Investment Risk Analysis: NEUROMINDS LTD (07636375)

1. Risk Rating: HIGH

This company presents significant solvency and continuity concerns. It is technically insolvent with negative net assets of £15,745, is subject to a proposal to strike off from the Companies House register, and has an overdue confirmation statement. The business appears dormant with zero employees and no discernible trading activity, while accumulated losses continue to grow year on year.

2. Key Concerns

a) Technical Insolvency and Deteriorating Balance Sheet The filed accounts confirm negative net assets of (£15,745) as at 31 May 2024, a significant deterioration from (£5,219) in 2023 and (£100) in 2022. The profit and loss reserve shows accumulated losses of (£15,845). Long-term creditors of £23,867 and accruals/deferred income of £8,491 substantially exceed the company's assets. The company is unable to meet its obligations from its own resources and depends entirely on creditor forbearance.

b) Strike-Off Proceedings The company status of "Active – Proposal to Strike off" indicates that a process has been initiated to remove the company from the register. This could be voluntary (initiated by the director) or compulsory (initiated by a creditor or Companies House). Either scenario signals that the business is not intended to continue as a going concern. Any investment would be at immediate risk of being stranded in a dissolved entity.

c) PSC Register Inconsistencies and Overdue Filings Three individuals are listed as each owning more than 75% of shares: Mr Douglas De Souza, Mr Dougas Desouza (likely a duplicate entry with a typo), and Mr Steven Payne. It is mathematically impossible for three individuals to each hold >75% of ordinary share capital. This suggests either administrative errors in the PSC register or a failure to update the register following changes in ownership. Additionally, the confirmation statement is overdue, compounding governance concerns.

3. Positive Indicators

a) Positive Working Capital Position Net current assets stand at £16,613, with cash of £5,404 and debtors of £12,256 against current liabilities of only £1,047. This means the company can meet its short-term obligations, though this is of limited comfort given the overall negative equity position.

b) Longevity of Entity The company has been incorporated since 2011 (approximately 13 years), suggesting it has operated through various business cycles. It previously traded under the name NLP DYNAMICS LTD until 2019, indicating some operational history.

c) Minimal Creditor Pressure Indicators There is no evidence of county court judgments, winding-up petitions, or formal insolvency proceedings (administration, receivership) beyond the strike-off proposal. The long-term creditors may be related party debts rather than third-party obligations, which could mean less immediate enforcement pressure.

4. Due Diligence Notes

Strike-Off Origin: Determine whether the strike-off was initiated voluntarily by the director (Form DS01) or compulsorily by a third party. A compulsory strike-off by Companies House typically follows failure to file accounts or confirmation statements, which would align with the overdue confirmation statement noted. If a creditor has petitioned for winding up, this changes the risk profile significantly.

Long-Term Creditors (£23,867): Investigate the nature of these liabilities. Given the company's minimal share capital (£100) and accumulated losses, these are likely director loans or related party debts. If they are callable on demand, the solvency position could deteriorate further rapidly. The accounts provide no breakdown.

Debtors (£12,256): Understand the composition and recoverability of these debtors. In a dormant company with no turnover, the existence of significant debtors raises questions about whether these are inter-company balances, loans, or stale trade debts that may be impaired.

PSC Register Resolution: The duplicate/contradictory PSC entries must be clarified with Companies House. The register should reflect the current ownership position accurately. Mr Steven Payne's >75% holding alongside Mr De Souza's holding requires explanation.

Related Party Transactions: The accounts are unaudited and abridged, filed under the small companies regime. There is no related party disclosure, which is a standard requirement. Given the single director structure and the nature of the liabilities, related party transactions are highly probable and should be investigated.

Cash Trajectory: Cash has declined from £14,936 (2019) to £5,404 (2024), with a particularly sharp drop between 2019-2021. While the company is dormant, cash is being consumed by administrative costs, suggesting ongoing cash burn with no revenue to support it.

Accruals and Deferred Income (£8,491): This figure has remained unchanged between 2023 and 2024, which is unusual. Understand whether this represents income received in advance of services never delivered, or another obligation.