POWER IOT SOLUTIONS LIMITED

Executive Summary

POWER IOT SOLUTIONS LIMITED exhibits signs of financial distress with negative working capital and net assets, indicating liquidity and capitalization challenges. The company currently relies heavily on director support to continue operations. Immediate actions focused on improving cash flow, securing additional capital, and stringent cost control are essential to restore financial health and sustainability.

POWER IOT SOLUTIONS LIMITED - Analysis Report

Company Number: 13881146

Analysis Date: 2025-07-20 12:49 UTC

Financial Health Assessment Report for POWER IOT SOLUTIONS LIMITED

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1. Financial Health Score: D

Explanation:
The company shows signs of financial strain, reflected in negative net current assets and net liabilities as of the latest financial year. While it remains a going concern due to director support, its balance sheet exhibits symptoms of distress. The micro-entity status and minimal asset base limit its financial resilience. This grade suggests caution and the need for prompt financial management actions.

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2. Key Vital Signs

Metric	2025 (£)	Interpretation
Current Assets	3	Extremely low; indicates minimal liquid resources
Current Liabilities	576	Liabilities due within one year outweigh assets significantly
Net Current Assets (Working Capital)	-573	Negative working capital; a red flag for short-term liquidity
Net Assets (Equity)	-573	Negative equity; company’s liabilities exceed assets
Shareholders' Funds	-573	Reflects accumulated losses or funding gaps
Number of Employees	1	Very small operation, typical of micro-entity

Interpretation:

• The company’s negative net current assets indicate it cannot cover its short-term debts with available liquid assets, a classic symptom of cash flow distress.
• Negative net assets show the company is technically insolvent on a balance sheet basis, indicating financial weakness or early-stage losses.
• Despite these signs, the company is classified as a going concern based on the director’s commitment to provide ongoing support, which acts like a stabilizing "lifeline."
• The minimal asset base and size suggest limited capacity to absorb shocks or invest in growth without external funding.

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3. Diagnosis

The financial "vital signs" reveal a company in a fragile state, akin to a patient with low blood pressure and weak pulse needing immediate care. The severely negative working capital and net assets signal liquidity stress and undercapitalization. This typically reflects either early-stage development with initial losses or operational cash shortages.

The continuing support from the director is currently sustaining the company, but this is a temporary measure rather than a sign of underlying financial health. The company has no significant fixed assets and minimal cash or receivables, suggesting limited operating activity or early setup phase.

In medical terms, the company is stable but at risk of a financial "collapse" if the director's support is withdrawn or if operating losses continue unchecked.

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4. Recommendations

To improve financial wellness and avert further distress, the company should consider the following actions:

1. Cash Flow Enhancement:

   • Accelerate cash inflows by improving billing and collections.
   • Negotiate extended payment terms with creditors to ease short-term cash outflows.

2. Capital Injection:

   • Seek additional equity investment or director loans to restore positive net assets and working capital.
   • Explore small business grants or funding schemes available for micro-entities in IT services.

3. Cost Management:

   • Review and minimize operational expenses, especially fixed overheads.
   • Avoid unnecessary expenditure until financial stability improves.

4. Business Development:

   • Focus on securing contracts or recurring revenue streams to build a reliable income base.
   • Consider partnerships or outsourcing to reduce capital needs.

5. Financial Monitoring:

   • Implement regular cash flow forecasting and budgeting to detect early warning signs.
   • Maintain transparent reporting and consider professional financial advice.

6. Governance and Compliance:

   • Continue timely filing of accounts and confirmation statements to avoid penalties.
   • Ensure directors’ responsibilities are clearly documented given the company’s financial position.

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