SB-2

As filed with the Securities and Exchange Commission on November 2 , 2005 Registration No. 333-_______

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

CARBIZ INC.
(Name of small business issuer in its charter)

Ontario, Canada	7372	Not Applicable
(State or jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification Number)

7405 North Tamiami Trail
Sarasota, Florida 34243
(941) 952-9255
(Address and telephone number of principal executive offices)

7405 North Tamiami Trail
Sarasota, Florida 34243
(941) 952-9255
(Address of principal place of business or intended principal place of business)

William Guerrant, Esq.
Hill, Ward & Henderson P.A.
101 East Kennedy Blvd.
Suite 3700
Tampa, Florida 33602
(813) 221-3900
(Name, address and telephone number of agent for service)

Copies to:

Thomas M. Rose	Bryce Tingle
Troutman Sanders LLP	Scott Reeves
222 Central Park Avenue	TingleMerrett LLP
Suite 2000	1250 Standard Life Building
Virginia Beach, Virginia 23462	639 – 5th Avenue S.W.
(757) 687-7715	Calgary, Alberta T2P 0M9
	Canada
	(403) 571-8002

     Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. x

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ¨

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ¨

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box .¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of	Amount	Proposed	Proposed	Amount of
Securities to be Registered	to be	Maximum	Maximum	Registration
	Registered (1)	Offering Price	Aggregate	Fee
		Per Unit	Offering Price (6) (7)(8)
		(2) (3) (4) (5)
Common Shares	27,497,764	$0.09	$2,474,798.76	$291.28
Common Shares Underlying Class A Common Share Purchase	11,254,541	$0.13	$1,463,090.33	$172.21
Warrants
Common Shares Underlying Class B Common Share Purchase	5,627,259	$0.13	$731,543.67	$86.10
Warrants
Common Shares Underlying Other Warrants	428,296	$0.19	$81,376.24	$9.58
Total	44,807,860		$4,750,809.00	$559.17

(1) Pursuant to Rule 416 under the Securities Act of 1933, this Registration Statement also covers such indeterminate number of common shares as may be required to prevent dilution resulting from share splits, share dividends or similar events.
(2) Calculated pursuant to Rule 457(c) and (g) under the Securities Act of 1933.
(3) Based on the actual warrant exercise price per Rule 457(g).
(4) U.S. dollar amounts are calculated based on the noon buying rate in New York City for cable transfers payable in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York on October 27, 2005. On such date, the noon buying rate was Cdn$1.00 = U.S. $0.8551.
(5) Estimated pursuant to Rule 457(c) solely for purposes of calculating the amount of the registration fee using the Cdn$0.10 average of the high and low sales price for the registrant’s common shares on the TSX Venture Exchange on October 27, 2005.
(6) Represents 11,254,541 common shares that may be issued upon exercise of class A common share purchase warrants at an exercise price of Cdn$0.15 per share.
(7) Represents 5,627,259 common shares that may be issued upon exercise of class B common share purchase warrants at an exercise price of Cdn$0.15 per share.
(8) Represents 214,148 common shares that may be issued upon exercise of agent’s first warrants and 214,148 common shares that may be issued upon exercise of agent’s second warrants at an exercise price of Cdn$0.23 and Cdn$0.22, respectively.

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     The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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     The information contained in this prospectus is not complete and may be changed. The securities may not be sold until the registration statement filed with the Securities and Exchange Commission has been declared effective. This prospectus is not an offer to sell these securities, and it is not soliciting any offer to buy these securities, in any state where the offer or sale is not permitted or would be unlawful prior to registration under the securities laws of any such state.

(Subject to completion, dated November 2, 2005)

PROSPECTUS

CARBIZ INC.

Up to 44,807,860 Common Shares
Offered by Selling Shareholders

_____________________

     This prospectus relates to up to 44,807,860 common shares which may be sold from time to time by the selling shareholders named herein or their pledgees, donees or successors. These shares consist of:

• 10,623,815 common shares that will be issuable upon conversion of our 5% convertible debentures as described herein;

• 11,254,541 common shares that would be issuable upon exercise of class A common share purchase warrants issuable upon conversion of our 5% convertible debentures as described herein;

• 5,627,259 common shares that would be issuable upon exercise of class B common share purchase warrants issuable upon conversion of our 5% convertible debentures as described herein;

• 428,296 common shares that would be issuable upon exercise of certain warrants issuable upon conversion of our 5% convertible debentures described herein; and

• 16,873,949 common shares that are currently issued and outstanding and held by the selling shareholders.

     The shares are being registered to permit the selling shareholders to sell the shares from time to time in the public market. Selling shareholders may sell shares under this prospectus at fixed prices or prices that may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, or at negotiated prices.

     We will not receive any of the proceeds from the sale of these shares. We will, however, receive the respective exercise price upon the exercise of our class A common share purchase warrants and our class B common share purchase warrants which will occur prior to the sale of the underlying common shares by a selling shareholder.

     Our common shares are traded on the TSX Venture Exchange under the symbol “CZ.” On November 1, 2005, the last trading day prior to the filing of this registration statement, the closing sale price of our common shares on the TSX Venture Exchange was Cdn$0.09. There is currently no public market for our common shares in the United States. We will seek to list our common shares on the Over-The-Counter Bulletin Board after this registration statement is declared effective.

     We are an Ontario, Canada corporation incorporated in March 1998. Our principal executive offices are located at 7405 North Tamiami Trail, Sarasota, Florida 34243, and our telephone number is 941-952-9255.

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_____________________

     Before purchasing any of the common shares covered by this prospectus, carefully read and consider the risk factors included in the section entitled “Risk Factors” beginning on page 5. Investing in our common shares is speculative, and you could lose all of your investment.

_____________________

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the common shares or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

_____________________

The date of this prospectus is November 2, 2005

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TABLE OF CONTENTS

	Page
About This Prospectus	1
Special Note Regarding Forward-Looking Statements	1
Prospectus Summary	3
The Offering	4
Currency and Exchange Rates	4
Summary Financial Information	5
Risk Factors	5
Use of Proceeds	14
Price Range of Common Shares	14
Tax Consequence to United States Holders	15
Dividend Policy	16
Equity Compensation Plans as of January 31, 2005	16
Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Business	26
Management	33
Certain Relationships and Related Transactions	38
Security Ownership of Certain Beneficial Owners and Management	39
Description of Securities	40
Selling Shareholders	41
Plan of Distribution	45
Legal Matters	47
Change in Certifying Accountants	47
Experts	47
Where to Find Additional Information	48
Index to Financial Statements	49

ABOUT THIS PROSPECTUS

     This prospectus is part of a registration statement we filed with the Securities and Exchange Commission. If the Securities and Exchange Commission declares the registration statement effective, the selling shareholders named beginning on page 41 may sell up to 44,807,860 common shares. We will update this prospectus from time to time to include new information about Carbiz, and we will file supplements to the prospectus with the Securities and Exchange Commission. You should carefully read this prospectus, any prospectus supplement, and the information we from time to time file with Securities and Exchange Commission as described under the caption “Where You Can Find Additional Information.” In this prospectus, unless the context otherwise requires, “Carbiz,” “we,” “us,” and “our” refer to Carbiz Inc.; our wholly-owned subsidiary Carbiz USA Inc., incorporated in the State of Delaware; Carbiz USA Inc.’s wholly-owned subsidiary Carbiz Auto Credit, Inc., incorporated in the State of Florida; and our joint venture arrangement Carbiz Auto Credit JV1, LLC, formed in the State of Florida.

     You should rely only on the information provided in this prospectus or included in any prospectus supplement. We have authorized no one to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or the prospectus supplement is accurate as of any date other than the date on the front of the document.

_____________________

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Some of the statements in this prospectus and in any prospectus supplement we may file constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events concerning our business and our future revenues, operating results, and financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “forecast,” “predict,” “propose,” “potential,” or “continue” or the negative of those terms or other comparable terminology.

     Any forward-looking statements contained in this prospectus or any prospectus supplement are only estimates or predictions of future events based on information currently available to our management and management’s current beliefs about the potential outcome of future events. Whether these future events will occur as management anticipates, whether we will achieve our business objectives, and whether our revenues, operating results, or financial condition will improve in future periods are subject to numerous risks. These risks include, but are not limited to, our new business strategy; our limited operating history and history of losses; the potential maturity of our 5% convertible debentures; our need for additional financing; our dependence on key personnel; our attraction and retention of officers and directors; control of us by existing shareholders; the volatility of our common share price; the lack of liquidity related to our common shares; penny stock risks related to our common shares; our integration of acquisitions; risks related to our insurance coverage; our history of not declaring dividends; risks related to our internal controls; your potential inability to enforce civil liabilities against us and our officers and directors; risks related to sub-prime borrowers; risks related to general economic conditions; competition; government regulation; risks related to joint venture arrangements; protection of our proprietary rights; potential infringement by us of third parties’ proprietary rights; risks related to third-party licenses; risks related to new product development; risks related to product defects; risks related to system security breaches; risks related to our business model consulting services; the seasonality of our TaxMax business; regulation of and litigation exposure to refund anticipation loans; our compliance with privacy laws and other risks discussed elsewhere in this prospectus. The section of this prospectus captioned “Risk Factors,” beginning on page 5, provides a more detailed discussion of the various risks that could cause our actual results or future financial condition to differ materially from forward-looking statements made in this prospectus. The factors discussed in this section are not intended to represent a complete list of all the factors that could adversely affect our business, revenues, operating results, or financial condition. Other factors that we have not considered may also have an adverse effect on our business, revenues, operating results, or financial condition, and the factors we have identified could affect us to a greater extent than we currently anticipate. Before making any investment in our securities, we encourage you to carefully read the information contained under the caption “Risk Factors,” as well the other information contained in this prospectus and any prospectus supplement we may file.

_____________________

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     Carbiz.com is a registered trademark of Carbiz. Trade names and trademarks of other companies appearing in this prospectus are the property of their respective holders.

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PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by the more detailed information and the financial statements and notes thereto appearing elsewhere in this prospectus. Prospective investors should consider carefully the information discussed under “Risk Factors,” beginning on page 5. An investment in our securities presents substantial risks, and you could lose all or substantially all of your investment.

Carbiz Inc.

     Historically, we have been primarily in the business of developing, marketing and supporting products for the North American automotive industry. Our client base is made up of used and new automobile dealers, with over 80% of our clients specifically in the used vehicle business. Our products fall into three primary categories:

•   software products for operation of auto dealers and business model consulting for “Buy Here-Pay Here” operations,

• tax return processing for auto purchase down payment assistance, and

• direct auto sales and financing through wholly-owned operations or joint venture arrangements.

     Our dealer software solutions focus on finance, sub-prime finance and Buy Here-Pay Here finance operations and dealer accounting solutions while our business model consulting products focus on assisting our dealers in the successful operation of a Buy Here-Pay Here business. Our principal software and consulting products include:

•   Management System Plus (“MSP”) – Provides dealers with ability to offer Buy Here-Pay Here financing at the point of sale including inventory management, contracting and collection functionality.

•     VisualCat – Provides dealers with the ability to offer prime and sub-prime financing through third-party lenders at the point of sale including inventory management, storage of lender criteria, credit bureau access and contracting functionality.

•   Independent Dealer Accounting (“IDA”) – Provides a suite of accounting and financial reporting tools designed specifically for independent dealers, including real time integration with MSP and VisualCat.

•   Traffic Management System – Provides dealers with the ability to track walk-in and phone traffic in the dealership including follow up list generation, sales result reporting and VisualCat interface functionality.

•     Dealer Controlled Finance (“DCF”) Business Model Package – Provides dealers with a complete Buy Here-Pay Here operation model including policies and procedures, sales methods, collections methods and manager and associate training.

•     Guardian Consulting Service – Provides DCF dealers with a weekly review of goals, problem areas and operational results done through extraction of data from the dealer’s software, a written summary of results, and presentation of the report by conference call by a Carbiz consultant.

•   Onsite Consulting – Provides dealers with an onsite review of sales and collections policies and procedures including the presentation of a written summary of recommendations by a Carbiz consultant.

•   Training – Provides dealers with a manager training class and an associate training class held bi-monthly at the Carbiz facility in Sarasota, Florida.

     Our TaxMax product provides dealers with the ability to offer a “refund for down payment” program during the income tax filing season. TaxMax receives return data for a dealer’s customer by fax or internet, prepares the return while the customer is at the dealer, electronically files the completed return, provides quick funding of the refund through a bank affiliation, and routes the funds directly to the dealer by onsite check printing or electronic funds transfer.

     In May 2004, we opened our first Carbiz Auto Credit center in Palmetto, Florida as a result of our decision to enter the direct automobile sales market. Our “credit center” is a used car dealership that offers financing onsite to

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customers with poor credit through the utilization of our software products and our DCF business model. Rather than continuing to focus only on our existing software, consulting and TaxMax business, it is our intent to expand and diversify our business by opening additional credit centers in the future. In November 2004, our second Carbiz Auto Credit location was opened in St. Petersburg, Florida, and our third location was opened in Tampa, Florida in July 2005.

     We have incurred net losses since our inception and may incur losses and negative cash flows for at least the next two years. Our ability to fund our recurring losses from operations depends upon the market acceptance of our software, consulting, and TaxMax products, the success of our Carbiz Auto Credit center business, and/or raising other sources of financing.

Our corporate information

     We were incorporated in the province of Ontario, Canada in March 1998. Our principal executive offices are located at 7405 North Tamiami Trail, Sarasota, Florida 34243. Our telephone number at that location is (941) 953-3812, and our website address is www.carbiz.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus.

THE OFFERING

Common shares offered by the selling shareholders	Up to 44,807,860 common shares
Common shares outstanding on July 31, 2005	41,090,514 common shares
Common shares outstanding after this offering(1)	69,024,425 common shares
Use of proceeds	We will not receive any proceeds from the sale of common shares by the selling shareholders. We will receive proceeds from the exercise of our class A common share purchase warrants and our class B common share purchase warrants for which the underlying shares to be issued to the selling shareholders may be sold by the selling shareholders in accordance with this prospectus. We intend to use any proceeds we receive from the exercise of those warrants for working capital and general corporate purposes. See “Use of Proceeds.”
Risk factors	Investing in our common shares involves a high degree of risk. You should carefully review and consider the risks set forth under “Risk Factors,” as well as the other information contained in this prospectus before purchasing any of our common shares.

(1) This number assumes the issuance of 17,310,096 common shares that may be issued upon exercise of class A common share purchase warrants, class B common share purchase warrants and certain other warrants held by selling shareholders. We cannot assure you that the warrants will be exercised by the selling shareholders.

CURRENCY AND EXCHANGE RATES

     Some of the financial and other information included in this prospectus is presented in Canadian dollars (“Cdn$”). The following table sets out the exchange rates, based on the noon buying rates in New York City for cable transfers in foreign currencies, as certified for customs purposes by the Federal Reserve Bank of New York, for the conversion of Canadian dollars into United States dollars in effect at the end of the following periods, and the average exchange rates (based on the average of the exchange rates on the last day of each month in such periods) and the range of high and low exchange rates for such periods.

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						Six-Month
						Period Ended
	Years Ended January 31,					July 31, 2005
	2001	2002	2003	2004	2005	2005
Average for the period	0.6709	0.6414	0.6392	0.7289	0.7763	0.8112

     The following table sets out the high and low exchange rates for one Cdn$ expressed in terms of one US$ in effect at the end of the following periods.

	April	May	June	July	August	September
	2005	2005	2005	2005	2005	2005
High for the Month	0.8233	0.8082	0.8159	0.8300	0.8411	0.8615
Low for the Month	0.7957	0.7872	0.7950	0.8041	0.8206	0.8417

     As of November 2, 2005 the noon rate of exchange, as reported by the Federal Reserve Bank of New York for the conversion of United States dollars into Canadian dollars was US$1.1806 (US$1.00 = Cdn$0.8470) . Unless otherwise indicated in this prospectus, all references herein are to United States dollars.

SUMMARY FINANCIAL INFORMATION

		Fiscal Year						Six-Month Period
		Ended January 31						Ended July 31
		2005			2004			2005			2004
Statement of Operations Data:
Revenue	$	3,359,551		$	2,960,865		$	2,295,669		$	1,703,434
Cost of sales		1,486,506			1,491,122			1,109,475			757,893
Gross profit		1,873,045			1,469,743			1,186,194			945,541
Operating expenses		3,415,695			2,541,110			1,235,038			1,619,725
Operating income (loss)		(1,542,650	)		(1,071,367	)		(48,844	)		(674,184	)
Interest expense		(144,892	)		(97,119	)		(118,669	)		(40,988	)
Minority interest income (loss)		-0-			-0-			13,005			-0-
Net income (loss)	$	(1,687,542	)	$	(1,168,486	)	$	(154,508	)	$	(715,172	)
Other comprehensive income (loss)		(98,841	)		(26,524	)		-0-			26,022
Comprehensive income (loss)	$	(1,786,383	)	$	(1,195,010	)	$	(154,508	)	$	(689,150	)
Net income (loss) per share	$	(0.05	)	$	(0.04	)	$	(0.00	)	$	(0.02	)

		January 31, 2005			July 31, 2005
Balance Sheet Data:
Cash and cash equivalents	$	130,520		$	56,309
Working capital deficiency	$	495,344		$	318,031
Total assets	$	1,533,774		$	1,614,869
Total current liabilities	$	1,348,973		$	1,337,552
Total capital deficiency	$	(1,083,585	)	$	(976,696	)

RISK FACTORS

     Investing in our common shares involves substantial risk, including the potential loss of your entire investment. You should carefully consider the following factors as well as other information contained in this prospectus and any prospectus supplement before deciding to invest in our common shares.

