SOURCE: CapSource Financial, Inc.

May 23, 2007 10:04 ET

CapSource Announces 1st Quarter 2007 Sales up 94%; Gross Profit Increases 50%

BOULDER, CO -- (MARKET WIRE) -- May 23, 2007 -- CapSource Financial, Inc. (OTCBB: CPSO) announced that for the first quarter ended March 31, 2007, consolidated net sales increased by 94.1% to $10,664,902 compared to $5,494,718 for the same period last year. Net sales is made up of two components: trailer and parts sales, which improved in the first quarter of 2007 by $5,171,755, an increase of 96.6% over the same period of 2006; and lease/rental income, which declined by $1,571, a reduction of 1.1% compared to the same period last year. The trailer/parts sales growth resulted from a 62.8% increase in sales volume in the first quarter of 2007, or $3,450,169, of which $1,474,535 was due to volume growth in Mexican operations, as well as sales of $1,975,634 contributed by the newly acquired U.S. trailer sales operation.

Fred Boethling, President and CEO, said, "Our quarterly sales and gross profit both rose sharply compared to the same period last year. I'm especially proud of this achievement given the fact that overall industry trailer sales slowed measurably during the quarter." Mr. Boethling also noted that, "Any quarter in which we double our sales and increase our gross profit by 50% has to be considered a good performance. Our team did just that -- and did it in an unsettled market."

Gross profit consists of net sales and rental income less cost of sales and operating leases. For the first quarter ended March 31, 2007, gross profit increased $232,873, or 49.6%, to $702,820 compared to $469,947 for the same period last year. This increase in gross profit was due, in part, to the increase in total sales, partially offset by a reduction in the average gross profit per unit sold. The average gross profit per unit sold declined as a result of pricing pressures by certain high volume, lower margin fleet customers.

Selling, general and administrative expense for the first quarter ended March 31, 2007 was $895,728 compared to $575,517 for the same period last year, an increase of 55.6%. This increase of $320,211 was due in part to selling, general and administrative expenses of approximately $200,000 incurred in the acquired U.S. operation, including $24,920 of amortization expense related to the acquired intangible assets. The Company also incurred additional expenses in the first quarter of 2007 related to filing the registration statement in conjunction with the private placement that took place in 2006.

Net loss for the first quarter ended March 31, 2007 was $339,903, or $0.02 per diluted share, compared to a net loss of $228,409, or $0.02 per diluted share for the same period of 2006. The increase of $111,494 in net loss for 2007 resulted from the increases in selling, general and administrative expense and net interest expense, partially offset by the growth in trailer sales and gross profit.

About CapSource Financial, Inc.

CapSource Financial, Inc. was incorporated in 1996 to take advantage of the North American Free Trade Agreement (NAFTA) and the increased economic activity that NAFTA triggered when the world's largest free trade area was created by linking 406 million people in Mexico, the U.S. and Canada producing more than $11 trillion worth of goods and services. Mexico is now the United States' second largest trading partner with an average of $650 million in goods crossing the border each day. U.S. trade with Mexico has increased nearly 500 percent -- from $48 billion to $239 billion since the passage of NAFTA. The vast majority of this trade moves by truck.

CapSource Financial, Inc., a U.S. corporation with its principal place of business in Boulder, Colorado, is a holding company that sells and leases dry van and refrigerated truck trailers and manages a lease/rental fleet of over-the-road truck trailers and related equipment through its wholly owned Mexican operating subsidiaries. The Company is the only authorized Hyundai dealer in Mexico. In addition, the Company sells dry van and refrigerated truck trailers in California and Texas through its subsidiary Capsource Equipment Co. d/b/a Prime Time Trailers. In both California and Texas the Company is the authorized Hyundai Trailer dealer. CapSource's common stock trades on the electronic bulletin board under the symbol CPSO.

Certain matters discussed within this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although CapSource Financial, Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from our expectations include financial performance, changes in national economic conditions, economic conditions in Mexico, availability of financing, governmental approvals and other risks detailed from time to time in the company's SEC reports.

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