SMALL BATCH CAFE LIMITED

Executive Summary

Small Batch Cafe Limited, a recently incorporated private limited company operating in the café sector, currently shows negative net assets and working capital deficits, raising significant solvency and liquidity concerns. While regulatory compliance is satisfactory, further examination of cash flows and loan recoverability is advised to assess operational sustainability. Investors should approach with caution until these financial uncertainties are clarified.

SMALL BATCH CAFE LIMITED - Analysis Report

Company Number: 14423155

Analysis Date: 2025-07-20 12:13 UTC

1. Risk Rating: HIGH
   The company exhibits negative net current assets and shareholders' funds within its first full accounting period, indicating potential solvency and liquidity challenges.

2. Key Concerns:

• Negative Working Capital: Current liabilities (£77,115) exceed current assets (£66,627) by £10,488, signaling possible liquidity issues that could impair the company’s ability to meet short-term obligations.
• Negative Shareholders’ Funds: Retained earnings and overall equity stand at a deficit of £8,957, reflecting accumulated losses or initial funding shortfalls, raising concerns about financial stability.
• Interest-Free Loans Repayable on Demand: £31,342 of loans to third parties are interest-free and repayable on demand, creating uncertainty around cash inflows and potential liquidity pressures if demands arise.

3. Positive Indicators:

• Timely Compliance: The company is active, with no overdue filings for accounts or confirmation statements, indicating good regulatory compliance and governance.
• Established Management: The director has been in position since incorporation, suggesting continuity in leadership.
• Clear Industry Focus: Operating in the unlicensed restaurants and cafes sector, a defined and understandable market segment, which may facilitate focused operational strategy.

4. Due Diligence Notes:

• Review cash flow forecasts and bank statements to assess short-term liquidity and ability to manage working capital deficits.
• Investigate the nature and collectability of the £31,342 interest-free loans to third parties, including terms and likelihood of repayment.
• Examine the company’s business plan and funding sources given the negative equity position to understand how ongoing operations are supported.
• Confirm any contingent liabilities or off-balance sheet obligations that may further impact solvency.
• Assess market conditions and competitive positioning in the local café sector to evaluate operational sustainability.