8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

_________________

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

_________________

Date of Report (Date of earliest event reported):  April 30, 2010

PIONEER POWER SOLUTIONS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	333-155375	26-3387077
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Parker Plaza 400 Kelby Street, 9th Floor Fort Lee, New Jersey	07024
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 867-0700

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

On May 4, 2010, Pioneer Power Solutions, Inc. (“Pioneer”) filed a Current Report on Form 8-K with the U.S. Securities and Exchange Commission (the “SEC”) concerning the consummation of a merger (the “Merger”) whereby Pioneer acquired Jefferson Electric, Inc. (“Jefferson”) and certain related agreements and transactions.  This Amendment No. 1 (“Amendment No. 1”) is being filed to provide the financial statements described under Item 9.01 below, in accordance with the requirements of Item 9.01 of Form 8-K.

Item 9.01.      Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

The audited combined financial statements of Jefferson for the years ended December 31, 2009 and 2008 are attached as Exhibit 99.1 to this Amendment No. 1 and are incorporated herein by reference.

The unaudited combined financial statements of Jefferson for the three months ended March 31, 2010 and 2009 are attached as Exhibit 99.2 to this Amendment No. 1 and are incorporated herein by reference.

(b) Pro forma financial information.

Unaudited pro forma consolidated financial statements and explanatory notes relating to the Merger as of March 31, 2010, for the three month period ended March 31, 2010 and for the year ended December 31, 2009 are attached as Exhibit 99.3 to this Amendment No. 1 and are incorporated herein by reference.

(d) Exhibits.

Exhibit No.	Description
99.1	Audited combined financial statements of Jefferson Electric, Inc. for the years ended December 31, 2009 and 2008.
99.2	Unaudited combined financial statements of Jefferson Electric, Inc. for the three months ended March 31, 2010 and 2009.
99.3	Unaudited pro forma consolidated financial statements and explanatory notes relating to the Merger as of March 31, 2010, for the three month period ended March 31, 2010 and for the year ended December 31, 2009.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PIONEER POWER SOLUTIONS, INC.
Dated: May 28, 2010	By:	/s/ Nathan J. Mazurek
		Name:	Nathan J. Mazurek
		Title:	Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Audited combined financial statements of Jefferson Electric, Inc. for the years ended December 31, 2009 and 2008.
99.2	Unaudited combined financial statements of Jefferson Electric, Inc. for the three months ended March 31, 2010 and 2009.
99.3	Unaudited pro forma consolidated financial statements and explanatory notes relating to the Merger as of March 31, 2010, for the three month period ended March 31, 2010 and for the year ended December 31, 2009.

EX-99.1

Exhibit 99.1

JEFFERSON ELECTRIC, INC.

AND AFFILIATES

COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2009 AND 2008

WITH INDEPENDENT AUDITORS' REPORT

INDEPENDENT AUDITORS' REPORT

To the Boards of Directors

Jefferson Electric, Inc. and affiliates

We have audited the accompanying combined balance sheets of JEFFERSON ELECTRIC, INC. AND AFFILIATES as of December 31, 2009 and 2008, and the related combined statements of income, equity (deficit) and cash flows for the years then ended.  These financial statements are the responsibility of the companies' management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Jefferson Electric, Inc. and affiliates as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying combined financial statements have been prepared assuming that the companies will continue as a going concern.  As discussed in Note 2 to the combined financial statements, the companies are in default on their loan agreement with the bank and are operating under a bank forbearance agreement.  As discussed in Note 5, the companies and the shareholder have committed to transactions and agreements that would sell control of the companies to an unrelated party and extend the companies' bank debt.  If these transactions are not completed, the conditions noted above raise substantial doubt about their ability to continue as a going concern.  Management's plans regarding those matters are described in Note 5.  The combined financial statements do not include any adjustments t hat might result from the outcome of this uncertainty.

/s/ Vrakas/Blum, S.C.

Brookfield, Wisconsin

February 15, 2010

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JEFFERSON ELECTRIC, INC. AND AFFILIATES
COMBINED BALANCE SHEETS - DECEMBER 31, 2009 AND 2008
	2009		2008
CURRENT ASSETS
Cash	$	121,610	$	38,682
Accounts receivable - trade, net		2,107,270		3,324,511
Inventories, net		2,145,558		5,315,129
Prepaid expenses and other		157,525		255,159
TOTAL CURRENT ASSETS		4,531,963		8,933,481
PROPERTY AND EQUIPMENT
Leasehold improvements		194,775		392,857
Machinery and equipment		2,493,545		2,713,673
Office equipment, furniture and fixtures		264,513		291,450
TOTAL PROPERTY AND EQUIPMENT		2,952,833		3,397,980
Less - accumulated depreciation		1,751,906		1,836,507
NET PROPERTY AND EQUIPMENT		1,200,927		1,561,473
GOODWILL		384,827		384,827
OTHER		48,236		133,765
	$	6,165,953	$	11,013,546

The accompanying notes are an integral part of these statements.

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	2009			2008
CURRENT LIABILITIES
Cash overdraft	$	-		$	114,875
Current portion of debt		4,883,478			4,938,519
Accounts payable		3,373,440			3,810,932
Accrued liabilities		1,023,359			616,837
TOTAL CURRENT LIABILITIES		9,280,277			9,481,163
DEBT, less current portion		3,063,509			3,677,355
EQUITY (DEFICIT)		(6,177,833	)		(2,144,972	)
	$	6,165,953		$	11,013,546

The accompanying notes are an integral part of these statements.

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JEFFERSON ELECTRIC, INC. AND AFFILIATES
COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
	2009			2008
NET SALES	$	20,185,997		$	27,156,052
COST OF SALES		18,225,578			21,502,079
GROSS PROFIT		1,960,419			5,653,973
SELLING EXPENSES		3,138,038			4,075,883
ADMINISTRATIVE EXPENSES		1,368,656			933,325
INCOME (LOSS) FROM OPERATIONS		(2,546,275	)		644,765
OTHER (INCOME) EXPENSE
Interest expense		566,135			535,961
Facility shutdown expenses (see Note 3)		572,119			-
Transaction and bank expenses (see Note 5)		179,201			-
Other, net		96,231			(147,647	)
TOTAL OTHER (INCOME) EXPENSE		1,413,686			388,314
NET INCOME (LOSS)	$	(3,959,961	)	$	256,451

The accompanying notes are an integral part of these statements.

