ASSURESTACK LTD

Executive Summary

ASSURESTACK LTD is in the early stages of development but currently faces financial challenges including negative equity and limited cash reserves. While the company holds valuable intangible assets indicative of growth potential, urgent actions are needed to improve liquidity and manage debt to ensure ongoing viability. Focused efforts on revenue generation and financial oversight will improve the company’s prospects.

ASSURESTACK LTD - Analysis Report

Company Number: 14385331

Analysis Date: 2025-07-29 12:20 UTC

Financial Health Assessment for ASSURESTACK LTD as at 30 September 2024

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1. Financial Health Score: D

Explanation:
The company shows significant signs of financial distress, primarily due to negative net assets and a working capital deficit. While it holds intangible assets (development costs), its liabilities exceed assets, and cash reserves are minimal. This indicates a fragile financial position that requires close monitoring and remedial action.

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2. Key Vital Signs

Metric	2024 Figure (£)	Interpretation
Fixed Assets (Intangible)	78,000	Investment in development costs, indicating growth focus.
Current Assets (Cash)	160	Very low liquidity; minimal cash on hand.
Current Liabilities	242	Small short-term creditors; manageable in isolation.
Creditors Due After 1 Year	80,000	Significant long-term liabilities; likely loans or deferred payments.
Net Current Assets (Working Capital)	-82	Negative working capital, indicating short-term liquidity strain.
Net Assets (Total Equity)	-2,082	Negative equity means liabilities exceed assets, a symptom of financial distress.
Shareholders' Funds	-2,182	Negative shareholder equity; capital erosion.
Profit and Loss Account	-2,182	Accumulated losses or expenses exceeding income.

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3. Diagnosis

• Liquidity ("Healthy Cash Flow"): The company has a dangerously low cash balance (£160) and negative working capital of £82. This signals a lack of "healthy cash flow" to cover immediate obligations, akin to a patient with weak pulse and low oxygen saturation—urgent attention needed to avoid short-term financial collapse.

• Capital Structure ("Net Assets"): Negative net assets (-£2,082) and shareholders’ funds (-£2,182) indicate the company’s liabilities exceed its assets. This is comparable to a patient whose vital organs are underperforming—the foundation of the business is weakened, raising concerns about solvency.

• Asset Base: The company’s primary assets are intangible development costs (£78,000), likely capitalised software or technology development. While this represents future growth potential, intangible assets are less liquid and more uncertain in value compared to physical assets.

• Liabilities: The long-term liabilities (£80,000) are substantial relative to the asset base, potentially loans or deferred payments. The large amount compared to the company’s assets is a "symptom of distress," suggesting the company is financing growth through debt but without sufficient earnings or cash flow to cover it yet.

• Profit & Loss: The absence of reported profit & loss details (due to exemption) and negative retained earnings suggest the company may be incurring losses or reinvesting heavily in development. The directors have not provided an audit, which is permissible under small company rules but limits transparency.

• Operational Status: The company is young (incorporated 2022), with no employees reported and appears to be in an early development phase. This is consistent with start-up "growing pains" where expenses exceed revenue as the business invests in products/services.

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4. Recommendations

• Improve Liquidity:

  • Seek immediate injection of working capital through shareholder loans, equity funding, or short-term financing to strengthen cash reserves and cover upcoming liabilities.
  • Negotiate extended payment terms with creditors to ease short-term cash flow pressures.

• Monitor and Manage Debt:

  • Review terms of the £80,000 long-term liability; explore refinancing or restructuring options to reduce interest burden and improve repayment schedules.
  • Avoid accumulating further long-term debt without clear revenue generation plans.

• Enhance Revenue Generation:

  • Accelerate commercialisation of the intangible assets (development projects) to generate sustainable income.
  • Consider strategic partnerships or sales channels to convert development into cash inflows.

• Financial Reporting:

  • Consider voluntary audit or enhanced financial disclosure to improve stakeholder confidence and transparency.
  • Implement robust budgeting and cash flow forecasting to anticipate funding needs.

• Governance and Oversight:

  • Directors should actively monitor financial health and seek professional advice to avoid insolvency risks.
  • Explore potential grant funding or R&D tax credits applicable to technology development to improve financial position.

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Medical Analogy Summary

ASSURESTACK LTD currently exhibits "symptoms of financial distress" with negative equity and poor liquidity akin to a patient with low vital signs requiring immediate intervention. The intangible assets represent promising "organ function" but are insufficient alone to sustain the company's "life." Without prompt "treatment" via cash injections and debt management, the company risks entering a critical state of insolvency.

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