CYGNET-WIRE LTD

Executive Summary

CYGNET-WIRE LTD demonstrates a precarious financial position with sustained negative net assets and inadequate liquidity, raising significant concerns about its ability to service debt. The company's reliance on director support and lack of operational cash flow underpin a high credit risk profile. Without substantial improvements in financial health or capital structure, credit facilities cannot be safely extended.

CYGNET-WIRE LTD - Analysis Report

Company Number: SC718514

Analysis Date: 2025-07-20 12:50 UTC

1. Credit Opinion: DECLINE
   CYGNET-WIRE LTD exhibits significant financial weakness with persistent negative net assets and net current liabilities. The company’s shareholders' funds remain substantially negative (£-17,621 as of 31 Dec 2023) and liquidity is strained given current liabilities (£22,744) far exceed current assets (£3,994). The absence of cash reserves and reliance on receivables that may not convert promptly increase repayment risk. The company is in early stages (incorporated in Dec 2021) and shows no employee base or director remuneration, suggesting limited operational scale and uncertain business sustainability. Despite director assurances of support, there is insufficient evidence of financial resilience or management capacity to support credit extension without significant conditions.

2. Financial Strength:
   The balance sheet reveals critical weaknesses: net current liabilities of £-18,750 and negative net assets of £-17,621. Intangible assets relate to digital cryptocurrency assets but have been impaired and revalued downward, reflecting volatility and possible impairment losses. No fixed tangible assets or cash holdings reduce collateral value and financial buffer. The company’s equity is entirely negative driven by accumulated losses (£-17,024 retained earnings). Overall, the financial structure is fragile with a high risk of insolvency absent capital injection or operational profitability.

3. Cash Flow Assessment:
   Liquidity position is poor with zero cash at year-end and receivables of only £3,994 against current liabilities of £22,744. Negative working capital of £-18,750 indicates the company may face difficulty meeting short-term obligations as they fall due. The absence of cash flow from operations (no disclosure of revenue or profit) and no employee payroll point to minimal ongoing trading activity or revenue generation. The company’s dependency on director financial support for going concern status highlights weak internal cash flow generation.

4. Monitoring Points:

• Monitor quarterly cash flow and liquidity position closely for any improvement or deterioration.
• Track debtors' collection efficiency and any changes in outstanding payables or creditor terms.
• Observe changes in intangible asset valuation related to cryptocurrency holdings given market volatility.
• Review management actions to improve capital structure or secure external financing.
• Watch for director support continuation or new capital injections to sustain operations.