Company Number: 13584629

Analysis Date: 2025-07-20 11:55 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity concerns, evidenced by persistent negative net current assets and shareholders’ funds over multiple years. The liabilities consistently exceed assets, indicating an ongoing deficit position.

2. Key Concerns:

• Negative Net Current Assets and Shareholders’ Funds: The company’s current liabilities substantially exceed current assets (£-117,789 in 2024), and shareholders’ equity is negative (£-9,921 in 2024), signaling financial distress and potential inability to meet short-term obligations.
• High Director’s Loan Account Liability: £119,780 is owed to directors’ current accounts, with £100,000 secured against it, suggesting reliance on director funding which may not be sustainable or easily recoverable by other creditors.
• Operating Losses and Cash Flow Pressure: Cash balances have decreased from £59,597 in 2023 to £36,914 in 2024, indicating cash burn. The company’s inability to generate sufficient operational cash flow is a critical concern, especially given the negative working capital.

3. Positive Indicators:

• No Filing or Regulatory Compliance Issues: The company’s accounts and confirmation statement filings are up to date and not overdue, suggesting compliance with statutory requirements.
• Stable Management: The founding director has been in place since incorporation, providing stability in leadership.
• Small Entity Reporting: The company is classified as a small entity and benefits from simplified reporting, which may reduce administrative burden and costs.

4. Due Diligence Notes:

• Investigate Cash Flow and Profitability Trends: Obtain management accounts or cash flow forecasts to understand operational viability and potential turnaround plans.
• Assess Director Loan Arrangements: Clarify terms and security of director loans and the risk posed to external creditors.
• Review Lease Obligations: The company has lease commitments (£18,750 due within one year); assess impact on liquidity and any future commitments.
• Examine Trading Performance and Market Position: As a café operator in a competitive sector, evaluate customer base, revenue streams, and impact of external factors such as inflation or pandemic recovery.
• Confirm No Hidden Contingent Liabilities: Validate whether there are any off-balance sheet liabilities or ongoing disputes that could worsen financial position.