FALCON GLOBAL LIMITED

1. Risk Rating: HIGH

The company’s latest balance sheet shows a material deterioration in liquidity: current liabilities of £107,421 against current assets of £53,249, producing net current liabilities of £54,172. Cash at bank is nil, while bank loans and overdrafts due within one year total £58,459. Net assets fell from £164,201 to £120,878 during the year, an apparent decline of £43,323 in retained earnings. The company remains active and filing-compliant, but on the available data it does not appear to have sufficient liquid resources to meet its short-term obligations.

2. Key Concerns

• Negative working capital and zero cash: The company has a current ratio of approximately 0.50, with cash at bank reduced to nil. Bank borrowings and overdrafts are now wholly within one year, suggesting possible pressure from lenders or a need to refinance.
• Declining net assets and apparent loss: Retained earnings decreased by £43,323 in 2025. No income statement has been filed, but the movement indicates either a trading loss or distributions. This follows a more general pattern of volatile net asset levels over recent years.
• Intangible asset concentration and related party debtor: Intangible assets of £173,844 represent the vast majority of fixed assets. Recoverability depends on future project viability. In addition, related parties owed the company £19,143 at the balance sheet date, up from £nil in 2024, which raises questions about cash tied up outside the business.

3. Positive Indicators

• The company has been registered and active since 2000, with no current insolvency proceedings.
• Net assets remain positive at £120,878, and total assets stand at £228,299.
• Filing obligations appear up to date: accounts are not overdue, and the next confirmation statement is not due until September 2027.
• The company is entitled to the small companies exemption from audit, which reduces compliance burden but also means limited independent assurance over the figures.

4. Due Diligence Notes

• Obtain management accounts and cash flow forecasts to assess whether the company can continue as a going concern for the next 12 months.
• Confirm the terms of the bank facility, including the overdraft limit, security, repayment schedule, and whether any facilities are repayable on demand.
• Request a breakdown of other creditors (£37,368) and taxation liabilities (£10,509) to check for any arrears or HMRC time-to-pay arrangements.
• Investigate the nature and recoverability of the related party debtor of £19,143, including whether it is arm’s length and when repayment is expected.
• Review the composition and impairment assessment of intangible assets, particularly development costs capitalised and amortised over five years.
• Examine the decrease in retained earnings of £43,323 to determine whether this reflects trading losses, dividends, or director remuneration decisions.
• Check the Companies House register for any charges, debentures, or security against assets, which may affect creditor priority.
• Consider key-person risk: the company has only two directors/employees, and the directors control the entire issued share capital.