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JEFFERSON ELECTRIC, INC. AND AFFILIATES
COMBINED STATEMENTS OF EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
	Jefferson Electric, Inc. common stock *		Jefferson Electric Staffing, Inc. common stock **			TDK Holdings, Ltd. common stock ***		Jefferson Electric, Inc. additional paid in capital		Jefferson Electric, Inc. treasury stock ****			Retained earnings			Jefferson Electric Leasing, LLC member's capital			Totals
BALANCES, DECEMBER 31, 2007	$	6,885	$	900		$	-	$	93,115	$	-		$	1,160,178		$	386,745		$	1,647,823
Merger of entities under common control		-		(900	)		-		900		-			-			-			-
Purchase of 4,590 shares of treasury stock		-		-			-		-		(4,117,917	)		-			-			(4,117,917	)
Net income		-		-			-		-		-			253,895			2,556			256,451
Return of 2007 excess distributions		-		-			-		-		-			98,527			37,572			136,099
Distributions declared		-		-			-		-		-			(67,428	)		-			(67,428	)
BALANCES, DECEMBER 31, 2008		6,885		-			-		94,015		(4,117,917	)		1,445,172			426,873			(2,144,972	)
Merger of entities under common control		-		-			-		900		-			425,973			(426,873	)		-
Formation of TDK Holdings, Ltd.		-		-			100		-		-			-			-			100
Net loss		-		-			-		-		-			(3,959,961	)		-			(3,959,961	)
Distributions declared		-		-			-		-		-			(73,000	)		-			(73,000	)
BALANCES, DECEMBER 31, 2009	$	6,885	$	-		$	100	$	94,915	$	(4,117,917	)	$	(2,161,816	)	$	-		$	(6,177,833	)

* $1 par value, 9,000 shares authorized, 6,885 shares issued, 2,295 shares outstanding as of December 31, 2009 and 2008

** $1 par value, 9,000 shares authorized, 900 shares issued and outstanding as of December 31, 2007

*** $.01 par value, 10,000 shares authorized, issued and outstanding as of December 31, 2009

**** 4,590 shares at cost as of December 31, 2009 and 2008

The accompanying notes are an integral part of these statements.

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JEFFERSON ELECTRIC, INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(3,959,961	)	$	256,451
Add (deduct)
Depreciation		431,328			350,521
Allowance for doubtful accounts provision		114,442			41,899
Obsolescence provision (credit)		359,608			(34,214	)
Loss on disposal of property and equipment		2,469			-
Increase (decrease) in cash (cash overdraft) due to
changes in assets and liabilities
Accounts receivable		1,102,799			(790,779	)
Inventories		2,809,963			(1,203,811	)
Prepaid expenses and other		97,634			(200,118	)
Other assets		85,529			28,687
Accounts payable		(437,492	)		1,232,593
Accrued liabilities		406,522			(34,225	)
NET CASH FLOW - OPERATING ACTIVITIES		1,012,841			(352,996	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(73,251	)		(657,615	)
Purchase of membership interests of Nexus Custom
Magnetics, LLC		-			(751,507	)
NET CASH FLOW - INVESTING ACTIVITIES		(73,251	)		(1,409,122	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on new revolving credit line		(103,633	)		4,351,465
Net payments on revolving credit line - former bank		-			(2,996,075	)
Proceeds from issuance of debt		20,498			4,488,703
Principal payments on debt		(585,752	)		(684,683	)
Equity contribution to form TDK Holdings, Ltd.		100			-
Purchase of treasury stock		-			(4,117,917	)
Return of 2007 excess distributions		-			136,099
Distributions paid		(73,000	)		(67,428	)
NET CASH FLOW - FINANCING ACTIVITIES		(741,787	)		1,110,164
NET CHANGE IN CASH (CASH OVERDRAFT)	$	197,803		$	(651,954	)
CASH (CASH OVERDRAFT), NET
Beginning of year		(76,193	)		575,761
End of year	$	121,610		$	(76,193	)
ADDITIONAL INFORMATION
Interest paid	$	545,000		$	512,000

The accompanying notes are an integral part of these statements.

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JEFFERSON ELECTRIC, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2009 AND 2008

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business - Jefferson Electric, Inc. (JEI) is a manufacturer of dry type transformers.  JEI sells its products to distributors and manufacturers located nationwide.  The company generated 29% of its net sales from one major customer in 2009 and 29% from two major customers in 2008.  One of the 2008 customers (15% in 2008) removed the majority of its business from JEI in late 2008.  Accounts receivable from these customers were $52,000 and $248,000 as of December 31, 2009 and 2008.

Basis of presentation - The accompanying combined financial statements include the accounts of JEI and its affiliates, which are as follows.

Jefferson Electric Staffing, Inc. (JES), which hired, trained, and supplied all employees for JEI.  JES was dissolved and merged into JEI in January 2008.

TDK Holdings, Ltd. (TDK), which was formed in November 2009 to hire and supply certain management employees for JEI.

Jefferson Electric Leasing, LLC (JEL), which made all new equipment purchases and leased all equipment to JEI.  JEL was dissolved and merged into JEI in July 2009.

Nexus Custom Magnetics, LLC (Nexus), a wholly-owned subsidiary of JEI as of April 2008 (see below).

Nexus Magneticos de Mexico, S. de R.L. de C.V. (Nexus Mexico), a Mexican-based entity that is a 99% owned subsidiary of Nexus.  The remaining 1% minority interest has not been recorded in the financial statements due to its insignificance.

The companies are collectively known as "Jefferson".  All balances and transactions between the companies are eliminated in combination.

In April 2008, JEI purchased all of the membership interests of Nexus from an unrelated party.  Nexus (and subsidiary) was a contract manufacturer used by JEI which JEI now uses as its only manufacturing facility (after closing down its Brownsville, Texas facility in 2009 - see Note 3).  The accompanying combined financial statements include the results of operations of Nexus and its subsidiary since April 15, 2008.  The purchase price exceeded the fair value of the assets acquired by $385,000, which was recorded as goodwill.  The purchase price was allocated as follows.

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Property and equipment	$	349,000
Other assets		100,000
Goodwill		385,000
	$	834,000

The sellers were paid $221,000 at closing, with an additional $600,000 to be deferred and paid according to the terms of the purchase agreement.  The remaining $13,000 of purchase price consisted of capitalized closing costs.  The $600,000 deferred purchase price was satisfied entirely during 2008 and 2009, primarily by the payment of certain liabilities of Nexus and its subsidiary that existed prior to the purchase by JEI and were retained by the sellers.  In addition, JEI has $295,000 included in accrued liabilities as of December 31, 2009 related to contract manufacturing services provided by Nexus to JEI prior to the transaction.  The parties agreed to extended payment terms related to these payables.

JEI and the sellers are currently in litigation related to the transaction, including a dispute regarding some of the amounts JEI has offset against the deferred purchase price.  The ultimate outcome of this litigation is uncertain, but management believes that JEI will prevail.  The financial statements do not contain any adjustments that might be needed as an outcome of this litigation.

