| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously disclosed, Power Solutions International, Inc. (the “Company”) and Weichai America Corp. (“Weichai America”) entered into a Share Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company issued and sold to Weichai America, and Weichai America subscribed for and purchased from the Company, 2,728,752 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), and 2,385,624 shares of the Company’s series B preferred stock, par value $0.001 per share, which were subsequently converted on a two to one basis into 4,771,248 shares of Common Stock. The Company issued to Weichai America a stock purchase warrant, which was subsequently amended on November 30, 2017, exercisable for such number of additional shares of Common Stock such that Weichai America upon exercise will hold 51% of the shares of Common Stock then outstanding on a fully diluted basis (as amended, the “Warrant”).
On September 30, 2018, the Warrant was amended and restated (the “Amended Warrant”). The Amended Warrant (a) defers the exercise period of the Warrant, which is now exercisable for a ninety (90) day period commencing upon April 1, 2019, and (b) updates the exercise provisions to provide that the Amended Warrant remains exercisable at a price per share of Common Stock equal to the lesser of (i) 50% of the volume weighted average price (“VWAP”) during the 20 consecutive trading day period preceding October 1, 2018 and (ii) 50% of the VWAP during the 20 consecutive trading day period preceding the date of exercise. The Board of Directors of the Company can elect, in its sole discretion, to accelerate the exercise period of the Amended Warrant.
As previously disclosed, on August 29, 2018, Weichai America notified the Company of its intention to exercise the Warrant in full on or following October 1, 2018 (the date upon which the Warrant became exercisable under the original terms thereof), although Weichai reserved all rights not to exercise the Warrant at such time and exercise at a later time, or not to exercise the Warrant as well. As a result of the amendments reflected in the Amended Warrant (unless the exercise period is accelerated pursuant to the terms thereof), Weichai America may not exercise the Amended Warrant until April 1, 2019.
The foregoing description of the Amended Warrant is not complete and is qualified in its entirety by reference to the Amended Warrant, a copy of which is attached hereto as Exhibit 10.1, and is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information provided in Item 1.01 of this Form8-K concerning the Amended Warrant is incorporated herein by reference. The foregoing security was issued in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(2) of the Securities Act of 1933, as amended.
Caution Regarding Forward-Looking Statements
This Current Report on Form8-K contains forward-looking statements regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are covered by the “Safe Harbor for Forward-Looking Statements” provided by the Private Securities Litigation Reform Act of 1995. The Company has tried to identify these forward-looking statements by using words such as “anticipate,” “believe,” “budgeted,” “contemplate,” “estimate,” “expect,” “forecast,” “guidance,” “may,” “outlook,” “plan,” “projection,” “should,” “target,” “will,” “would,” or similar expressions, but these words are not the exclusive means for identifying such statements. The Company cautions that a number of risks, uncertainties and other factors could cause the Company’s actual results to differ materially from those expressed in, or implied by, the forward-looking statements, including, without limitation: the final results of the Audit Committee’s independent review as it impacts the Company’s accounting, accounting policies and internal control over financial reporting; management’s ability to successfully implement the Audit Committee’s remedial recommendations; the reasons giving rise to the prior resignation of RSM US LLP as the Company’s independent registered public accounting firm and the impact of the resignation on the Company’s relationship with its lender and trade creditors and the potential for defaults and exercise of creditor remedies; the time and effort required to complete the restatement of the affected financial statements, complete its delinquent financial statements and amend or prepare the related Form10-K and Form10-Q filings; the subsequent discovery of additional adjustments to the Company’s previously issued financial statements;
