BAANX GROUP LTD — Credit Assessment

1. Credit Opinion: DECLINE (unsecured facilities)

This is a loss-making, highly leveraged crypto-asset business with eroded equity, stale financial information, overdue statutory filings, and recent governance instability. The company does not currently demonstrate the payment capability or financial resilience required for unsecured bank credit. Key drivers:

• Accumulated losses of £2.68m at FY2022, following a swing from +£173k retained profit to a £2.86m loss in a single year.
• Equity of just £255k, and only positive because of a £1.08m revaluation reserve created in FY2022. Stripping out this paper gain, underlying equity is negative (~£821k) — technically balance-sheet insolvent on an underlying basis.
• Extreme gearing: total liabilities of ~£14.0m against £0.26m equity. The business is funded almost entirely by creditors, principally £10.6m of long-term creditors (likely shareholder/investor loans — terms and subordination unknown).
• Overdue accounts and confirmation statement — a direct indicator of weak financial administration.
• Sector risk: digital assets/crypto lending is high volatility and carries UK regulatory (FCA registration) requirements. Note the SIC code (74909 – other professional/scientific activities) does not reflect the actual business described on its website.
• Governance concerns: PSC records are contradictory (one individual holding 50–75%, another >75% — both cannot be correct), and the 50–75% shareholder/director (Xxxxxx Xxxxxxxxname shown to subscribers) resigned in October 2025.

Any future reconsideration would require, at minimum: current filed accounts, subordination of related-party debt, tangible security or guarantees, and evidence of regulatory permissions.

2. Financial Strength

Weak and deteriorating. The balance sheet expanded aggressively between FY2020 (£2.2m assets) and FY2022 (£14.3m assets), funded by long-term creditors rising from £0.2m to £10.6m. This is classic cash-burn growth financed by external funding rather than retained earnings.

Asset quality is questionable: - £4.3m fixed investments appeared in FY2022, supported by a £1.08m revaluation — unaudited, nature undisclosed, and in a crypto business these may be digital-asset-linked and highly volatile. - £2.2m intangible assets with zero amortisation charged — aggressive treatment that flatters the balance sheet. - £4.7m "stocks" in a professional-services SIC company is unusual; if this represents digital asset holdings, realisable value is unpredictable.

The FY2022 accounts are unaudited, abridged, with no P&L filed — minimal transparency. Critically, the most recent detailed financials available are now over two years old, and current filings are flagged overdue. We are being asked to lend blind.

3. Cash Flow Assessment

• Cash at FY2022 was £2.55m (up from £1.65m), and the headline current ratio of 2.25x looks adequate. However, this is misleading:
• Quick ratio excluding stocks is 0.88x — below the 1.0x threshold, meaning liquid assets do not cover £3.4m of short-term creditors.
• Cash rose despite a £2.86m loss, achieved by liquidating working capital (debtors down £2.95m, stocks down £1.0m) and drawing a further ~£0.9m of long-term debt. That is funding-driven liquidity, not operational cash generation — unsustainable.
• With 25 employees (up from 15) and ongoing losses, the burn rate against available cash is a material concern. Debt service capability is effectively nil without continued external funding.

4. Monitoring Points

Should any exposure be contemplated or inherited, monitor:

1. Filing compliance — overdue accounts and confirmation statement must be regularised immediately; continued default is a strike-off risk and a covenant trigger.
2. FY2023–FY2025 accounts — revenue trend, loss run-rate, and cash runway versus the £2.55m last reported.
3. Nature of the £10.6m long-term creditors — related-party status, repayment terms, subordination, and any conversion rights.
4. Composition and valuation of stocks (£4.7m) and investments (£4.3m) — exposure to crypto market drawdowns and impairment risk against the thin equity base.
5. Ownership and board stability — resolution of the contradictory PSC register and the impact of the majority shareholder's resignation as director.
6. FCA registration status for cryptoasset activities — operating without required permissions would be an immediate decline/exit trigger.
7. Revaluation reserve (£1.08m) — the only item keeping equity positive; any write-down pushes the company into negative net assets.

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