Togeder: Where Cash Gets Stuck Between Inventory, Consignment and Receivables Financing

The main article on Togeder made a fair point: 2025 looked better operationally. Revenue rose to NIS 109.6 million, operating profit returned to NIS 15.2 million, net profit turned positive at NIS 1.9 million, and cash flow from operations also turned positive at NIS 6.58 million.

This follow-up isolates one narrower question: how much of that improvement actually got released into cash, and how much of it simply got stuck inside working capital. That is the key question here, because in Togeder it is not enough to stop at the profit line or at positive operating cash flow. The real test is where the cash sits at year-end, who is financing the in-between stage, and how much of the balance sheet is truly liquid.

The answer is less comfortable than the headline. On paper, the surplus of current assets over current liabilities jumped to NIS 22.7 million at the end of 2025 from NIS 5.7 million a year earlier. But inside NIS 94.0 million of current assets sit NIS 56.3 million of inventory, NIS 15.0 million of receivables, and only NIS 12.2 million of cash and cash equivalents. That is not a cash cushion. It is mostly a stock-and-customer-credit cushion.

Four datapoints hold the whole thesis together:

• Operating cash flow came in at NIS 6.58 million, but after NIS 1.08 million of lease principal, NIS 5.14 million of reported land-use and fixed-asset investment, and NIS 1.75 million spent on buying minority shares, the all-in cash picture was still negative by NIS 1.38 million.
• Inventory rose to NIS 56.3 million despite a NIS 1.50 million inventory write-down. That means the build happened even after some cleanup of weaker stock.
• Inventory on consignment with distributors jumped to NIS 6.94 million from NIS 1.80 million, while inventory stored in Uganda warehouses fell to NIS 5.85 million from NIS 14.03 million. The cash moved forward in the chain, but it still did not turn into cash.
• Receivables stood at NIS 14.96 million, while liabilities backed by receivables stood at NIS 11.53 million. In simple terms, a large part of the customer line was already being used as a financing base while the credit risk still remained with the company.

A working-capital surplus that does not become a cushion

If the read stops at the bottom line of working capital, 2025 looks like a cleanup year. Current assets rose to NIS 94.0 million, current liabilities fell to NIS 71.3 million, and the surplus between them almost quadrupled. It is easy to read that as a move from financing stress into breathing room.

But here the composition matters more than the sum. Almost 60% of current assets are inventory. Another roughly 16% are receivables. Cash is only NIS 12.2 million. That means the balance sheet looks better mainly because working capital is sitting deeper inside the operating cycle, not because it has already come out of it.

The liquidity note sharpens that further. Total contractual payments on financial liabilities within one year stood at NIS 68.5 million, up from NIS 59.8 million a year earlier. Even if all the financial assets listed in the credit and liquidity note are counted together, cash, restricted deposit, and receivables, the total only reaches NIS 29.5 million. In other words, the one-year liability load was more than twice the relatively available financial assets. The working-capital surplus is real, but it does not sit in places that are easy to use for paying obligations.

That distinction matters economically. In Togeder at the end of 2025, the question is not only whether there is profit. The question is whether that profit sits on a working-capital cycle that is already beginning to unwind, or on a cycle that still has to be financed. Right now the answer is much closer to the second option.

Inventory did not just grow. It moved deeper into the process and the channel

To understand where the cash gets stuck, the inventory line has to be unpacked. Here the mix matters more than the headline number. Raw material in dried cannabis flower fell to NIS 19.5 million from NIS 32.6 million. At the same time, work in process in dried flower jumped to NIS 26.3 million from NIS 8.7 million, and cannabis oil work in process rose to NIS 3.54 million from NIS 0.25 million.

That is a material point, because it means the 2025 inventory build is not just a warehouse full of raw agricultural stock. The cash moved one stage deeper into the process. Less sits at the very start of the chain, and more sits in processing and preparation for sale. Operationally that can reflect progress. In cash terms, it is still capital that has not come back.

The second layer in note 9 matters even more. At the end of 2025, inventory included NIS 6.94 million on consignment with distributors acting on the company's behalf, up from only NIS 1.80 million at the end of 2024. At the same time, inventory stored in the company's Uganda warehouses fell to NIS 5.85 million from NIS 14.03 million.

