Company Number: 13840254

Analysis Date: 2025-07-20 11:14 UTC

Risk Rating: HIGH

Justification: The company exhibits significant net liabilities and negative shareholders’ funds, indicating solvency concerns. Current liabilities exceed current assets substantially when considering all liabilities, especially long-term creditors. Despite some cash holdings, the company’s financial position suggests an inability to meet all obligations without additional funding or restructuring.

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Key Concerns:

1. Negative Net Assets and Shareholders’ Funds:
   As of 31 January 2025, the company has net liabilities of approximately £42,014 and shareholders’ funds of -£42,116. This negative equity position raises serious solvency concerns.

2. Substantial Long-Term Creditors:
   The company has long-term creditors of £50,671, which have increased markedly from £18,675 the previous year. This indicates growing debt obligations that may be difficult to service given the company’s financial profile.

3. Working Capital and Liquidity Risks:
   While current assets, primarily cash (£7,932), exceed current liabilities (£480), the company’s overall financial health is undermined by its long-term liabilities. The working capital position is positive, but this is outweighed by the scale of total liabilities, raising questions about sustainable liquidity and cash flow to cover all obligations.

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Positive Indicators:

1. Current Assets Consist Mainly of Cash:
   The company holds cash balances (£7,932) rather than illiquid current assets, indicating some immediate liquidity.

2. No Overdue Filing or Compliance Issues:
   The company’s accounts and confirmation statements are up to date and not overdue, demonstrating good regulatory compliance.

3. Single Director and PSC:
   The ownership and management are concentrated in one individual, which can facilitate quick decision-making and responsiveness.

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Due Diligence Notes:

• Nature and Terms of Long-Term Creditors:
  Investigate the composition, interest rates, repayment terms, and security of the £50,671 long-term creditors to assess refinancing or repayment risks.

• Cash Flow and Profitability:
  Review detailed profit and loss accounts and cash flow statements to understand operational cash generation, recurring revenues, and expense trends.

• Going Concern Assumptions:
  Confirm management’s rationale supporting the going concern basis given the negative equity and increasing debt levels.

• Future Funding Plans:
  Assess plans for capital injection, debt restructuring, or asset sales to address net liability position.

• Director’s Track Record and Related Party Transactions:
  Given the director is also the sole shareholder and secretary, check for any related party loans or transactions that could impact financial stability.

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