The business left behind after the sale of online fashion brand In The Style has outlined plans to enter liquidation.
Itsarm plc is the cash shell that remained listed on the London Stock Exchange's AIM after the operating company was sold to a private equity firm for £1.2m in a bid to avoid administration.
The listed entity said that while it received net proceeds of around £500,000 from the deal, it has no income and continues to incur operating expenses including the costs of having to remain an AIM-quoted company.
READ MORE: Click here to sign up to the BusinessLive North West newsletter
The company said these "costs are significant in the context of the cash available" to it.
Itsarm said that as of April 25, it had cash of £516,000 with current contractual liabilities of £231,000 primarily relating to one-off expenses incurred for insurance and advisory fees during April 2023.
It added that it also has ongoing costs including directors' fees, insurance, AIM listing fees, registrar fees, professional and other advisers' fees and website hosting payments.
Itsarm said the directors are "taking steps to renegotiate fees where possible" but said the current monthly spend is approximately £40,000 before any one-off expenses including advisory costs relating to the future of the company.
In a statement issued to AIM, the business said: "Given the company's cash position, its current contractual liabilities, the contingent liabilities it has to consider and the ongoing cost run-rate, the likelihood of the company being able to continue for a period longer than three months from the date of this announcement before becoming insolvent is low."
Itsarm has previously stated it does not intend to enter into an acquisition or reverse takeover deal and added that "no approach has been received from any third-party presenting an option for the company to undertake such a transaction since becoming a cash shell".
Its statement added: "Following further consultation with the company's advisers, the board has determined that it would be in the best interests of the company and its shareholders as a whole to put forward a formal proposal to shareholders for a members' voluntary liquidation of the company.
"The board is of the view that the MVL represents the best and most cost-effective option to protect and realise any shareholder value, given that the company's operating subsidiary has been sold and the company no longer has any trading business or income of any sort."
Itsarm has also said it intends to seek approval from its shareholders to cancel the admission of its shares on AIM.
If backed, the shares are expected to be cancelled on May 26.
Itsarm also said that if it is able to be wound up on a solvent basis, a distribution to shareholders "is anticipated but this is unlikely to exceed 0.2 pence per ordinary share".
It added that "there is unlikely to be any distribution to shareholders if the company is wound up on an insolvent basis".
In The Style's operating company, In The Style Fashion was bought by Baaj Capital LLP in March.
The brand was founded by Adam Frisby who led it to float on AIM in March 2021 with a market capitalisation of £105m.
READ MORE:
