SOURCE: CapSource Financial, Inc.

May 01, 2006 16:34 ET

CapSource Financial, Inc. Announces Significant Equity Investment From Whitebox Advisors, LLC as Well as Conversion of Debt to Equity

BOULDER, CO -- (MARKET WIRE) -- May 1, 2006 --CapSource Financial, Inc. (OTC BB: CPSO) announced today that it has sold 5,000,000 shares of its common stock to certain partnerships controlled by Whitebox Advisors, LLC a Minneapolis-based hedge fund for a purchase price of $2,000,000 or $.40 per share. As part of the investment, Whitebox will receive warrants to purchase an additional 5,000,000 shares of the Company's common stock at an exercise price of $.90 per share. The warrants expire in 2011. The Company will also elect two representatives of Whitebox to its Board of Directors. The proceeds from the Whitebox investment will be used for acquisitions and general corporate purposes. Whitebox has the ability to increase its investment in CapSource by 15% on the same terms by exercise of an option that expires in 180 days.

As part of the Whitebox investment, CapSource announced that Randolph M. Pentel, its Chairman and largest shareholder, exchanged $871,865.89 of debt he held in the company into common stock of the company at $.40 per share. A total of 2,179,664 shares of the company's common stock was issued to Mr. Pentel in satisfaction of the debt represented by the exchange. As part of the debt conversion Mr. Pentel also received warrants to purchase 2,179,664 shares of the Company's common stock at an exercise price of $.90. Mr. Pentel's warrants will also expire in 2011.

Fred Boethling, President and CEO of CapSource said, "The equity investment from Whitebox and the conversion of a significant portion of the Company's debt to equity places us in an excellent position to continue our growth and achieve profitability." Mr. Boethling noted that the Company's revenues have grown in excess of 100% compounded annually since 1999 to just over $20 million in 2005.

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 owns and manages a lease/rental fleet of over-the-road truck trailers and related equipment through its REMEX subsidiary. RESALTA has an exclusive relationship with Hyundai to sell Hyundai trailers in Mexico. Both REMEX and RESALTA are based in Mexico City. 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 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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