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Risks Related to Our Company

     New Business Strategy

     Until recently, our business operations have been focused primarily on the development of our software, consulting and TaxMax products for the North American automotive industry related to the purchase and financing of automobile transactions and the operations of Buy Here-Pay Here businesses. In May 2004, we decided to enter the direct automobile sales market by opening our first Carbiz Auto Credit center in Palmetto, Florida, which is a used car dealership that offers onsite financing to customers with poor credit through the utilization of our software products and our DCF business model. Rather than continuing to focus only on our existing software, consulting and TaxMax business, it is our intent to expand and diversify our business by opening additional credit centers in the future. In November 2004, our second Carbiz Auto Credit location was opened in St. Petersburg, Florida. In order to further accelerate the growth of our credit center business, we recently announced an agreement for the formation of a joint venture company for purpose of opening several additional credit centers over a period of time, the first of which was opened in Tampa, Florida during July 2005. The structure of this joint venture involves the joint venture partner investing the necessary funding and Carbiz providing management and the licensing of certain of our software and other intellectual property to the joint venture company. The credit centers opened as joint ventures will run under the Carbiz Auto Credit name. We seek to grow the first joint venture company to five locations, and we seek to enter into additional joint venture companies in the future to facilitate growth of the credit center business at a faster rate than is possible with internal funding of additional centers only. Our joint venture company may not be successful or grow beyond a single location or our joint venture model may not attract additional joint venture partners in the future.

     Although we will be relying heavily on our proprietary methods and technologies and our experience with advising third parties as to how to utilize those methods and technologies in their businesses, our management team does not have extensive experience with directly operating used car dealerships or selling automobiles directly to consumers with poor credit. Management may not be able to successfully implement this new business strategy and successfully compete in the used car finance business. If we are not successful in implementing this new business strategy, it would likely have a materially adverse effect on our financial position, liquidity and results of operations.

Limited Operating History; History of Losses

     We commenced operations in March 1998. We have a limited operating history and, as a result, we face many of the risks and uncertainties encountered by early-stage companies. Further, our limited operating history and the changing nature of our business make it difficult to predict our future operating results and how our business will develop.

     We have incurred net losses in each fiscal year since inception. During the six-month period ended July 31, 2005, we incurred a loss of approximately $154,000, and at July 31, 2005, we had an accumulated deficit of approximately $21.4 million. As a result of our intent to expand our business by opening additional credit centers, we have increased our operating expenses in recent periods and plan further increases in the future. Our planned increases in operating expenses may result in larger losses in future periods. As a result, we will need to generate significantly greater revenues than we have to date to achieve profitability. We cannot assure you that our revenues will increase. Our business strategies may not be successful, and we may not be profitable in any future period.

Maturity of 5% Convertible Debentures

     On October 12, 2004, we conducted a private placement of Cdn$1,614,030 principal amount of 5% convertible debentures. These debentures were to automatically convert into units, with each unit comprised of one common share, one class A common share purchase warrant and one-half of one class B common share purchase warrant, at a price of Cdn$0.22 per unit upon the listing of our common shares for trading on the Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant was to be exercisable through October 12, 2009 for one common share at an exercise price of Cdn$0.23, each whole class B common share purchase warrant was to be exercisable through October 12, 2009 for one common share at an exercise price of Cdn$0.30 per common share. If we did not meet the conditions for the conversion within 180 days of October 12, 2004, we were obligated to issue additional class A common share purchase warrants and class B common share purchase warrants to debenture holders upon the conversion of the debentures up to a maximum of 6% of the number of these securities the debenture holder would be entitled to receive upon the conversion of his, her or its debenture. Interest did not accrue on the debentures until May 1, 2005. If the conditions necessary for the conversion

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of these debentures were not met by October 6, 2005, the debentures matured and the principal and accrued interest would be due and payable in full on that date.

     As of October 6, 2005, we had not achieved a listing on the Over-The-Counter Bulletin Board, and we did not have sufficient cash on hand to repay the debentures. As a result, we negotiated with our debenture holders for an extension of the maturity date until April 6, 2006 in order to allow us additional time to list our common shares for trading on the Over-The-Counter Bulletin Board and delist our common shares from trading on the TSX Venture Exchange. In exchange for the extension of the maturity date, we offered to lower the conversion rate of the debentures to Cdn$0.15 per unit and the exercise price for each of the class A common share purchase warrants and the class B common share purchase warrants to Cdn$0.15. The holders of Cdn$846,297.50 principal amount of our debentures sought to be paid the principal and interest on their debentures on the maturity date, while the remaining debenture holders agreed to the extension of the maturity date. Because we did not have sufficient cash on hand to repay these debenture holders, certain of our directors and executive officers agreed to purchase 5% convertible debentures from us on the same terms as the debenture holders who agreed to the extension of the maturity date to provide us with sufficient cash to repay the debenture holders who sought to be paid the principal and interest on their debentures. Those debenture holders who agreed to the extension of the maturity date are entitled to 5% interest on their debentures beginning on May 1, 2005, and are entitled to the full 6% of the number of additional warrants to be issued upon conversion of their debentures. The new debenture holders are entitled to 5% interest on their debentures beginning immediately, and are entitled to the full 6% of the number of additional warrants that were to be issued by us to the debenture holder that the new debenture holder’s investment in us was used to pay in full.

     If we are not able to list our common shares for trading on the Over-The-Counter Bulletin Board and delist our common shares for trading on the TSX Venture Exchange on or before April 6, 2006, Cdn$1,576,852.40 principal amount of 5% convertible debentures will mature with interest and will be immediately due and payable. We do not expect that at such time we will have sufficient cash on hand to repay this amount. If we do not have sufficient cash on hand to repay this amount, we may be required to seek additional financing. We may not be successful in our efforts to arrange additional financing, if needed, on terms satisfactory to us or at all. The failure to obtain additional financing could result in a substantial curtailment of our operations. If additional financing were raised by the issuance of securities, control of Carbiz may change and/or our shareholders may suffer significant dilution.

Need for Additional Financing

     Should our operating revenues fail to increase to provide sufficient cash flow to fund operations we may require additional financing. Based on second quarter results and an assumption of meeting business projections for the remainder of the fiscal year and the year following, our current cash flow from operations and our cash on hand are sufficient to fund our operations until January 2007. Actual results that vary from projections may require the need for additional cash during that period. Our ability to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as our business performance. We may not be successful in our efforts to arrange additional financing, if needed, on terms satisfactory to us or at all. The failure to obtain adequate financing could result in a substantial curtailment of our operations. If additional financing is raised by the issuance of securities, control of Carbiz may change and/or our shareholders may suffer significant dilution.

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Dependence on Key Personnel

     Our performance and future operating results are substantially dependent on the continued service and performance of our senior management and key technical and sales personnel. Further, we may need to hire a number of technical and sales personnel. Competition for such personnel is intense, and we may not retain our key technical, sales and managerial employees or we may not be able to attract or retain highly qualified technical and managerial personnel in the future.

     The loss of the services of any of our senior management or other key employees or the inability to attract and retain the necessary technical, sales and managerial personnel could have a material adverse effect upon our business, financial condition, operating results and cash flows. We do not currently maintain “key man” insurance for any senior management or other key employees.

Attraction and Retention of Officers and Directors

     We may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the recent and currently proposed changes in the rules and regulations which govern publicly-held companies. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the Securities and Exchange Commission that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles.

Control by Existing Shareholders

     Our present officers, directors and greater than 5% shareholders together beneficially own approximately 44.8% of our outstanding common shares. Further, after the conversion of the 5% convertible debentures, our present officers, directors and greater than 5% shareholders together will beneficially own approximately 55.2% of our common shares. As a result, these shareholders, if they act together, are able to control all matters requiring shareholder approval including the election of directors and approval of significant corporate transactions. This concentration of ownership may delay, deter or prevent actions that would result in a change of control and might affect the market price of our common shares.

Volatility of Share Price

     The market price of our common shares has fluctuated significantly in the past and is likely to fluctuate significantly in the future. During the past two years, our common shares have traded on the TSX Venture Exchange between a low of Cdn$0.06 per share and a high of Cdn$0.40 per share. Furthermore, securities markets have experienced significant price and volume fluctuations and the market prices of the securities of finance-related companies, including automobile finance companies, have been especially volatile. Fluctuations in our common shares could result from, among other things:

• quarterly variations in operating results;

• short-selling of our common shares;

•   significant sales or issuances of our common shares or the perception that such sales or issuances could occur;

• events affecting other companies that investors deem to be comparable to us; and

• general economic trends and conditions.

These market fluctuations might have a material adverse effect the market price of our common shares.

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Lack of Liquidity

     We will seek to list our common shares on the Over-The-Counter Bulletin Board after this registration statement is declared effective. Trading in stocks quoted on the Over-The-Counter Bulletin Board is often thin and characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. Moreover, the Over-The-Counter Bulletin Board is not a stock exchange, and trading of securities on the Over-The-Counter Bulletin Board is often more sporadic than the trading of securities listed on a quotation system such as Nasdaq or a stock exchange such as Amex. Accordingly, you may have difficulty reselling any of the common shares you purchase from a selling shareholder.

Penny Stock Risks

     If the trading price of our common shares is less than $5.00 per share, trading in our common shares would be subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934, which require additional disclosure by broker-dealers in connection with any trades involving a stock defined as a “penny stock.” A broker-dealer is required to deliver to a customer information regarding the risks of investing in penny stocks, its offer and bid prices for the penny stock and the amount of compensation received by the broker-dealer with respect to such transactions. The additional burdens imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our common shares, which could reduce the liquidity of our common shares and thereby have a material adverse effect on the trading market for our securities.

Integration of Acquisitions

     We may, when and if the opportunity arises, acquire other products, technologies or businesses involved in activities, or having product lines, that are complementary to our business. Acquisitions involve numerous risks, including difficulties in the assimilation of the operations, technologies and products of the acquired companies, the diversion of management’s attention from other business concerns, risks associated with entering markets or conducting operations with which we have no or limited direct prior experience and the potential loss of key employees of the acquired company. Moreover, any anticipated benefits of an acquisition may not be realized. Future acquisitions by us could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, and the write-off of acquired research and development costs, all of which could have a material adverse effect on our financial condition, results of operations and cash flows.

Insurance

     Our operations are subject to a number of hazards and risks. We maintain insurance at levels that are customary in our industry to protect against these liabilities; however, our insurance may not be adequate to cover all losses or liabilities that might be incurred in our operations. Moreover, we will be subject to the risk that we may not be able to maintain or obtain insurance of the type and amount desired at reasonable rates. If we were to incur a significant liability for which we were not fully insured, it could seriously harm our business.

Dividends

     We have never declared or paid any cash dividends on our common shares. The payment of any future dividends will be of the sole discretion of our board of directors. We currently intend to retain earnings to finance the expansion of our business and, therefore, we do not anticipate paying dividends in the foreseeable future. Therefore, you likely must rely upon the appreciation of our common share price to gain from your investment in our common shares.

Internal Controls

     Upon becoming a reporting issuer in the United States, we will be required to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Specifically, we and our independent registered public accounting firm will be required to certify the adequacy of our internal controls over financial reporting as of January 2008. Identification of material weaknesses in internal controls over financial reporting by us or our independent registered public accounting firm could adversely affect our competitive position in our business and the market price for our common shares.

Enforcement of Civil Liabilities in Canada

     We are incorporated under the laws of the province of Ontario, Canada. Some of our directors and officers are citizens or residents of countries other than the United States and certain of our assets and the assets of such persons are located outside of the United States. Consequently, it may be difficult for you to effect service of process within the United States upon our directors and officers or to realize in the United States upon judgments against such persons granted by courts of the United States based upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States. There is doubt as to the enforceability against us and against our non-U.S. resident directors and officers, in original actions in Canadian courts, of liabilities based upon the U.S. federal securities laws and as to the enforceability against us and against our non-U.S. resident directors and officers in Canadian courts of judgments of U.S. courts obtained in actions based upon the civil liability provisions of the U.S. federal securities laws. As a result, it may not be possible to enforce those actions against us or against certain of our directors and officers.

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Risks Related to Our Credit Center Business

Sub-Prime Borrowers

     With our credit center business, we intend to focus on serving customers with poor credit. These customers are often referred to as “sub-prime borrowers.” Sub-prime borrowers typically have higher-than-average delinquency and default rates. While we believe that we effectively manage the risks associated with lending to these borrowers, our risk management policies and procedures may not be effective in the future. In the event that we underestimate the default risk of these borrowers, our financial position, liquidity and results of operations would be adversely affected, possibly to a material degree.

General Economic Conditions

     We are subject to general economic conditions which are beyond our control. During periods of economic slowdown or recession, such as the United States economy has at times experienced, delinquencies, defaults, repossessions and losses generally increase. These periods also may be accompanied by decreased consumer demand for automobiles and declining values of automobiles securing outstanding loans, which weakens collateral coverage and increases the amount of a loss in the event of default. Significant increases in the inventory of used automobiles during periods of economic recession may also depress the prices at which repossessed automobiles may be sold or delay the timing of these sales. Because the focus of our credit center business will be on sub-prime borrowers, the actual rates of delinquencies, defaults, repossessions and losses on these loans are higher than those experienced in the general automobile finance industry and could be more dramatically affected by a general economic downturn. In addition, during an economic slowdown or recession, our servicing costs may increase without a corresponding increase in our servicing income. While we seek to manage the higher risk inherent in loans made to sub-prime borrowers through the risk management policies and procedures we employ, these policies and procedures may not afford adequate protection against these risks. Any sustained period of increased delinquencies, defaults, repossessions or losses or increased servicing costs could also have a material adverse effect on our financial position, liquidity and results of operations.

Competition

     Competition in the used automobile retail industry is intense and highly fragmented. We compete with (i) other similar used car dealerships that offer Buy Here-Pay Here financing, (ii) the used vehicle retail operations of franchised automobile dealerships, (iii) independent used vehicle dealers, and (iv) individuals who sell used vehicles in private transactions. Also, we compete for both the purchase and resale of used vehicles. Some of our competitors have substantially greater financial resources than we do.

     Management believes the principal competitive factors in the sale of used vehicles include: (i) the availability of financing to consumers with limited credit histories or past credit problems, (ii) the breadth and quality of vehicle selection, (iii) pricing, (iv) the convenience of a dealership’s location, and (v) customer service. We may not be able to compete successfully in this market or against our competitors with respect to all of these competitive factors.

Government Regulation

     Our operations, in particular the financing services we provide with our credit centers, are subject to regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations.

     In the states in which we operate, a consumer credit regulatory agency regulates and enforces laws relating to consumer lenders and sales finance agencies such as us. These rules and regulations generally provide for licensing of sales finance agencies; limitations on the amount, duration and charges, including interest rates, for various categories of loans; requirements as to the form and content of finance contracts and other documentation; and restrictions on collection practices and creditors’ rights. We are also subject to periodic examination by state regulatory authorities.

     We are also subject to extensive federal regulation, including the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. These laws require us to provide certain disclosures to prospective borrowers and protect against discriminatory lending practices and unfair credit practices. The principal disclosures required under the Truth in Lending Act include the terms of repayment, the total finance charge and the annual percentage rate charged on each loan. The Equal Credit Opportunity Act prohibits creditors from discriminating against loan applicants on the basis of race, color, sex, age or marital status. According to Regulation B promulgated under the Equal Credit Opportunity Act, creditors are required to make certain disclosures regarding consumer rights and advise

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consumers whose credit applications are not approved of the reasons for the rejection. In addition, the credit scoring system we use must comply with the requirements for such a system as set forth in the Equal Credit Opportunity Act and Regulation B. The Fair Credit Reporting Act requires us to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency. Additionally, we are subject to the Gramm-Leach-Bliley Act, which requires us to maintain privacy with respect to certain consumer data in our possession and to periodically communicate with consumers on privacy matters. We are also subject to the Soldiers’ and Sailors’ Civil Relief Act, which requires us to reduce the interest rate charged on each loan to customers who have subsequently joined, enlisted, been inducted or called to active military duty. Failure by us to comply with these statutes and regulations could result in consumers having rights of rescission and other remedies that could have an adverse effect on us.

     We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable local, state and federal regulations. However, we may not be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could have a material adverse effect on our operations. Further, the adoption of additional, or the revision of existing, rules and regulations could have a material adverse effect on our business.

