DUGAA SYSTEMS UK LTD

Executive Summary

DUGAA SYSTEMS UK LTD is experiencing significant financial distress marked by negative net current assets and shareholders’ funds, indicating liquidity and solvency challenges. Immediate actions focusing on cash flow management, capital injection, and operational review are critical to stabilize and improve the company’s financial condition.

DUGAA SYSTEMS UK LTD - Analysis Report

Company Number: 13791037

Analysis Date: 2025-07-20 17:10 UTC

Financial Health Assessment of DUGAA SYSTEMS UK LTD as at 31 December 2024

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1. Financial Health Score: Grade D

Explanation:
The company is experiencing significant financial distress, indicated by persistent and increasing negative net current assets and shareholders' funds. The balance sheet reveals a heavy burden of current liabilities far exceeding current assets, a symptom of liquidity and solvency issues. Although the company is still active, these "symptoms" suggest a fragile financial condition requiring urgent attention.

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2. Key Vital Signs:

Metric	2024 (£)	Interpretation
Fixed Assets	1,124	Very low investment in long-term assets; minimal physical infrastructure. Indicates a lightweight asset base.
Current Assets	23	Extremely low short-term assets (cash, receivables). Indicates poor liquidity — "dry mouth" symptom.
Current Liabilities	115,019	High short-term obligations, potentially due soon. "Heavy debt load" causing strain.
Net Current Assets	(114,996)	Strongly negative working capital; company owes far more than it owns in liquid form. Critical liquidity "symptom".
Total Assets Less Current Liabilities	(113,872)	Negative net assets; company liabilities exceed assets, a key distress indicator.
Shareholders' Funds	(113,872)	Negative equity position shows accumulated losses or capital erosion — "weak immune system".

Trend Observation:
From 2021 to 2024, the company has seen a steady deterioration in net current assets and shareholders funds from -£45,600 to -£113,872, indicating worsening financial health over time.

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3. Diagnosis:

DUGAA SYSTEMS UK LTD exhibits clear symptoms of financial distress:

• Liquidity Crisis: The company’s current liabilities massively outweigh current assets. This "cash flow blockage" suggests the company may struggle to meet short-term obligations as they fall due.
• Solvency Concerns: Negative shareholders’ funds indicate that the company has accumulated losses or capital depletion; the balance sheet is deeply "unhealthy," with liabilities exceeding assets.
• Operational Contraction: The average number of employees is now zero (down from 2), potentially indicating business contraction, downsizing, or operational pause.
• Asset Base Minimal: Very low fixed assets suggest limited tangible resources to leverage or sell to improve liquidity.
• No Audit Requirement: Being a micro-entity exempts the company from audit, which may limit external scrutiny but also implies smaller scale operations.

Overall, the company’s financial "vital signs" suggest it is in a critical phase, with symptoms akin to a patient suffering from severe malnutrition and dehydration — the company lacks the financial "nutrients" and "fluid" (cash and assets) to sustain healthy operations without immediate intervention.

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4. Recommendations:

To improve financial wellness and reverse the downward spiral, the company should consider the following:

1. Urgent Cash Flow Management:

   • Develop a robust cash flow forecast to identify and prioritize payments.
   • Negotiate with creditors for extended payment terms or restructuring to ease immediate liquidity pressure.

2. Capital Injection:

   • The sole shareholder (Mr. Alex Code) could consider injecting fresh equity or convertible loans to restore positive net assets and stabilize the balance sheet.

3. Cost Rationalization and Business Review:

   • Evaluate operational costs to reduce overheads further.
   • Assess the business model and product-market fit to ensure sustainable revenue generation.

4. Debt Restructuring:

   • Explore formal or informal debt restructuring discussions with lenders to avoid insolvency risks.

5. Strategic Planning:

   • Consider seeking external professional advice, including turnaround specialists.
   • Review growth and investment plans cautiously until financial stability is restored.

6. Compliance and Reporting:

   • Maintain timely filings and transparent accounting to retain stakeholder confidence.

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Medical Analogy Summary:

DUGAA SYSTEMS UK LTD is currently in a state similar to a patient with severe dehydration and malnutrition: its financial "vital signs" are weak, with dangerously low liquidity and negative equity indicating deep distress. Without immediate "fluid" (cash) and "nutritional" support (capital and revenue), the company risks systemic failure. Prompt intervention is essential to restore financial health and ensure survival.

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