CAGR: Smart City Boom Set to Propel California Grapes!

Overview of California Grapes International (CAGR)

California Grapes International, Inc. (OTC: CAGR) is a micro-cap company that historically specialized in importing and distributing California wines to international markets, particularly China. The company went public in 2003 and built a portfolio of over 300 California wine labels for export (^[1]) (^[2]). In 2012, it even opened a flagship California wine bar and retail shop in Beijing’s Sanlitun district as part of its expansion (^[2]). The bullish narrative behind the stock’s tagline – “Smart City Boom Set to Propel California Grapes!” – was that rapid urbanization and the rise of “smart cities” (especially in China) would spur a more affluent middle class, boosting demand for imported wines. Indeed, China was one of the world’s most important sources of growth in wine demand during the early 2010s (^[3]), which likely underpinned the company’s strategy. However, as detailed below, CAGR’s fundamentals and current status raise serious doubts about its ability to capitalize on any such boom. The stock trades at essentially penny-stock levels (literally fractions of a cent), reflecting a collapse in investor confidence and value.

Current Snapshot: The latest trading data shows CAGR at $0.0000 per share (rounded to four decimals), effectively valuing the company at nearly zero. CNBC lists the market capitalization at roughly $163 total (yes, only in the hundreds of dollars) with no dividend and minimal shares trading (^[4]). Simply put, the market has all but written off this company’s equity value.

Dividend Policy & Shareholder Yield

CAGR has never paid a dividend, and any near-term dividend prospects appear nonexistent. The CNBC stock summary explicitly shows “Dividend –” (blank) for the stock (^[4]), indicating a 0% yield. This is unsurprising given the company’s chronic lack of profits – GuruFocus notes the stock’s P/E is “At Loss” (negative earnings) (^[5]). As a small distribution business that struggled to scale its revenue, management likely prioritized working capital and expansion over returning cash to shareholders during its operative years. Moreover, CAGR is not a REIT or income-generating property trust, so metrics like FFO or AFFO (funds from operations) do not apply here. In fact, the company’s financial statements (last published in 2012) suggest it was in growth mode with minimal cash flow, making dividends impractical (^[2]). Shareholders have thus received no payouts and are instead relying on speculative capital gains – gains which have not materialized as the stock value has virtually evaporated.

Dividend History: There is no record of any past dividend distributions by California Grapes International. The firm’s focus was on reinvestment and overseas expansion, and given its subsequent collapse in market value, any notion of future dividends is highly speculative. Investors should assume a zero-yield, high-risk equity until a dramatic turnaround proves otherwise.

Financial Leverage and Debt Maturities

Leverage: California Grapes International’s balance sheet data is sparse due to limited disclosures after 2012. The last available figures (FY2012) showed total assets of only $1.84 million (^[2]), comprised largely of wine inventory and a small retail shop presence. There is no indication of significant long-term debt or outstanding bonds – any financing was likely done via short-term liabilities and equity dilution. The company did see its inventory balloon by +328% in 2012 (to ~$993k) as it ramped up for expansion (^[2]), which may have been funded by payables or advances from partners. However, no major loans or maturities have been reported publicly. It appears CAGR did not carry traditional bank debt or publicly traded notes that would come due; instead, it likely relied on private funding and issuing shares to raise cash (a common practice for OTC micro-caps).

Maturities: With no known long-term debt on the books, CAGR has no bond maturity schedule to worry about. This means there aren’t looming repayment deadlines – but that’s not necessarily a positive, as it reflects the company’s inability to secure sizable credit facilities in the first place. If there are any liabilities, they would be in the form of short-term obligations (e.g. accounts payable to wineries or trade creditors). Those would typically be due within 12 months and presumably managed through operating cash (which in CAGR’s case was very limited). The absence of term debt may have spared the company interest costs, but it also underscores that traditional lenders likely saw it as too risky or too small to lend to.

Financial Health: It’s important to note that Simply Wall St gives CAGR a 0/6 score on financial health (^[6]). In other words, by all standard metrics (debt levels, balance sheet robustness, etc.), the company fails to meet even minimal benchmarks. This suggests that if there are any debts, they probably exceed the company’s meager assets, or the equity is negative – a major red flag. Without current financial statements, investors cannot ascertain the exact leverage, but the takeaway is that CAGR has a very weak financial foundation. The company’s prior filings in 2012 were enough to upgrade it from “Stop” to “Yield” sign on OTC Markets (^[2]), but maintaining compliant status was an issue. Given no filings in recent years, one can infer that liabilities and potential default risks (if any) are opaque and uncontrolled, which significantly elevates investment risk.

