Credit Assessment: GO M.A.D. LIMITED (03302441)

1. Credit Opinion: CONDITIONAL

Decline for unsecured facilities. Consider modest, fully secured facilities only, subject to enhanced information requirements and personal guarantees from the Xxxxxxxname shown to subscribers directors.

Reasoning: - Negative tangible net worth. The balance sheet carries £2.05m of intangible assets — 85% of total assets — against net assets of £1.92m. Stripping intangibles out, tangible net worth is approximately -£132k. The note discloses these are predominantly development costs with a stated policy of no amortisation (the £50k annual charge implies only ~£0.5m of the £2.54m cost base is amortising patents/licences). Under FRS 102 this is an aggressive policy, and the accounts are unaudited, so the carrying value has had no external challenge. If impaired, reported equity is eliminated. - Equity erosion. Net assets fell £369k (-16%) in one year and are down 27% from the 2021 peak. With no income statement filed, we cannot determine whether this is a trading loss or dividend extraction — either is concerning given cash fell to £32k and bank debt rose in the same period. Paying dividends while liquidity tightens would be a stewardship red flag. - Working capital deficit. Net current liabilities of £93k (vs net current assets of £201k prior year). Current liabilities more than doubled to £378k, including £159k of tax/HMRC liabilities (up 87%) and £134k of unexplained "other creditors" (up from £8k).

Mitigants: 28 years of continuous trading through multiple downturns; clean filing and compliance record; no adverse director conduct data; modest absolute bank debt (~£177k); negligible trade creditor exposure; stable headcount of 14.

2. Financial Strength

The reported equity base looks comfortable until you examine its composition. This is an asset-light professional services business whose balance sheet strength rests almost entirely on capitalised development costs. Realisable asset cover for a lender is poor: £77k of fixtures/IT/vehicles and £245k of debtors. There is no freehold property. Security value is therefore limited to a debenture over book debts and whatever substance sits behind the intangibles — which requires independent verification.

3. Cash Flow Assessment

• Liquidity is thin. Cash of £31,852 covers just 8% of current liabilities. The company is effectively operating hand-to-mouth and is reliant on debtor conversion (£152k trade debtors, down 40% YoY).
• Falling debtors alongside falling equity suggests revenue contraction, not improved collections. Debtor days have likely shortened only because billings have shrunk.
• The £159k tax/social security creditor and £134k spike in other creditors must be explained. A HMRC Time-to-Pay arrangement or director loan reclassification would materially change the risk picture. Until clarified, treat as potential arrears funding the operation.
• Debt service on ~£177k of bank loans should be manageable if the business is genuinely profitable, but the absence of a filed P&L means repayment capacity cannot be evidenced from public data. Management accounts and the full income statement are a precondition to any facility.

4. Monitoring Points

1. Nature of the £369k equity reduction — trading loss vs. distribution. Obtain the income statement.
2. Composition of "other creditors" (£134k) and tax liabilities (£159k) — confirm no HMRC arrears/TTP.
3. Intangible asset substantiation — what revenue do the development costs support? Request impairment review evidence; consider amortisation-normalised equity in covenant setting.
4. Cash and working capital trajectory — quarterly management accounts; flag any further net current liability deterioration.
5. Bank debt movement — further increases without corresponding cash generation is a decline trigger.
6. Key person concentration — husband-and-wife director/PSC structure; succession and cross-guarantee position.
7. Filing behaviour — currently clean; any lateness would be an early warning signal given the stretched liquidity.

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