Pink Sheets

Another race against time, CapSource Financial (website) sells and leases refrigerator trailers in Mexico. Revenues have been increasing rapidly. They had trouble in 2004 with short supplies for inventory. Gross margins are absolutely terrible. This is a portrait of a drowning company. Maybe they'll start making money, but I don't think it will last. The competition is bad and these guys are probably high cost providers. This is one of those situations that you'd hate to be in and, thankfully because I'm an investor, I can choose to step around it.

The market cap is under $6 million. It's priced assuming they'll scrape out about $100K per quarter in profits. However, the ask is at 70 cents (last sale of 51 cents).

I made money on the Mexican trucking phenomenon with Celedon (CLDN) back in the first half of 2002.

Q2 05 (announced):
revenue: $6.1 million!
cogs: $5.7 million
SG&A: approx $558K
still the same pricing pressues

Q1 05:
revenue: $3.2 million
cogs: $2.9 million
SG&A: $531K
trailer sales up 168%, rental down 34%
gross margins up 36% (increase in sales partially offset by price pressures and decline in rental)

Q3 04:
revenue: $1.97 million (down very slightly)
cogs: $1.78 million
SG&A: $468K
trailer sales increased only 1.1%, lease/rental down 13.5%.
gross margins down 19% due to pricing pressures (these guys are probably high cost providers relative to their competition)
SG&A down 20% due to austerity measures.

Q2 04:
revenue: $1.4 million (26% increase over prior year)
cogs: $1.24 million
SG&A: $495K
trailer sales up 37%, lease/rental down 12% (being defocused)
gross margin increased 28%, same austerity measures for SG&A
agressive sales would have ended here due to inventory shortages

Q1 04:
revenue: $1.33 million (72.5% increase over prior year)
cogs: $1.14 million
SG&A: $419K
trailer sales up 108%, lease/rental down 15%
gross margins down due to agressive sales effort, new sales/storage facility raised SG&A, temporary salary reductions for US executives