Company Number: 14040883

Analysis Date: 2025-07-29 14:43 UTC

1. Risk Rating: HIGH
   The company exhibits a significant negative net asset position (£-1,343,058 as of 2023) and a large amount of long-term liabilities (£3.53 million convertible loans), indicating solvency concerns. Although the directors assert going concern status based on convertible loans not being demanded for repayment imminently, the substantial shareholder deficit and creditor reliance elevate risk.

2. Key Concerns:

• Negative Shareholders’ Funds: The company’s net liabilities have increased from £-444,390 in 2022 to £-1,343,058 in 2023, reflecting accumulated losses and potential erosion of capital.
• High Long-Term Debt Exposure: Convertible loans of £3.53 million, a significant increase from prior year, pose refinancing and liquidity risks if lending terms change or repayment is demanded unexpectedly.
• Working Capital Position: Current liabilities (£109,539) are covered by current assets (£2,296,541) with a strong net current asset surplus, but the large negative net asset position overall suggests financial stress beyond short-term liquidity.

3. Positive Indicators:

• Strong Cash Holdings: Cash of approximately £2.25 million provides good immediate liquidity to meet short-term obligations.
• No Overdue Filings or Compliance Issues: The company’s last accounts and confirmation statement are filed on time, indicating sound regulatory compliance.
• Growing Business Scale: Increase in current assets and convertible loans suggests ongoing investment and scaling efforts supported by lenders or investors.

4. Due Diligence Notes:

• Review Convertible Loan Terms: Confirm the conditions, maturity, interest rates, and conversion rights of the £3.53 million convertible loans and the lender’s stance on repayment or conversion.
• Assess Revenue and Profitability Trends: Obtain detailed profit and loss information to understand revenue growth, cost structure, and path to profitability given the accumulated losses.
• Investigate Directors’ Plans for Solvency: Validate management’s going concern assumptions and strategic plans to address the shareholders’ deficit and long-term liabilities.