CIPHERX TECHNOLOGIES LTD

Executive Summary

Cipherx Technologies Ltd exhibits strong liquidity and working capital but faces significant challenges due to a steep decline in net assets and accumulated losses. The large long-term liability poses solvency risks that demand careful management. Immediate focus on debt restructuring, profitability improvement, and capital reinforcement is essential to restore financial health and ensure sustainable growth.

CIPHERX TECHNOLOGIES LTD - Analysis Report

Company Number: 13607960

Analysis Date: 2025-07-20 14:57 UTC

Financial Health Assessment: CIPHERX TECHNOLOGIES LTD (As of 30 September 2024)

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1. Financial Health Score: C

Explanation:
Cipherx Technologies Ltd shows mixed signs of financial health. While it maintains solid current assets and positive working capital ("healthy cash flow" indicators), its net assets and shareholders' funds have sharply declined from the previous year, reflecting "symptoms of distress" in capital structure and profitability. The presence of significant long-term liabilities raises concerns about solvency risks. Overall, the company is in a fragile state requiring attention to avoid worsening financial conditions.

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2. Key Vital Signs (Core Financial Metrics)

Metric	2024 Value	Interpretation
Current Assets	£189,574	Adequate liquid resources, mostly cash (£184,057), supporting short-term needs.
Current Liabilities	£9,058	Relatively low, indicating manageable short-term obligations.
Net Current Assets (Working Capital)	£180,516	Strong positive working capital indicates ability to cover short-term debts comfortably.
Creditors Due After One Year	£150,000	Large long-term liability; this could pressure financial stability ("chronic condition").
Net Assets	£30,516	Significantly decreased from £223,129 in 2023, signaling erosion of equity base.
Shareholders' Funds	£30,516	Reflects shareholder equity; sharp drop from previous year suggests losses or write-downs.
Profit & Loss Reserve	-£329,755	Deep accumulated losses, indicating ongoing unprofitability or investment burn.
Cash Reserves	£184,057	Good liquidity cushion, but declined from prior year (£220,353).

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3. Diagnosis: Financial Condition Analysis

Cipherx Technologies Ltd is currently in a "convalescent" phase financially. The company retains a strong liquidity position with abundant cash and solid net current assets, which is a positive "pulse" indication for day-to-day operations. However, the drastic reduction in net assets and shareholders' funds from £223k to just over £30k within one year is a "red flag" symptom. This deterioration arises mainly from an increase in long-term liabilities (£150,000) and a worsening Profit and Loss reserve, which now stands deeply negative (-£329,755).

The company's capital structure is burdened with significant long-term debt, which may strain its solvency if cash flows do not improve. The negative retained earnings suggest the company has been running at losses or investing heavily without corresponding revenue gains.

Additionally, the company is small-sized and classified under research and experimental development and online retail—a sector often requiring upfront investment before profitability. The presence of experienced directors and shareholders with significant control could be a strength if they can inject further capital or drive strategic improvements.

In summary, the company has "symptoms of financial distress" in its equity base and profitability, but a "healthy cash flow" buffer for now. It is vulnerable to liquidity shocks or failure to service long-term debt.

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4. Recommendations: Path to Financial Wellness

• Debt Management:
  Develop a clear plan to manage or refinance the £150,000 long-term creditor balance. Negotiating better terms or converting debt into equity would relieve pressure on net assets.

• Profitability Focus:
  Review the business model to identify ways to reduce losses and move towards profitability. Cost control and revenue enhancement should be priorities.

• Cash Flow Monitoring:
  Maintain rigorous cash flow forecasts to ensure liquidity remains strong. Avoid unnecessary cash outflows until profitability improves.

• Capital Injection:
  Consider raising additional equity capital from existing shareholders or new investors to rebuild shareholder funds and improve solvency.

• Operational Efficiency:
  Since the company operates in R&D and online retail, focus on optimizing operational efficiencies and scaling profitable segments.

• Regular Financial Reviews:
  Implement frequent financial health check-ups to detect early warning signs and act promptly.

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