Accounting estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Actual results could differ from those estimates.

Subsequent events - The financial statements include management's evaluation of the events and transactions occurring subsequent to December 31, 2009 through February 15, 2010, which is the date the financial statements were available to be issued.

Cash - JEI maintains its cash, as well as its revolving credit line and term loan at a financial institution in Wisconsin. The Federal Deposit Insurance Corporation (FDIC) provides limited insurance on cash deposits.  At times JEI’s cash deposits may exceed the FDIC insurance limit; however, JEI does not expect to experience any losses on its cash deposits.  Nexus Mexico maintains its cash at a financial institution in Mexico.

Foreign currency - The functional currency of Nexus Mexico is the U.S. dollar, however its operating accounts are maintained in Mexican pesos.  All balances maintained in Mexican pesos have been translated to U.S. dollars as of December 31, 2009 and 2008.  Net foreign currency transaction gains resulting from the translations were $63,000 in 2009 and $17,000 in 2008, and have been included in Jefferson’s determination of net income (loss) on the accompanying combined statements of income.

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Accounts receivable - trade consists of the following.

	2009		2008
Accounts receivable - trade, gross	$	2,233,569	$	3,439,611
Less:
Allowance for doubtful accounts		67,000		33,100
Allowance for cash discounts		4,000		14,000
Allowance for returns and credit memos		55,299		68,000
Accounts receivable - trade, net	$	2,107,270	$	3,324,511

Jefferson extends unsecured credit to its customers in the ordinary course of business but mitigates the associated credit risk by performing credit checks and actively pursuing past due accounts. Jefferson establishes receivable allowances based on a number of factors, including its loss history.

Inventories - Inventories are stated at cost using the first-in, first-out method which is not in excess of market.  Market is generally defined as net realizable value. Inventories are set forth below.

	2009		2008
Raw materials	$	694,292	$	1,464,501
Work in process		164,284		553,695
Finished goods		1,861,218		3,511,561
		2,719,794		5,529,757
Less - obsolescence reserve		574,236		214,628
Inventories, net	$	2,145,558	$	5,315,129

Jefferson determines its obsolescence reserve by considering a number of factors, including age of the inventory and various usage tests.  It is at least reasonably possible that Jefferson's estimate of the obsolescence reserve may change in the near term.

Depreciation - Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets.

Leasehold improvements	5 - 7 years
Machinery and equipment	5 - 20 years
Office equipment, furniture and fixtures	5 - 10 years

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Long-lived assets - Jefferson annually considers whether indicators of impairment of long-lived assets held for use are present.  If such indicators are present, Jefferson determines whether the sum of the estimated undiscounted future cash flow attributable to such assets is less than their carrying amounts, and if so, Jefferson would recognize an impairment loss based on the excess of the carrying amount of the assets over their fair value.  Management has determined that no such impairment was present as of December 31, 2009 or 2008.

Goodwill - Goodwill is tested annually for impairment.  After estimating the value of the goodwill using standard valuation techniques and comparing that value to the carrying cost, the company determined that there was no impairment of goodwill as of December 31, 2009 and 2008.

Revenue recognition - Sales and related cost of sales are generally recognized as finished products are shipped to customers.  Sales are presented net of any sales taxes.

Shipping and handling fees and costs - Jefferson nets shipping and handling revenues and costs in selling expenses.  Shipping and handling revenues were $298,000 and $585,000 in 2009 and 2008.  Shipping and handling costs were $1,127,000 and $1,640,000 in 2009 and 2008.

Warranty obligations - Jefferson accrues an estimate of its exposure to warranty claims based on both current and historical product sales data and warranty costs incurred.  The majority of Jefferson's products carry between a one and two year warranty.  The adequacy of the warranty liability is assessed at least annually and is included in accrued liabilities in the accompanying combined balance sheets.  The warranty liability was $64,000 and $72,000 as of December 31, 2009 and 2008.

Income taxes - By unanimous consent of its shareholder, JEI elected S Corporation status under the provisions of the Internal Revenue Code.  Under those provisions and most state laws, JEI generally does not pay federal or state income taxes on its taxable income.  As an S Corporation, any taxable income or loss of JEI will be includable in the individual income tax returns of the shareholder.

JES was a C Corporation prior to its merger into JEI.  TDK is a C Corporation.  JES and TDK had no income in 2009 and 2008 and thus no income tax provision was recorded.

JEL was a Limited Liability Company prior to its merger into JEI.  Any taxable income or loss of JEL was includable in the individual income tax returns of the member.

Per terms of certain loan agreements, JEI is limited to paying distributions sufficient to allow the shareholder to pay personal income taxes attributable to the earnings of the companies.  With few exceptions, JEI is no longer subject to federal income tax examinations by tax authorities for years before 2006 and state income tax examinations for years before 2005.

Nexus Mexico pays income taxes in Mexico.  JEI receives a credit which would be passed through to its shareholder for any income taxes paid by Nexus Mexico.  Income taxes paid were not significant in 2009 and 2008.

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2.  REVOLVING CREDIT LINE AND LONG-TERM DEBT

	2009		2008
Revolving credit line - due March 2010, interest at 8%	$	4,247,832	$	4,351,465
Term loan - monthly payments of $72,024 including interest at 7.27%, through February 2011, balloon payment due March 2011		3,655,933		4,227,648
Other		43,222		36,761
	$	7,946,987	$	8,615,874

During 2009, Jefferson was in violation of various covenants contained in its agreement with the bank.  As a result, Jefferson and the bank entered into a forbearance agreement through March 2010.  The maximum amount available on the revolving credit line is $5,000,000, and the line expires March 2010.

The forbearance agreement required Jefferson to provide the bank a copy of a letter of intent from an equity investor satisfactory to the bank by December 31, 2009 reflecting an intent to invest at least $3,000,000 in Jefferson.  This condition was satisfied in December 2009 (see Note 5).  The transaction is required to be closed and the funding received by March 31, 2010.

As a result of the letter of intent received (see Note 5), subsequent to December 31, 2009 Jefferson received a commitment letter from its bank which would extend the terms of its financing through March 2011 if the pending transaction closes.  The maximum amount available on the revolving credit line would be $5,000,000 and interest on the revolving credit line would be at the greater of 6% or prime plus 2%.

The revolving credit line and term loan are secured by substantially all assets of Jefferson, the unlimited personal guaranty of the shareholder and the assignment of $4,000,000 in life insurance policies.

Borrowings on the revolving credit line are limited to certain percentages of accounts receivable and inventories located in the United States.  Under the forbearance agreement, Jefferson also has the ability to borrow up to $700,000 on inventories located in Mexico.  Draws on the $700,000 foreign inventory portion of the line become due immediately upon the occurrence of certain events as defined in the agreement.

