PRISM POWER LTD

1. Risk Rating: HIGH Justification: The company exhibits a severe deterioration in its financial position, transitioning from positive net assets of £420,122 in December 2022 to negative net liabilities of £1,437,486 by June 2024. The company is technically insolvent on a balance sheet basis, with net current liabilities of £1.4M and cash reserves reduced to near zero (£3,906). The continuation of the business is entirely dependent on a post-balance sheet recapitalisation event, and there has been a significant exodus of key management personnel.

2. Key Concerns: * Technical Insolvency and Going Concern Risk: The balance sheet as of 30 June 2024 shows net liabilities of £1.44M and net current liabilities of £1.41M. The directors explicitly note that "challenging trading conditions... placed the business under some strain." The company's status as a going concern is heavily reliant on a recently agreed third-party investment, without which the financial statements suggest the company cannot meet its obligations as they fall due. * Severe Liquidity Deterioration: Cash at bank has collapsed from £283,791 in December 2022 to just £3,906 in June 2024. Meanwhile, current liabilities have surged to £6.6M, largely driven by an invoice discounting facility (disclosed in the accounting policies) which accounts for the high debtor figure (£4.9M) and the corresponding creditor liability. This indicates the company is aggressively leveraging its sales ledger to fund operations. * Governance and Management Exodus: There has been a mass resignation of directors. Xxxxxx Xxxxxxxxname shown to subscribers (who signed the accounts in May 2025), Xxxxxx Xxxxxxxxname shown to subscribers, and Xxxxxx Xxxxxxxxname shown to subscribers all resigned on the same date (listed as 2026-04-24, which may be a filing error or future date, but signifies a complete boardroom shift). Xxxxxx Xxxxxxxxname shown to subscribers is also a Person with Significant Control (owning 75-100% of shares/voting rights). The simultaneous departure of a PSC and multiple directors alongside a recapitalisation raises questions about potential loss of control or a forced restructuring.

3. Positive Indicators: * Secured Recapitalisation: The directors state that the third-party investment to recapitalise the business has been "agreed and finalised." If this capital has been successfully injected, it provides a necessary lifeline and may resolve the immediate net liability position. * Active Trading Pipeline: The presence of £4.9M in debtors and £287k in stocks suggests the company is still actively undertaking significant contract work. The underlying business of manufacturing and maintaining critical power systems appears to have demand, indicating the distress may be operational/cash-flow related rather than a lack of market interest. * Longevity: The company has been incorporated since 2003, giving it a 20-year operating history. It has successfully navigated previous trading cycles, suggesting underlying operational resilience.

4. Due Diligence Notes: * Recapitalisation Verification: It is critical to obtain documentary evidence that the mentioned recapitalisation has actually been completed and the funds cleared. Assess the terms of this investment—has it resulted in a change of control, and does it involve debt-to-equity swaps or high-interest lending? * Invoice Discounting Terms: Investigate the terms of the invoice discounting facility. With debtors at £4.9M and the facility likely comprising a large portion of the £6.6M current liabilities, any breach of banking covenants or loss of this facility would trigger immediate administration. * Director Resignations: Clarify the exact dates and reasons for the mass director resignations. Confirm whether the departure of Xxxxxx Xxxxxxxxname shown to subscribers (PSC) aligns with the new investment or if there is a dispute. Verify who currently holds significant control following the recapitalisation and resignations. * Accounting Period Anomaly: The latest accounts cover an 18-month period (1 Jan 2023 to 30 June 2024). Investigate the reason for the extended period and the change in the accounting reference date, as this is often a red flag for delaying the reporting of bad news or facilitating a financial restructuring.

Names of the people mentioned are shown to subscribers. See subscription