Company Number: 14862316

Analysis Date: 2025-07-20 17:46 UTC

1. Risk Rating: HIGH
   Babba's Limited shows significant solvency concerns with net liabilities of £8,107 at the end of its first financial year. Negative net current assets indicate potential liquidity issues. The company is very new, incorporated less than two years ago, with limited financial history to assess operational stability.

2. Key Concerns:

• Negative Net Assets: The company’s net liabilities position suggests it is currently insolvent on a balance sheet basis, which raises concerns about its ability to meet obligations.
• Liquidity Shortfall: Current liabilities exceed current assets by £8,107, indicating a working capital deficit that could impact day-to-day operations.
• Business Viability: As a micro-entity in the food services sector, with only 2 employees and no reported profit and loss data filed, sustainability and cash flow generation remain uncertain.

3. Positive Indicators:

• No Filing or Compliance Issues: All statutory filings are up to date with no overdue accounts or confirmation statements, suggesting sound regulatory compliance.
• Clear Ownership and Control: The sole significant controller holds 75-100% shares and voting rights, providing clear governance and decision-making authority.
• Exemption from Audit: Being a micro-entity, the company benefits from simplified reporting and exemption from audit, reducing administrative burden.

4. Due Diligence Notes:

• Investigate the nature and cause of the negative net assets—whether this reflects start-up losses, initial costs, or unpaid liabilities.
• Review cash flow statements and management accounts if available to assess liquidity trends and operational cash generation since incorporation.
• Clarify the company's business model, revenue streams, and plans to improve financial stability.
• Confirm no contingent liabilities or undisclosed debts that could exacerbate solvency risks.
• Assess the background and financial strength of the principal shareholder and directors for potential support.