The related loan agreement restricts or limits, among other things, additional indebtedness, capital expenditures, distributions, acquisitions and investments, disposition of assets and changes in ownership.  In addition, Jefferson must maintain certain financial covenants.  Jefferson continues to be in violation of several bank covenants as of December 31, 2009.

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The expected maturities of debt based on the anticipated refinancing as of December 31, 2009 are set forth below.

2010	$	4,883,000
2011		3,047,000
2012		13,000
2013		4,000

3.  OPERATING LEASES

JEI leases office, warehouse and manufacturing facilities under operating leases expiring at various dates through September 2013.  Under the warehouse and manufacturing facility lease agreements, JEI is generally responsible for all operating expenses, including, but not limited to, real estate taxes, utilities and insurance.  Per the terms of the office lease agreement, the company is responsible for utilities and insurance.  JEI also leases various equipment, software, and a vehicle.

During 2009, JEI closed down its Brownsville, Texas manufacturing facility and moved all manufacturing operations to its Reynosa, Mexico facility.  Later in 2009, JEI entered into an agreement to sublease the Brownsville facility to an unrelated party under the same terms as JEI’s lease.  Future lease payments on the Brownsville facility lease have been excluded from the schedule of future minimum rental payments below because of the sublease.

JEI incurred expenses relating to the shutdown of its Brownsville facility, including relocation expenses, of $572,000, which have been included in other expense on the accompanying 2009 combined statement of income.

Total rent expense was $630,000 and $542,000 in 2009 and 2008.  Future minimum rental payments required, exclusive of inflation escalators, are presented below.

2010	$	568,000
2011		486,000
2012		471,000
2013		147,000

4.  EMPLOYEES' SAVINGS PLAN

JEI and TDK have a salary deferral 401(k) plan covering substantially all employees.  JEI and TDK may make matching and profit sharing contributions as determined by the boards of directors. Total employer contributions were $82,000 and $26,000 in 2009 and 2008.

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5.  SUBSEQUENT EVENT AND FUTURE OPERATIONS

In December 2009, the sole shareholder of JEI and TDK signed a letter of intent to sell all of the outstanding shares of JEI and TDK to an unrelated party by March 31, 2010. The offer is contingent on Jefferson extending the terms of its financing arrangements with the bank.  After the transaction, the unrelated party would infuse $3,000,000 of cash into Jefferson to reduce its bank debt by at least $900,000, reduce accounts payable and provide additional working capital.

During 2009, JEI incurred expenses directly relating to its efforts to secure additional equity and obtaining the bank forbearance agreement (see Note 2), including legal fees and bank charges, of $179,000, which have been included in other expense on the accompanying 2009 combined statement of income.

The ability of the shareholder and Jefferson to finalize the transaction and extend the terms of the bank financing are critical to the future of Jefferson.  If the transaction and extension of the bank financing are not completed, there is substantial doubt about Jefferson's ability to continue as a going concern.  The combined financial statements do not include any adjustments that would be necessary if the transaction and bank financing are not completed.

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EX-99.2

Exhibit 99.2

JEFFERSON ELECTRIC, INC. AND AFFILIATES
COMBINED INTERIM BALANCE SHEETS (UNAUDITED)
	March 31, 2010			December 31, 2009
ASSETS
Current Assets
Cash and Cash Equivalents		8,976			121,610
Accounts Receivable - Trade, net		1,882,072			2,107,270
Inventories, net		1,874,793			2,145,558
Prepaid Expenses and Other		172,271			157,525
Total Current Assets		3,938,113			4,531,963
Property and Equipment
Leasehold Improvements		194,775			194,775
Machinery and Equipment		2,493,545			2,493,545
Office Equipment, Furniture and Fixtures		264,513			264,513
Total Property and Equipment		2,952,833			2,952,833
Less - Accumulated Depreciation		1,853,156			1,751,906
Net Property and Equipment		1,099,677			1,200,927
Goodwill		384,827			384,827
Other		48,236			48,236
TOTAL ASSETS		5,470,853			6,165,953
LIABILITIES & EQUITY
Current Liabilities
Cash Overdraft		-			-
Current Portion of Debt		5,047,884			4,883,478
Accounts Payable		3,377,223			3,373,440
Accrued Liabilities		966,694			1,023,359
Total Current Liabilities		9,391,801			9,280,277
DEBT, less current portion		2,693,745			3,063,509
EQUITY (DEFICIT)		(6,614,693	)		(6,177,833	)
TOTAL LIABILITIES & EQUITY		5,470,853			6,165,953

The accompanying notes are an integral part of these statements.

1

JEFFERSON ELECTRIC, INC. AND AFFILIATES
COMBINED INTERIM STATEMENTS OF INCOME (UNAUDITED)
	Three Months Ended
	March 31, 2010			March 31, 2009
Sales - Net		4,440,731			4,810,339
Cost of Sales		3,729,309			3,923,695
Gross Profit		711,422			886,644
Selling Expenses		562,707			774,306
Administrative Expenses		364,754			308,653
Income (Loss) from Operations		(216,039	)		(196,315	)
Other (Income) Expense
Interest (Expense) / Income		(155,027	)		(125,089	)
Transaction and Bank Expenses (Note 5)		(65,400	)		-
Other (Expense) / Income		(394	)		49,710
Net Income / (Loss)		(436,860	)		(271,694	)

The accompanying notes are an integral part of these statements.

2

JEFFERSON ELECTRIC, INC AND AFFILIATES
COMBINED INTERIM STATEMENTS OF EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 (UNAUDITED)
	Jefferson Electric, Inc. common stock		TDK Holdings, LTD common stock		Jefferson Electric, Inc. additional paid in capital		Jefferson Electric, Inc. treasury stock			Retained earnings			Totals
BALANCES, DECEMBER 31, 2009	$	6,885	$	100	$	94,915	$	(4,117,917	)	$	(2,161,816	)	$	(6,177,833	)
Net loss											(436,860	)		(436,860	)
BALANCES, MARCH 31, 2010	$	6,885	$	100	$	94,915	$	(4,117,917	)	$	(2,598,676	)	$	(6,614,693	)

The accompanying notes are an integral part of these statements.

