SCORPION MUSIC GROUP LIMITED

Executive Summary

Scorpion Music Group Limited is a newly incorporated private company operating in music publishing with a negative net asset position and working capital deficit as of its first reporting period. The company’s solvency relies heavily on director funding, with a significant interest-free loan from the sole director underpinning current liabilities. While regulatory compliance is satisfactory, the early stage of operations and financial structure indicate a high-risk profile requiring further investigation into cash flow forecasts and funding plans.

SCORPION MUSIC GROUP LIMITED - Analysis Report

Company Number: 14849969

Analysis Date: 2025-07-29 19:22 UTC

1. Risk Rating: HIGH
   The company exhibits a significant net liability position shortly after incorporation, with net assets at -£244,549 and current liabilities nearly double current assets (£548,699 vs. £304,150). This indicates a negative working capital situation and raises concerns about the company's ability to meet short-term obligations without additional funding.

2. Key Concerns:

• Negative Net Assets and Working Capital Deficit: The balance sheet shows net liabilities and a working capital deficiency, which signals solvency risk in the absence of timely capital injection or improved cash flows.
• Large Amount Owed to Director as Interest-Free Loan: £542,099 is owed to the sole director, repayable on demand but interest-free. This related party debt poses liquidity risk if not supported by further director funding or converted into equity.
• Very Early Stage with Limited Operating History: Incorporated in May 2023 and reporting first accounts for an eight-month period, the company’s business model, revenue generation capacity, and cash flow sustainability remain unproven.

3. Positive Indicators:

• No Overdue Filings or Compliance Issues: Accounts and confirmation statements are filed on time, indicating good regulatory compliance.
• Director Support Evident via Loan: The director has provided substantial financial support via a significant loan, suggesting commitment to funding ongoing operations.
• Clear Ownership and Governance: The sole director and 100% shareholder is clearly identified, reducing risks related to control disputes or complex governance structures.

4. Due Diligence Notes:

• Investigate the nature and timing of expected cash inflows to address current liabilities, particularly the realization of debtors (£304,150, classified as prepayments and accrued income).
• Clarify the director loan terms and intentions: whether it will be repaid soon, converted to equity, or extended further.
• Assess the business model and revenue pipeline in the music publishing and sound recording sector to evaluate operational viability and growth prospects.
• Confirm absence of contingent liabilities or off-balance-sheet risks not reflected in accounts.
• Review any plans for additional capital raising or external financing to improve solvency and liquidity.