PROSPECTBASE UK LIMITED

1. Risk Rating: MEDIUM

The company is active and its statutory filings are current, but it remains balance-sheet insolvent with negative shareholders’ funds of approximately £99,000. While net current assets are positive and cash reserves have increased materially, the business is heavily dependent on collecting £3.79 million of trade debtors to meet £3.8 million of current creditors. The short operating history (incorporated February 2024) and secured borrowings over tangible assets add further vulnerability.

2. Key Concerns

• Negative net assets: Shareholders’ funds are negative at approximately £99,000 (called-up share capital of £1 offset by a profit-and-loss reserve deficit), meaning total liabilities exceed total assets on the balance sheet.
• Debtor concentration and liquidity mismatch: Trade debtors of £3.79 million comprise most current assets, while cash at bank is only £512,661 against current creditors of £3.80 million. Any significant delay or default in debtor payments could create acute liquidity pressure.
• Layered and secured creditor obligations: Current creditors include £764,373 of taxation and social security liabilities and £2.68 million of other creditors, with a further £822,862 due after more than one year. The accounts state that tangible fixed assets are pledged to secure borrowings subject to fixed and floating charges, which ranks those lenders ahead of unsecured creditors.

3. Positive Indicators

• All statutory filings are up to date; neither the accounts nor the confirmation statement is overdue.
• The net current position improved from a deficit of £186,239 in 2024 to a surplus of £687,373 in 2025.
• Cash increased from £57,863 to £512,661 over the same period.
• The directors have adopted the going concern basis and state they have a reasonable expectation that the company has adequate resources to continue in operational existence.
• A corporate entity (Prospectbase B2b Holdings Limited) holds more than 75% of shares and voting rights and has the right to appoint and remove directors, which may provide capacity for shareholder support if required.

4. Due Diligence Notes

• Obtain the profit and loss account, which was not included in the filed accounts, to assess turnover, gross margin, and operating cash flow for both years.
• Clarify the composition of “other creditors” (£2.68 million current and £822,862 non-current), including whether any balances are owed to group companies or related parties.
• Review the aging and credit quality of the £3.79 million trade debtor balance, including any significant concentrations or overdue amounts.
• Examine the terms of the borrowings secured by fixed and floating charges over tangible assets, including repayment dates and any covenants.
• Confirm whether the parent company or shareholders have provided any funding commitments, guarantees, or letters of support.
• Verify the status of the £764,373 taxation and social security creditor and the £158,334 corporation tax liability, including any arrangements with HMRC.