SOURCE: CapSource Financial, Inc.

August 21, 2007 11:02 ET

CapSource Announces 2nd Quarter 2007 Sales Up 136%; Gross Profit Increases 50%

BOULDER, CO--(Marketwire - August 21, 2007) - CapSource Financial, Inc. (OTCBB: CPSO) announced that for the second quarter ended June 30, 2007, consolidated net sales increased by 136%, or $5,848,754, to $10,144,315 compared to $4,295,561 for the same period last year. Net sales is made up of two components: trailer and parts sales, which improved in the second quarter of 2007 by $5,855,993, an increase of 141% over the same period of 2006; and lease/rental income, which declined by $7,239, a reduction of 5% compared to the same period last year. Trailer/parts sales increased $4,545,464 during the second quarter of 2007 in the Mexican operations, which was driven by a continuing emphasis on expanding sales volume in Mexico. In addition, the newly acquired U.S. operations generated trailer/parts sales of $2,066,767 in the second quarter of 2007, an increase of $1,310,529 over the same period of 2006.

Fred Boethling, President and CEO, said, "Our second quarter results are gratifying given the industry wide slowdown in demand for new trailers. Moreover, this is the second quarter in a row that we have more than doubled our sales compared to the same accounting period last year." Boethling also noted, "Our partnership with Hyundai allows us to offer a first-class product at prices that represent real value -- a value that can be realized by our customers everyday as they operate our equipment."

For the six months ended June 30, 2007, consolidated net sales grew by 113% to $20,809,217 compared to $9,790,279 for the same period of 2006. This increase resulted from a 71% growth in sales volume in 2007, or $6,942,702, of which $4,547,948 was due to increased sales volume in our Mexican operations, as well as sales volume improvement of $2,394,754 in our U.S. operations. In addition, price increases of approximately 20% in both U.S. and Mexican operations added $4,076,236 to the total growth in consolidated net sales. These price increases were driven principally by a need to raise prices to offset significant increases in the costs to acquire both new and used trailers.

For the second quarter ended June 30, 2007, gross profit increased $338,568, or 88.6%, to $720,764 compared to $382,196 for the same period of 2006. 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 decline in average gross profit per unit was the result of pricing pressures by certain high volume, lower margin fleet customers.

For the six months ended June 30, 2007, gross profit increased $571,441, or 67.1%, to $1,423,584 compared to $852,143 for the same period of 2006. This improvement resulted from the increase in sales, partially offset by the decline in average gross profit per unit.

For the six months ended June 30, 2007, the company recognized an operating loss of $294,260, compared to $1,189,999 for the same period of 2006. Excluding the one-time charge of $784,679 in 2006, operating loss for the first six months of 2007 declined by $111,060 compared to $405,320 for the same period of 2006. This improvement resulted from the increase in sales and gross profit, partially offset by the increase in selling, general and administrative expense.

Net loss for the second quarter ended June 30, 2007 was $289,774, or $0.01 per diluted share, compared to a net loss of $1,192,814, or $0.07 per diluted share for the same period of 2006. This improvement of $903,040 in net loss includes the impact of increased sales and gross profit, partially offset by the increases in selling, general and administrative expense and net interest expense. In addition, net loss in 2006 includes the one-time charge of $784,679.

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 expectation reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectation 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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