ASYLUM MODELS AND EFFECTS LIMITED

Risk Rating: HIGH

Justification: The company moved from net assets of £244,684 at 30 June 2024 to net liabilities of £161,272 at 30 June 2025, with shareholders’ funds negative at £-161,374. Current liabilities of £437,230 exceed current assets of £241,638, producing net current liabilities of approximately £196,000. This indicates a net liabilities position and significant short-term funding pressure, although statutory filings remain up to date.

Key Concerns

1. Negative net assets and shareholders’ funds: Total liabilities exceed total assets, and shareholders’ funds are below zero, representing a deterioration of roughly £406,000 in one year.
2. Liquidity shortfall: Cash of £91,512 covers only about one-fifth of creditors due within one year (£437,230). Stocks have fallen to £11,130, leaving limited liquid assets to meet near-term obligations.
3. Rapid creditor growth: Creditors falling due within one year increased from £119,107 to £437,230, and creditors due after more than one year emerged at £50,992, suggesting a sharp accumulation of obligations without a corresponding increase in liquid resources.

Positive Indicators

1. Filing compliance: Accounts and confirmation statement are not overdue, and the company remains active on the register.
2. Cash reserves: A cash balance of £91,512 provides some short-term headroom, though it is insufficient to cover current liabilities in full.
3. Operational continuity: The company reports an average of 20 employees (up from 18) and continues to hold tangible fixed assets, which increased to £85,312 following additions of £84,012.

Due Diligence Notes

1. Request the full profit and loss account, which was not delivered with the abridged accounts, to identify the cause of the £406,000 swing in net assets (trading losses, impairments, or exceptional items).
2. Obtain a detailed breakdown of the £437,230 current creditors, distinguishing trade payables, tax liabilities, and any director or related-party balances.
3. Assess the recoverability of £138,996 debtors and the nature and expected return on the £84,012 tangible asset additions.
4. Clarify the terms, security, and repayment profile of the £50,992 creditors due after more than one year.
5. Review post-year-end management accounts and cash flow forecasts to determine whether the negative equity position has stabilized or worsened.
6. Confirm the ownership and control structure, given that one person with significant control holds more than 75% of shares and voting rights and the right to appoint and remove directors, which may concentrate decision-making.