INDICA TECHNOLOGY LTD

Executive Summary

Indica Technology Ltd is a small, early-stage IT consultancy and software developer with minimal but positive net assets. Liquidity has weakened recently, raising short-term credit risk. Conditional approval is recommended with ongoing close monitoring of working capital and cash flow to ensure debt servicing capability and operational resilience.

INDICA TECHNOLOGY LTD - Analysis Report

Company Number: 13160282

Analysis Date: 2025-07-20 11:15 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Indica Technology Ltd is a micro-entity with minimal financial scale and limited working capital. The company shows a declining net current asset position from £7,573 in 2024 to £1,959 in 2025, indicating tightening liquidity. However, it remains a going concern with positive net assets and no overdue filings. Given its small size and early stage (incorporated 2021), the credit risk is elevated but manageable with controls. Approval is conditional on monitoring liquidity closely and ensuring timely payment from customers. Additional security or guarantees may be advisable for larger credit lines.

2. Financial Strength:
   The balance sheet reflects a small but positive net asset base (£1,959) as of January 2025, down from £7,573 the prior year. Current assets increased modestly (£29.5k), but current liabilities nearly doubled (£27.5k vs £13.8k), causing net current assets to drop sharply. The company holds no fixed assets, consistent with a service-oriented IT consultancy and software development business. Shareholders’ funds are minimal but positive. Overall, the financial strength is fragile due to shrinking working capital and low capital buffers.

3. Cash Flow Assessment:
   The company’s liquidity position is marginal, with net current assets barely positive at £1,959 as of the last accounts. The increase in current liabilities suggests possible pressure on short-term cash flows. The average of 2 employees and the nature of the business imply relatively low fixed operating costs, but reliance on timely receivables and controlling payables will be critical. No cash flow statements are provided, so cash conversion cycles and free cash flow are unknown, adding uncertainty.

4. Monitoring Points:

• Monitor net current assets and liquidity ratios quarterly to detect any cash flow stress early.
• Track accounts receivable aging and payment patterns since short-term liabilities have risen significantly.
• Review any changes in director/shareholder control or business strategy given two directors hold significant control.
• Confirm continued accurate and timely filing of accounts and confirmation statements to avoid compliance risk.
• Assess impact of any new contracts or client concentration risk due to company size and industry.