3

JEFFERSON ELECTRIC, INC. AND AFFILIATES
COMBINED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED)
	Three Months Ended
	March 31, 2010			March 31, 2009
Net Income		(436,860	)		(271,694	)
Add back:  Non-Cash Items
Depreciation		101,250			112,200
Changes in Working Capital
Accounts Receivable - Trade		225,198			951,263
Inventory		270,765			91,094
Prepaid Expenses		(14,746	)		(60,290	)
Accounts Payable - Trade		3,783			(398,751	)
Accrued Liabilities		(56,665	)		(111,818	)
Cash Flow From Operations		92,724			312,004
Investing Activities
Fixed Assets - Original Cost		(0	)		(28,758	)
Cash Flow from Investing Activities		(0	)		(28,758	)
Financing Activities
Net Borrowings (Payments) on Revolving Credit Line		(50,316	)		40,376
Principal Payments on Debt		(155,042	)		(142,916	)
Cash Flow From Financing Activities		(205,358	)		(102,540	)
Total Cash Flows		(112,634	)		180,706
Cash Balance - Beginning of Period		121,610			(76,193	)
Cash Balance - End of Period		8,976			104,513
Additonal Informaiton
Interest Paid		156,000			124,000

The accompanying notes are an integral part of these statements.

4

JEFFERSON ELECTRIC, INC. AND AFFILIATES

Notes To Combined Financial Statements

Three Months Ended March 31, 2010

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business - Jefferson Electric, Inc (JEI) is a manufacturer of dry type transformers.  JEI sells its products to distributors and manufacturers located nationwide.  The company generated 33% of its net sales from one major customer during the period.  Accounts receivable from this customer were $86,000 as of March 31, 2010.

Basis of presentation – The accompanying combined financial statements include the accounts of JEI and its affiliates, which are as follows.

TDK Holdings, Ltd. (TDK), which was formed in November 2009 to hire and supply certain management employees for JEI.

Nexus Custom Magnetics, LLC (Nexus), a wholly-owned subsidiary of JEI as of April 2008.

Nexus Magneticos de Mexico, S. de R.L. de C.V. (Nexus Mexico), a Mexican-based entity that is a 99% owned subsidiary of Nexus.  The remaining 1% minority interest has not been recorded in the financial statements due to its insignificance.

The companies are collectively known as “Jefferson”.  All balances and transactions between the companies are eliminated in combination.

Accounting estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Actual results could differ from those estimates.

Cash – JEI maintains its cash, as well as its revolving credit line and term loan at a financial institution in Wisconsin.  The Federal Deposit Insurance Corporation (FDIC) provides limited insurance on cash deposits.  At times, JEI’s cash deposits may exceed the FDIC insurance limit: however, JEI does not expect to experience any losses on its cash deposits.  Nexus Mexico maintains its cash at a financial institution in Mexico.

Foreign currency – The functional currency of Nexus Mexico is the U.S. dollar, however its operating accounts are maintained in Mexican pesos.  All balances maintained in Mexican pesos have been translated to U.S. dollars as of March 31, 2010.  Net foreign currency transaction losses resulting from the translations were $2,000 for the period, and have been included in Jefferson’s determination of net income (loss) on the accompanying combined statements of income.

Accounts receivable – trade consists of the following.

5

	March 31, 2010		December 31, 2009
Accounts receivable – trade, gross	$	1,998,884	$	2,233,569
Less:
Allowance for doubtful accounts		64,183		67,000
Allowance for cash discounts		4,000		4,000
Allowance for returns/credit memos		48,629		55,299
Accounts receivable – trade, net	$	1,882,072	$	2,107,270

Jefferson extends unsecured credit to its customers in the ordinary course of business but mitigates the associated credit risk by performing credit checks and actively pursuing past due accounts.  Jefferson establishes receivable allowances based on a number of factors, including its loss history.

Inventories – Inventories are stated at cost using the first-in, first-out method which is not in excess of market.  Market is generally defined as net realizable value.

Inventories are set forth below.

	March 31, 2010		December 31, 2009
Raw materials	$	749,559	$	1,464,501
Work in process		144,464		553,695
Finished goods		1,531,197		3,511,561
		2,429,220		5,529,757
Less – obsolescence reserve		554,427		214,628
Inventories, net	$	1,874,793	$	5,315,129

Jefferson determines its obsolescence reserve by considering a number of factors, including age of the inventory and various usage tests.

Depreciation – Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets.

Leasehold improvements	5-7 years
Machinery and equipment	5-20 years
Office equipment, furniture and fixtures	5-10 years

Long-lived assets – Jefferson annually considers whether indicators of impairment of long-lived assets held for use are present.  If such indicators are present, Jefferson determines whether the sum of the estimated undiscounted future cash flow attributable to such assets is less than their carrying amounts, and if so, Jefferson would recognize an impairment loss based on the excess of the carrying amount of the assets over their fair value.  Management has determined that no such impairment was present as of March 31, 2010.

6

Goodwill – Goodwill is tested annually for impairment.  After estimating the value of the goodwill using standard valuation techniques and comparing that value to the carrying cost, the company determined that there was no impairment of goodwill as of March 31, 2010.

Revenue recognition – Sales and related cost of sales are generally recognized as finished products are shipped to customers.  Sales are presented net of any sales taxes.

Shipping and handling fees and costs – Jefferson nets shipping and handling revenues and costs in selling expenses.  Shipping and handling revenues were $42,000 during the period.  Shipping and handling costs were $220,000 during the period.

Warranty obligations – Jefferson accrues an estimate of its exposure to warranty claims based on both current and historical product sales data and warranty costs incurred.  The majority of Jefferson’s products carry between a one and two year warranty.  The adequacy of the warranty liability is assessed at least annually and is included in accrued liabilities in the accompanying combined balance sheets.  The warranty liability was $64,000 as of March 31, 2010.

Income taxes – By unanimous consent of its shareholder, JEI elected S Corporation status under the provisions of the Internal Revenue Code.  Under those provisions and most state laws, JEI generally does not pay federal or state income taxes on its taxable income.  As an S Corporation, any taxable income or loss of JEI will be includable in the individual income tax returns of the shareholder.

Per terms of certain loan agreements, JEI is limited to paying distributions sufficient to allow the shareholder to pay personal income taxes attributable to the earnings of the companies.  With few exceptions, JEI is no longer subject to federal income tax examinations by tax authorities for years before 2006 and state income tax examinations for years before 2005.

Nexus Mexico pays income taxes in Mexico.  JEI receives a credit which would be passed through to its shareholder for any income taxes paid by Nexus Mexico.

2. REVOLVING CREDIT LINE AND LONG-TERM DEBT

	March 31, 2010		December 31, 2009
Revolving credit line – due April 2010,	$	4,197,516	$	4,247,832
Interest at 8%
Term loan – monthly payments of $72,024
Including interest at 7.27% through October
2011, balloon payment due October 2011		3,505,442		3,655,933
Other Debt		38,671		43,222
	$	7,741,629	$	7,946,987

During 2009, Jefferson was in violation of various covenants contained in its agreement with the bank.  As a result, Jefferson and the bank entered into a forbearance agreement through April 2010. The maximum amount available on the revolving credit line is $5,000,000 and the line expires April 2010.

