CUBBY’S SALVE COLLECTION LTD

Executive Summary

Cubby’s Salve Collection Ltd demonstrates significant financial stress as of its latest accounts, with negative net assets and working capital deficits indicating potential solvency and liquidity concerns. Although compliant with filing requirements and maintaining intangible asset value, increased leverage and operational cash flow uncertainties warrant thorough investigation. Investors should exercise caution and seek further financial and operational information before considering exposure.

CUBBY’S SALVE COLLECTION LTD - Analysis Report

Company Number: SC652727

Analysis Date: 2025-07-20 11:44 UTC

1. Risk Rating: HIGH
   The company exhibits a negative net asset position as of the latest financial year end, with liabilities exceeding assets. The recent emergence of long-term debt and ongoing negative working capital raise concerns about solvency and liquidity.

2. Key Concerns:

• Negative Net Assets and Shareholders' Funds: The company reported net assets of -£439 at 31 January 2024, a significant deterioration from £4,850 the prior year, indicating erosion of equity and potential insolvency risk.
• Negative Working Capital Position: Current liabilities (£2,493) exceed current assets (£2,037), resulting in a net current liability of -£456. This suggests the company may struggle to meet short-term obligations without additional financing.
• Introduction of Bank Loans: The presence of £1,833 in long-term bank loans as of 2024, when none existed previously, indicates increased leverage that may stress financial flexibility if cash flows are insufficient.

3. Positive Indicators:

• Company Status and Compliance: The company is active, not in liquidation or administration, and filings (accounts and confirmation statement) are up to date with no overdue submissions.
• Intangible Assets Consistent: The company maintains intangible assets valued at £1,850, which may represent capitalized development costs, indicating ongoing investment in proprietary products or processes.
• Single Director Stability: The sole director has been in place since incorporation, which could suggest stable management oversight.

4. Due Diligence Notes:

• Investigate the nature and terms of the recent bank loan facility, including interest rates, repayment schedule, and any covenants.
• Review cash flow statements (not provided) to assess operational cash generation and ability to service debt and current liabilities.
• Assess the valuation and recoverability of intangible assets and stock, especially given the inventory reduction and potential obsolescence risks.
• Clarify the absence of employees and the operational model given zero average employees reported, checking for reliance on third parties or outsourcing.
• Understand the reason behind the significant drop in net assets from 2023 to 2024, including any extraordinary expenses, impairments, or losses.