Earnings, Cash Flow and Coverage Ratios

Operating Performance: CAGR’s earnings picture has been consistently bleak. The company’s own press release for FY2012 highlighted a 113% increase in sales (to ~$584k for 9 months) (^[2]), but it did not mention profits – implying that it likely still operated at a net loss. In fact, GuruFocus categorizes the stock’s earnings status plainly as “At Loss” (^[5]). This means the company has negative net income, so traditional coverage ratios are not meaningful.

Interest Coverage: Interest coverage measures how well earnings cover interest obligations. Given CAGR’s lack of profitability, any interest expense (if it even has interest-bearing debt) would not be covered by earnings. We do not have a reported EBIT figure, but it’s safe to assume EBIT was negative in recent years; thus an interest coverage ratio would be zero or undefined. The company’s strategy relied on equity funding rather than bank loans, so interest expense may have been minimal – but that’s only because lenders likely avoided extending credit. If there are hidden debts (e.g. a loan from an insider or convertible notes), the coverage would be very poor. For perspective, Simply Wall St flags that CAGR had a “high level of non-cash earnings” (^[6]) – a hint that reported income might include accounting gains or revenue not collected in cash. This often correlates with poor cash flow, meaning even if paper earnings existed, the cash to pay any fixed charges wasn’t there. All told, CAGR’s ability to service debt or interest is highly questionable, reinforcing its distressed status.

Fixed-Charge & Dividend Coverage: With no dividend commitments and presumably minimal fixed charges aside from basic operating costs (rent for a wine shop, etc.), there are no formal coverage ratios to calculate for those. However, the lack of any dividend is itself due to insufficient earnings to cover payouts. The company’s entire business barely generated half a million in annual revenue at last report (^[2]), which likely didn’t even cover salaries and SG&A, let alone leave a surplus for debt service or dividends. In summary, coverage metrics are effectively non-existent – CAGR doesn’t earn enough to cover anything beyond day-to-day expenses, and even that is in doubt.

Valuation and Comparables

By conventional valuation standards, California Grapes International is essentially valueless as a public company at this point. Its stock price is so low that rounding to two decimal places yields $0.00. The market cap is approximately $0.002 million (yes, about $2,000) according to analysis aggregates (^[6]), which is a rounding error in market terms. For context, that is orders of magnitude smaller than typical small-cap companies, indicating extreme distress or a dormant “shell” company. Here’s how CAGR stacks up on common valuation metrics:

– Price-to-Earnings (P/E): Not meaningful. Since earnings are negative, the P/E is effectively infinite. GuruFocus lists it as “At Loss” (^[5]), meaning you cannot derive a positive P/E. Investors in CAGR are not paying for current earnings at all – they’d be betting on a turnaround from losses to profits, which so far has not occurred.

– Price-to-Book (P/B): Approaches zero. GuruFocus calculates P/B as 0.0 (^[5]), implying that the stock trades at virtually nothing relative to any book value the company might have. This could be because the company’s book equity is negligible or negative, or because the market cap is so tiny that any book value per share (however small) makes the ratio effectively zero. In any case, a 0x P/B suggests the market doubts the company’s asset values or survival. (By contrast, healthy companies often trade at 1x–3x book; even distressed firms might trade at 0.5x book if there’s hope. 0.0x is off the charts.)

– Price/Sales: Insignificant. Using the last reported sales (~$0.58 million in 2012) and the current market cap (~$2k), the Price-to-Sales ratio is about 0.003. This is absurdly low – essentially the market is saying each $1 of annual revenue is only worth a fraction of a penny in market value. Typically, a stable beverage distributor might trade at, say, 1x to 2x sales. The microscopic P/S here underscores that investors assign virtually no value to the business’s revenue-generating ability. Of course, that revenue itself may no longer exist at 2012 levels, so even $0.58M might be an overestimate today.

– EV/EBITDA or P/FFO: Not applicable. The company likely has negative EBITDA and no meaningful “funds from operations.” As a non-REIT, P/FFO isn’t a standard metric, and given the losses, any EV/EBITDA would be negative or not meaningful. We also cannot reliably calculate an enterprise value (EV) since the market cap and any debt are unclear (but both are minimal).

Peer Comparables: Frankly, there are no true “comparables” for CAGR in the public markets. Its tiny size and delinquent status put it in the category of distressed penny stocks rather than active wine companies. For perspective, one could look at larger wine industry players – e.g., Constellation Brands (STZ) trades around ~4x sales and ~20x earnings, or smaller vintners like Willamette Valley Vineyards (WVVI) which might trade around 1x book – but such comparisons are not instructive here. CAGR lacks scale, brand assets, or profits, so comparing its ratios to any going concern is futile. The company’s valuation is essentially that of an empty corporate shell. In fact, the stock has been so illiquid and low-priced that OTC Markets moved it to the “expert market” (no public quotes) tier, meaning retail investors can barely trade it – a situation often reserved for companies that no longer merit a real valuation.

