Company Number: 12837935

Analysis Date: 2025-07-20 14:49 UTC

1. Credit Opinion: DECLINE
   CJ3 Ltd demonstrates significant financial distress with persistent negative net current assets and shareholders’ funds turning negative in the latest financial year. The company’s current liabilities substantially exceed current assets, indicating liquidity issues and potential difficulties in meeting short-term obligations. Despite directors’ assurances regarding going concern and pledged support, the financials reveal a fragile position unsuitable for new or increased credit without substantial security or guarantees.

2. Financial Strength:
   The company holds fixed assets valued around £365k consistently, but these are outweighed by short-term liabilities. Net current liabilities stood at approximately £368k for the year ended 31 August 2024, similar to prior years, indicating no improvement in working capital management. Shareholders’ funds have declined from positive £213 in 2023 to negative £3,222 in 2024, evidencing erosion of equity and accumulated losses. The micro-entity status limits disclosure detail but confirms a weak balance sheet with negative net assets.

3. Cash Flow Assessment:
   Current assets of £19,410 largely consist of short-term receivables and cash equivalents, which are insufficient to cover current liabilities of £387,338. This negative working capital position signals constrained liquidity and a risk that CJ3 Ltd may be unable to service immediate debts or operational expenses without external funding or director support. The directors’ note on going concern relies on pledged support rather than operating cash flows, highlighting dependence on shareholder intervention.

4. Monitoring Points:

• Liquidity ratios: Current ratio and quick ratio to monitor short-term solvency.
• Cash flow from operations: Track actual cash generation versus debt servicing needs.
• Debt maturity profile: Watch for upcoming creditor demands or potential refinancing risks.
• Directors’ support commitment: Confirm ongoing availability and terms of financial backing.
• Profitability trends: Monitor for turnaround in earnings to rebuild equity and reduce liabilities.