Joint Venture Arrangements

     One of our Carbiz Auto Credit centers is currently structured as a joint venture arrangement in which we possess a 50% ownership interest in exchange for our providing management services and licensing certain of our intellectual property to the joint venture company with our joint venture partner investing the funds necessary to operate the center. We anticipate that a significant portion of any future growth of our Carbiz Auto Credit center business will be made through similar joint ventures. However, we may not be able to identify suitable joint venture partners or opportunities or enter into joint venture arrangements on terms favorable to us, if at all. We generally will not be in a position to exercise sole decision-making authority regarding these joint ventures. Investments in joint ventures may under certain circumstances, involve risks not present when a third-party is not involved, including the possibility that joint venture partners might become bankrupt or fail to fund their share of the required capital contributions. Joint venture partners may have business interests, strategies or goals that are inconsistent with our business interests, strategies or goals and may be, in cases where we have a minority interest will be in a position to take actions contrary to our policies, strategies or objectives. Joint venture investments also entail a risk of impasse on decisions, because neither we nor our joint venture partner would have full control over the joint venture. Any disputes that may arise between us and our joint venture partners may result in litigation or arbitration that could increase our expenses and could prevent our officers and/or directors from focusing their time and effort exclusively on our business strategies. Consequently, actions by or disputes with our joint venture partners might result in subjecting our Carbiz Auto Credit centers owned by the joint venture to additional risks. In addition, we may in certain circumstances be liable for the actions of our third-party joint venture partners.

Risks Related to Our Software and Business Model Consulting Business

Competition

     The market for our software products is intensely competitive, fragmented and rapidly changing. As we develop new products, we may begin competing with companies with whom we have not previously competed. It is also possible that new competitors will enter the market or that our competitors will form alliances that may enable them to rapidly increase their market share.

     Some of our actual and potential competitors are larger, better established companies and have greater technical, financial and marketing resources. Increased competition may result in price reductions, lower gross margins or loss of our market share, any of which could have a material adverse effect our business, financial condition and operating results.

Protection of Proprietary Rights

     Our success depends in part on our ability to protect our proprietary software and our other proprietary rights from copying, infringement or use by unauthorized parties. To protect our proprietary rights we rely primarily on a combination of trade secret and trademark laws, confidentiality agreements with employees and third parties, and

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protective contractual provisions such as those contained in license agreements with consultants, vendors and customers, although we have not signed these types of agreements in every case. Despite our efforts to protect our proprietary rights, unauthorized parties may copy aspects of our products and obtain and use information that we regard as proprietary. Other parties may breach confidentiality agreements and other protective contracts we have entered into. We may not become aware of, or have adequate remedies in the event of, these types of breaches or unauthorized activities.

Infringement of Third Parties’ Proprietary Rights

     If any of our products violate third-party proprietary rights, including copyrights and patents, we may be required to re-engineer our products or obtain licenses from third parties to continue offering our products without substantial re-engineering. Although some of our current and potential competitors have sought copyright or patent protection, we have not sought copyright or patent protection for our software products. If a copyright or patent has been issued or is issued in the future to a third-party that prevents us from using technology included in our products, we would need to obtain a license or re-engineer our product to function without infringing the patent or copyright. Any efforts to re-engineer our products or obtain licenses from third parties may not be successful and, in any case, could substantially increase our costs, or force us to interrupt product sales or delay product releases.

Third-Party Licenses

     Some of our products are designed to include intellectual property owned by third parties. We believe we have all of the necessary licenses from third parties to use and distribute third-party technology and content that we do not own that is used in our current products and services. From time to time we may be required to renegotiate with these third parties – or negotiate with new third parties – to include their technology or content in our existing products, in new versions of our existing products or in wholly new products. We may not be able to negotiate or renegotiate licenses on reasonable terms, or at all. If we are unable to obtain the rights necessary to use or continue to use third-party technology or content in our products and services, we may not be able to sell the affected products, which would in turn have a negative impact on our revenue and operating results.

New Product Development

     We expect that a significant portion of our future revenue will be derived from the sale of newly introduced products and from enhancement of existing products. Our success will depend in part upon our ability to enhance our current products on a timely and cost-effective basis and to develop new products that meet changing market conditions, including changing customer needs, new competitive product offerings and enhanced technology. We may not be successful in developing and marketing on a timely and cost-effective basis new products and enhancements that respond to such changing market conditions. If we are unable to anticipate or adequately respond on a timely or cost-effective basis to changing market conditions, to develop new software products and enhancements to existing products, to correct errors on a timely basis or to complete products currently under development, or if such new products or enhancements do not achieve market acceptance, our business, financial condition, operating results and cash flows could be materially adversely effected. In light of the difficulties inherent in software development, we expect that we will experience delays in the completion and introduction of new software products.

Product Defects

     Software products as complex as ours may contain errors or defects, especially when first introduced or when new versions are released. We have had to delay commercial release of some versions of our products until software problems were corrected, and in some cases have provided product enhancements to correct errors in released products. Our new products and product enhancements or new applications or features may not be free from errors after commercial shipments have begun. Any errors that are discovered after commercial release could result in loss of revenues or delay in market acceptance, diversion of development resources, damage to our reputation, increased service and warranty costs and liability claims.

     Our end-user licenses contain provisions that limit our exposure to product liability claims, but these provisions may not be enforceable in all jurisdictions. A successful product liability claim could result in material liability and damage to our reputation.

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System Security Breaches

     A fundamental requirement for online communications is the secure transmission of confidential information over the Internet. Users of our products transmit their and their customers’ confidential information over the Internet. In our license agreements with our customers, we disclaim responsibility for the security of confidential data and have contractual indemnities for any damages claimed against us. However, if unauthorized third parties are successful in obtaining confidential information from users of our products, our reputation and business may be damaged and, if our contractual disclaimers and indemnities are not enforceable, we may be subjected to liability.

Business Model Consulting Services

     Our business model consulting services may result in professional liability. Our engagements involve matters that could have a severe impact on the client’s business and cause the client to lose significant amounts of money.

Accordingly, if a client is dissatisfied with our performance, the client could threaten or bring litigation in order to recover damages or to contest its obligation to pay our fees. Litigation alleging that we performed negligently or otherwise breached our obligations to the client could expose us to significant liabilities and tarnish our reputation.

Risks Related to Our TaxMax Business

Seasonality of Business

     Our tax return preparation and refund anticipation loan business is highly seasonal. We derive most of our revenue from this business during the fourth quarter and first quarter of each year as a result of dealers paying registration fees to enroll in our programs primarily from October through December and customers paying tax preparation fees primarily from January through April of each year. The concentration of this revenue-generating activity during this relatively short period presents a number of operational challenges for us, which primarily involve hiring a sufficient number of seasonal employees to assist with the processing of tax filings and ensuring optimal uninterrupted operations during this peak season.

     If we were unable to meet these challenges or we were to experience significant business interruptions during the tax season, which may be caused by labor shortages, systems failures, work stoppages, adverse weather or other events, many of which are beyond our control, we could experience a loss of business, which would have a material adverse effect on our business and results of operations.

Competition

     The tax return preparation business is highly competitive. With our TaxMax product, we specifically compete with one national provider along with several small regional providers in the automobile dealer market. Also, there are a substantial number of tax return preparation firms and accounting firms offering tax return preparation services, and many such firms offer refund anticipation loan services to the public. Some of our actual and potential competitors are larger, better established companies and have greater technical, financial and marketing resources. We may not be able to compete successfully in this market or against our competitors in the future.

Government Initiatives

     The performance of our tax business depends on our ability to offer access to products that increase the speed and efficiency by which customers of our customers can receive funds associated with their tax returns. The federal government and various state and local municipalities have, from time to time, announced initiatives designed to modernize their operations and improve the timing and efficiency of processing tax returns. If tax authorities are able to increase the speed and efficiency with which they process tax returns, the value and attractiveness of our products and demand for our services could be reduced.

Regulation of Refund Anticipation Loans

     Because these loans are short-term, their effective annual percentage rate is relatively high compared to other consumer loans. While these loans are not prohibited by federal regulations, some states have considered legislation,

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and a few states have interpreted existing laws in a manner that would effectively limit the annual percentage rate on refund anticipation loans or restrict our ability to receive fees in connection with these loans.

     Consumer advocacy groups have called for a legislative and regulatory response to the perceived inequity of these types of loans. One such consumer group advocates for the adoption by various states of regulations that would place significant limitations on annual percentage rates and impose costly bonding requirements, among other things. Legislation of this type, if adopted, would likely increase costs to us or could render refund anticipation loans too costly to market. In addition, various jurisdictions have also imposed regulatory restraints on the marketing of refund anticipation loans under existing laws. These restraints include requirements regarding specific disclosures that must be made to customers.

Litigation Exposure Relating to Refund Anticipation Loans

     Tax return preparers who facilitate the sale of refund anticipation loans have been subject, from time to time, to individual and class action lawsuits concerning their role in facilitating these loans. These lawsuits have alleged, among other claims, collusion between the tax return preparers and lenders in violation of federal law and fraud on the part of the tax return preparers for failing to disclose the nature of the loan or that the tax return preparer receives a fee from the lender in connection with the loan. Although we do not believe that if these claims were made against us that they would have merit, and we would vigorously contest them, given the number of refund anticipation loans we facilitate every year and the inherent uncertainties of the U.S. legal system, we could experience significant losses as a result of litigation defense and resolution costs, which would have a significant adverse impact on our business.

Compliance with Privacy Laws

     Privacy concerns relating to the disclosure of consumer financial information have drawn increased attention from federal and state governments. The Internal Revenue Service generally prohibits the use or disclosure by tax return preparers of taxpayers’ information without the prior written consent of the taxpayer. In addition, the Gramm-Leach-Bliley Act and other Federal Trade Commission regulations require financial service providers, including tax return preparers, to adopt and disclose consumer privacy policies and provide consumers with a reasonable opportunity to opt out of having personal information disclosed to unaffiliated third parties for advertising purposes. Although we have established security procedures to protect against identity theft, breaches of our customers’ privacy may occur. To the extent the measures we have taken prove to be insufficient or inadequate, we may become subject to litigation or administrative sanctions, which could result in significant fines, penalties or damages and harm to our reputation.

USE OF PROCEEDS

     Assuming that all of our class A common share purchase warrants and our class B common share purchase warrants held by the selling shareholders are exercised for cash, we will receive proceeds of approximately Cdn$2,532,270 which we intend to use for working capital and general corporate purposes. We will not receive any proceeds from the sale by the selling shareholders of their common shares or common shares issued to them upon exercise of our class A common share purchase warrants or our class B common share purchase warrants.

     We have agreed to bear the expenses in connection with the registration of the common shares being offered by the selling shareholders under this prospectus.

PRICE RANGE OF COMMON SHARES

     Our common shares are quoted on the TSX Venture Exchange under the symbol “CZ”. Our common shares are not currently listed for trading in the United States. We will seek to list our common shares for trading on the Over-The-Counter Bulletin Board after this registration statement is declared effective.

     The quarterly high and low sales price information in Canadian dollars on the TSX Venture Exchange of our common shares during the periods indicated are as follows:

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	High	Low
Fiscal Year Ending January 31, 2006
Third Quarter (through November 1, 2005)	Cdn$0.15	Cdn$0.06
Second Quarter	Cdn$0.20	Cdn$0.06
First Quarter	Cdn$0.20	Cdn$0.11
Fiscal Year Ending January 31, 2005
Fourth Quarter	Cdn$0.20	Cdn$0.12
Third Quarter	Cdn$0.27	Cdn$0.16
Second Quarter	Cdn$0.29	Cdn$0.15
First Quarter	Cdn$0.40	Cdn$0.20
Fiscal Year Ended January 31, 2004
Fourth Quarter	Cdn$0.40	Cdn$0.15
Third Quarter	Cdn$0.18	Cdn$0.06
Second Quarter	Cdn$0.12	Cdn$0.07
First Quarter	Cdn$0.10	Cdn$0.06

     As of November 1, 2005, the closing sales price for our common shares was Cdn$0.09 per share on the TSX Venture Exchange.

     As of October 5, 2005, there were approximately 117 holders of record of our common shares.

TAX CONSEQUENCES TO UNITED STATES HOLDERS

     The discussion under this heading summarizes the principal Canadian federal income tax consequences of acquiring, holding and disposing of our common shares for our shareholders who are not residents of Canada but are residents of the United States and who will acquire and hold our common shares as capital property for the purposes of the Income Tax Act (Canada) (which we refer to as the “Canadian Tax Act”). This summary does not apply to shareholders who carry on business in Canada through a “permanent establishment” situated in Canada or who perform independent personal services in Canada through a fixed base in Canada if the shareholders’ holdings in us are effectively connected with such permanent establishment or fixed base. This summary is based on the provisions of the Canadian Tax Act and the applicable regulations and on an understanding of the administrative practices of Canada Revenue Agency, and takes into account all specific proposals to amend the Canadian Tax Act or regulations made by the Minister of Finance of Canada as of today’s date. It has been assumed that there will be no other relevant amendment of any governing law although no assurance can be given in this respect. This discussion is general only and is not a substitute for independent advice from a shareholder’s own Canadian and U.S. tax advisors. The provisions of the Canadian Tax Act are subject to income tax treaties to which Canada is a party, including the Canada-United States Income Tax Convention (1980), as amended (the “Convention”).

Dividends on Common Shares and Other Income

     Under the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian withholding tax at the rate of 25% on dividends paid or deemed to have been paid to him or her by a corporation resident in Canada. The Convention limits the rate to 15% if the shareholder is a resident of the United States and the dividends are beneficially owned by and paid to the shareholder and to 5% if the shareholder is also a corporation that beneficially owns at least 10% of the voting stock of the payer corporation.

     The amount of a stock dividend (for tax purposes) would generally be equal to the amount by which our paid up or stated capital had increased by reason of the payment of such dividend. We will furnish additional tax information to shareholders in the event of such a dividend. The Convention generally exempts from Canadian income tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization constituted and operated exclusively to administer a pension, retirement or employee benefit fund or plan, if the organization is a resident of the United States and is exempt from income tax under the laws of the United States.

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     The tax payable on dividends is to be withheld at source by us or personnel acting on our behalf. We are liable for the amount of the tax if we fail to so withhold. The taxpayer is liable in any event if we fail to withhold.

Dispositions of Common Shares and Other Income

     Under the Canadian Tax Act, a taxpayer’s capital gain or capital loss from a disposition of our common shares is the amount, if any, by which his or her proceeds of disposition exceed (or are exceeded by, respectively) the aggregate of his or her adjusted cost base of the shares and reasonable expenses of disposition. The capital gain or loss must be computed in Canadian currency using a weighted average adjusted cost base for identical properties. Capital gains net of losses are currently taxable as to 50%. The amount by which a shareholder’s capital loss exceeds the capital gain in a year may be deducted from a capital gain realized by the shareholder in the three previous years or any subsequent year, subject to certain restrictions in the case of a corporate shareholder.

     If our common shares are disposed of to us other than in the open market in the manner in which common shares would normally be purchased by the public, the proceeds of disposition will, in general terms, be considered as limited to the paid-up capital of the common share and the balance of the price paid will be deemed to be a dividend. In the case of a shareholder that is a company, the amount of any capital loss otherwise determined may be reduced, in certain circumstances, by the amount of dividends previously received in respect of the common shares disposed of, unless the company owned the common shares for at least 365 days prior to sustaining the loss and the company (together with companies, persons and other entities, with whom the company was not dealing at arm’s length) did not own more than 5% of our common shares from which the dividend was received, at the time the dividend was received. These loss limitation rules may also apply where a company is a member of a partnership or a beneficiary of a trust that owned the common shares disposed of.

     Under the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains, and may deduct allowable capital losses, realized on a disposition of “taxable Canadian property.” Our common shares will only be taxable Canadian property if at any time in the 60 months immediately preceding the disposition, 25% or more of our issued common shares belonged to one or more persons in a group comprising the shareholder and persons with whom the shareholder did not deal at arm’s length. We believe the Convention will generally relieve United States residents from liability for Canadian tax on capital gains derived from a disposition of our common shares.

DIVIDEND POLICY

     We have never declared or paid any cash dividends on our common shares. The payment of any future dividends will be of the sole discretion of our board of directors. We currently intend to retain earnings to finance the expansion of our business and, therefore, we do not anticipate paying dividends in the foreseeable future.

EQUITY COMPENSATION PLANS AS OF JANUARY 31, 2005

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights     (a)	Weighted-average Exercise Price of Outstanding Options, Warrants and Rights       (b)	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by security holders	4,089,988	$0.18	10,213
Equity compensation plans not approved by security holders
Total	4,089,988	$0.18	10,213

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements concerning our revenues, operating results, and financial condition. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to, our new business strategy; our limited operating history and history of losses; the potential maturity of our 5% convertible debentures; our need for additional financing; our dependence on key personnel; our attraction and retention of officers and directors; control of us by existing shareholders; the volatility of our common share price; the lack of liquidity related to our common shares; penny stock risks related to our common shares; our integration of acquisitions; risks related to our insurance coverage; our history of not declaring dividends; your potential inability to enforce civil liabilities against us and our officers and directors; risks related to our internal controls; risks related to sub-prime borrowers; risks related to general economic conditions; competition; government regulation; risks related to joint venture arrangements; protection of our proprietary rights; potential infringement by us of third parties’ proprietary rights; risks related to third-party licenses; risks related to new product development; risks related to product defects; risks related to system security breaches; risks related to our business model consulting services; the seasonality of our TaxMax business; regulation of and litigation exposure to refund anticipation loans; our compliance with privacy laws, and the other additional risks and uncertainties identified under the caption “Risk Factors,” beginning on page 6 and elsewhere in this prospectus or in any prospectus supplement we may file. You are encouraged to review these risk factors and this additional information carefully. An investment in our common shares involves substantial risk and could result in the loss of your entire investment. The following discussion should also be read in conjunction with our financial statements and notes thereto appearing elsewhere in this prospectus.

