DIGITAL DRAGONS IT LTD

Executive Summary

Digital Dragons IT LTD shows a deteriorating financial position with increasing net liabilities and negative working capital, indicating an inability to meet debt obligations. The company’s minimal assets and lack of employees suggest limited operational cash flow, leading to a high credit risk. Given these factors, credit approval is not advised without substantial financial restructuring or capital support.

DIGITAL DRAGONS IT LTD - Analysis Report

Company Number: 12406390

Analysis Date: 2025-07-20 12:33 UTC

1. Credit Opinion: DECLINE
   Digital Dragons IT LTD exhibits significant financial distress, with consistent and worsening net liabilities over recent years. The company’s negative net assets position (£-21,141 as of 31/01/2024) and persistent working capital deficits indicate an inability to meet short-term obligations. The absence of employees and minimal fixed assets further suggest limited operational capacity. Without evidence of profitability or capital injection, the risk of default on credit facilities is high.

2. Financial Strength:
   The balance sheet shows deteriorating financial health. Net current liabilities have increased from £-4,855 in 2021 to £-22,001 in 2024. Total net liabilities have grown to over £21k. Fixed assets are negligible (£860), and shareholders’ funds remain deeply negative. This indicates that liabilities exceed assets, and the company is technically insolvent on a balance sheet basis. The micro-entity status and lack of external equity injection or reserves undermine financial resilience.

3. Cash Flow Assessment:
   Current liabilities (£26,001) far exceed current assets (£4,000), resulting in a severe working capital shortfall. This lack of liquidity is a red flag for debt servicing capability. No employees or operational scale suggest minimal revenue generating capacity to improve cash flows. There is no indication of significant cash reserves or credit lines to buffer cash flow gaps.

4. Monitoring Points:

• Monitor future filings for improvements in net current assets and net asset position.
• Watch for any capital injections or shareholder loans to improve solvency.
• Track changes in operational scale or revenue streams that could enhance liquidity.
• Observe director conduct and filing compliance for any governance or regulatory risks.