Company Number: 15092563

Analysis Date: 2025-07-20 13:50 UTC

1. Credit Opinion: DECLINE
   Basboga Limited is a newly incorporated private limited company with only one financial year of data, showing a weak financial position. The company has a significant negative net asset position of -£70,800, primarily due to £72,000 of capitalised borrowing costs recorded as long-term liabilities. Current liabilities (£34,576) exceed current assets (£35,776) only marginally, resulting in minimal net current assets (£1,200), which suggests very limited short-term liquidity cushion. The company is loss-making as evidenced by the accumulated deficit in the profit and loss reserve. Given the negative equity, lack of profitability, and low working capital, the company currently lacks the financial strength and cash flow stability to confidently service new credit facilities. Credit approval is not recommended at this stage.

2. Financial Strength:
   The balance sheet shows total net assets of -£70,800, indicating the company is technically insolvent from an equity standpoint. The primary reason is £72,000 of borrowing costs capitalised, creating a long-term creditor balance that outweighs the company's tangible net assets. Fixed asset details are not explicitly disclosed but appear to be linked to these capitalised costs. Shareholders' funds are negative, which is a concern for going concern. However, directors state a going concern basis due to expected sales growth, but this is unproven. The company has modest current assets mainly held in cash (£28,844) and short-term debtors (£6,932). Overall, the financial strength is weak.

3. Cash Flow Assessment:
   Cash balance of £28,844 provides some immediate liquidity; however, current liabilities of £34,576 erode working capital, leaving a net current asset position of just £1,200. Cash flow from operations is likely negative given £67,677 staff costs and an overall loss position implied by the negative retained earnings. The company operates with only two employees and seems to be in an early investment phase. The lack of positive cash flow and minimal working capital buffer indicates vulnerability to short-term cash demands and inability to meet debt service without additional financing or equity injection.

4. Monitoring Points:

• Track progress in generating positive operating cash flow and profitability in subsequent periods.
• Monitor reduction of capitalised borrowing costs or conversion to equity to improve net asset position.
• Watch for improvements in working capital ratios, especially current assets versus current liabilities.
• Assess management's ability to secure additional funding or improve sales growth, as claimed.
• Review any changes in director appointments or ownership structure impacting financial strategy.