7

The forbearance agreement required Jefferson to provide the bank a copy of a letter of intent from an equity investor satisfactory to the bank by December 31, 2009 reflecting an intent to invest at least $3,000,000 in Jefferson.  This condition was satisfied in December 2009 (see Note 5).  The transaction is required to be closed and the funding received by April 30, 2010.

As a result of the letter of intent received, subsequent to December 31, 2009 Jefferson received a commitment letter from its bank which would extend the terms of its financing through October 2011 if the pending transaction closes.  The maximum amount available on the revolving credit line would be $5,000,000 and interest on the revolving credit line would be the greater of 6.5% or the banks reference rate (prime) plus 2.5%.

The revolving credit line and term loan are secured by substantially all assets of Jefferson, the unlimited personal guaranty of the shareholder and the assignment of $4,000,000 in life insurance policies.

Borrowings on the revolving credit line are limited to certain percentages of accounts receivable and inventories located in the United States.  Under the forbearance agreement, Jefferson also has the ability to borrow up to $700,000 on inventories located in Mexico.  Draws on the $700,000 foreign inventory portion of the line become due immediately upon the occurrence of certain events as defined in the agreement.

The related loan agreement restricts or limits, among other things, additional indebtedness, capital expenditures, distributions, acquisitions, and investments, disposition of assets and changes in ownership.  In addition, Jefferson must maintain certain financial covenants. Jefferson continues to be in violation of several bank covenants as of March 31, 2010.

The expected maturities of debt based on the anticipated refinancing as of March 31, 2010 are set forth below:

2011	$5,048,000
2012	2,681,000
2013	10,000
2014	3,000

3. OPERATING LEASES

JEI leases office, warehouse and manufacturing facilities under operating leases expiring at various dates through September 2013.  Under the warehouse and manufacturing facility lease agreements, JEI is generally responsible for all operating expenses, including, but not limited to, real estate taxes, utilities and insurance.  Per the terms of the office lease agreement, the company is responsible for utilities and insurance.  JEI also leases various equipment and software.

During 2009, JEI closed down its Brownsville, Texas manufacturing facility and moved all manufacturing operations to its Reynosa, Mexico facility.  Later in 2009, JEI entered into an agreement to sublease the Brownsville facility to an unrelated party under the same terms as JEI’s lease.  Future lease payments on the Brownsville facility have been excluded from the schedule of future minimum rental payments below because of the sublease.

8

Total rent expense was $122,440 for the three month period ended March 31, 2010.  Future minimum rental payments required, exclusive of inflation escalators, are presented below.

9 months ended 12-31-10	$364,000
Year ended 12-31-11	473,000
Year ended 12-31-12	471,000
Year ended 12-31-13	147,000

4. EMPLOYEE’S SAVINGS PLAN

JEI and TDK have a salary deferral 401(k) plan covering substantially all employees.  JEI and TDK may make matching and profit sharing contributions as determined by the boards of directors.  Total employer contributions were $21,000 for the period.

5. SUBSEQUENT EVENT AND FUTURE OPERATIONS

In December 2009, the sole shareholder of JEI signed a non-binding letter of intent to sell all of the outstanding shares of JEI to an affiliate of Pioneer Power Solutions, Inc. (Pioneer) by April 30, 2010.  The letter of intent was contingent on Jefferson extending the terms of its financing arrangements with its bank lender.

During the three months ended March 31, 2010, JEI incurred expenses directly related to its efforts to secure additional equity and to obtain the bank agreement, including legal fees and bank charges, of $65,400, which have been included in other expense on the accompanying combined statement of income.

On April 30, 2010, the transaction contemplated by the non-binding letter of intent signed in December 2009 was closed. Upon consummation of the merger, all of the equity interests of the sole shareholder of JEI issued and outstanding were cancelled and converted into the right to receive an aggregate of 486,275 common shares of Pioneer.

Pioneer advanced $3,000,000 to the successor corporation of JEI which was incorporated for the purpose of the merger, which was utilized to partially repay the principal amount outstanding under JEI’s revolving credit facility with its bank and to partially repay the principal amount outstanding under Jefferson’s term loan facility.

9

EX-99.3

Exhibit 99.3

PIONEER POWER SOLUTIONS, INC.

Unaudited Pro Forma Financial Information

Basis of Presentation

On April 30, 2010, Pioneer Power Solutions, Inc. (“Pioneer” or the “Company”) acquired Jefferson Electric, Inc., a Delaware corporation (“Jefferson”), through a merger (the “Merger”) pursuant to which JEI Acquisition, Inc., a wholly owned subsidiary of the Company, merged with and into Jefferson, with Jefferson continuing as the surviving corporation.  Upon consummation of the Merger, all 2,295 shares of Jefferson’s common stock were cancelled and converted into the right to receive an aggregate of 486,275 shares of common stock of the Company.  The Company also advanced $3.0 million to Jefferson, which was utilized to partially repay the principal amount outstanding under Jefferson’s revolving credit facility with its bank and to partially repay the principa l amount outstanding under Jefferson’s term loan facility.  In connection with the Merger, JE Mexican Holdings, Inc., a newly incorporated Delaware corporation and wholly owned subsidiary of the Company, purchased from Thomas Klink, the former sole stockholder of Jefferson, one hundred percent of the membership interests in Jefferson Electric Mexico Holdings LLC (“JE Mexico”), a Wisconsin limited liability company, for nominal consideration. JE Mexico was the holder of less than 0.1% of Nexus Magneticos de Mexico, S. de R.L. de C.V., the principal manufacturing subsidiary of Jefferson.  Also on April 30, 2010, in exchange for $10,000, the Company sold to Mr. Klink a five-year warrant that is exercisable for up to 1 million shares of common stock of the Company at an initial exercise price of $3.25 per share, subject to customary anti-dilution adjustments.

The following unaudited pro forma consolidated financial statements have been prepared to give effect to the Merger. The unaudited pro forma consolidated statement of earnings for the three month period ended March 31, 2010 gives effect to the Merger as if it had occurred on January 1, 2010 and was derived from the unaudited interim financial statements of Pioneer and Jefferson as of and for the three month period ended March 31, 2010. The unaudited pro forma consolidated statement of earnings for the year ended December 31, 2009 gives effect to the Merger as if it had occurred on January 1, 2009 and is derived from the audited financial statements of Pioneer and Jefferson as of and for the year ended December 31, 2009.

The Merger was accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total estimated purchase price, calculated as described in Note 1 of the unaudited pro forma consolidated financial statements, is allocated to the tangible and intangible assets acquired and liabilities assumed in connection with the Merger, based on their estimated fair values as of the effective date of the Merger.  Goodwill arising from the Merger has been determined as the excess of the purchase price over the net of the amounts assigned to acquired assets and liabilities assumed. The unaudited pro forma consolidated statements of earnings also include certain acquisition accounting adjustments that are expected to have a continuing impact on the combined results.

