Company Number: 13589848

Analysis Date: 2025-07-20 17:47 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency risk as demonstrated by its negative net assets position (£-216,113) and substantial net current liabilities (£-1,460,334) at the latest year-end (31 August 2023). The large increase in current liabilities relative to current assets, combined with a negative shareholder equity position, indicates potential financial distress.

2. Key Concerns:

• Negative Net Assets and Shareholders’ Funds: The company moved from positive net assets (£203,269 in 2022) to negative by 2023, signaling erosion of capital and potential insolvency risk.
• Severe Working Capital Deficit: The net current liabilities have increased markedly from £399,035 in 2022 to £1,460,334 in 2023, highlighting liquidity pressures and potential difficulty meeting short-term obligations.
• Concentration of Directors and Related Party Transactions: Key control rests with a single individual holding 25-50% shares and voting rights, with consultancy transactions between directors and the company. This may raise governance concerns and potential conflicts of interest.

3. Positive Indicators:

• Timely Compliance: The company has no overdue filings, with accounts and confirmation statements filed on time, indicating good regulatory compliance.
• Intangible and Fixed Asset Growth: Intangible fixed assets approximately doubled in value from £591k to £1.22m, suggesting investment in proprietary technology or intellectual property, which aligns with the IT services industry focus.
• Increasing Employee Base: The average number of employees increased from 6 to 10, indicating operational growth and potential business scaling.

4. Due Diligence Notes:

• Examine the nature of current liabilities: The increase in creditors, especially other creditors rising significantly, requires scrutiny to understand if these represent loans, deferred payments, or shareholder funding.
• Review cash flow and funding arrangements: Given the negative working capital, investigate recent cash inflows, any bridging finance, or shareholder loans to assess liquidity sufficiency.
• Evaluate related party transactions and director influence: Assess terms and appropriateness of consultancy fees paid to directors and the governance safeguards in place to mitigate conflicts of interest.
• Assess going concern assumptions: Directors have declared the company a going concern, but the underlying assumptions should be reviewed carefully in light of financial deterioration.
• Verify asset valuations: Confirm the basis for intangible asset capitalisation and amortisation policies to ensure realistic balance sheet representation.