KAPLAN PHARMA LTD

Executive Summary

KAPLAN PHARMA LTD exhibits critical financial distress with negative net assets and severely inadequate liquidity, reflecting early-stage operational challenges and undercapitalisation. Immediate capital injection and cash flow management are essential to stabilise the business, while strategic focus and financial discipline will be vital for future recovery and growth.

KAPLAN PHARMA LTD - Analysis Report

Company Number: 15722154

Analysis Date: 2025-07-29 19:24 UTC

Financial Health Assessment of KAPLAN PHARMA LTD
As of Financial Year Ending 31 May 2025

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1. Financial Health Score: F (Critical Condition)

Explanation:
The company shows a critical financial health condition primarily due to deeply negative net current assets and net liabilities. This indicates severe liquidity distress and potential solvency issues early in its lifecycle.

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2. Key Vital Signs: Critical Metrics and Interpretation

Metric	Value (£)	Interpretation
Current Assets	150	Almost negligible cash or short-term resources available.
Current Liabilities	5,920	Short-term debts significantly exceed assets.
Net Current Assets (Working Capital)	-5,770	Negative working capital is a strong symptom of financial distress; company cannot cover short-term obligations.
Net Assets (Total Equity)	-5,770	Negative net assets indicate liabilities exceed total assets; company is technically insolvent.
Shareholders’ Funds	-5,770	The owner’s equity is negative, reflecting accumulated losses or undercapitalisation.
Number of Employees	1	Very small operational scale, typical for a micro-entity startup.
Account Category	Micro	Limited financial data due to small size and early stage.

Additional Context:

• The company was incorporated recently (May 2024) and has filed its first micro-entity accounts.
• The director, Mr. Ahmet Kaplan, owns 75-100% of shares and voting rights, indicating tight control but also concentrated risk.
• Industry classification includes research and experimental development, management consultancy, retail via mail order/internet, and textile wholesale, suggesting diverse or exploratory business activities.

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3. Diagnosis: What the Financial Data Reveals About Business Health

Symptoms of Financial Distress:

• The company’s balance sheet reveals a "critical illness" stage: current liabilities far outweigh current assets, creating a cash flow bottleneck. This is akin to a patient with dangerously low blood pressure—there is insufficient liquidity to sustain day-to-day operations.
• Negative net assets mean the company’s total obligations exceed its resources, a sign of insolvency risk. Without intervention, this could lead to creditor pressure or insolvency proceedings.
• The minimal asset base (£150) reflects either a startup phase with few operational assets or underinvestment in working capital.
• One employee suggests the company is in early development or pre-revenue phase, which may explain initial losses but does not alleviate the urgent need for capital infusion.
• Lack of audit and reliance on micro-entity provisions limit transparency but are typical for such small companies.

Underlying Issues:

• Potential undercapitalisation at formation.
• Possibly, early operating losses or initial expenses exceeding available funds.
• Cash flow management challenges are evident, with immediate liabilities threatening operational continuity.

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4. Recommendations: Specific Actions to Improve Financial Wellness

Immediate Actions (Stabilising the Patient):

• Capital Injection: The company needs an immediate cash infusion from the owner or external investors to restore positive working capital and provide liquidity for operations.
• Review and Restructure Debts: Negotiate with creditors to extend payment terms or reduce liabilities where possible, easing short-term cash flow pressures.
• Cash Flow Monitoring: Implement daily cash flow forecasts to detect liquidity crunches early and adjust spending accordingly.

Short to Medium Term (Rehabilitation and Growth):

• Business Model Clarity: Focus on core profitable activities. Given the diverse SIC codes, consider narrowing the business scope to improve operational efficiency and revenue generation.
• Cost Control: Minimise overheads and non-essential expenses until stable revenue streams are established.
• Financial Reporting: Prepare regular management accounts to monitor financial health beyond statutory filings, enabling proactive management decisions.
• Seek Professional Advice: Engage financial advisors or accountants experienced with startups and micro-entities to optimise financial strategy and compliance.

Long Term (Sustained Health):

• Build Reserves: Once operationally stable, accumulate positive net assets to build a buffer against future shocks.
• Diversify Funding Sources: Explore grants, loans, or equity financing aligned with company growth plans, particularly in research and development sectors.
• Governance and Controls: Establish internal controls to prevent financial mismanagement and ensure regulatory compliance.

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Medical Analogy Summary

KAPLAN PHARMA LTD is currently in the "critical care unit" of financial health, with dangerously low liquidity and negative equity marking symptoms of severe financial distress. Without urgent "treatment" in the form of capital support and debt restructuring, the "patient" risks insolvency. However, as a newly incorporated micro-entity, such challenges are not uncommon and can be managed with disciplined financial management and strategic focus.

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