The preliminary allocation of the purchase price was based upon management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed and such estimates and assumptions are subject to change. The final purchase price allocation is dependent upon the completion of the valuation of Jefferson’s assets acquired and liabilities assumed, which Pioneer expects to complete during the second quarter of fiscal 2010. The final purchase price allocation and its effect on results of operations may differ significantly from the pro forma amounts included in the pro forma unaudited consolidated financial statements, although these amounts represent management’s best estimates as of the date of this document.

The unaudited pro forma consolidated financial statements do not include any adjustments regarding liabilities incurred or cost savings achieved resulting from any operational integration of the two companies, as management is in the process of assessing what, if any, future actions it will undertake with respect to such integration.

1

The unaudited pro forma consolidated financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the financial position or results of operations in future periods or that actually would have been realized had Pioneer and Jefferson been a combined company during the periods presented. The unaudited pro forma consolidated financial statements, including the notes thereto, should be read in conjunction with Pioneer’s audited consolidated financial statements, including the notes thereto, included in its Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on April 15, 2010, and its Quarterly Report on Form 10-Q for the three month period ended March 31, 2010, filed with the Securities and Exchange Commission on May 17, 2010, as well as Jefferson’s audited combined financial statements and combined interim financial statements, including the notes thereto, included in this Form 8-K/A.

2

Pioneer Power Solutions, Inc.

(Formerly Sierra Concepts, Inc.)

Pro Forma Consolidated Balance Sheets

As at March 31, 2010

(Unaudited)

(Expressed in U.S. Funds)

	Pioneer  Power  Solutions, Inc.			Jefferson  Electric, Inc.			Pro Forma Adjustments				Pro Forma Consolidated Balance Sheet
ASSETS
Cash and Cash Equivalents	$	3,116,149		$	8,976		$	(3,000,000	)	(a)	$	135,025
								10,000		(b)
								(100	)	(c)
Accounts Receivable		4,699,209			1,882,072							6,581,281
Inventories		6,297,985			1,874,793			95,104		(d)		8,267,882
Prepaid Expenses and Other Assets		252,253			172,271							424,524
Current Assets		14,365,596			3,938,113							15,408,712
Property, Plant and Equipment		972,336			1,099,677			1,343,605		(d)		3,415,618
Deferred Income Tax Asset		13,487			0							13,487
Intangible Assets		0			48,236			(48,236	)	(e)		4,350,000
								4,350,000		(e)
Goodwill		0			384,827			(384,827	)	(f)		5,790,132
								5,790,132		(f)
Other Assets		0			0							0
Total Assets		15,351,419			5,470,853							28,977,949
LIABILITIES
Current Portion of Debt		91,879			5,047,884			(3,000,000	)	(a)		2,139,763
Accounts Payable and Accrued Liabilities		4,291,818			4,343,917			250,000		(g)		8,885,735
Income Taxes Payable		236,366			0							236,366
Current Portion of Deferred Income Tax Liability		0			0			164,650		(h)		164,650
Advances from Limited Partners of a Shareholder		150,000			0							150,000
Current Liabilities		4,770,063			9,391,801							11,576,514
Pension Deficit		328,116			0							328,116
Deferred Income Tax Liability		0			0			2,105,335		(h)		2,105,335
Long-Term Debt		0			2,693,745							2,693,745
		5,098,179			12,085,546							16,703,709
SHAREHOLDERS' EQUITY
Capital Stock		29,000			6,985			(6,985	)	(i)		29,486
								486		(i)
Additional Paid-in Capital		5,285,729			94,915			(94,915	)	(i)		7,556,243
								1,449,514		(i)
								821,000		(j)
Treasury Stock		0			(4,117,917	)		4,117,917		(k)		0
Accumulated Other Comprehensive Loss		(355,545	)		0							(355,545	)
Accumulated Retained Earnings (Deficit)		5,294,056			(2,598,676	)		2,598,676		(l)		5,044,056
								(250,000	)	(g)
Total Shareholders' Equity		10,253,240			(6,614,693	)						12,274,240
Total Liabilities & Shareholders' Equity	$	15,351,419		$	5,470,853						$	28,977,949

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

3

Pioneer Power Solutions, Inc.

(Formerly Sierra Concepts, Inc.)

Pro Forma Consolidated Statements of Earnings

For the Three Month Period Ended March 31, 2010

(Unaudited)

(Expressed in U.S. Funds)

										Pro Forma
	Pioneer		Jefferson							Consolidated
	Power		Electric,			Pro Forma				Statement
	Solutions, Inc.		Inc.			Adjustments				of Earnings
Sales	$	8,250,817	$	4,440,731						$	12,691,548
Cost of Goods Sold		6,444,382		3,729,309		95,104			(d)		10,268,795
Gross Profit		1,806,435		711,422							2,422,753
Expenses
Selling, General and Administrative		1,103,004		826,211			(60,000	)	(m)		1,869,215
Depreciation		46,999		101,250			39,812		(n)		188,061
Amortization of Intangibles		0		0			41,381		(o)		41,381
Foreign Exchange (Gain)/Loss		92,494		0							92,494
		1,242,497		927,461							2,191,151
Operating Income		563,938		(216,039	)						231,602
Interest and Bank Charges		13,090		155,027			(71,781	)	(p)		96,336
Transaction and Bank Expenses		0		65,400			(65,400	)	(q)		0
Other, Net		0		394							394
Earnings Before Income Taxes		550,848		(436,860	)						134,872
Provision for Income Taxes		161,000		0			(108,100	)	(r)		52,900
Net Earnings		389,848		(436,860	)						81,972
Other Comprehensive Income
Foreign Currency Translation Adjustments		332,034		0							332,034
Pension Adjustment, Net of Taxes of $1,833		3,119		0							3,119
Comprehensive Income	$	725,001	$	(436,860	)					$	417,125
Basic and Diluted Weighted Average Number of Common Shares Outstanding		29,066,398		2,295			(2,295	)	(s)		29,552,673
							486,275		(s)
Basic and Diluted Earnings Per Common Share	$	0.01								$	0.00

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

4

Pioneer Power Solutions, Inc.

(Formerly Sierra Concepts, Inc.)

