Company Number: 14844973

Analysis Date: 2025-07-20 17:18 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity concerns, as evidenced by substantial net current liabilities and negative shareholders' funds within its first financial year.

2. Key Concerns:

• Severe Negative Net Current Assets: The company shows net current liabilities of approximately £102k against current assets of £38.7k, indicating potential cash flow difficulties in meeting short-term obligations.
• Significant Negative Net Assets and Shareholders’ Funds: Net liabilities of £72,784 suggest the company is effectively insolvent on a balance sheet basis, which raises questions about ongoing financial sustainability.
• High Operating Lease Commitments: Future minimum lease payments total £280,000 over five years, representing a considerable fixed cost burden relative to current asset levels and negative equity, increasing financial strain.

3. Positive Indicators:

• No Overdue Filings or Regulatory Issues: The company’s accounts and confirmation statements are up to date, indicating compliance with filing requirements and good governance in this respect.
• Clear Ownership and Control: With a single controlling party owning 75-100% shares and voting rights, decision-making is centralized, which may allow for swift operational or financial restructuring if needed.
• Tangible Fixed Assets Present: Fixed assets of £29,171 provide some asset backing, although modest relative to liabilities.

4. Due Diligence Notes:

• Examine Cash Flow Projections and Funding Sources: Investigate how the company plans to address its negative working capital and fund lease obligations given the low cash on hand (£1,153).
• Assess Revenue and Profitability Trends: Limited financial history is available (first year), so review management accounts or forecasts to evaluate operational viability and ability to turn around the balance sheet deficit.
• Review Lease Terms and Potential for Renegotiation: Given the substantial lease commitments, analyze lease contracts for flexibility or break clauses that could mitigate future financial strain.
• Confirm Debtor Quality and Collectability: £35,031 of debtors represent a large portion of current assets; verify aging and likelihood of collection to assess liquidity reliability.

Executive Summary:
Art & Grind Ltd, a newly incorporated licensed restaurant and retail business, currently faces high solvency and liquidity risks as reflected by significant net current liabilities and negative net assets in its first year of trading. While regulatory compliance is satisfactory and asset base modestly positive, substantial lease commitments and negative working capital present challenges to operational sustainability. Further due diligence on cash flows, lease terms, and debtor quality is recommended to fully assess financial viability.