SPLIT SECOND RESEARCH LIMITED

1. Risk Rating: MEDIUM

Justification: The company maintains positive net assets and adequate liquidity to cover short-term obligations. However, recent financial years show a significant and steady erosion of equity (from £198,200 in 2023 to £92,786 in 2025), indicating sustained operational losses and a contracting asset base that warrant caution.

2. Key Concerns

• Erosion of Shareholder Funds: Net assets have nearly halved from £175,504 in 2024 to £92,786 in 2025. The P&L reserves dropped by approximately £82,700, pointing to a substantial loss for the financial year ending December 2025.
• Declining Total Asset Base: Total assets have steadily decreased from £498,324 in 2023 to £250,128 in 2025. This suggests a contracting business scale, potential asset disposals to fund operations, or significant write-downs.
• Operational Contraction: The average number of employees dropped from 4 in 2024 to 3 in 2025. For a business operating in software development and research, a reduction in headcount could signal reduced project capacity or cost-cutting measures in response to financial pressure.

3. Positive Indicators

• Healthy Liquidity Position: Cash at bank stands at £94,299 as of December 2025. Net current assets (working capital) are positive at £68,987, indicating the company can comfortably meet its short-term liabilities of £123,352 using current assets of £192,339.
• Regulatory Compliance: The company is active, and all statutory filings (accounts and confirmation statements) are up to date with no overdue flags. The financial statements are properly prepared under the small companies regime (FRS 102 Section 1A).
• Stable Ownership Structure: Control is clearly defined under the parent entity, Split Second Holdings Limited (owning >75%), alongside the founding directors. This provides strategic continuity and clear governance.

4. Due Diligence Notes

• Profitability Drivers: Investigate the specific causes behind the significant drop in P&L reserves in 2025. Determine whether this is due to a one-off impairment, increased operating expenses, or a structural decline in revenue.
• Debtor Quality: Review the nature and aging profile of the £98,040 debtors. As trade receivables represent a large portion of current assets, confirming their collectability is crucial to validating the stated liquidity position.
• Director Resignation: Examine the circumstances surrounding the resignation of Xxxxxx Xxxxxxxxname shown to subscribers in January 2026 to understand any potential governance shifts or strategic disagreements.
• Parent Company Health: Clarify the financial stability of Split Second Holdings Limited, as the parent exerts significant control and may dictate future capital injections or strategic direction.

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