In summary, CAGR’s valuation metrics all point to one conclusion: the equity is practically worthless. Any investment at this stage is purely speculative, hinging on hopes of a miraculous business revival or a reverse merger that injects a new profitable venture into the shell.

Key Risks and Red Flags

Investors considering California Grapes International face an extreme risk profile, laden with red flags:

– Tiny Market Cap & Illiquidity: With a market capitalization in the mere hundreds or low-thousands of dollars, CAGR is effectively a failed listing (^[6]). Such a low value suggests the stock market anticipates a high probability of complete loss. The shares are also highly illiquid – Simply Wall St notes the stock “Shares are highly illiquid” (^[6]), and recent trading volumes are often zero. This means investors might not be able to sell their shares at any reasonable price. The bid-ask spread, if quotes exist at all, could be enormous (e.g., you might only find buyers at $0.000001 when sellers want $0.00001). Illiquidity amplifies volatility and risk of being stuck with an unsellable position.

– Lack of Financial Disclosure: A major red flag is the absence of up-to-date financial statements. The latest official figures are from 2012; Simply Wall St highlights that CAGR’s “latest financial reports are more than a year old” (^[6]) – in reality, they are nearly a decade out of date. This informational black hole means investors are essentially flying blind. The company ceased providing SEC filings or even OTC market updates, which triggered a downgrade to delinquency status. Back in late 2012, management had to scramble to file statements to avoid an OTC “Stop” sign (^[2]); it achieved temporary compliance, but evidently couldn’t maintain it. This lack of transparency is a glaring warning sign – it often indicates either that operations have ceased or that there’s something to hide (such as mounting losses or insolvency). Either way, it erodes any trust in management.

– Going Concern & Viability: With such a small scale and negative earnings, there is substantial going-concern risk. Put bluntly, we do not even know if California Grapes International is still operating as a business. No press releases or updates in years suggest it might be defunct. If it is operating, it likely requires external funding to survive, which could mean continual dilution of shareholders. The company’s ability to continue as a going concern is highly doubtful absent a major capital infusion or strategic pivot.

– Dilution and Share Issuances: Micro-cap companies often issue large amounts of stock to raise funds, diluting existing shareholders. This appears to have happened with CAGR. For instance, one data source lists ~16.3 million shares outstanding (^[4]), but the ultra-low market cap implies there could be many more unaccounted shares (potentially hundreds of millions) if we reconcile price quotes. The discrepancy suggests either outdated share count info or mass dilution via new share issuance or convertible debt conversions. Such dilution would drastically reduce any per-share value for current investors. Without filings, shareholders cannot track how many shares are now in the float – a classic red flag in penny stocks.

– Business Execution Risks: Even if we set aside the financial distress, CAGR’s underlying business faces steep challenges. It operates (or operated) in the highly competitive wine distribution market in China. While China’s wine demand grew in the early 2010s, that boom has since stalled. In fact, China’s per capita wine consumption peaked in the mid-2010s and imports have more than halved since then (^[3]). This reversal was due to factors like government crackdowns on gift-giving, competition from other export countries, and changing consumer preferences. For a tiny entrant like California Grapes International, these macro headwinds would be devastating – the core market it targeted shrank dramatically just as the company was trying to establish itself. This makes the original growth thesis (exporting California wine to feed China’s rising demand) far less viable today.

– Regulatory and Market Access: Importing alcohol into China involves regulatory hurdles (import licenses, tariffs, distribution laws). Any misstep or tightened regulation could have impeded CAGR’s business. Additionally, currency fluctuations (USD/RMB) affect the cost competitiveness of California wine. These risks require robust management – but CAGR’s team and resources were very limited, raising the chance of execution failures.

– Management and Governance: Little is known about the current management or board of directors. The last known CEO, Jeffrey Crittenden, touted the initial expansion success in 2012 (^[2]), but since then no communication exists. The appointment of new VPs or directors back in 2012 was announced (^[7]), yet it’s unclear if those individuals remained or if the company even has active officers now. The lack of governance transparency is a red flag; shareholders have no insight into who is steering the ship (if anyone). Such opacity can sometimes cloak malfeasance or simply signal organizational inertia.

In summary, CAGR exhibits virtually every red flag one can imagine: no financial transparency, extreme micro-cap status, likely non-compliance with reporting, a questionable continuation of operations, and adverse market trends. Prospective investors should regard it as an extremely speculative venture with a high probability of permanent capital loss.

Open Questions and Outlook

Given the multitude of uncertainties, several open questions remain about California Grapes International and its future:

– Is the Company Still Active? – The foremost question: Does CAGR have ongoing operations in 2025? There have been no updates on the Beijing wine bar or any business activities for years. It’s possible the company has effectively shut down its wine distribution business. Investors are left to wonder if there is any revenue or assets left, or if CAGR exists only on paper now. Confirmation of operations (or liquidation) is crucial, yet we have no recent filings to answer this.

