PARAYTEC LIMITED

1. Risk Rating: HIGH

Justification: Paraytec Limited is deeply insolvent, with net liabilities of £1.5 million and a severe liquidity deficit. The company’s net current liabilities sit at £-1.5 million against negligible cash reserves of £2,322. The business is entirely dependent on the continued financial support of its parent company to meet its day-to-day obligations, rendering it a high financial risk without external subsidy.

2. Key Concerns

• Critical Solvency and Liquidity Deficit: The company’s current liabilities (£1.56M) vastly exceed its current assets (£54k), resulting in net current liabilities of over £1.5 million. With cash depleted to just £2,322 and no disclosed overdraft facilities, the company is entirely unable to meet its debts as they fall due from its own operational resources.
• Accumulating Losses and Equity Destruction: Shareholders' funds have deteriorated dramatically from a positive £2.02 million in 2020 to a negative £3.54 million in 2025. Retained losses are growing annually, indicating a persistent inability to generate profitable revenue from its operations.
• Going Concern Dependency: The directors' going concern assertion is explicitly predicated on the parent company (Truetide plc) continuing to fund operations via repayable loans. If the parent entity withdraws this support, calls in the loans, or faces its own financial difficulties, Paraytec Limited would almost certainly face immediate insolvency.

3. Positive Indicators

• Parent Company Backing: Truetide plc (formerly Braveheart Investment Group plc) has demonstrated a sustained commitment to funding the company through its developmental phase. The classification of parent loans under current liabilities is standard, but the historical context suggests a long-term willingness to support the subsidiary.
• Regulatory Compliance: The company is fully up to date with its statutory filing requirements. Accounts for the year ending 31 March 2025 were filed on time, and the confirmation statement is current, indicating no administrative neglect.
• Operational Progress: The strategic notes indicate ongoing commercial development, specifically the partnership with Analytik Limited to market the CX300 platform. This demonstrates that the company is still actively pursuing revenue generation and is not a dormant or abandoned entity.

4. Due Diligence Notes

• Parent Company Financial Health: The most critical area for further investigation is the financial stability and liquidity of Truetide plc. Because Paraytec is entirely dependent on the parent for survival, any distress at the parent level will cascade directly to this subsidiary.
• Loan Subordination: It must be confirmed whether the parent company loans classified as current liabilities are formally subordinated or if there is a legally binding commitment not to demand repayment for at least 12 months from the date of signing the accounts. Without this assurance, the going concern basis is fragile.
• Commercial Viability and Burn Rate: Further investigation is required into the realistic timeline for the CX300 platform to achieve commercial traction. With cash reserves critically low, understanding the monthly cash burn and the timing of expected royalty or sales income is vital.
• PSC Register Anomaly: The PSC register lists both Braveheart Investment Group Plc and Truetide Plc as holding more than 75% of shares and voting rights. While the accounts clarify that Truetide is the parent (previously named Braveheart), this overlap on the PSC register should be clarified to ensure accurate legal ownership records.
• Inventory Valuation: Inventories remain static at £25,044 (unchanged from 2024). Given the company's cash constraints, it is worth verifying whether this inventory is realizable or potentially obsolete, which could further erode the asset base.