Overview

Our revenue is currently derived from three sources, which include:

•     Software product and support sales and business model consulting services - through initial software license fees and subsequent support agreements, which provide monthly maintenance fees as well as through a combination of one-time consulting fees and monthly business analysis services;

•     Tax return processing used for down payments on automobile purchases (Taxmax) – through seasonal registration fees, the bulk of which are received from October through December of each year, and subsequent tax processing fees, the bulk of which are received in February and March of each year; and

•     Direct auto sales and related financing (Carbiz Auto Credit centers) – through our Buy Here-Pay Here specialty finance business, which includes company owned locations as well as locations owned by our joint venture

     Historically, we have been a software company that has also offered tax return processing services for, and business model consulting services to, the North American automobile industry. In May 2004, we decided to enter the direct automobile sales market utilizing our own software and business model consulting products by opening our first “credit center” in Palmetto, Florida, which is a used car dealership that offers financing onsite to customers with poor credit. Rather than continuing to focus our resources only on our software, tax processing and consulting businesses, it is our intent to expand and further diversify our business operations by opening additional credit centers in the future. We opened our second credit center in St. Petersburg, Florida in November 2004, and we recently opened our third credit center, a joint venture location, in Tampa, Florida. We anticipate opening additional credit centers in the future, with some of these credit centers being wholly-owned by us and others utilizing the joint venture structure discussed elsewhere in this prospectus. See “Business – Carbiz Auto Credit” on page 27 of this prospectus.

     In terms of our existing software and consulting businesses, we believe that our IDA software and the related consulting will drive our software revenue and consulting services growth in the near term. To date, it has been installed in ten dealerships, and we have a backlog of six installations which are expected to be fully operational by the end of the third quarter of this fiscal year. There is an industry-wide movement towards standardization of independent dealer accounting that is spearheaded by NIADA (National Independent Automobile Dealer Association) and NABD (National Alliance of Buy Here-Pay Here Dealers). We have worked closely with both of these associations during the development of our IDA software, and have received the “Approved Vendor for Standardized Accounting” designation

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from NIADA. As a result, we believe that this product is positioned to become one of the accepted industry standards and a primary accounting solution for independent dealers throughout North America.

     Although our revenues related to our tax processing services decreased during the fiscal year ended January 31, 2005 and six months ended July 31, 2005 compared to prior periods, we believe that the introduction of our TaxMax on-site data entry and check printing systems will improve our revenues for our TaxMax business in the future. Further, we have tested our TaxMax programs in other preparation venues, and we believe that the results of these tests demonstrate the potential for further expansion of our TaxMax product into other preparation venues in the future.

Critical Accounting Policies

Revenue Recognition

     Our revenue is derived from the sale of licenses, services and commissions, the sale of products to dealers in the automobile industry and sale of used vehicles. We recognize revenue in accordance with Statement of Position 97-2, “Software Revenue Recognition,” issued by the American Institute of Certified Public Accountants in October 1997 as amended by Statement of Position 98-9 issued in December 1998 for all software or software related revenue. For all non-software or non-software related revenue, we recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin 104, “Revenue Recognition,” which was preceded by Staff Accounting Bulletin 101, “Revenue Recognition in Financial Statements.” For contracts involving multiple deliverables, where the deliverables are governed by more than one authoritative accounting standard, we generally apply the Financial Accounting Standards Board Emerging Issues Task Force Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” to determine whether deliverables should be accounted for separately.

     We derive our revenue through the licensing of software products and providing related services, including installation, training and support, our TaxMax products, and our Buy Here-Pay Here Carbiz Auto Credit business. Our revenue from licenses is recognized upon the execution of a license agreement, when the licensed product has been delivered, fees are fixed or determinable, collection is probable and when all significant obligations have been fulfilled. Related services revenue is recognized when a signed contract has been executed, the services have been delivered, and obligations have been fulfilled. Our TaxMax revenue is made up of two parts. The first part is the dealer sign-up fee. These fees are paid between October and December. The second part is the tax preparation fees earned between January and April. As a majority of the tax preparation fees are earned subsequent to the year end, a portion of the sign up fees and related expenses are deferred and recognized as the tax preparation services are rendered. We also sell and finance used automobiles. The sale of vehicles is recognized once the customer takes delivery and title has passed to the customer. In the case of financing of sold vehicles, the interest is recognized over the term of the loan, which is generally 80 weeks, based on the principal outstanding at the time.

Use of Estimates

     We prepare our financial statements in accordance with generally accepted accounting principals in the United States. The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based upon historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates are evaluated on an on-going basis and are used when accounting for items and matters such as the allowance for doubtful accounts, deferred revenue and related costs and contingencies. Actual results may differ from these estimates under different assumptions.

Stock-Based Compensation

     We account for stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” Pursuant to this accounting standard, we record deferred compensation for share options granted to employees at the date of grant based on the difference between the exercise price of the options and the market value of the underlying shares at that date. Deferred compensation is amortized to compensation expense over the vesting period of the underlying options. No compensation expense is recorded for stock options that are granted to employees and directors when the exercise price is equal to the fair market value of the shares at the time of the grant.

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Change in Functional Currency

     Historically, the Canadian dollar has been our functional currency, and financial statements were reported in Canadian dollars. During the year ended January 31, 2005, we determined that as a result of the continued move of our operations and personnel, combined with significant debt issuances in the United States, our functional currency had changed to U.S. dollars. In addition, we determined that we would report our financial statements in U.S. dollars. All amounts presented in these financial statements are expressed in U.S. dollars unless otherwise indicated.

     In accordance with Statement of Financial Accounting Standards No. 52 “Foreign Currency Translation,” we have translated into U.S. dollars the financial statements as at and for the years ended January 31, 2005 and 2004. The method of translation used has resulted in the financial statements of prior years presented for comparison being translated as if the U.S. dollar had always been used as the reporting currency.

     Prior to November 1, 2004, the date on which we determined that our functional currency had changed to U.S. dollars, this translation was done using the current rate method. Under the current rate method, our assets and liabilities were translated into U.S. dollars at the exchange rate at the balance sheet date. Revenue, costs and expenses were translated at average rates prevailing during the periods. Translation adjustments arising prior to November 1, 2004 were reported as a component of other comprehensive income.

     Subsequent to November 1, 2004, this translation was done using the temporal method. Under the temporal method, our monetary assets and liabilities were translated to U.S. dollars at the exchange at the balance sheet date, while equity and non-monetary assets and liabilities were translated at their historical rates. Revenue, costs and expenses were translated at average rates prevailing during the periods. Translation adjustments arising prior to November 1, 2004 were reported as a component of net loss for the year.

Six Month Financial Information

     The following table sets forth selected six month financial information for our period ended July 31, 2005 and 2004. Period-to-period comparisons of Carbiz’s financial results are not necessarily meaningful and should not be relied upon as an indication of future performance.

Six months ended July 31, 2005 compared to the six months ended July 31, 2004

		2005		% of Revenue			2004		% of Revenue
Revenue	$	2,295,669		100.0		$	1,703,434		100.0
Cost of sales	$	1,109,475		48.3		$	757,893		44.5
Gross profit	$	1,186,194		51.7		$	945,541		55.5
Operating expenses	$	1,235,038		53.8		$	1,619,725		95.1
Operating income (loss)	$	(48,844	)	(2.1	)	$	(674,184	)	(39.6	)
Interest expense	$	(118,669	)	5.2		$	(40,988	)	2.4
Minority interest income (loss)	$	13,005		0.1		$	-0-
Net income (loss)	$	(154,508	)	(6.7	)	$	(715,172	)	(42.0	)
Other comprehensive income (loss)	$	-0-				$	26,022		1.5
Comprehensive income (loss)	$	(154,508	)	(6.7	)	$	(689,150	)	(40.5	)
Loss per common share (1)	$	(.00	)			$	(.02	)
Total assets	$	1,614,869				$	1,004,265
Long-term liabilities	$	1,017,018				$	804,577

(1) Fully diluted loss per share does not differ from basic loss per share for any of the above-noted periods as the conversion or exercise of any potentially dilutive securities would be anti-dilutive.

Revenue

     In the six months ended July 31, 2005, our revenues increased by $592,235 compared to our six month revenue during the previous period ended July 31, 2004. This increase was primarily due to the positive sales generated by our new operating unit, Carbiz Auto Credit, which generated sales of $718,820, including $700,020 from our company

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owned locations and $18,800 from our joint venture location, during the first six months of 2005. This increase was offset by a reduction in our TaxMax revenue of approximately $97,000 during the first six months of 2005 when compared to the first six months of 2004. We continue to eliminate non-performing products impacting revenue negatively in the short-term, replacing them with higher priced, higher margin products, which we expect to positively impact future revenues.

Cost of Sales

     Our cost of sales expense increased by $351,582 for the six months ended July 31, 2005, compared to same period ended July 31, 2004. Carbiz Auto Credit operations added cost of sales of $522,075, including $509,393 from our company owned locations and $12,682 from our joint venture location, during the six months ended July 31, 2005, and all other parts of the operation decreased cost of sales by $98,261 during the six months ended July 31, 2005. We anticipate that our cost of sales expense will continue to increase as we open additional Carbiz Auto Credit centers in the future.

Expenses

     For the six months ended July 31, 2005, our operating expenses decreased by $85,508 compared to the same period ended July 31, 2004. The Carbiz Auto Credit operating expenses were $309,774, including $277,784 from our company owned locations and $31,990 from our joint venture location, during the six months ended July 31, 2005, while operating expenses for other segments decreased by $336,684 during the six months ended July 31, 2005. This primarily resulted from a decrease in expenses to accrue for tax work for the six months ended July 31, 2004 that did not reoccur in the current year six months ended July 31, 2005 as well as allocation of management expenses to Carbiz Auto Credit.

     We have not been investing significant amounts in fixed assets over the past two years. This fact is reflected in the decrease in depreciation and amortization expenses by $299,179 for the six months ended July 31, 2005 as compared to the same period ended July 31, 2004. During the six months ended July 31, 2004, we had increased the amortization of leaseholds as a result of moving to a new location. Leaseholds were reduced to zero prior to July 31, 2004.

Interest Expense

     Our interest expense increased by $77,681 for the six months ended July 31, 2005, compared to the same period ended July 31, 2004. We continue to pay down our longer term debt, with principal payments being made monthly.

Software Sales, Support and Consulting

     This segment of our business consists of new sales and recurring monthly revenue for software products and new sales, new sales and recurring monthly revenue of consulting products, and other related products including revenue from credit bureau fees, supply sales, and forms programming. Our total software, consulting and other sales during the six months ended July 31, 2005 increased over the prior period ended July 31, 2004 by $113,771.

     Total software sales during the six months ended July 31, 2005 increased over the prior period by $97,652, with recurring monthly support revenue showing improvement over the prior period by an increase of $50,575 or 17.2% . Sales of new software installations also showed improvement over the prior period by an increase of $38,430 or 26.7% ..

     The adoption of our current Carbiz Windows-based programs by existing DOS users continued to show an upward trend during the six months ended July 31, 2005, with approximately 8% of users on previous generation DOS programs upgrading to current programs. We believe this demonstrated that our existing user base is remaining stable while new, incremental software sales should continue to add customers for consulting services. We believe the overall trend also indicates continuing growth of recurring revenue.

     The results of our IDA installations had some positive impact on the six months ended July 31, 2005, with several completed installations included in the sales totals. The monthly recurring support revenue for IDA in the six months ended July 31, 2005, grew to $8,500, with additional installations to be completed during the third quarter of

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fiscal 2006. Dealer interest in IDA continues to increase, which along with a shift in emphasis to higher value monthly support functions, we believe should result in continued growth in installations and recurring revenue.

     Our new sales of consulting services for the six-month period ended July 31, 2005 showed a decrease from the prior period of $34,456 or 64.2%, while recurring monthly consulting revenue remained constant with the prior period. New consulting customers were an even mix of additional locations opened by existing customers and new consulting customers.

     Software sales provide opportunities for us to introduce our consulting services to business clients. While our software products facilitate data accumulation and reporting, our consulting services help to interpret the data and provide advice, as well as industry benchmarks, to help dealers improve results. Our consulting focuses on implementing a data tracking product that automates some data analysis, creates a recurring revenue stream and facilitates additional consulting services.

     We offer two levels of consulting services targeted mainly to the Buy Here-Pay Here dealer. The standard package includes unlimited manager training, unlimited “800” number technical support, a monthly benchmarking report of composite data from dealerships using our system, and one training conference per year. The premier package also includes a weekly faxed performance report based on download and analysis of the client’s data. Our consultants provide telephone consultation to discuss the report and provide guidance on areas where improvements could be made. We also may provide customized trend analysis on specialized issues. Also included in the premier package are three on-site visits each year by our consultant. Each visit includes a top-to-bottom audit of sales, operations, procedures, marketing activities, inventories, computer systems and financial results.

TaxMax

     TaxMax is our tax preparation and refund division. The seasonal nature of our TaxMax business means that the impact of our return preparation operations is recognized during the first quarter of each year. Our TaxMax revenue for the six months ended July 31, 2005 declined by $97,299 or 20.6% over the prior period, reflecting a continuing trend of lower dealer participation in tax refund promotions and lower tax return volume per location.

     While overall revenue was down for our TaxMax business, there are several developments that we believe will help trend more positive results for our TaxMax business next tax season. First, more than 80% of our TaxMax dealers have adopted the TaxMax on-site check printing system introduced in September 2004. This technology improves dealer efficiency and eliminates the cost of delivering checks or conducting electronic fund transfers. Second, a test group of approximately 20 dealers adopted a new online entry system for return data at the dealer site for this tax season. This new technology improves the efficiency and response time by up to 75% by eliminating much of the internal labor to prepare each return while improving the service provided to the dealer.

     Additionally, a test program was set up with TaxMax personnel in a check cashing store for this tax season using the online entry technology. While this test site did not contribute significantly to our total revenue, it did produce tax return volume of approximately four times the average auto dealer location and demonstrated the potential for further expansion of the TaxMax program into other preparation venues.

Carbiz Auto Credit

     The fastest growing segment of our business continues to be our Carbiz Auto Credit Buy Here-Pay Here specialty consumer finance business. In May and November 2004, Carbiz opened two facilities in Florida called “Carbiz Auto Credit,” that originate, underwrite, fund and collect auto loans to customers with credit difficulties. The scalable business model leverages our industry expertise and proprietary underwriting and collection processes.

     Results from the Palmetto, Florida location have indicated a strong consumer demand for the finance product in that market, as well as reinforcing the effectiveness of our system for operations, marketing, underwriting and collections.

     In order to further accelerate the growth of our credit center business, we recently announced the formation of a joint venture company with the intent of opening additional credit centers over a period of time. The first of these credit centers recently opened in Tampa, Florida.

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Year End Financial Information

     The following summary of selected financial information for the years ended January 31, 2005 and 2004 is derived from, and should be read in conjunction with, and is qualified in its entirety by reference to, our audited annual financial statements, including the notes thereto, and with audited financial statements for fiscal years ended January 31, 2005 and 2004.

Year ended January 31, 2005 compared to the year ended January 31, 2004

		January		% of		January		% of
		2005		Revenue		2004		Revenue
Revenue	$	3,359,551		100.0	$	2,960,865		100.0
Cost of sales	$	1,486,506		44.2	$	1,491,122		50.4
Gross Profit	$	1,873,045		55.7	$	1,469,743		49.6
Operating expenses	$	3,415,695		101.7	$	2,541,110		85.8
Operating income (loss)	$	(1,542,650	)	(45.9)	$	(1,071,367	)	(36.2)
Interest expense	$	(144,892	)	4.3	$	(97,119	)	3.3
Net income (loss)	$	(1,687,542	)	(50.2)	$	(1,168,486	)	(39.5)
Other comprehensive income (loss)	$	(98,841	)	2.9	$	(26,524	)	0.9
Comprehensive income (loss)	$	(1,786,383	)	(53.1)	$	(1,195,010	)	(40.4)
Loss per common share(1)	$	(0.05	)		$	(0.04	)
Total assets	$	1,533,774			$	1,319,674
Long-term liabilities	$	1,268,386			$	1,101,299

(1) Fully diluted loss per share does not differ from basic loss per share for any of the above-noted periods as the conversion or exercise of any potentially dilutive securities would be anti-dilutive.

