PERIPHERY SECURITY LTD

Executive Summary

Periphery Security Ltd is a micro-entity in early development with significant negative net assets and a large negative working capital position, reflecting acute liquidity and solvency challenges. The company is currently reliant on director support and convertible loans, with no clear evidence of profitability or sustainable cash flow. Given these financial weaknesses, credit exposure would be high risk without substantial mitigants or security.

PERIPHERY SECURITY LTD - Analysis Report

Company Number: 13961642

Analysis Date: 2025-07-29 16:39 UTC

1. Credit Opinion: DECLINE
   Periphery Security Ltd demonstrates significant financial distress, evidenced by persistent negative net assets and net current liabilities that have substantially worsened over two years. The current liabilities exceed current assets by £87k as of the latest accounts, indicating potential liquidity challenges. The company relies heavily on director support and convertible loan notes to sustain operations, which introduces refinancing and related-party risk. Given the micro-entity status and early stage of operation, with no demonstrated profitability or asset base, extending credit would pose high risk without substantial additional security or guarantees.

2. Financial Strength:
   The balance sheet shows a troubling trend with net liabilities worsening from approximately £9k negative in 2023 to nearly £88k negative in 2024. Fixed assets are negligible (£1k), and current liabilities have increased over tenfold to £122k, while current assets have increased modestly to £33k. Shareholders’ funds are deeply negative, indicating accumulated losses and no equity buffer to absorb shocks. The presence of convertible loan notes (£95,710) suggests reliance on debt financing convertible to equity, which is a positive governance measure but also underscores cash flow constraints.

3. Cash Flow Assessment:
   Current liabilities vastly exceed current assets, resulting in a negative working capital position of -£87k. This indicates that the company does not have sufficient liquid resources to cover short-term obligations without external funding or director support. The directors note continuing support, but this is not a guaranteed source of liquidity and presents contingent risk. No profit and loss data is available to assess operational cash flow generation, but the negative equity and net liabilities imply ongoing losses and cash burn.

4. Monitoring Points:

• Liquidity and working capital trends in next financial periods
• Status and terms of convertible loan notes and any upcoming conversion or redemption events
• Directors’ continued financial support and any capital injections
• Profitability development once operating history matures
• Any increase in tangible or intangible assets to build balance sheet strength
• Timely filing of accounts and confirmation statements to monitor compliance and transparency