ATTY & SMART LIMITED

1. Risk Rating: HIGH

The company exhibits severe financial distress characterized by persistent, deepening insolvency and a critical lack of liquidity. Net liabilities have grown from £19,303 in 2017 to £80,754 in 2026, and the company holds virtually no cash (£210) to cover near-term obligations of over £80,000. Furthermore, the recent disposal of all fixed assets raises significant concerns about the viability of ongoing operations.

2. Key Concerns

• Critical Insolvency: The company is deeply balance-sheet insolvent. Net assets stand at negative £80,754, and shareholders' funds are negative £80,754, indicating accumulated losses that have entirely eroded the share capital and created a substantial deficit. This trajectory has worsened consistently over the past decade.
• Extreme Liquidity Deficit: Current assets total a mere £241 (comprising £210 cash and £31 debtors) against current liabilities of £80,995. This yields a current ratio of approximately 0.003, indicating an absolute inability to meet short-term debts as they fall due from existing resources.
• Asset Depletion: In the 2026 financial year, the company disposed of all its fixed assets—both intangible (trademarks of £3,642) and tangible (plant & machinery of £2,055). This leaves the company with no operational asset base to generate future revenue, suggesting a potential cessation of core trading activities or a shift in business model that is not evidenced in the accounts.

3. Positive Indicators

• Creditor Forbearance: The most notable, albeit circumstantial, positive indicator is that the company continues to operate despite its extreme insolvency. This strongly implies that the primary creditors—specifically the "Other creditors" owed £80,650—are likely related parties or directors who are willing to defer repayment to keep the entity active.
• Regulatory Filing Compliance: Despite the financial distress, the company has maintained its filing requirements for annual accounts up to 31 March 2026, which are not overdue. This prevents administrative strike-off by Companies House, though the confirmation statement is currently overdue.

4. Due Diligence Notes

• Composition of "Other Creditors": £80,650 out of £80,995 in current liabilities is categorized as "Other creditors." It is critical to determine who these creditors are. If they are director loans, the solvency risk is mitigated by the likelihood of subordination. If they are trade or institutional creditors, the risk of insolvency proceedings is imminent.
• Going Concern Basis: The accounts were prepared on a going concern basis, but no explicit justification or statement of support from creditors/directors is visible in the filleted accounts. An investor should request the director's rationale for the going concern assessment given the net liabilities and cash position.
• Overdue Confirmation Statement: The confirmation statement was due on 21 March 2026 and is marked as overdue. While less critical than overdue accounts, this indicates a lapse in basic administrative compliance that could lead to penalties or regulatory scrutiny.
• Operational Status: The disposal of all fixed assets and the presence of only £31 in debtors (suggesting no active trade debtors) requires investigation. It must be established whether the company has ceased trading, is acting as a dormant shell, or is operating a completely asset-light model.