Revenue

     In the year ended January 31, 2005, our revenues increased by $398,686 compared to the previous year. This increase was primarily due to the positive sales generated by our new operating unit, Carbiz Auto Credit, which generated sales of $594,722 in its nine months of operations. This increase was partially offset by a reduction in our TaxMax revenue of approximately $157,000 during the year ended January 31, 2005 compared to the previous year. We continue to eliminate non-performing products impacting revenue negatively in the short-term, replacing them with higher priced, higher margin products, which we expect to positively impact the future.

     Our total software, consulting and other sales during the year ended January 31, 2005 decreased over the prior year by $38,524. While our total revenue from our core software and consulting products increased by $68,919, revenue from all other products decreased by $107,601 during the year ended January 31, 2005 compared to the previous year. This significant difference consists of a decrease in credit bureau revenue of $32,607 due to changes in reporting regulations that resulted in a decision to discontinue certain credit bureau agent relationships and a decrease in custom programming fees of $41,255 due to a single large project in the prior year that was a one-time occurrence.

Cost of Sales

     Our cost of sales expense decreased by $4,616 for the year ended January 31, 2005, compared to the previous year. Our Carbiz Auto Credit operations added cost of sales of $300,977. Cost of sales for all other parts of the operation decreased by $305,593 during the year ended January 31, 2005 compared to the previous year, with the decrease primarily due to a reallocation of payroll costs related to product development and enhancement as a result of changes in operations. During the year ended January 31, 2005, those payroll costs were allocated to operating expenses rather than to cost sales as was done in the previous year.

Expenses

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     For the year ended January 31, 2005, our operating expenses increased by $926,132 compared to the previous year. The major causes of the increase were increased professional fees related to our preparation of our U.S. registration statement, and the addition of the Carbiz Auto Credit operations. The professional fees increase totaled approximately $280,000 and Carbiz Auto Credit operations amounted to $315,269 of the increase year over year. The remaining difference is due to currency fluctuations in various operating expense categories as well as a reallocation of payroll costs related to product development and enhancement as a result of changes in operations. During the year ended January 31, 2005, those payroll costs were allocated to operating expenses rather than to cost sales as was done in the previous year. We also continue to accrue professional fees in connection with our U.S. registration statement and intended listing of our common shares on the Over-The-Counter Bulletin Board.

     We have not been investing significant amounts in fixed assets over the past two years. This fact is reflected in the decrease in depreciation and amortization expenses by $51,547 for the year ended January 31, 2005 as compared to the previous year.

Interest Expense

     Our interest expense increased by $47,773 for the year ended January 31, 2005, compared to the previous year. We continue to pay down our long-term debt, with principal payments being made monthly.

Software Sales, Support and Consulting

     This segment of our business consists of new sales and recurring monthly revenue for software products, and new sales and recurring monthly revenue of consulting products, and other related products including revenue from credit bureau fees, supply sales, and forms programming.

     Our software recurring revenue for the year ended January 31, 2005 continued to show improvement over the prior year with an increase of 3% in our monthly support revenue. Our sales of new software installations also showed improvement over the prior year with an increase of 9.5% . This reflected the beginning of positive growth as a result of changes in our product mix to eliminate less profitable products and shift the focus of sales of our core software and support products that can provide long-term growth opportunities.

     The adoption of our current Carbiz Windows-based programs by our existing DOS users continued to show an upward trend. During the year ended January 31, 2005, approximately 6% of users on previous generation DOS programs upgraded to current programs. This was a consistent trend quarter-by-quarter throughout the year, demonstrating that our existing user base is remaining stable while new, incremental software sales should continue to add customers for consulting services. We believe that this overall trend indicates continuing growth of recurring revenue.

     The results of our IDA installations had some positive impact on the year ended January 31, 2005, with several completed installations included in the sales totals. The monthly recurring support revenue for IDA in the year ended January 31, 2005 was negligible, with the completed installations producing support revenue in the fourth quarter. Dealer interest in IDA continues to increase, which along with a shift in emphasis to higher value monthly support functions, we believe should result in continued growth in installations and recurring revenue.

     Our new sales of consulting services for the year ended January 31, 2005 showed an increase from the prior year of 10.9%, which also resulted in an increase of recurring monthly consulting revenue of 4.5% over the prior year. New consulting customers were an even mix of additional locations opened by existing customers and new consulting customers.

     Software sales provide opportunities for us to introduce our consulting services to business clients. While our software products facilitate data accumulation and reporting, our consulting services help to interpret the data and provide advice, as well as industry benchmarks, to help dealers improve results. Our consulting focuses on implementing a data tracking product that automates some data analysis, creates a recurring revenue stream and facilitates additional consulting services.

     We offer two levels of consulting services targeted mainly to the Buy Here-Pay Here dealer. The standard package includes unlimited manager training, unlimited “800” number technical support, a monthly benchmarking

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report of composite data from dealerships using our system, and two training conferences per year. The premier package also includes a weekly faxed performance report based on download and analysis of the client’s data. Our consultants provide telephone consultation to discuss the report and provide guidance on areas where improvements could be made. We also may provide customized trend analysis on specialized issues. Also included in the premier package are three on-site visits each year by our consultant. Each visit includes a top-to-bottom audit of sales, operations, procedures, marketing activities, inventories, computer systems and financial results.

TaxMax

     TaxMax is our tax preparation and refund division. The seasonal nature of our TaxMax business means that the impact of our return preparation operations is recognized in the first quarter of each year. Our TaxMax revenue for the year ended January 31, 2005 declined by 19.7% over the prior year, reflecting a continuing trend of lower dealer participation in tax refund promotions and lower tax return volume per location.

     While overall revenue was down for our TaxMax business, there are several developments that we believe will help trend more positive results for our TaxMax business next tax season. First, more than 80% of our TaxMax dealers have adopted the TaxMax on-site check printing system introduced in September 2004. This technology improves dealer efficiency and eliminates the cost of delivering checks or conducting electronic fund transfers. Second, a test group of approximately 20 dealers adopted a new online entry system for return data at the dealer site for this tax season. This new technology improves the efficiency and response time by up to 75% by eliminating much of the internal labor to prepare each return while improving the service provided to the dealer.

     Additionally, a test program was set up with TaxMax personnel in a check cashing store for this tax season using the online entry technology. While this test site did not contribute significantly to our total revenue, it did produce tax return volume of approximately four times the average auto dealer location and demonstrated the potential for further expansion of the TaxMax program into other preparation venues.

Carbiz Auto Credit

     The fastest growing segment of our business continues to be our Carbiz Auto Credit Buy Here-Pay Here specialty consumer finance business. In May and November 2004, Carbiz opened two facilities in Florida called “Carbiz Auto Credit,” that originate, underwrite, fund and collect auto loans to customers with credit difficulties. The scalable business model leverages our industry expertise and proprietary underwriting and collection processes.

     Results from the Palmetto, Florida location have indicated a strong consumer demand for the finance product in that market, as well as reinforcing the effectiveness of our system for operations, marketing, underwriting and collections.

     In order to further accelerate the growth of our credit center business, we recently announced the formation of a joint venture company with the intent of opening additional credit centers over a period of time. The first of these credit centers recently opened in Tampa, Florida.

Liquidity and Capital Resources

     As of January 31, 2005 and July 31, 2005, we had $130,520 and $56,309, respectively, in cash and cash equivalents. During the six months ended July 31, 2005, we decreased our accounts payable and accrued liabilities by $113,036, which now total $931,121. During the year ended January 31, 2005, we made debt repayments totaling $140,427. We have continued to rely on private placements to meet our cash flow requirements. Operationally, we have not generated the necessary revenue to cover our operating expenses.

     On October 6, 2005, we completed a non-brokered private placement of 5% convertible debentures for gross proceeds of Cdn$809,119.94 issued to certain of our executive officers and directors. Prior to the maturity date, the debentures convert automatically upon the listing of our common shares for trading on the Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. The debentures convert into units, with each unit comprised of one common share, one class A common share purchase warrant and one-half of one class B common share purchase warrant, at a price of Cdn$0.15 per unit. Each class A common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share.

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Each whole class B common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share. The maturity date for the debentures is April 6, 2006, and interest immediately accrues on the debentures. All of the proceeds from this private placement were used to repay the principal and accrued interest on certain other debentures that matured on October 6, 2005, because the debenture holders would not extend the maturity date of those debentures until April 6, 2006.

     On July 29, 2005, we completed a non-brokered private placement of a $150,000 principal amount promissory note that bears interest at a rate of 17.7% with Medipac (US) International Inc., which is a wholly-owned subsidiary of Medipac International Inc. which is an entity controlled by Mr. Quigley, who is one of our directors, and Mr. Popel, who is also one of our directors. This note calls for payments of $15,000 including principal and interest to begin on October 1, 2005 and will mature on August 1, 2006.

     On October 12, 2004, we completed a brokered private placement of 5% convertible debentures for net proceeds of Cdn$1,614,030 issued to a group consisting of non-U.S. and U.S. purchasers. The debentures were to convert automatically upon the listing of our common shares for trading on the Over-The-Counter Bulletin Board and the delisting of our common shares from trading on the TSX Venture Exchange. The debentures were to convert into units, with each unit comprised of one common share, one class A common share purchase warrant and one-half of one class B common share purchase warrant, at a price of Cdn$0.22 per unit. Each class A common share purchase warrant was to be exercisable through October 12, 2009 for one common share at an exercise price of Cdn$0.23 per common share. Each whole class B common share purchase warrant was to be exercisable through October 12, 2009 for one common share at an exercise price of Cdn$0.30 per common share. Interest did not accrue on the debentures until May 1, 2005. If the conditions necessary for the conversion of these debentures were not met by October 6, 2005, the debentures matured and the principal and accrued interest would be due and payable in full on that date.

     As a result of not achieving a listing on the Over-The-Counter Bulletin Board by October 6, 2005 and not having sufficient cash on hand to repay the debentures, we negotiated with our debenture holders for an extension of the maturity date until April 6, 2006 in order to allow us additional time to list our common shares for trading on the Over-The-Counter Bulletin Board and delist our common shares from trading on the TSX Venture Exchange. In exchange for the extension of the maturity date, we offered to lower the conversion rate of the debentures to Cdn$0.15 per unit and the exercise price for each of the class A common share purchase warrants and the class B common share purchase warrants to Cdn$0.15. The holders of Cdn$846,297.50 principal amount of our debentures sought to be paid the principal and interest on their debentures, while the remaining debenture holders agreed to the extension of the maturity date.

     In consideration for the services provided by an agent related to the private placement on October 12, 2004, the agent received a cash commission equal to 10% of the gross proceeds raised by the agent, which totaled $61,974. The agent is also entitled to receive a cash fee equal to 2% of the gross proceeds from the subsequent exercise within twelve months from the date the debentures are converted of any class A common share purchase warrants or class B common share purchase warrants that were issued upon conversion of debentures placed by the agent. In addition, the agent will receive that number of units that is equal to 10% of the number of units to be issued on the date the debentures are converted with respect to debentures placed by the agent. Each unit shall consist of one first common share purchase warrant and one second common share purchase warrant. Each first common share purchase warrant may be exercised to acquire one common share at a price of Cdn$0.22 per share on or before the date that is five years from the date the debentures are converted into units. Each second common share purchase warrant may be exercised to acquire one common share at a price of Cdn$0.23 per share on or before the date that is five years from the date the debentures are converted into units.

     On September 16, 2004, we completed a non-brokered private placement of 91,000 units at a purchase price of Cdn$0.30 per unit to a group consisting of non-U.S. and U.S. purchasers for gross proceeds of Cdn$27,300. Each unit consisted of one common share and one common share purchase warrant, with each common share purchase warrant exercisable for one common share until September 16, 2005 upon payment by the holder of Cdn$0.30 per common share.

     On July 9, 2004, we completed a brokered private placement of 602,431 units at a purchase price of Cdn$0.30 per unit to a group consisting of non-U.S. and U.S. purchasers for gross proceeds of Cdn$180,729. Each unit consists of one common share and one common share purchase warrant, with each common share purchase warrant exercisable for one common share until July 9, 2005 upon payment by the holder of Cdn$0.30 per common share. The agents involved

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in the private placement were issued 302,387 common share purchase warrants, with each common share purchase warrant exercisable for one common share until July 9, 2006 upon payment by the holder of Cdn$0.30 per common share.

     On May 5, 2004, we completed a non-brokered private placement of 232,628 units at a purchase price of Cdn$0.30 per unit to a group consisting of non-U.S. purchasers and U.S. purchasers for gross proceeds of Cdn$69,788. Each unit consists of one common share and one common share purchase warrant, with each common share purchase warrant exercisable into one common share until May 5, 2005 upon payment by the holder of Cdn$0.30 per common share.

     On March 31, 2004, we completed a non-brokered private placement of 1,054,158 units at a purchase price of Cdn$0.30 per unit to a group consisting of non-U.S. and U.S. purchasers for gross proceeds of Cdn$316,247. Each unit consists of one common share and one common share purchase warrant, with each common share purchase warrant exercisable into one common share until March 31, 2005 upon payment by the holder of Cdn$0.30 per common share.

     With the exception of the most recent private placement, we used all of these funds primarily to finance our operating loss and expand our Carbiz Auto credit operations.

     Payments due from us over the next five fiscal years for operating and capital leases, and short and long-term debt are as follows:

		Less Than		One to		Three to		Greater Than		Total
		One Year		Three Years		Five Years		Five Years
Operating Leases	$	207,000	$	311,000	$	-	$	-	$	518,000
Capital Leases		12,833		28,674		3,041		-		44,548
Long-Term Debt		187,046		386,266		-		-		573,312
Interest		30,494		27,967		-		-		58,461
	$	437,373	$	753,907	$	3,041	$	-	$	1,194,321

     Should our operating revenues fail to increase to provide sufficient cash flow to fund operations we may require additional financing. Based on first quarter results and an assumption of meeting business projections for the remainder of the fiscal year and achieving a listing on the Over-The-Counter Bulletin Board and a delisting on the TSX Venture Exchange on or before April 6, 2006, our current cash flow from operations and our cash on hand are sufficient to fund our operations until January 2007. Actual results that vary from projections may require the need for additional cash during that period. Our ability to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as our business performance. There can be no assurance that we will be successful in our efforts to arrange additional financing, if needed, on terms satisfactory to us or at all. The failure to obtain adequate financing could result in a substantial curtailment of our operations. If additional financing is raised by the issuance of securities, control of Carbiz may change and/or our shareholders may suffer significant dilution.

Off-Balance Sheet Arrangements

     As of July 31, 2005, Carbiz has a $20,000 standby letter of credit for its leased premises, which will be reduced to nil in December 2005.

BUSINESS

Carbiz Inc.

     We were incorporated pursuant to the provisions of the Business Corporations Act (Ontario) under the name “Data Gathering Capital Corp.” on March 31, 1998. We changed our name from “Data Gathering Capital Corp.” to “Carbiz.com Inc.” on September 1, 1999. Thereafter, we changed our name again to “Carbiz Inc.” on July 15, 2003.

     On July 14, 1998, we completed our initial public offering in Canada by issuing 1,500,000 common shares, and we listed our common shares for trading on the junior capital pool board of The Alberta Stock Exchange (now the TSX Venture Exchange Inc.) on July 23, 1998.

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     On December 18, 1998, we acquired our wholly-owned subsidiary, Data Gathering Service Inc., by way of a reverse takeover. Data Gathering Service Inc. was incorporated under the Business Corporations Act (Ontario) on November 30, 1995. Data Gathering Service Inc. was in the business of consulting to auto dealers. On August 1, 1999, we acquired all of the shares of Autosure Financial Corporation Atlantic Limited and MPI Marketing Professionals Incorporated, both companies incorporated under the Companies Act (Nova Scotia) that were in the business of providing auto dealer software for sales enhancement. On January 20, 2000, Autosure Financial Corporation changed its name to 2288764 Nova Scotia Ltd. On March 29, 2000, we acquired all of the shares of Advanced Dealer Services, Inc., a company incorporated under the laws of the State of Florida that was in the business of providing software and business model consulting to Buy Here-Pay Here automobile dealers. On April 4, 2000, we acquired all of the shares of Abbey Canada Inc., a company incorporated under the Business Corporations Act (Ontario) that was in the business of credit insurance. On May 19, 2000, we acquired all of the shares of TaxMax Service Group, Inc., a company incorporated under the laws of the State of Florida that was in the business of providing tax return processing for auto dealer customers for use of refunds as down payments.

     We currently operate one wholly-owned subsidiary in the United States, Carbiz USA Inc., which is incorporated in the State of Delaware. Carbiz USA Inc. also has an operating subsidiary in the United States, Carbiz Auto Credit, Inc., which is incorporated in the State of Florida.

     On February 25, 2005, we also entered into a joint venture agreement with an entity controlled by one of our directors and, as a result, we own a 50% interest in Carbiz Auto Credit JV1, LLC, a limited liability company formed in Florida.

     Our Canadian registered office is located at Suite 930, 3044 Bloor Street West, Toronto, Ontario, M3Y 2Y8. Our United States registered agent is William Guerrant, Esq. of Hill, Ward & Henderson P.A. at 101 East Kennedy Blvd., Suite 3700, Tampa, Florida 33602. Our principal office is located at 7405 North Tamiami Trail, Sarasota, Florida 34243. Our telephone number is (941) 952-9255.

