Company Number: 14673204

Analysis Date: 2025-07-20 18:54 UTC

1. Risk Rating: HIGH
   The company exhibits high solvency risk with net liabilities of £50,194 as at 31 March 2024. Current liabilities (£115,324) significantly exceed current assets (£29,712), resulting in a negative working capital position of £85,612. This financial structure indicates an inability to meet short-term obligations from available liquid resources.

2. Key Concerns:

• Negative Net Assets and Working Capital: The company’s balance sheet shows net liabilities and a substantial working capital deficit, highlighting financial instability.
• High Related Party Borrowings: Over £103,000 is owed to related parties, which may indicate reliance on external funding from controlling entities rather than operational cash flow.
• Start-up Losses and Limited Operating History: Incorporated in Feb 2023, the company reported a loss of £50,294 in its first 13-month period, which is typical for a start-up but requires close monitoring to ensure operational sustainability.

3. Positive Indicators:

• No Overdue Filings: The company is compliant with filing deadlines for accounts and confirmation statements, suggesting good governance in regulatory compliance.
• Clear Ownership and Control: Ownership is consolidated under L&J Churro Ltd, providing clear control and potentially facilitating funding or strategic support.
• Asset Base in Tangible and Intangible Assets: Although modest, the company holds fixed assets including plant and machinery (£39,512) and a trademark (£159), which supports ongoing business operations.

4. Due Diligence Notes:

• Investigate the terms and sustainability of related party loans and any plans for repayment or conversion to equity.
• Assess the company’s cash flow forecasts and break-even timeline, given the current negative working capital position.
• Review management plans to improve profitability and reduce losses in subsequent periods.
• Confirm lease obligations and their impact on cash flows, as future commitments total £25,825.
• Verify completeness of financial statements and explore any contingent liabilities or off-balance sheet risks not apparent from the current filings.