– Can the “Smart City” Boom Propel Growth? – The report’s title posits that a smart city boom could benefit “California Grapes.” In theory, continued urbanization and technological development in cities (both in China and emerging markets) might lead to greater disposable incomes and a taste for imported wine. But can CAGR capitalize on that? Without a functioning business and with China’s wine demand no longer surging as before, it’s highly questionable whether any macro trend will “propel” this company. This remains an open question: is the purported tailwind real or just a catchy headline? Right now, the connection between smart cities and this grape distributor appears tenuous at best.

– Will There Be a Strategic Pivot or Restructuring? – Many defunct penny-stock companies attempt a reverse merger or pivot to a hot new sector (for example, some have pivoted to blockchain, cannabis, etc., in the past). Might California Grapes International reinvent itself – perhaps leverage its public listing for a totally new business unrelated to wine (maybe even something in smart city tech)? Such scenarios are pure speculation, but not unheard of in OTC markets. No announcements have been made, so shareholders are in the dark. This question ties closely to the next:

– What Is Management’s Plan (if any)? – Investors have essentially no guidance. Are there any efforts by management to salvage value – e.g., seeking new partnerships, selling the company’s shell to a private firm that wants a public listing, or attempting to re-enter compliance to attract new capital? The lack of communication is worrying. If management is silent because nothing is happening, that bodes ill. If something is happening behind the scenes, shareholders won’t know until (or unless) a formal 8-K or press release is issued. The plan (or absence of one) is an open question mark hanging over CAGR.

– How Will Regulatory Changes Affect the Stock? – Recent OTC market rule changes (SEC Rule 15c2-11 enforcement) moved no-information stocks to the Expert Market, restricting trading. CAGR appears to be in that category now (as evidenced by its “EM” listing on some platforms). An open question is whether the company will ever provide adequate disclosures to regain public trading status. If not, current shareholders may be stuck indefinitely with untradeable stock. The outlook for regaining compliance – and thereby liquidity – is uncertain.

Outlook: At this juncture, the outlook for California Grapes International is highly pessimistic unless dramatic changes occur. The optimistic scenario (however remote) would involve new investment or a merger that injects a profitable business into the company, thereby giving the stock renewed life. In that case, the “smart city boom” or any growth narrative would come from that new business, not the legacy wine operations. The pessimistic (and more likely) scenario is that CAGR remains a dormant entity, eventually getting formally delisted or dissolved, with the common stock ending up worthless. The broader lesson for investors is clear: macro growth themes (like smart cities or rising Chinese consumption) cannot rescue a company with fundamentally broken financials and execution. Without solid management and financial health, even the strongest tailwinds may not be enough.

Open Questions Summary: Can CAGR prove it’s more than a penny-stock casualty and actually ride any growth trend? Or will it remain an object lesson in speculative investing gone wrong? Until the company breaks its silence with concrete information, these questions remain unanswered – leaving investors to proceed with extreme caution.

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Sources:

1. California Grapes International press release (Business Wire) – FY2012 financial highlights and CEO commentary (^[2]) (^[2]). 2. AlphaSpread / Company profile – Business description (wine distribution to China, IPO 2003) (^[1]). 3. CNBC Stock Quote – Latest market data for CAGR (price $0.00, market cap ~$163, no dividend) (^[4]). 4. GuruFocus Snapshot – Valuation metrics (P/E “At Loss”, P/B ~0, etc.) (^[5]). 5. Simply Wall St Analysis – Risk checks (illiquidity, no recent financials, ~$2K market cap) (^[6]). 6. Cambridge Journal of Wine Economics – China wine market growth in early 2010s and subsequent peak/decline (^[3]) (^[3]). 7. OTC Markets/Company Release – Disclosure status update (2012 OTC compliance filing) (^[2]).

Sources

1. https://alphaspread.com/security/otc/cagr/investor-relations
2. https://cnbc.com/2012/10/24/california-grapes-international-inc-announces-filing-fiscal-year-end-2012-financial-statements.html
3. https://cambridge.org/core/journals/journal-of-wine-economics/article/chinas-wine-market-recent-shocks-longterm-prospects/E6B6F8B046CEA34C52282747311389C2
4. https://cnbc.com/quotes/CAGR
5. https://gurufocus.com/stock/CAGR/summary?mobile=
6. https://simplywall.st/stocks/us/retail/otc-cagr/california-grapes-international
7. https://marketscreener.com/quote/stock/CALIFORNIA-GRAPES-INTERNA-120791718/

For informational purposes only; not investment advice.