Our Business

     We are a provider of specialty consumer financing products, software, training and consulting services, mainly to the automotive Buy Here-Pay Here industry in the United States. Since our founding in 1995, we have served numerous new and used car dealerships of all sizes and in many geographic areas. We have been and continue to be focused on Buy Here-Pay Here dealerships, which are automotive dealers who use their own money to finance vehicles for customers with sub-standard or poor credit. According to articles published by the National Alliance of Buy Here-Pay Here Dealers in July 2003, the Buy Here-Pay Here industry in the United States generates over $50 billion per year in revenue from over 30,000 lots throughout the country.

     In addition to continuing to grow our core business, the main thrust of our expansion strategy includes establishing our own group of Buy Here-Pay Here credit centers in order to capitalize on our knowledge and experience in this area. We opened our first “Carbiz Auto Credit” finance center in Palmetto, Florida on May 10, 2004. We believe the favorable economics and market opportunity in the Buy Here-Pay Here industry and our prior knowledge and expertise advising automobile dealerships in this industry positions us to be successful in the Buy Here-Pay Here market.

     We have developed a solid and growing base of customers and revenue, and we currently serve over 3,500 clients across all 50 states who utilize one or more of our products and/or services. Our products fall into three primary categories: software products for operation of auto dealers and business model consulting, tax return processing for auto purchase down payment assistance, and direct auto sales and financing through our wholly-owned operations or our joint venture arrangements.

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Dealer Software and Business Model Consulting

     Our dealer software solutions focus on finance, sub-prime finance and Buy Here-Pay Here finance operations and dealer accounting solutions. After a series of acquisitions, we spent most of 2001 and 2002 consolidating over sixty separate software programs into three main programs (MSP, VisualCAT and IDA). We plan to continue developing, selling and maintaining each of these and the other products and services listed below, as well as identifying new products and services for the specialty consumer finance and automotive businesses.

Our principal products include:

•	Management System Plus (“MSP”) – Provides dealers with the ability to offer Buy Here-Pay Here financing at the point of sale, including inventory management, contracting and collection functionality. The Buy Here- Pay Here business emerged as a distinct business category when car dealers began financing “unbankable” customers in order to sell used cars. In short, the customer needs a car, the dealer wants to make a profit, and no one will lend the customer the money, so the dealer finances the deal. The Buy Here-Pay Here business is the combination of a consumer finance company and a used car dealership. Customers typically make a down payment and then make weekly payments to the dealer. In order to obtain dealer financing, customers typically pay high interest rates, usually in the range of 18-22% per annum.
	MSP is a Windows program written in Visual Basic and is available for delivery on a single person computer, a local area network, or via the Internet. Recent enhancements include an interface with starter interrupt devices, automated Internet credit report access, and automated access to the Office of Foreign Assets Control “bad guy” list.
•	VisualCat – Provides dealers with the ability to offer prime and sub-prime financing through third-party lenders at the point of sale, including inventory management, storage of lender criteria, credit bureau access and contracting functionality. The program compares the credit parameters of each finance program offered by various lenders against customer data and determines which, if any, are available based on the buyer’s credit status and maximum monthly payment. The program then matches the buyer’s maximum monthly payment with every vehicle in the dealer’s inventory to allow the dealer to select appropriate vehicles for the buyer. The software enables dealers to expand their customer base by arranging financing for the full range of automotive customers.
	VisualCAT is a Windows program written in Delphi and is available for delivery on a single personal computer, a local area network, or via the Internet. Recent enhancements include automated Internet credit report access, and automated access to the Office of Foreign Assets Control “bad guy” list.
•	Independent Dealer Accounting (“IDA”) – Provides a suite of accounting and financial reporting tools designed specifically for independent dealers, including real-time integration with MSP and VisualCat. All appropriate entry points create entries and updates in real-time in both the dealer management system and accounting files. One benefit of this tight integration is the production of a daily operation control report, previously available only in systems beyond the financial reach of the smaller dealer. Another key area of integration is the generation of real-time transactions to a related finance company. For the Buy Here-Pay Here dealer that has a related finance company, when the contract is sold to the company from the dealership, IDA will automatically generate all transactions in both companies.
	The major modules of IDA include powerful tools for the management of:
	•      General ledger;
	•      Vehicle inventory;
	•      Accounts payable;
	•      Accounts receivable;
	•      Journal transactions; and
	•      Payroll.

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	IDA is the result of years of development of accounting functions in the DOS version of our Buy Here-Pay Here software. Our understanding of the dealership accounting functions results from many installations where we not only provide software to the dealer but also provide consulting services that touch all areas of the dealer operations. IDA brings that depth of accounting design and operational knowledge to a system integrated with our current Windows dealer management systems to provide a complete management solution to the independent dealer. IDA is a Windows program written in Visual Basic and is available for delivery on a single personal computer, a local area network, or via the Internet. With our IDA product, we are an Approved Vendor for Standardized Accounting by the NIADA.
•	Traffic Management System – Provides dealers with the ability to track walk-in and phone traffic in the dealership including follow-up list generation, sales result reporting and VisualCat interface functionality. Traffic Management System enables dealers to do the following:
	•	Track prospects and sold and cancelled customers.
	•	Provide a multitude of reports including salesperson’s activities, salesperson efficiency, customer and prospect contacts, customer analysis by model type and source, etc.
	•	Provide daily follow-up scheduling.
	•	Provide unlimited follow-up letters with an automated letter-printing program.
		Effective traffic management can assist dealers improve their closing ratios, sell more cars and increase customer satisfaction.
•	BHPH Business Model Consulting – Our business model consulting products focus on assisting our dealers with the successful operation of a Buy Here-Pay Here business. Our consultants have extensive knowledge and practical experience in finance and insurance, sub-prime finance and the Buy Here-Pay Here business. Dealers can choose from various products, including:
	•	Dealer Controlled Finance (“DCF”) Business Model Package – Provides dealers with a complete Buy Here-Pay Here operation model including policies and procedures,   sales methods, collections methods and manager and associate training.
	•	Guardian Consulting Service – Provides DCF dealers with a weekly review of goals, problem areas and operational results done through extraction of data from the dealer’s software, a written summary of results, and presentation of the report by conference   call by a Carbiz consultant.
	•	Onsite Consulting – Provides dealers with an onsite review of sales and collections policies and procedures including the presentation of a written summary of recommendations by a Carbiz consultant.
	•	Training – Provides dealers with a manager training class and an associate training class held monthly at the Carbiz facility in Sarasota, Florida.

TaxMax

     We purchased our current TaxMax business in 2000. In the last eight years, the TaxMax products have processed over $100 million in tax refunds. It has served as a tremendous lead generator for our customers, especially during the months of January through April. It has also increased sales by an average of fifteen cars per lot during this timeframe and also increased the size of initial down payments by customers, which allows dealers to break even more quickly. We have grown this division significantly since its purchase, and we continue to also secure and explore joint ventures outside of the automobile financing business, including employee placement agencies and payroll processing companies, among others.

     Our TaxMax product provides dealers with the ability to offer a “refund for down payment” program during the income tax filing season. For an initial sign-up fee, a dealer receives a marketing package, signage and training with the TaxMax program. We generate income based on the initial fees from the dealers and subsequent tax preparation

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fees paid by the customer. TaxMax receives return data for a dealer’s customer by fax or internet, prepares the return while the customer is at the dealer, electronically files the completed return, provides quick funding of the refund through a bank affiliation, and routes the funds directly to the dealer by onsite check printing or electronic funds transfer. Due to the seasonal nature of TaxMax, we recognize most of our revenue and expenses during the fourth and first quarters of each fiscal year when we enroll dealerships and process tax returns.

Carbiz Auto Credit

     In May 2004, we opened our first Carbiz Auto Credit center in Palmetto, Florida as a result of our decision to enter the direct automobile sales market. Our “credit center” is a used car dealership that offers financing onsite to customers with poor credit through the utilization of our software products and our DCF business model. Rather than continuing to focus only on our existing software, consulting and TaxMax business, it is our intent to expand and diversify our business by opening additional credit centers in the future. In November 2004, our second Carbiz Auto Credit location was opened in St. Petersburg, Florida, and our third location, the first location of our joint venture, recently opened in Tampa, Florida. Each credit center originates, funds, manages and collects loans for vehicles sold to customers.

The Buy Here-Pay Here Industry

     Buy Here-Pay Here is the common term for automobile dealers who use their own money to finance vehicles for customers. The term developed because the customer makes his/her car payment in person, at the same lot where they bought the vehicle. The customer base for these dealers is people who have poor or badly impaired credit histories, thus making conventional financing and even sub-prime financing unavailable to them. This includes customers with multiple bankruptcies, multiple accounts defaulted upon and charged-off by previous lenders, etc. They have low-paying jobs, no health insurance, and a history of not paying their bills. Nevertheless, all of these people typically need a car to get to work and for other basic transportation needs. According to an article in the Wall Street Journal dated July 8, 2003, statistics show approximately 70% of those who visit a Buy Here-Pay Here lot buy and finance a car from that lot.

     Although the Buy Here-Pay Here business looks like the retail automobile sales business on the surface, it is, in fact, a “finance and collections” business. Successful Buy Here-Pay Here dealers have developed ways to ensure collections of not only of their costs, but most of their profit as well.

     The reason Buy Here-Pay Here dealers can operate profitably with this class of customer is that they have developed business practices which allow them to collect sufficient amounts of money to cover their charge-off losses and generate a profit. In fact, some are so successful that they can maintain average charge-off rates of 5% of outstanding loan balances or lower, and produce return on investment in the triple digits. Some of the procedures Buy Here-Pay Here dealers have developed to ensure this are:

•   Payday Payments – The typical Buy Here-Pay Here customer can pay $55 - $65 dollars per week, but cannot pay $200 a month. They just can’t save and are poor money managers.

•   Required In-Person Payments – This avoids the “check is in the mail” syndrome, and also allows the dealerships to develop personal relationships.

•   Development of Personal Relationships – People will pay “friends” before they will pay faceless entities like the phone or power companies.

•   Start Collection Process Immediately – Buy Here-Pay Here dealers begin this process the day after the customer is delinquent or if payment is not made in full.

     We believe that if managed properly, the Buy Here-Pay Here business can be profitable. Further, we believe that we have gained significant knowledge, data and expertise through our years of training others to successfully start and operate Buy Here-Pay Here businesses to begin starting our own Buy Here-Pay Here group of dealerships.

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Markets

     The primary market for our software and TaxMax products and services is the automotive retail industry in North America, with a direct focus on the Buy Here-Pay Here segment. According to an annual summary of industry data published in May 2005 by NADA, it is estimated that new car dealers generated approximately $714 billion in sales in the United States in 2004. Further, according to this same source, there are approximately 21,640 franchised automotive dealers in the United States, of which a significant number engage in Buy Here-Pay Here automobile sales. Although we consider all dealers as potential customers, we believe that the specific Buy Here-Pay Here dealer segment is best suited for our MSP and IDA software products and the franchised dealer segment is best suited for our VisualCAT software product.

     As a result of changing demographics and a growing segment of the population with declining credit worthiness, we believe that the need for Buy Here-Pay Here dealerships continues to grow. Many new car or franchise dealers are entering the Buy Here-Pay Here market as a way to increase their business by capturing the customer that could not be financed through normal prime of sub-prime channels offered by the dealer. This vertical integration also works in the use of inventory by making older trade in vehicles that would otherwise be disposed of wholesale available for sale to the Buy Here-Pay Here customer, providing a higher margin on that vehicle. The dealer principle in these cases will not be physically located at the Buy Here-Pay Here facility, and is a prime prospect for our business model consulting products.

     To date, we have opened three Carbiz Auto Credit centers in the State of Florida. It is our intent to continue to open additional Carbiz Auto Credit centers in the future, with these additional centers likely located in the State of Florida.

Sales and Marketing

     Sales of our software and consulting products and our TaxMax products are conducted by our sales staff located at our corporate office in Sarasota, Florida. Our sales staff is responsible for responding to sales leads generated from our marketing activity, explaining products and services, demonstrating products, following-up with customers, and closing orders.

     Product marketing for all products includes several industry conferences and trade shows during the year, including the National Alliance of Buy Here-Pay Here Dealers Conference, NIADA Annual Convention, the National Sub-Prime and Buy Here-Pay Here Conference, and several state independent dealer association conventions. Such trade show activity provides an opportunity to present our products directly to attending dealers as well as providing an increased general awareness of Carbiz within the dealer market.

     Product print advertising is done on a consistent basis in multiple industry trade publications, including Used Car News, Auto Remarketing, and Used Car Dealer magazines. In addition, an active Internet advertising program includes key word search placement on multiple search engines, with click through results directed to the Carbiz website. On a seasonal basis, additional advertising is placed specifically for our TaxMax products.

     As a result of the acquisition of several regional software companies during 2000, we currently have a user base of approximately 3000 software installations, many of which are still using older programs originally purchased from the acquired companies. Marketing to this specific target group is done through an ongoing program of outbound phone calls and specific mailings to users of individual products.

Research and Development

     Research and development is carried out by a staff of program developers who maintain and enhance our current products as well design and program new products for future release. As a result, these expenses are included in the total operating expenses of our software division along with product support rather than as a segregated expense or capital cost. While our development efforts over the past two years have been primarily focused on the development of our IDA software product, it is not possible to specifically separate those development expenses from our overall product costs.

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Government Regulations and Industry Standards

     Our operations are subject to regulation, supervision and licensing under various United States federal, state and local statutes, ordinances and regulations.

     Although we are not directly subject to any United States federal or state regulations that affect our ability to operate our software, the functionality of our software related to the calculation of interest APR and the printed disclosure of this amount on auto finance contracts is subject to verification that the calculations and disclosures meet both United States federal and state regulations. In some cases, the verification process is done internally using the published standards and in some cases samples are submitted to a state for approval. All such verifications are redone each time any changes are made to an applicable portion of our software.

     Our TaxMax division has processed an application with the Internal Revenue Service for and has received status as an “electronic return originator” and as such has received from the Internal Revenue Service an electronic filer identification number (EFIN) which is required to process and E-file customer tax returns. The annual requirements to maintain this status, including current document filings and completion of an audit of procedures and paperwork, are completed each year.

     With respect to the financing services we provide with our credit centers in the states in which we operate, a consumer credit regulatory agency regulates and enforces laws relating to consumer lenders and sales finance agencies such as us. These rules and regulations generally provide for licensing of sales finance agencies; limitations on the amount, duration and charges, including interest rates, for various categories of loans; requirements as to the form and content of finance contracts; and other documentation, and restrictions on collection practices and creditors’ rights. We are also subject to periodic examination by applicable state regulatory authorities.

     We are also subject to extensive United States federal regulation, including the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. These laws require us to provide certain disclosures to prospective borrowers and protect against discriminatory lending practices and unfair credit practices. The principal disclosures required under the Truth in Lending Act include the terms of repayment, the total finance charge and the annual percentage rate charged on each loan. The Equal Credit Opportunity Act prohibits creditors from discriminating against loan applicants on the basis of race, color, sex, age or marital status. According to Regulation B promulgated under the Equal Credit Opportunity Act, creditors are required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection. In addition, the credit scoring system we use must comply with the requirements for such a system as set forth in the Equal Credit Opportunity Act and Regulation B. The Fair Credit Reporting Act requires us to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency. Additionally, we are subject to the Gramm-Leach-Bliley Act, which requires us to maintain privacy with respect to certain consumer data in our possession and to periodically communicate with consumers on privacy matters. We are also subject to the Soldiers’ and Sailors’ Civil Relief Act, which requires us to reduce the interest rate charged on each loan to customers who have subsequently joined, enlisted, been inducted or called to active military duty.

     We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable local, state and federal regulations.

Competition

     The market for auto dealer software, in particular software for independent dealers, is not dominated by any large national provider as compared to the market for new cars or franchise dealers. Within our primary markets, we compete directly with other dealer software providers such as Auto-Master, AutoStar, and Micro-21, most of whom market and service customers within a regional geographic area. We offer efficient stand-alone systems to dealers that provide comparatively inexpensive personal computer-based solutions that focus on management systems designed specifically for the automotive market. We provide dealers with a full range of solution products to allow dealers to effectively and efficiently operate their dealerships. We sell all products or services as a full service suite or independently as required. We believe that none of our competitors offer the same breadth of product offerings.

     The tax return preparation business is highly competitive. With our TaxMax product, we specifically compete with one national provider along with several small regional providers in the automobile dealer market. Also, there are

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a substantial and increasing number of tax return preparation firms and accounting firms offering tax return preparation services and refund anticipation loan services to the public. We believe that the most significant competitive advantage of TaxMax is its ability to offer rapid return preparation and refund processing from a remote location without the necessity of that location having or obtaining an electronic return originator license from the Internal Revenue Service. TaxMax will continue to enhance its capabilities through the development and use of unique technologies.

