DATA CO LAB LTD

Executive Summary

DATA CO LAB LTD shows signs of financial distress with negative net assets but improved liquidity and working capital, indicating a potential path to recovery. Urgent action is needed to strengthen the balance sheet and manage debts while focusing on cash flow and operational scaling. With strategic interventions, the company may stabilize and improve its financial health over time.

DATA CO LAB LTD - Analysis Report

Company Number: 13149158

Analysis Date: 2025-07-20 17:27 UTC

Financial Health Assessment for DATA CO LAB LTD (As at 31 January 2024)

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1. Financial Health Score: D

Explanation:
The company shows some signs of life but is currently in a state of financial distress. Negative net assets and shareholders’ funds indicate a balance sheet "illness" that needs urgent attention. However, improving net current assets and cash balances suggest some recovery efforts or stabilizing cash flows, which may be a positive sign if sustained.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Cash at Bank	£5,997	A modest cash reserve, showing improvement from prior years (from £152). Positive for short-term liquidity.
Current Liabilities	£9,949	Debts due within one year, slightly increased from £8,850 in 2023. Needs monitoring to avoid liquidity crunch.
Net Current Assets (Current Assets - Current Liabilities)	£4,623	Positive working capital, a healthy "pulse" indicating the company can meet short-term obligations. Significant improvement from negative £800 in 2023.
Net Assets (Total Assets - Total Liabilities)	-£5,326	Negative net assets ("balance sheet infection") reflect accumulated losses exceeding assets.
Shareholders’ Funds	-£5,326	Mirrors net assets, indicating owners' equity is eroded. Negative equity is a symptom of financial stress.
Share Capital	£1.00	Very minimal capital base, typical for a small company but limits financial buffer.
Employees	0	No employees suggest reliance on contractors or the director alone, which may affect scalability and operational health.

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3. Diagnosis

• Balance Sheet Health: The company is showing a "symptom" of sustained losses or undercapitalization, as evidenced by negative net assets and shareholders’ funds. This condition is akin to a patient with chronic illness—there is a deficit that has built up over time.

• Liquidity and Working Capital: The positive net current assets and increased cash balance are encouraging signs—a "stable heartbeat." The company currently holds enough liquid assets to cover short-term debts, reducing immediate risk of cash flow failure.

• Leverage and Debt Position: Current liabilities have increased slightly, but the significant concern is the long-term creditors (£9,949), which contribute to the negative net assets. This "debt burden" restricts financial flexibility and may incur interest or repayment pressures.

• Operational Activity: The company operates in technical consulting and software development, sectors where intangible assets and intellectual property are key but not reflected heavily on the balance sheet. No employees are reported, suggesting a potentially lean or nascent operation.

• Governance and Control: The sole director and 100% owner is Dr Behnood Afsharizand, indicating clear control but also concentration risk. The director’s involvement is critical for turnaround and future strategy.

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4. Recommendations

• Capital Injection or Debt Restructuring: To address the "balance sheet infection," consider an equity injection or negotiate with creditors to restructure outstanding debts. This will strengthen shareholders' funds and reduce financial strain.

• Cash Flow Management: Maintain and enhance cash reserves by closely managing receivables and payables. Healthy cash flow is vital to maintain operations and avoid liquidity crises.

• Operational Scaling: Evaluate the business model to increase revenue streams or reduce overhead. Given zero employees, explore hiring or subcontracting strategically to scale projects without excessive fixed costs.

• Financial Monitoring: Implement regular financial reviews to detect early "symptoms" of distress. Use budgeting and forecasting tools to anticipate cash needs and profitability.

• Strategic Planning: Develop a clear business plan with milestones for returning to profitability and building net assets. Consider potential markets or services to expand consulting and software development offerings.

• Seek Professional Advice: Engage with financial and business advisors to assist with restructuring, tax planning, and strategic growth to ensure sustainable financial health.

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