Company Number: 13035146

Analysis Date: 2025-07-20 13:11 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity concerns, as evidenced by persistent negative net current assets and net liabilities worsening year-on-year. These financial indicators suggest material difficulty in meeting short-term obligations without additional financing or operational improvement.

2. Key Concerns:

• Negative Net Current Assets: The company’s net current liabilities increased from approximately £14,866 in 2022 to £23,289 in 2023, indicating worsening liquidity pressure. Current liabilities exceed current assets substantially, raising concerns about meeting near-term obligations.
• Net Liabilities and Shareholders’ Deficit: The balance sheet shows net liabilities of £21,113 at the end of 2023, a deterioration from £12,306 the prior year, reflecting accumulated losses and erosion of equity capital. This signals ongoing financial distress and potential insolvency risk.
• Dependence on Related Party Creditors and Borrowings: Significant creditor balances include £34,400 owed to related parties and £12,415 in borrowings, highlighting reliance on external funding sources. The growth in trade creditors from £1,000 to £23,545 also suggests cash flow strain and possible payment delays.

3. Positive Indicators:

• Revenue Recognition and Inventory Growth: Stock levels increased markedly from £6,457 to £30,844, which may indicate business growth or stockpiling in anticipation of sales.
• Compliance with Filing Obligations: The company’s accounts and confirmation statements are filed on time, with no overdue filings, reflecting governance discipline in statutory compliance.
• Single Director with Full Control: Ms. Wenting Hu owns 75-100% of shares and voting rights, potentially allowing streamlined decision-making and control over remedial actions.

4. Due Diligence Notes:

• Investigate the nature and terms of related party loans and trade creditors, including repayment schedules and whether these represent ongoing support or deferred payments.
• Review cash flow statements and profit & loss accounts (not filed or disclosed here) to assess operational cash generation capability and loss trends.
• Clarify business model sustainability given persistent losses and negative equity—specifically, turnover trends and gross margins in the retail segment of sports goods.
• Confirm whether the company has any contingent liabilities or off-balance sheet commitments that may exacerbate financial risk.
• Assess the director’s plans or any restructuring initiatives to restore solvency or raise additional equity or debt finance.