     Competition in the used automobile retail and finance industries is intense and highly fragmented. Although the range of possible points of purchase include (i) other similar used car dealerships that offer Buy Here-Pay Here financing, (ii) the used vehicle retail operations of franchised automobile dealerships, (iii) independent used vehicle dealers, and (iv) individuals who sell used vehicles in private transactions, we believe that the actual competition for our Carbiz Auto Credit lies only with other similar used car dealerships that offer Buy Here-Pay Here financing.

Proprietary Rights

Carbiz Inc. has registered the trademark and servicemark of “Carbiz.com” in Canada and the United States.

Employees

     We have 34 full-time employees. We also employ 90 seasonal employees that provide assist us with our tax refund and refund anticipation loan services during the months of December through March each year.

Description of Property

     Our principal executive office located at 7405 North Tamiami Trail, Sarasota, Florida 34243-1808 consists of approximately 4700 square feet of office space. We pay $6,250 in rent per month to lease this property, and our lease expires on May 31, 2009.

     Our Palmetto, Florida credit center located at 314 8^th Avenue W, Palmetto, Florida 34221-5161 consists of approximately 1000 square feet of commercial space. We pay $3,000 in rent per month to lease this property, and our lease expires on March 31, 2009.

     Our St. Petersburg, Florida credit center located at 2324 Central Ave., St. Petersburg, Florida 33712-1149 consists of approximately 1500 square feet of commercial space. We pay $2,300 in rent per month to lease this property, and our lease expires on October 31, 2009.

     Our Tampa, Florida credit center located at 4102 N. Florida Ave., Tampa, Florida 33603-3818 consists of approximately 700 square feet of commercial space. We pay $2,500 in rent per month to lease this property, and our lease expires on March 31, 2010.

     We do not currently maintain any investments or interests in real estate, real estate mortgages or securities of persons primarily engaged in real estate activities, nor do we expect to do so in the foreseeable future.

Legal Proceedings

     We are not currently a party to any legal proceeding or governmental proceeding nor are we currently aware of any pending legal proceeding or governmental proceeding proposed to be initiated against us.

MANAGEMENT

Executive Officers and Directors

Our directors, executive officers and key employees as of July 31, 2005 are as follows:

Name	Age	Position
Carl Ritter (1)	45	Chairman, Chief Executive Officer and a Director

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Richard Lye	60	President, Corporate Secretary and a Director
Ross Quigley(1)	59	Director
Theodore Popel(1)	57	Director
Aldo Sistilli	45	Chief Financial Officer and Vice President Finance
Stanton Heintz	56	Chief Operating Officer

(1) Indicates member of our Audit Committee.

Biographical information for directors and executive officers:

     Carl Ritter - Chairman, Chief Executive Officer and a Director. Mr. Ritter has been the Chief Executive Officer and a director of Carbiz since March 1998. Prior to joining Carbiz, Mr. Ritter was the President of Data Gathering Service Inc. from August 1995 until March 1998, a private company engaged in software development for Automotive F&I Software. Prior to co-founding Data Gathering Service Inc. with Mr. Lye, Mr. Ritter held several senior management positions in the retail automotive industry in Canada, including operating several car dealerships as President and Dealer Principal of North Toronto Mazda and Durham Mazda.

     Richard Lye – President, Corporate Secretary and a Director. Mr. Lye has been with Carbiz since March 1998, and has been the President of Carbiz since April 2001 and Corporate Secretary and a director of Carbiz since June 2004. Prior to joining Carbiz, Mr. Lye was the Vice President of Data Gathering Service Inc. from August 1995 until March 1998. Prior to co-founding Data Gathering Service Inc. with Mr. Ritter, Mr. Lye held several senior management positions in the retail automotive industry in Canada, including serving as the General Manager for a major Canadian Chevrolet dealership located in Toronto. Mr. Lye holds a permanent teaching certificate from the Province of Ontario and also is a graduate of the NADA Dealer Academy.

     Ross Quigley - Director. Mr. Quigley has been a director of Carbiz since March 1998. Since May 1988, Mr. Quigley has been the Chief Executive Officer of the Medipac International Group of Companies, a private corporate group that provides administration services and medical insurance coverage for traveling Canadians, and Reed Mather Insurance Group Inc., a private multi-line insurance brokerage. Mr. Quigley attended Dalhousie University, Halifax, Nova Scotia, Canada for four years in the engineering physics, mathematics and psychology disciplines. Mr. Quigley has completed several actuarial and insurance courses and holds several general and life insurance licenses in various provinces of Canada.

     Theodore Popel - Director. Mr. Popel has been a director of Carbiz since June 2004. Since January 1995, Mr. Popel has been the Vice President of Medipac Assistance International Inc., which is a company that provides emergency medical assistance and managed care for traveling Canadians.

     Aldo Sistilli - Chief Financial Officer and Vice President Finance. Mr. Sistilli has been the Chief Financial Officer of Carbiz since February 2001 and the Vice President Finance of Carbiz since November 1999. Mr. Sistilli is also in the sole proprietor of Aldo Sistilli, CMA. Mr. Sistilli graduated from Ryerson University with a Bachelor of Business Management Degree in 1985, and obtained the Certified Management Accountant designation in 1989.

     Stanton Heintz - Chief Operating Officer. Mr. Heintz has been the Chief Operating Officer of Carbiz since May 2002. Mr. Heintz joined Carbiz in May 2000 as a Vice President following the acquisition of TaxMax, Inc. by Carbiz, which was a company founded by Mr. Heintz. Prior to the acquisition of TaxMax, Inc. by Carbiz, Mr. Heintz had been the President of TaxMax, Inc. since September 1996. Mr. Heintz graduated from Bluffton College in Bluffton, Ohio with a Bachelor of Arts in Business Administration in 1971.

     All directors are elected annually and serve until the next annual meeting of shareholders or until the election and qualification of their successors. All executive officers serve at the discretion of our board of directors. There are no family relationships between any of our directors or executive officers.

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Director compensation

     Our directors do not currently receive any cash compensation for service on our board of directors or any committee, although we do reimburse directors for their reasonable out-of-pocket expenses associated with attending meetings. Directors are eligible for option grants under our stock option plan. See “Stock Option Plan” below. The following table sets forth the aggregate number of options granted to each of our current non-employee directors in each of the last three fiscal years.

	Fiscal Year Ended		Fiscal Year Ended		Fiscal Year Ended
	January 31, 2005		January 31, 2004		January 31, 2003
		Exercise		Exercise		Exercise
Non-employee director	Shares	Price	Shares	Price	Shares	Price
Ross Quigley	Nil		100,000 (1)	$0.24	129,000(6)	$0.24
			100,000 (2)	$0.24	200,000(7)	$0.19
			106,000 (3)	$0.16
Theodore Popel	Nil		92,000 (4)	$0.24	Nil
			106,000 (5)	$0.16	Nil

______________

(1)	These options expire on March 31, 2009.
(2)	These options expire on July 1, 2009.
(3)	These options expire on December 14, 2009.
(4)	These options expire on July 1, 2009.
(5)	These options expire on December 14, 2009.
(6)	These options expire on December 15, 2008.
(7)	These options expire on November 28, 2008.

Board committees

     Our board of directors has established an audit committee. We have not established a compensation committee and, therefore, the full board of directors performs the functions of such committee. Our audit committee currently consists of Messrs. Ritter, Quigley and Popel. Our audit committee is responsible for reviewing our financial reporting procedures and internal controls, the scope of annual and any special audit examinations carried our by our auditors, the performance, independence, and compensation of our auditors, systems and disclosure controls established to comply with regulatory requirements and our annual financial statements before they are reviewed and approved by our board of directors. Such reviews are carried out with the assistance of our auditors and our senior financial management.

Executive Compensation

     The following table sets forth information for each of the three most recently completed fiscal years ending January 31^st concerning the compensation of (i) our chief executive officer and (ii) all other executive officers of Carbiz who earned over $100,000 in salary and bonus in the fiscal year ended January 31, 2005. We refer to these individuals in this prospectus as our “named executive officers.”

		Annual Compensation			Long-term Compensation
					Awards		Payouts
Name and Principal Position	Year	Salary(1) ($)	Bonus ($)	Other Annual Compensation(2)(3) ($)	Restricted Stock Award(s)	Securities Underlying Options/ SARS (#)	LTIP Payouts ($)	All Other Compensation ($)
Carl Ritter	2005	174,890	Nil	Nil	Nil	306,000	Nil	Nil
Chief Executive	2004	70,631	Nil	66,245	Nil	100,000	Nil	Nil
Officer	2003	Nil	Nil	112,058	Nil	Nil	Nil	Nil

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		Annual Compensation			Long-term Compensation
					Awards		Payouts
Name and Principal Position	Year	Salary(1) ($)	Bonus ($)	Other Annual  Compensation(2)(3)  ($)	Restricted Stock Award(s)	Securities Underlying   Options/ SARS (#)	LTIP Payouts ($)	All Other Compensation ($)
Richard Lye	2005	138,019	Nil	Nil	Nil	306,950	Nil	Nil
President and	2004	104,753	Nil	Nil	Nil	104,050	Nil	Nil
Corporate	2003	74,831	Nil	Nil	Nil	Nil	Nil	Nil
Secretary(4)
Stanton Heintz	2005	120,122	Nil	Nil	Nil	306,062	Nil	Nil
Chief Operating	2004	112,669	Nil	Nil	Nil	104,050	Nil	Nil
Officer	2003	73,858	Nil	Nil	Nil	Nil	Nil	Nil

Notes:

(1)	These figures represent payments made through Carbiz USA Inc., Carbiz’s wholly-owned US subsidiary.
(2)	Perquisites and other personal benefits did not exceed the lesser of $50,000 and 10% of the total annual salary and bonuses for the named executive officers.
(3)	These figures represent payments made in accordance with the provisions of applicable management and consulting agreements which have expired as of December 2004.
(4)	As at the year ended January 31, 2005, Carbiz owed Mr. Lye $26,050 in past wages.

Options Granted During the Most Recently Completed Financial Year

     The following table sets forth certain information relating to stock options granted to our named executive officers for the fiscal year ended January 31, 2005:

	Securities	% of Total
	Underlying	Options/SARs	Exercise or
	Options/SARs	Granted to	Base Price
	Granted	Employees in	($/Security)
	(#)	Fiscal Year		Expiration Date
Carl Ritter	100,000	15.9%	$0.24	March 31, 2009
	100,000		$0.24	July 1, 2009
	106,000		$0.16	December 14, 2009
Richard Lye	100,000	16.0%	$0.24	March 31, 2009
	100,000		$0.24	July 1, 2009
	106,950		$0.16	December 14, 2009
Stanton Heintz	100,000	15.9%	$0.24	March 31, 2009
	100,000		$0.24	July 1, 2009
	106,062		$0.16	December 14, 2009

Aggregated Option/SAR Exercises During the Last Fiscal Year and Financial Year-end Option/SAR Values

     The following table sets forth certain information respecting the numbers and accrued value of unexercised stock options as at January 31, 2005 and options exercised by the named executive officers during the fiscal year ended January 31, 2005:

	Securities		Number of Securities Underlying		Value of Unexercised
	Acquired on	Value	Unexercised Options/SARs at		In-the-Money Options/SARs at
	Exercise	Realized	Fiscal Year End		Fiscal Year End (1)
	(#)	($)	(#)		($)
			Exercisable	Unexercisable	Exercisable	Unexercisable
Carl Ritter	200,136	21,327	300,000	106,000	Nil	Nil
Richard Lye	100,000	15,760	354,050	106,950	Nil	Nil

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	Securities		Number of Securities Underlying		Value of Unexercised
	Acquired on	Value	Unexercised Options/SARs at		In-the-Money Options/SARs at
	Exercise	Realized	Fiscal Year End		Fiscal Year End (1)
	(#)	($)	(#)		($)
			Exercisable	Unexercisable	Exercisable	Unexercisable
Stanton Heintz	Nil	Nil	418,938	106,062	Nil	Nil

(1) Calculated as the difference in the market value of the securities underlying the options at January 31, 2005 and the exercise price.

Long-Term Incentive Plans

We do not have any long-term incentive plans.

Stock Option Plan

     Our stock option plan authorizes our board of directors to issue stock options to directors, officers, key employees and others who are in a position to contribute to the future success and growth of Carbiz. Under our stock option plan, the aggregate number of common shares issuable upon exercise of options granted may not exceed 10% of the total number of our outstanding common shares at the time the options are granted. Further, the aggregate number of common shares issuable upon the exercise of the options granted to any one individual may not exceed 5% of the total number of our outstanding common shares. Options issued pursuant to our stock option plan must have an exercise price not less than that permitted by the stock exchange on which our common shares are then listed or quoted. The period during which an option may be exercised shall be determined by our board of directors at the time the option is granted. No option may be exercisable for a period exceeding five years from the date the option is granted, unless specifically approved by our board of directors and which cannot exceed a maximum of 10 years from the date the option is granted.

     The options granted under our stock option plan expire on the earlier of the expiration date of the option or 30 days after the date a holder ceases to be employed or retained by us. In the event of the death or permanent disability of a holder, any option previously granted to the holder shall be exercisable until the earlier of the expiration date of the option or 12 months after the date of death or permanent disability of the holder.

     In the event of a sale of all or substantially all of our assets or in the event of a change in control of Carbiz, each holder shall be entitled to exercise, in whole or in part, the options granted to such holder, either during the term of the option or within 90 days after the date of the sale or change of control, whichever first occurs.

Termination of Employment, Change in Responsibilities and Employment Contracts

     Except as disclosed in this prospectus, we do not have any employment contracts with our executive officers. In addition, there are no compensatory plans or arrangements with any executive officer (including payments to be received from Carbiz or any subsidiary), which result or will result from the resignation, retirement or any other termination of employment of such executive officer or from a change of control of Carbiz or any subsidiary or any change in such executive officer’s responsibilities following a change in control.

Report on Repricing of Options/SARS

We did not reprice any options or SARs outstanding during the fiscal year ended January 31, 2005.

Indemnification of Directors and Officers and Related Matters

     Subject to the limitations contained in the Business Corporation Act (Ontario), our bylaws provide that our directors and officers, former directors or officers, or a person who acts or acted at our request as a director or officer of another body corporate of which we are or were a shareholder or creditor, and all of their heirs and legal representatives, shall be indemnified against all costs, charges and expenses reasonably incurred by such persons in connection with the defense of any civil, criminal or administrative action or proceeding to which they are made a party by reason of being or having held such positions, provided that the person seeking indemnity:

37

• acted honestly and in good faith with a view to our best interests; and

•   in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that his or her conduct was lawful.

Our bylaws also provide that our directors and officers shall not be liable for:

• any acts or omissions of any other officer or director;

•   any loss, damage or expenses related to an insufficiency or deficiency of title to any property acquired for or on behalf of Carbiz;

•   any loss or damage arising from the bankruptcy, insolvency or tortuous acts of any person occasioned by any error of judgment or oversight on the part of the officer or director; or

•   any other loss, damage or misfortune that happens in the execution of the duties of his or her office or in relation thereto, unless it results from his or her own willful neglect or default;

provided, however, that nothing in the bylaws relieves any director or officer from the duty to act in accordance with the Business Corporation Act (Ontario)and the regulations thereunder or from liability for any breach thereof.

     Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of us pursuant to the foregoing provisions, or otherwise, we have been advised that it is the opinion of the Securities and Exchange Commission that such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Except for the transactions described below, none of our directors, named executive officers or greater than 5% shareholders, nor any associate or affiliate of any of the above named persons have any interest, direct or indirect, in any transaction within the last two years of the date of this prospectus, or in any proposed transaction which has materially affected or will materially affect us.

     During the year ended January 31, 2005 the Company paid $45,252 (2004 - $44,493) for director, officers and property insurance to a company owned and operated by the spouse of a significant shareholder. At year-end, $19,362 (2004 - $35,450) of this amount was still outstanding, which was reduced to zero as of July 31, 2005. This transaction was measured at the exchange amount, which is the amount of consideration established and agreed to by both parties.

     For the years ended January 31, 2004 and January 31, 2005, pursuant to the terms of a management agreement dated October 12, 1999 between Carbiz and 1043917 Ontario Inc., we paid $70,631 and $nil, respectively, to 1043917 Ontario Inc., a corporation controlled by Mr. Ritter. This agreement with 1043917 Ontario Inc. expired on January 31, 2005. In addition, in consideration for services rendered pursuant to this management agreement, Mr. Ritter also received compensation, including benefits, of $66,245 and $174,890, respectively, through Carbiz USA Inc., one of our wholly-owned subsidiaries.

     On October 6, 2005, we completed a non-brokered private placement of Cdn$809,119 principal amount 5% convertible debentures with Mr. Ritter, Mr. Ritter’s wife, Mr. Quigley and Medipac International Inc., which is an entity controlled by Mr. Quigley, who is one of our directors, and for which Mr. Popel, who is also one of our directors, is an officer.

