Company Number: 12577204

Analysis Date: 2025-07-20 12:54 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity risks, reflected in persistent and increasing net liabilities and working capital deficits over the last several years. The negative shareholders’ funds and substantial creditors exceeding current assets indicate a strained financial position.

2. Key Concerns:

• Negative Net Assets and Shareholders’ Deficit: The company’s net liabilities have grown from approximately £4,761 in 2020 to £43,386 in 2024, signaling ongoing accumulated losses and erosion of capital.
• Chronic Working Capital Deficit: Current liabilities consistently exceed current assets (e.g., £98,632 liabilities vs. £53,760 assets in 2024), indicating potential difficulties meeting short-term obligations.
• High Director Advances: The directors have extended substantial loans/advances to the company (£76,875 outstanding in 2024), which may indicate reliance on insider funding to maintain operations and additional risk if these are repayable on demand.

3. Positive Indicators:

• Timely Filing and Compliance: The company is up to date on accounts and confirmation statement filings, with no overdue filings or indications of regulatory non-compliance.
• Active Status and Continuity: Incorporated in 2020 and currently active with no liquidation or administration proceedings reported.
• Revenue Recognition Policy and Accounting Compliance: The financial statements follow applicable UK accounting standards and small companies’ regime, suggesting adherence to statutory reporting requirements.

4. Due Diligence Notes:

• Investigate the nature and terms of director advances for potential repayment risk or impact on cash flow.
• Review detailed income statement and cash flow data (not provided) to assess operational profitability and cash generation capacity.
• Clarify debtor quality and aging profile given significant increase in trade debtors to £44,584 in 2024 from £1,007 in 2023; assess collectability risk.
• Understand business model sustainability given the industry classification in internet and mail order retail and the financial distress indicators.
• Confirm absence of contingent liabilities or off-balance sheet obligations that could exacerbate financial risk.