Company Number: 13110672

Analysis Date: 2025-07-19 13:05 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   AK Social Ltd is a very young micro-entity incorporated in early 2021, engaging in artistic creation. The latest accounts (year ended 31 January 2022) reveal a marginal net liability position (-£90) largely driven by accruals and deferred income (£62.55k) that exceed total assets less current liabilities (£62.46k). Although the company shows positive net current assets (£50.46k), the negative net asset position indicates a weak equity base. The overdue accounts filing is a concern for compliance and transparency. Given these factors, credit exposure should be limited or conditional on updated financial information and assurances on cash flow management.

2. Financial Strength:
   The balance sheet shows modest fixed assets (£12k) and current assets (£54.7k), with low current liabilities (£4.3k), which results in a strong working capital position. However, the large deferred income/accruals figure creates a net liabilities situation, effectively eroding shareholders’ funds. This suggests the company may have received payments in advance or has recognized income for services not yet delivered, reflecting timing differences rather than operational losses. The absence of retained earnings and the small share capital (£1) mean financial resilience is limited, and the company has no buffer to absorb adverse events.

3. Cash Flow Assessment:
   The accounts do not provide direct cash flow statements, but the strong net current assets imply reasonable short-term liquidity. The high deferred income could represent prepayments from customers, which provides some cash inflow, but also an obligation to deliver future services. The minimal current liabilities reduce immediate pressure on cash outflows. However, given the negative equity and stage of development, the company likely relies on ongoing funding or director support to maintain liquidity. The overdue accounts filing may also indicate limited administrative controls, which could impair cash flow management.

4. Monitoring Points:

• Timely submission of next accounts to assess updated financial position and profit generation.
• Changes in net asset position and whether net liabilities persist or are resolved.
• Level and nature of deferred income/accruals to understand ongoing obligations versus revenue recognition.
• Cash flow trends including operating cash generation and working capital movements.
• Compliance status with filing deadlines to avoid regulatory penalties and maintain creditworthiness.
• Any capital injections or director loans that support liquidity and solvency.