Pro Forma Consolidated Statements of Earnings

For the Year Ended December 31, 2009

(Unaudited)

(Expressed in U.S. Funds)

											Pro Forma
	Pioneer			Jefferson							Consolidated
	Power			Electric,			Pro Forma				Statement
	Solutions, Inc.			Inc.			Adjustments				of Earnings
Sales	$	40,598,576		$	20,185,997						$	60,784,573
Cost of Goods Sold		28,733,839			18,225,578		95,104			(d)		47,054,521
Gross Profit		11,864,737			1,960,419							13,730,052
Expenses
Selling, General and Administrative		4,052,459			4,075,366			(240,000	)	(m)		7,887,825
Depreciation		167,614			431,328			159,247		(n)		758,189
Amortization of Intangibles		0			0			165,524		(o)		165,524
Foreign Exchange (Gain)/Loss		(272,026	)		0							(272,026	)
		3,948,047			4,506,694							8,539,512
Operating Income		7,916,690			(2,546,275	)						5,190,540
Interest and Bank Charges		311,498			566,135			(188,593	)	(p)		689,040
Facility Shutdown Expenses		0			572,119							572,119
Transaction and Bank Expenses		0			179,201			(179,201	)	(q)		0
Other, Net		0			96,231							96,231
Earnings Before Income Taxes		7,605,192			(3,959,961	)						3,833,150
Provision for Income Taxes		2,490,000			0			(984,000	)	(r)		1,506,000
Net Earnings		5,115,192			(3,959,961	)						2,327,150
Other Comprehensive Income
Foreign Currency Translation Adjustments		487,463			0							487,463
Pension Adjustment, Net of Taxes of $93,736		(208,498	)		0							(208,498	)
Comprehensive Income	$	5,394,157		$	(3,959,961	)					$	2,606,115
Basic and Diluted Weighted Average Number of Common Shares Outstanding		23,292,603			2,295			(2,295	)	(s)		23,778,878
								486,275		(s)
Basic and Diluted Earnings Per Common Share	$	0.22									$	0.10

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

5

Pioneer Power Solutions, Inc.

Notes to Unaudited Pro Forma Consolidated Financial Statements

For the Three Month Period Ended March 31, 2010 and for the Year Ended December 31, 2009

1. Preliminary Purchase Price Allocation

On April 30, 2010, Pioneer completed the Merger. The unaudited pro forma consolidated financial statements reflect the total estimated purchase price for Jefferson of approximately $10.0 million, which consists of the following (in thousands):

Consideration:
Common stock (486,275 shares)	$	1,450
Warrant issued		821
Proceeds from warrant sale		(10	)
		2,261
Debt assumed:
Bank indebtedness		7,703
Capitalized lease obligations		39
		7,742
Total	$	10,003

6

Under the acquisition method of accounting, the total estimated purchase price is allocated to Jefferson’s tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of April 30, 2010, the effective date of the Merger. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, and other factors as described in the introduction to these unaudited pro forma consolidated financial statements, the preliminary estimated purchase price is allocated as follows (in thousands):

Cash and cash equivalents	$	9
Accounts receivable		1,882
Inventory		1,970
Prepaid expenses		172
Property and equipment		2,443
Accounts payable and accrued liabilities		(4,344	)
Deferred tax liabilities		(2,270	)
Net tangible liabilities acquired		(137	)
Definite-lived intangible assets acquired		4,350
Goodwill		5,790
Total Purchase Price	$	10,003

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Prior to the end of the measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

Identifiable intangible assets having finite lives arising from the Merger are valued at $1.9 million and will be amortized on a straight-line basis with a weighted average remaining useful life of 10.8 years.  None of the definite-lived intangible assets acquired are deductible for tax purposes. The excess of the purchase price over the aggregate fair values, which was $5.8 million, was recorded as goodwill.  Goodwill has an indefinite life, is not subject to amortization and is not deductible for tax purposes. Goodwill arising from the Merger will be tested for impairment at least annually (more frequently if indicators of impairment arise). In the event that management determines that the goodwill has become impaired, Pioneer will incur an accounting charge for the am ount of the impairment during the fiscal quarter in which the determination is made.

2. Pro Forma Adjustments

Pro forma adjustments are made to reflect the estimated purchase price, to adjust amounts related to Jefferson’s tangible liabilities and tangible and intangible assets to a preliminary estimate of the fair values of those liabilities and assets, to reflect the amortization expense related to the tangible and intangible assets and to reclassify certain financial statement amounts to conform to Pioneer’s financial statement presentation.

The specific pro forma adjustments included in the unaudited pro forma consolidated financial statements are as follows:

(a) To reflect advance of $3.0 million in cash to Jefferson which was used to partially repay Jefferson's bank indebtedness. The advance was made in the form of a subordinated note which has been eliminated upon consolidation.

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(b) To reflect proceeds received from sale of a warrant to purchase 1.0 million common shares to the former sole stockholder of Jefferson in conjunction with the Merger.

(c) To reflect the nominal price paid to acquire the remaining 0.1% minority equity interest in Jefferson's Mexican subsidiary.

(d) To reflect the fair value of inventory, property and equipment acquired in the Merger.

(e) To reflect the fair value of intangible assets acquired in the Merger consisting of the estimated value of customer relationships ($1.8 million), acquired Underwriters Laboratory files ($0.7 million), acquired trademarks ($1.8 million), and non-competition agreements ($0.1 million).

(f) To reflect the fair value of acquired goodwill as if the Merger occurred on March 31, 2010.

(g) To reflect estimated additional transaction costs resulting from the Merger.

(h) To reflect deferred tax liabilities arising out of the difference between the carrying value and fair value of Jefferson's tangible and intangible assets.

(i) To eliminate Jefferson’s historical capital stock and additional paid-in capital balances ($101,900) and to reflect the 486,275 shares of common stock issued to the former sole stockholder of Jefferson as consideration in the Merger.

(j) To reflect a fair value of $821,000, which was determined using the Black-Scholes option pricing model, for a five-year warrant to purchase 1,000,000 million common shares of the Company's common stock at an exercise price of $3.25 per share in exchange for proceeds of $10,000.

(k) To eliminate Jefferson’s historical treasury stock balance.

(l) To eliminate Jefferson’s historical stockholder's deficit balance.

(m) To reflect the discontinuation, upon the Merger, of monthly professional service fees paid to Jefferson's former financial advisor.

(n) To reflect incremental depreciation expense as a result of the write-up in the fair value of property and equipment acquired in the Merger.

(o) To reflect estimated pro forma amortization expense related to the intangible assets acquired in the Merger.

(p) To reflect interest expense savings as a result of the Merger due to the $3.0 million paydown of Jefferson's bank debt by Pioneer.

(q) Adjustment to eliminate expenses in connection with extending Jefferson's bank loan agreement that would not have been incurred had the Merger been completed as of the start of the fiscal period.

(r) To reflect  the expected future tax benefit of Jefferson's reported loss during the period based on the estimated marginal tax rate to take effect following the Merger (prior to the Merger, Jefferson was an S-corporation).

(s) To reflect the number of shares of Pioneer's common stock issued as consideration in the Merger.

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