Company Number: 12732422

Analysis Date: 2025-07-20 17:26 UTC

1. Risk Rating: HIGH
   The company shows persistent negative net current assets and shareholders’ funds over multiple years, indicating ongoing solvency and liquidity concerns. The directors’ significant outstanding loans to the company further highlight funding reliance on insiders, raising financial stability risks.

2. Key Concerns:

• Negative Net Current Assets and Shareholders’ Funds: The company’s net current liabilities are approximately £11,793 as of July 2024, with cumulative negative equity of £16,367, demonstrating that liabilities exceed assets. This condition has persisted for at least four years.
• Director Loans and Reliance on Insider Funding: Directors’ loans outstanding total approximately £214,507, a significant liability to the company and a sign that external financing or operational cash flow is insufficient. Such related-party financing may pose risk if directors withdraw support or face financial difficulties themselves.
• Low Turnover and Operating Scale: With turnover under £50,000 in the latest reported year and only two employees, the company operates at minimal scale, which may impair its ability to generate sustainable profits or cash flows to resolve negative equity and working capital deficits.

3. Positive Indicators:

• Current Filing Status and Compliance: The company is active, filing accounts and confirmation statements on time with no overdue filings, indicating compliance with regulatory requirements.
• Stable Director Structure: Two current directors have been in place since incorporation, providing continuity in management.
• Exemption from Audit: The micro-entity status and exemption from audit reduce administrative costs, which may be appropriate given the company’s size.

4. Due Diligence Notes:

• Review detailed cash flow statements, if available, to assess actual liquidity and timing of payables and receivables.
• Investigate nature and terms of director loans, including repayment schedules and any security interests.
• Clarify business model viability given low turnover and persistent losses—consider external market factors or operational challenges.
• Confirm absence of director disqualifications or regulatory investigations given the company’s financial position.
• Assess potential related-party transactions and risks arising from concentrated ownership and control.