Pomvom: How much cash room is left after the raise, restricted cash and debt
The liquidity chart points to almost ILS 27 million, but that figure includes restricted deposits. Once that layer is stripped out and set against debt and lease obligations, Pomvom enters 2026 with time it bought, not with an abundant cushion.
The main article argued that Pomvom bought time, but had not yet proven it could replace Merlin without reopening the cash question. This follow-up isolates only that issue: how much of the end-2025 cash position is actually free once restricted deposits, debt and the auditor's liquidity emphasis are read through properly.
The right frame here is all-in cash flexibility. The question is not how much normalized cash the business might produce in a steady year. The question is how much real room is left after actual cash uses, debt and lease obligations. That is the right lens because the 2026 pressure is not abstract: Merlin, which represented 41% of revenue and 40% of gross profit in 2025, rolls off during the second quarter.
What Is Actually Left In The Cash Balance
The most misleading number in the filing is ILS 27 million. It is not wrong, but it does need to be unpacked. In management's liquidity chart, the year-end balance includes restricted deposits. In the balance sheet itself, the picture is split: ILS 23.1 million of cash and cash equivalents, plus ILS 3.9 million of restricted deposits, of which ILS 0.7 million is current and ILS 3.1 million is non-current.
That difference matters because the deposit is not free cash. It is part of the bank-loan structure. Anyone reading the liquidity chart as if it reflects a fully available ILS 27 million cushion is missing the center of the story. The more liquid cash layer is ILS 23.1 million, and even that is before putting debt against it.
| Layer | ILS m | What it means |
|---|---|---|
| Balance embedded in the liquidity chart | 27.0 | Includes cash plus restricted deposits |
| Cash and cash equivalents on the balance sheet | 23.1 | This is the more usable cash layer |
| Restricted deposits | 3.9 | Cash tied to the loan structure |
| Long-term loans and current maturities | 14.6 | Financial debt on the books, including the PPP loan |
| Lease liability | 0.6 | Small, but still a real cash claim |
| Cash after loans and leases | 7.9 | The gross breathing room before 2026 operating needs |
That is not an empty cash balance, but it is not a wide cushion either. Once loans are set against it, the room shrinks to ILS 8.5 million, and after leases to ILS 7.9 million. For a small company entering a year in which a major partner rolls off, that already becomes a number that needs to be read carefully.
The 2025 bridge tells the same story. Operating cash flow turned positive at ILS 1.8 million, but alongside that came ILS 3.3 million of capex, ILS 7.0 million of long-term loan repayment, ILS 2.2 million of interest paid and ILS 0.4 million of lease payments. The ILS 19.3 million equity raise was two and a half times larger than the year's net increase in cash, ILS 7.7 million. Put differently, Pomvom did not exit 2025 with more cash because the operating model alone funded the year.
Debt Bought Time, But Not Cheaply
The May 2025 loan amendment did something important: it pushed the principal wall out. Instead of paying USD 2 million within 12 months, the company paid a one-time USD 1 million amount in May 2025, moved to 12 months of interest-only payments, and will now repay the remaining roughly USD 4.8 million in 37 equal monthly installments from June 2026 through June 2029. That cut current maturities to ILS 3.0 million at end-2025 from ILS 8.4 million a year earlier.
But that time was not bought cheaply. The stated rate on the loan stood at SOFR plus 7% at year-end 2025, or about 10.65%. The effective yield was already 18.26%. On top of that, the bank received 534,695 warrants, and the company also committed to an additional payment of up to USD 70 thousand if the share price averages ILS 4 or more across 30 consecutive trading days and if the company posts positive quarterly net profit for two consecutive quarters. This is no longer just plain debt. It is an expensive financing package with equity-linked upside for the lender.
The collateral package is also wide. The loan is secured by charges over company assets, goodwill, customer receivables, intellectual property and holdings in subsidiaries. In addition, the company must maintain a deposit equal to 25% of the unpaid principal balance. That is why part of what looks like available cash on the surface remains tied up.
| Item | Carrying amount at end-2025 | Contractual cash flow within 1 year | Contractual cash flow in 2 to 5 years | Why it matters |
|---|---|---|---|---|
| Long-term loans and current maturities | ILS 14.6 million | ILS 5.0 million | ILS 14.4 million | Contractual cash is higher than the carrying amount because it includes interest |
| Lease liability | ILS 0.6 million | ILS 0.2 million | ILS 0.4 million | Small relative to debt, but still fixed cash use |
The most important point here is what was not pressing immediately. At end-2025, the company was in compliance with its main covenant at 1281% versus a minimum threshold of 200% for cash and receivables relative to current maturities. In other words, Pomvom's problem at end-2025 was not covenant proximity. The bank was not standing at the door. The issue was, and still is, what that picture looks like after Merlin rolls off and the company has to preserve the same room on top of a smaller operating base.
Why The Auditor Still Highlighted Liquidity
The auditor's emphasis-of-matter paragraph did not appear because end-2025 looked like immediate insolvency. Quite the opposite: the year-end balance sheet looked calmer than 2024, and the covenant position was very wide. The paragraph appeared because the December 31, 2025 snapshot already stopped representing the economics of 2026.
That is exactly what note 1(e) says in more formal language. Management acknowledges that Merlin was a significant revenue source, presents a budget and action plans, points to an efficiency program implemented at the beginning of 2026, and adds that additional approved plans are available, including the allocation of resources toward raising further financing if needed for ongoing activity and expansion. This is not a going-concern qualification, but it is not a comfort paragraph either.
Management estimates the 2026 efficiency steps will reduce expenses and cash needs by ILS 7 million to ILS 8 million. That is material. But it has to be set against what is being replaced: not a seasonal wobble or a small contract, but the loss of a partner that generated ILS 90.7 million of revenue in 2025. So even if end-2025 is not a debt-wall story, early 2026 still remains a story of limited breathing room that depends on execution.
The non-obvious point is that the auditor's emphasis does not contradict the wide covenant headroom. It completes it. End-2025 says the company had enough air to avoid an immediate financing event. The emphasis paragraph says that air still depends on the cost-cut program, the ramp of new agreements and continued access to financing working roughly as planned.
The Bottom Line
Pomvom entered 2026 with a cash position that looked better than a year earlier, but part of that improvement rests on an equity raise, a pushed-out principal schedule and deposits that are not truly free. Anyone reading the ILS 27 million liquidity-chart figure as surplus unrestricted cash is missing the point. The more relevant figure is ILS 23.1 million of cash and cash equivalents, and the stricter one is roughly ILS 7.9 million after loans and leases.
That is why Pomvom's liquidity thesis is neither "the problem is solved" nor "the company is already at the edge." The more precise read is that the company bought itself time, but bought it at a high price and with a cushion that does not tolerate a long delay in replacing Merlin. The next reports should therefore be read less through headline new revenue and more through three numbers: truly free cash, actual debt service and how much gross profit the replacement contracts leave inside the business.
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