NEWS RELEASE

Release Date:   August 5, 2005
Contacts:  James R. Herndon or R. Rand Ray - (601) 899-8980
Internet Address:  www.capsources.com

CapSources, Inc.
Announces Conditional Approval for the Creation of a
Rural Business Investment Company (RBIC)

Ridgeland, MS - On June 1, 2005, CapSource Emergence Fund, L.P., an affiliate of CapSources, Inc., was notified that it is one of two applicants chosen from across the United States to receive conditional approval from the United States Small Business Administration (SBA) and the United States Department of Agriculture (USDA) to be licensed as a Rural Business Investment Company (RBIC) under the USDA's Rural Business Investment Program (RBIP). 

CapSource Emergence Fund, L.P., will be a venture capital fund focused on offering access to capital to rural enterprises throughout Mississippi, Alabama, Georgia, Florida, Tennessee, Arkansas, Louisiana and Texas.  CapSource Emergence Fund, L.P. will be managed by the same team that currently manages the CapSource Fund, L.P. and the CapSource 2000 Fund, L.P., which are both licensed Small Business Investment Companies (SBIC) focused on growth stage companies operating in the Southeast and Southwest regions of the United States.

CapSource Emergence Fund, LP has begun the process of raising $10 million of private capital and will complete a final review with the SBA and USDA before formal licensing as an RBIC can be accomplished.  The CapSource Emergence Fund, L.P. plans to raise its private capital by targeting investors who have strong affiliations to rural communities and who are interested in investing in a program designed to stimulate economic growth in underserved Rural America.  The Fund anticipates that both institutional and high net worth investors will participate in the Fund along with foundations dedicated to improving rural communities.  Management expects that fund raising and final licensing will be completed by mid-year 2006.  Once final approval has been received, the CapSource Emergence Fund, L.P. will be eligible for an additional $20 million of leverage through the issuance of debentures guaranteed by the USDA. Combined, the Fund will have capital available for investments of $30 million to deploy in the rural regions of the southeastern and southwestern United States.

"CapSource looks forward to providing financial and management resources to growing rural small businesses with an objective of realizing a successful business outcome for all stakeholders - the owners and employees of the small business and the rural communities they serve, the USDA and the investors in the CapSource Emergence Fund," said James R. Herndon, Managing Partner of CapSource Emergence Fund, L.P.  

About CapSources, Inc.
CapSources, Inc. emerged from a mid-market investment banking company, Amerimark Capital Corporation, which was formed in 1998 by two of the three current principals of CapSources.  After an investment banking office in Houston, Texas was established in 1993, a review of the current market by the principals determined a need in the southeastern and southwestern United States for funding resources for established, well-managed companies that were under-capitalized.  Consequently, in 1997, CapSources began fund raising for a fund to be based in Ridgeland, Mississippi.  

Fundraising for the CapSource Fund, LP was completed in December 1997, and was licensed as a Small Business Investment Company (SBIC) in May 1998.  Then a second fund, the CapSource 2000 Fund, LP, was established and licensed as an SBIC in June 2001. 

The CapSource Fund, LP and CapSource 2000 Fund, LP targets companies that have been in operation for at least two to five years, occupy an established market niche, and have proven opportunities for profitable growth.  The target company's success often creates a capital crisis because it has reached or exceeded traditional bank lending limits and must look to venture capital or subordinate debt to finance expansion.  The Funds, therefore, offer successful, experienced business owners an alternative to seeking growth capital from private investors who normally seek significant equity positions and control of the business.  Investments by the Funds are particularly appropriate for companies executing an aggressive growth or acquisition strategy pointing toward a sale of the business or other exit event within the next five years.

The management of the CapSource Emergence Fund will consist of five principals who currently manage the CapSource Fund, LP and CapSource 2000 Fund, LP - Bob F. Weatherly in Houston Texas, James R. Herndon in Ridgeland, Mississippi, Charles R. Martin in Dallas, Texas, R. Rand Ray in Ridgeland, Mississippi and Larry M. Hicks in Houston, Texas.  This management team has extensive experience in funds management and has been together for six years.   

About the Rural Business Investment Program
The Rural Business Investment Program ("RBIP") was created by an amendment to the 2002 Farm Bill which directed the USDA to establish the RBIP to promote economic development and job creation in rural areas by allowing newly-formed venture capital companies to leverage private capital funds with government financial assistance and to obtain government grant resources for technical assistance.  The RBIP's costs will be paid from the funds of the USDA's Community Credit Corporation.  The USDA and the SBA have entered into an interagency agreement to design, operate and oversee the program that provides a total of $60 million in RBIP debenture guarantees, which will support the creation of up to three Rural Business Investment Companies.