COLLABOR8 LTD

Executive Summary

Collabor8 Ltd is currently experiencing financial distress, characterized by negative net assets and a significant working capital deficit, which threatens liquidity. While investment in intellectual property signals potential, urgent action is needed to improve cash flow and strengthen the balance sheet. With focused financial management and possible capital support, the company can work towards restoring financial health and ensuring sustainable operations.

COLLABOR8 LTD - Analysis Report

Company Number: 13410933

Analysis Date: 2025-07-29 19:23 UTC

Financial Health Assessment Report for COLLABOR8 LTD

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1. Financial Health Score: D

Explanation:
The company is currently exhibiting symptoms of financial distress with significant negative net assets and working capital deficits. While the business remains active with no overdue filings, the balance sheet reveals a weakened financial position requiring urgent attention.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Net Assets	£-3,490	Negative net assets indicate liabilities exceed assets, a key symptom of financial weakness.
Net Current Assets (Working Capital)	£-15,491	Large working capital deficit suggests liquidity strain; company may struggle to meet short-term obligations.
Cash at Bank	£95	Very low cash reserves, insufficient as "healthy cash flow" buffer for operational needs.
Debtors	£820	Some receivables exist, but small relative to liabilities; cash conversion cycle appears weak.
Fixed Assets (Intangible IP)	£12,001	Investment in Intellectual Property assets, but amortisation not yet impacting P&L.
Shareholders’ Funds	£-3,490	Negative equity shows accumulated losses or funding gaps, reducing financial resilience.
Share Capital	£1	Minimal share capital, indicating limited initial equity injection.
Average Employees	2	Small team size consistent with micro or small company size and limited operational scale.

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3. Diagnosis

The financial "vital signs" of COLLABOR8 LTD reveal that the company is currently in an unhealthy financial state, primarily due to the substantial negative net current assets (working capital deficit of £15,491). This deficit signals acute liquidity problems, where current liabilities are far surpassing current assets, exposing the company to potential cash flow crises.

The negative net assets (£-3,490) reflect that the company owes more than it owns, which is a classic symptom of financial distress. The minimal cash balance (£95) compounds this concern, indicating that the company has little immediate liquidity to fund day-to-day operations or unexpected expenses.

Despite these red flags, the company has intangible assets (intellectual property worth £12,001), signaling some investment in future earning potential. However, this asset class is not highly liquid and cannot easily be converted to cash to cover liabilities.

The directors have stated no material uncertainties about going concern, but the current financials suggest they need a robust plan to restore liquidity and solvency. The company is small with only two employees, which limits its operational scale and may constrain revenue generation potential in the short term.

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4. Recommendations

To restore financial wellness and avoid worsening symptoms, the company should consider the following steps:

• Improve Liquidity Management:

  • Accelerate collection of debtors and tighten credit control to convert receivables into cash faster.
  • Negotiate extended payment terms with creditors to ease immediate cash outflows.
  • Explore short-term financing options or overdraft facilities as a bridge for working capital needs.

• Capital Injection or Restructuring:

  • Consider raising additional equity capital or shareholder loans to eliminate negative equity and stabilize the balance sheet.
  • Review the company’s cost structure and reduce unnecessary expenses to conserve cash.

• Monetize or Leverage Intangible Assets:

  • Develop a strategy to commercialize intellectual property to generate revenue streams.
  • Assess potential for licensing or partnerships to extract value from intangible assets.

• Regular Financial Monitoring:

  • Implement rigorous financial reporting and cash flow forecasting to identify emerging distress symptoms early.
  • Engage with professional advisors if necessary to advise on turnaround strategies.

• Maintain Compliance:

  • Continue timely filing of accounts and confirmation statements to avoid penalties and maintain stakeholder confidence.

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