Struggling payments company Powa Technologies — reportedly valued at £1.8 billion ($2.7 billion) — only had enough money in the bank at the start of this month to keep it going for two weeks, according to accounts seen by The Financial Times.
London-based Powa is struggling to pay staff and suppliers. Accounts show it raised a total of $50 million (£34.9 million) last year from investors, but as of February 5, 2016, when the accounts were approved, it only had $250,000 (£174,600) in the bank. Meanwhile, the group owes $16.4 million (£11.4 million).
In the disclosure, Powa says: “The Board considers this sufficient to cover our requirements for the next two weeks, from the date of the financial statement.” Powa, founded in 2007, has raised $175 million (£122.2 million) from investors to date.
Management says they are confident they can secure new funding but admit that funding issues “have cast significant doubts about the Group’s and the Company’s ability to continue as a going concern.” The phrase “going concern” is the legal term used when there is some risk of a company failing completely.
Auditors PwC flagged the risk of Powa going bust specifically in their report on the company.
The company says it is in ongoing discussions with high-net-worth individuals and family offices to pump more money into the company.
The board says it and existing shareholders will put more money into the business to keep the lights on for the next three to four months until long-term funding can be secured. Powa’s biggest investor, Wellington Management, gave Powa a loan as recently as November.
Powa says six potential investors are carrying out due diligence on the company at the moment and Powa itself is in discussion with Goldman Sachs and Royal Bank of Canada to appoint them as funding advisors. Powa said the company will make an announcement imminently that would “clarify the funding situation,” according to the FT Powa declined to comment further to Business Insider.
Just £120 in a whole year
The accounts of Powa Technologies (UK) also give an insight into the high burn-rate and low revenues that have got the business into trouble.
Powa has a mobile app called PowaTag that allows people to buy and order something by taking a photo of it on their smartphone. It also makes point-of-sale software for retailers and e-commerce software.
Powa Technologies (UK) is the rebranded name for MPayMe, a Hong Kong-based mobile payment app that Powa bought for $75 million in an all-stock deal in June 2014.
In that same year, which the accounts cover, the company had revenues of just £120, while running up administrative expenses of £2.3 million. That set up obviously left the company with a £2.3 million loss for the year.
Powa Technologies (UK) spent £975,118 on wages in the year, distributed to an average of 14 employees — an average salary of £69,650. Two directors between them took home £153,331 in pay and pension contributions.
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