That shift tells a clear story. The inventory mix suggests that a larger part of the stock moved from warehouse storage toward the distribution channel. But in consignment, that cash has still not left the balance sheet. It is closer to the shelf and the market, but it still sits inside the company's inventory. That is why 2025 can look like an operationally improved year and still remain a year in which cash is locked inside stock.

The inventory write-down also helps frame the number correctly. The company recorded a NIS 1.497 million inventory impairment in 2025 after NIS 1.791 million in 2024. So this is not a case where inventory only looks bigger because nothing got written down. Even after a real write-down, inventory still grew. That is working capital that genuinely absorbs cash.

Customers are already being used for financing, not only for collection

The other side of the story sits in receivables. Note 20(c) describes a mechanism that is central to understanding cash quality here: during 2024 the group entered agreements with non-bank credit companies that provide short-term financing of 3 to 6 months backed by specific trade receivables. But this is not a true transfer of receivables off the company's risk. The note explicitly says the conditions for derecognition are not met, the contractual rights to cash flows were not detached, and the credit risk remains with the group.

That is the key point. The company pulls cash forward, but it does not transfer the risk away. That is why the balance sheet still shows both the receivables and the financial liability raised against them.

At the end of 2025, liabilities backed by receivables stood at NIS 11.53 million. Against that stood NIS 14.96 million of receivables. In other words, the receivables-backed liability was equal to roughly 77% of the entire customer line at year-end. Even without knowing exactly which invoices were pledged, the message is clear: the receivables line is far from a free pool of cash.

Note 32 adds another layer of caution. The company says that most of the group's sales were made to a small number of customers in Israel, and that customer balances therefore represent a concentration of credit risk. So this is not only a collection-timing issue. It is also a concentration issue. If some of those customers are also the base for discounting or pledging receivables, then the same layer on the balance sheet is carrying both a liquidity function and a credit-risk function.

Economically, the balance-sheet structure points to working capital being financed in two steps. First through inventory that moved deeper into processing and consignment, and then through receivables that are already being used as collateral for financing. That is not necessarily irrational in a year of growth and operational improvement, but it is still evidence that the cycle has not yet been released.

Positive operating cash flow still does not mean full cash flexibility

This is where the cash framing matters. In Togeder's case, the right lens is not only how much cash the business generates before other uses. The better lens is the full cash picture, what is left after the period's actual cash uses. That is the relevant frame when the question is whether 2025 really opened up financial room.

Operating cash flow, as noted, was NIS 6.58 million. That is real, and it matters, especially after prior years did not look like this. But the next step matters just as much. In the same year the company paid NIS 1.08 million of lease principal, spent NIS 3.72 million on land-use rights, NIS 1.41 million on property, plant and equipment, and another NIS 1.75 million on buying minority shares. After all of that, the full cash picture was still negative by NIS 1.38 million.

Even if the minority purchase is stripped out as a less recurring use, only NIS 0.365 million remains after lease principal and the reported investment in land-use rights and fixed assets. That is already a very thin result relative to the NIS 6.58 million headline.

The cash flow statement also gives the wider frame. Cash increased by NIS 3.78 million, but that increase did not come from the operating cycle freeing itself. It came alongside NIS 4.08 million of positive financing cash flow. So year-end cash is indeed higher, but the route to that higher balance still ran through debt and financing facilities, not only through a release of working capital.

What would prove that cash is finally starting to move

The 2025 report does not cancel the operational improvement. It just puts it in the right place. Togeder shows that the business can generate revenue and profit, but it still does not prove that the same cycle is already producing free cash.

For the read to change in the coming reports, three things need to happen together. The first is a real decline in inventory, or at least a stop to further accumulation, especially in consignment stock. If the goods have already moved to distributors, the next stage has to be collection, not longer parking on the shelf. The second is a lower reliance on receivables-backed financing relative to the receivables balance. If receivables keep growing only together with financing raised against them, the cash still is not really arriving. The third is the ability to hold positive operating cash flow after the actual uses of cash, not only before lease principal and investment.

The bottom line of this continuation is straightforward: 2025 improved the operation, but it still did not release the cycle. Cash moved from Uganda warehouses into processing, consignment, and receivables, and part of the receivables line has already become collateral for financing. Until that chain ends in cash rather than in more stock and more discounting, the quality of the cash improvement will remain limited.