or that any additional
deficiencies, if identified, will not constitute additional
material weaknesses. The Company will continue its efforts to
improve its internal controls while seeking its successor
independent registered public accounting firm.
| Item5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers |
On February1, 2017, Michael P. Lewis, Chief Financial Officer of
the Company, agreed to take a leave of absence and relinquish his
duties until further notice. On February1, 2017, Mr.Lewis also
submitted a letter to the Company noticing his intent to resign
his employment with the Company, effective March4, 2017, citing
good reasons for the resignation under the terms of his
employment agreement with the Company. As of the date of this
Report, the Company has not responded to Mr.Lewis letter.
On February1, 2017, the Board retained Timothy J. Cunningham of
Randstad Professionals US, LP (d/b/a Tatum), a leading executive
consulting services firm, to serve in an interim role as the
Companys Chief Financial Officer. Mr.Cunningham, age 63, has over
thirty years of professional experience in providing financial
consulting services. He has been associated with Tatum since
2005. Mr.Cunningham has served in interim officer roles as chief
financial officer for such companies as Schawk, Inc., a business
services, manufacturer and marketing services firm, Dental
Services Group, a dental services and products firm, and Pregis
Corporation, a global manufacturer of protective and specialty
packaging products. He has extensive experience in a broad range
of industries, including, steel, packaging, consumer products,
and advertising. The Company will pay Tatum fees based on hourly
rates at the rate of $250/hour and $350/hour for hours greater
than 40.
| Item7.01. | Regulation FD Disclosure |
The Company has initiated a process to explore the strategic
alternatives available to the Company with a view toward
improving its long-term capital structure and liquidity and
maximizing shareholder value. Strategic alternatives may include,
but are not limited, to a potential financing, refinancing,
in-court and out-of-court restructuring, or a merger,
acquisition, joint venture, divestiture, or other disposition of
some or all of the Companys assets outside of the ordinary course
of business.
No definitive schedule to complete its review of strategic
alternatives has been established. There can be no assurance that
this process will result in a transaction, or if a transaction is
undertaken as to its terms or timing. As a matter of policy, the
Company does not comment on or provide the market with updates as
to the status of any informal expressions of interest or formal
proposals or offers presented to the Company from time to time,
or the course of discussions with any prospective counterparties,
nor will it comment upon any rumors with regard to either of the
foregoing or make a further announcement regarding the Companys
consideration of any proposal or other expressions of interest
until such time, if ever, that it enters into a definitive
agreement for a completed transaction or is otherwise required to
make an announcement.
Caution Regarding Forward-Looking Statements
This Form 8-K Current Report 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. Examples of such forward-looking
statements include, but are not limited to, statements regarding
potential impacts of RSMs resignation, the ongoing nature of the
Audit Committees internal review, the ability to engage a new
independent registered public accounting firm, the ability to
complete the restatement of the affected financial statements and
address material weaknesses, and its strategic alternative
process. 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 RSMs resignation; delays in engaging a new
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; 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; RSM identifying
disagreements or additional reportable events in a letter
addressed to the SEC to Item304 of Regulation S-K; 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 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 potential delisting
of the Companys common stock from NASDAQ and any adverse effects
resulting therefrom; and the impact of the previously disclosed
investigation initiated by the SEC and any related or additional
governmental investigative or enforcement proceedings. 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.
| Item9.01. | Financial Statements and Exhibits. |
(d) Exhibits
The Exhibit Index appearing immediately after the page to this
Report is incorporated herein by reference.
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 up +0.07 at 7.52 with 39,182 shares trading hands.