     On July 29, 2005, we completed a non-brokered private placement of a $150,000 principal amount promissory note that bears an interest rate of 17.7% with Medipac (US) International Inc., which is a wholly-owned subsidiary of Medipac International Inc. which is an entity controlled by Mr. Quigley, who is one of our directors, and Mr. Popel, who is also one of our directors. This note calls for payments of $15,000 including principal and interest to begin on October 1, 2005 and will mature on August 1, 2006.

     On February 28, 2005, Carbiz entered into a joint venture agreement with Jonross, Inc., an entity controlled by Mr. Quigley, who is a director of Carbiz, by forming Carbiz Auto Credit JV1, LLC, a Florida limited liability

38

company. Under the terms of the operating agreement, we agreed to provide management and license certain intellectual property to the joint venture company and Jonross, Inc. agreed to invest $500,000 in the joint venture company each in exchange for a 50% interest. We also have a revolving loan agreement with the joint venture company with no fixed repayment term at an annual interest rate of the U.S. prime rate plus 1.5% .

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following tables set forth certain information regarding beneficial ownership of our common shares as of July 31, 2005, by (i) each person or entity who is known by us to own beneficially more than 5% of our outstanding common shares, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all directors and executive officers as a group. As of July 31, 2005, we had 41,090,514 common shares issued and outstanding. Assuming the conversion of all the 5% convertible debentures, we will have 51,714,329 common shares issued and outstanding.

     Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and includes voting and investment power with respect to our common shares. Common shares subject to convertible debentures, warrants or options that are currently convertible or exercisable or convertible or exercisable within 60 days after July 31, 2005 are deemed to be beneficially owned by the person holding those securities for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other shareholder. Unless otherwise indicated, the address for each person listed in the following table is c/o Carbiz Inc., 7405 North Tamiami Trail, Sarasota, Florida 34243.

			Common Shares Beneficially Owned
	Common Shares Beneficially Owned		(assuming conversion of all 5%
Name and Address of			convertible debentures) (13)
Beneficial Owner	Number	Percentage	Number	Percentage
John Gallucci	4,862,511 (1)	11.8%	4,862,511 (1)	9.4%
Stanton Heintz	744,709 (2)	1.9%	744,709 (2)	1.5%
Richard Lye	1,163,200 (3)	2.8%	1,163,200 (3)	2.2%
Medipac International, Inc.	2,340,000	5.7%	12,459,130 (8)	21.5%
Theodore Popel	817,100 (4)	2.0%	1,698,580 (4)(9)	3.2%
Ross Quigley	8,495,995 (5)	20.4%	22,282,560 (5)(10)	36.6%
Carl Ritter	2,854,930 (6)	6.9%	3,920,642 (6)(11)	7.4%
All directors and executive	14,830,067 (7)	33.8%	30,563,824 (7)(12)	47.6%
officers as a group (6 persons)

_________________
(1) Includes 4,223,511 common shares held in the name of 1144822 Ontario Inc., a company of which Mr. Gallucci is the President and owner of one-third of the outstanding securities.
(2) Includes 525,000 common shares issuable upon exercise of options.
(3) Includes 411,000 common shares issuable upon exercise of options.
(4) Includes 198,000 common shares issuable upon exercise of options. Although Mr. Popel is an officer of Medipac International Inc., he disclaims beneficial ownership of the securities held by Medipac International Inc.
(5) Includes (i) 635,000 common shares issuable upon exercise of options, (ii) 2,340,000 common shares held in the name of Medipac International Inc., a company wholly-owned and controlled by Mr. Quigley, and (iii) 1,189,000 common shares held in the name of Samual A. Quigley, who is Mr. Quigley’s son.
(6) Includes 406,000 common shares issuable upon exercise of options.
(7) Includes 2,840,429 common shares issuable upon exercise of options.
(8) Includes 3,907,000 common shares, 4,141,420 common shares underlying class A common share purchase warrants and 2,070,710 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$586,050 convertible debenture.

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(9) Includes 340,593 common shares, 360,592 common shares underlying class A common share purchase warrants and 180,295 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$50,000 convertible debenture.
(10) Includes (i) 340,593 common shares, 360,592 common shares underlying class A common share purchase warrants and 180,295 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$50,000 convertible debenture, and (ii) 3,907,000 common shares, 4,141,420 common shares underlying class A common share purchase warrants and 2,070,710 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$586,050 convertible debenture held by Medipac International, Inc., a corporation wholly-owned and controlled by Mr. Quigley.
(11) Includes (i) 78,140 common shares, 82,828 common shares underlying class A common share purchase warrants and 41,414 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$11,721 convertible debenture held directly by Mr. Ritter, (ii) 333,333 common shares, 353,332 common shares underlying class A common share purchase warrants and 176,665 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$50,000 convertible debenture held by Mr. Ritter’s wife.
(12) Includes 6,075,318 common shares, 6,438,962 common shares underlying class A common share purchase warrants and 3,219,477 common shares underlying class B common share purchase warrants that will be issued upon conversion of Cdn$909,119.94 in convertible debentures.
(13) Includes any interest that has accrued on the convertible debentures through October 6, 2005.

DESCRIPTION OF SECURITIES

Common Shares

     We have authorized an unlimited number of common shares with no par value. The holders of common shares are entitled to one vote for each share held of record on all matters submitted to a vote of the shareholders, other than meetings of the holders of another class of shares. No holder of our common shares may cumulate votes in voting for our directors. Subject to preferences that may be applicable to any preferred shares currently outstanding or to be issued in the future, holders of common shares are entitled to receive ratably such dividends as may be declared by our board of directors out of funds legally available therefore. In the event of our liquidation, dissolution or winding up, holders of the common shares are entitled to all assets remaining after payment of liabilities and the liquidation preference of any then outstanding preferred shares. Holders of common shares have no preemptive rights and no right to convert their common shares into any other securities of Carbiz.

Preferred Shares

     We have authorized an unlimited number of preferred shares. Our articles of incorporation authorize our board of directors to issue, by resolution and without any action by our shareholders, one or more series of preferred shares and may establish the designations, dividend rights, dividend rate, conversion rights, voting rights, terms of redemption, terms of retraction, liquidation preference, sinking fund or purchase fund terms and all other preferences and rights of any series of preferred shares, including rights that could adversely affect the voting power of the holders of our common shares.

     One of the effects of undesignated preferred shares may be to enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of preferred shares pursuant to board of director’s authority described above may adversely affect the rights of holder of our common shares. For example, preferred shares issued by us may rank prior to the common shares as to dividend rights, liquidation preferences or both, may have full or limited voting rights and may be convertible into common shares. Accordingly, the issuance of preferred shares may discourage bids for our common shares at a premium or may otherwise adversely affect the market price of our common shares.

Series 1 Preferred Shares

     We have authorized a total of 10,000,000 series 1 preferred shares, none of which are outstanding.

     Voting

     Except as provided in the Business Corporation Act (Ontario), each holder of series 1 preferred shares is not entitled to receive notice of or to attend any meeting of our shareholders and is not entitled to vote at any meeting of our shareholders.

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     Dividends

     In priority to holders of our common shares and all other shares ranking junior to the series 1 preferred shares, each holder of series 1 preferred shares is entitled to receive a fixed 10% cumulative preferential cash dividend on the principal amount of each preferred share during each fiscal year when declared by our board of directors. Except with the unanimous written consent of the holders of the series 1 preferred shares, no dividend may be declared and paid on our common shares or on any other shares ranking junior to the series 1 preferred shares unless and until the preferential non-cumulative cash dividends on all series 1 preferred shares have been declared and paid or set apart for payment.

     Liquidation

     In the event of a liquidation, dissolution or winding up of Carbiz or any other distribution by way of repayment of capital, each holder of series 1 preferred shares shall be entitled to receive Cdn$0.10 per share together with any accrued but unpaid fixed preferential cash dividends before any amount is paid or distributed to the holders of our common shares.

     Redemption or Conversion

     The series 1 preferred shares will be automatically redeemed for Cdn$0.10 per share together with any accrued but unpaid fixed preferential cash dividends on the first day following the second anniversary of their date of issuance.

     Prior to the mandatory redemption date, the holders of series 1 preferred shares may convert each series 1 preferred share into one common share and all accrued but unpaid dividends on any series 1 preferred shares into common shares on the basis of one common share for each $0.10 of dividend amount to be converted by the holder.

Transfer Agent

     CIBC Mellon Trust Company at its principal offices in Vancouver, British Columbia, Canada, is the registrar and transfer agent of our common shares.

SELLING SHAREHOLDERS

     The table below lists the selling shareholders and other information regarding the beneficial ownership of the common shares by each of the selling shareholders. The second column lists the number of common shares beneficially owned by each selling shareholder as of July 31, 2005. The third column lists the number of common shares that may be resold under this prospectus. The fourth and fifth columns list the number of common shares owned and the percentage of common shares owned after the resale of the common shares registered under this prospectus. Except for their ownership of the common shares, none of the selling shareholders, other than Messrs. Quigley, Popel, Gallucci, Ritter, Heintz, Sistilli, and Lye and Medipac International Inc. have had any material relationship with us within the past three years. With respect to Messrs. Quigley, Popel, Ritter, Heintz, Sistilli and Lye, they are all currently directors and/or officers of Carbiz, and Mr. Gallucci was formerly a director of Carbiz. An entity controlled by Mr. Quigley is a joint venture partner of Carbiz. Mr. Popel and a wholly-owned subsidiary of Medipac International Inc., which is an entity controlled by Mr. Quigley, recently entered into a $150,000 principal amount promissory note with Carbiz. Midtown Partners & Co., LLC, formerly Innovation Capital, LLC, served as our placement agent in October 2004 relating to our offer and sale of certain of our 5% convertible debentures. The total number of common shares outstanding as of July 31, 2005 was 41,090,514. Assuming the conversion of all the 5% convertible debentures, we will have 51,714,329 common shares issued and outstanding.

     Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and includes voting and investment power with respect to our common shares. Common shares subject to convertible debentures, warrants or options that are currently convertible or exercisable or convertible or exercisable within 60 days after July 31, 2005 are deemed to be beneficially owned by the person holding those securities for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other shareholder.

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			Common Shares
Name of Selling Shareholder	Common Shares Beneficially Owned	Common Shares Offered by this	Beneficially Owned
	Prior to Offering (22)	Prospectus (23)	After Offering
			Number	Percentage
Carr, Steven P. (1)	443,380	443,380	-	*
Fusani, Jerry T. (2)	110,843	110,843	-	*
Gallucci, John (3)	4,862,511	4,862,511	-	*
Heintz, Stanton (4)	744,709	219,709	525,000	1.0%
Hoefer, Debra J. (5)	110,843	110,843	-	*
Hughes, John (6)	443,380	443,380	-	*
Kochevar, G. Raymond (7)	110,843	110,843	-	*
Kochevar, Jon R. (8)	3,879,628	3,879,628	-	*
Lye, Richard (9)	1,163,200	752,200	411,000	*
Medipac International, Inc. (10)	12,459,130	12,459,130	-	*
Midtown Capital, LLC (11)	428,296	428,296	-	*
Moore, Bruce (12)	110,843	110,843	-	*
Moore, Keith A. (13)	243,858	243,858	-	*
Moore, Kent Ashley (14)	554,228	554,228	-	*
Popel, Theodore (15)	1,698,580	1,500,580	198,000	*
Quigley, Ross (16)	22,282,560	21,647,560	635,000	1.2%
Quigley, Samuel	1,189,000	1,189,000	-	*
Ritter, Carl (17)	2,854,930	2,448,930	406,000	*
Ritter, Carol (18)	863,330	863,330	-	*
Sistilli, Aldo (19)	654,133	88,704	565,429	1.1%
Snively, Richard L. (20)	221,687	221,687	-	*
Vicis Capital Master Fund (21)	5,542,325	5,542,325	-	*

____________________
* Indicates less than one percent (1%).

(1) Includes 171,317 common shares, 181,376 common shares underlying class A common share purchase warrants and 90,687 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$25,150 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(2) Includes 42,829 common shares, 45,343 common shares underlying class A common share purchase warrants and 22,671 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$6,287.50 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(3) Includes 4,223,511 common shares held in the name of 1144822 Ontario Inc., a company of which Mr. Gallucci is the President and owner of one-third of the outstanding securities.

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(4) Includes 525,000 common shares issuable upon exercise of options.

(5) Includes 42,829 common shares, 45,343 common shares underlying class A common share purchase warrants and 22,671 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$6,287.50 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(6) Includes 171,317 common shares, 181,376 common shares underlying class A common share purchase warrants and 90,687 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$25,150 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(7) Includes 42,829 common shares, 45,343 common shares underlying class A common share purchase warrants and 22,617 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$6,287.50 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

 (8) Includes 1,499,037 common shares, 1,587,061 common shares underlying class A common share purchase warrants and 793,530 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$220,062.50 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(9) Includes 411,000 common shares issuable upon exercise of options.

(10) Includes 3,907,000 common shares, 4,141,420 common shares underlying class A common share purchase warrants and 2,070,710 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$586,050 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share.

(11) Includes 214,148 common shares underlying agent’s first warrants and 214,148 common shares underlying agent’s second warrants that will be issued upon the conversion of certain convertible debentures. These convertible debentures will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each agent’s first warrant and each agent’s second warrant may be exercised through five years following the date the convertible are converted at an exercise price Cdn$0.23 and Cdn$0.22, respectively.

(12) Includes 42,829 common shares, 45,343 common shares underlying class A common share purchase warrants and 22,671 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$6,287.50 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(13) Includes 94,224 common shares, 99,756 common shares underlying class A common share purchase warrants and 49,878 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$13,832.50 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share,

43

each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share

(14) Includes 214,147 common shares, 226,721 common shares underlying class A common share purchase warrants and 113,360 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$31,437.50 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(15) Includes (i) 198,000 common shares issuable upon exercise of options, and (ii) 340,593 common shares, 360,592 common shares underlying class A common share purchase warrants and 180,295 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$50,000 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share. Although Mr. Popel is an officer of Medipac International Inc., he disclaims beneficial ownership of the securities held by Medipac International Inc.

(16) Includes (i) 635,000 common shares issuable upon exercise of options, (ii) 2,340,000 common shares held in the name of Medipac International Inc., a company wholly-owned and controlled by Mr. Quigley, (iii) 1,189,000 common shares held in the name of Samuel A. Quigley, who is Mr. Quigley’s son, (iv) 340,593 common shares, 360,592 common shares underlying class A common share purchase warrants and 180,295 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$50,000 convertible debenture, and (v) 3,907,000 common shares, 4,141,420 common shares underlying class A common share purchase warrants and 2,070,710 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$586,050,000 convertible debenture held by Medipac International, Inc., a corporation wholly-owned and controlled by Mr. Quigley. The Cdn$50,000 convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share. The Cdn$586,050 convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share.

(17) Includes (i) 406,000 common shares issuable upon exercise of options, (ii) 78,140 common shares, 82,828 common shares underlying class A common share purchase warrants and 41,414 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$11,721 convertible debenture, and (iii) 333,333 common shares, 353,332 common shares underlying class A common share purchase warrants and 176,665 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$50,000 convertible debenture held by Carol Ritter, who is Mr. Ritter’s wife. These convertible debentures will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share.

(18) Includes 333,333 common shares, 353,332 common shares underlying class A common share purchase warrants and 176,665 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$50,000 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share.

(19) Includes 565,429 common shares issuable upon exercise of options.

(20) Includes 85,658 common shares, 90,687 common shares underlying class A common share purchase warrants and 45,342 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$12,575 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B

44

common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(21) Includes 2,141,481 common shares, 2,267,230 common shares underlying class A common share purchase warrants and 1,133,614 common shares underlying class B common share purchase warrants that will be issued upon conversion of a Cdn$314,375 convertible debenture. This convertible debenture will convert automatically upon the listing of our common shares for trading on the United States Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. Each class A common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share, each class B common share purchase warrant may be exercised through October 12, 2009 for one common share at an exercise price of Cdn$0.15 per common share.

(22) Includes any interest that has accrued on the convertible debenture(s) through October 6, 2005.

(23) Excludes certain common shares issuable upon exercise of options held by certain of the selling shareholders.

PLAN OF DISTRIBUTION

Resales by selling shareholders

     We are registering the resale of the shares on behalf of the selling shareholders. The selling shareholders may offer and resell the shares from time to time, either in increments or in a single transaction. They may also decide not to sell all the shares they are allowed to resell under this prospectus. The selling shareholders will act independently of us in making decisions with respect to the timing, manner, and size of each sale.

Donees and Pledgees

     The term “selling shareholders” includes donees, i.e., persons who receive shares from a selling shareholder after the date of this prospectus by gift. The term also includes pledgee, i.e., persons who, upon contractual default by a selling shareholder, may seize shares which the selling shareholder pledged to such person. If a selling shareholder notifies us that a donee or pledge intends to sell more than 500 shares, we will file a supplement to this prospectus.

Costs and commissions

     We will pay all costs, expenses, and fees in connection with the registration of the shares. The selling shareholders will pay all brokerage commissions and similar selling expenses, if any, attributable to the sale of shares.

Types of sale transactions

     The selling shareholders may sell the shares in one or more types of transactions (which may include block transactions):

• in the over-the-counter market, when our common shares are listed on the Over-The Counter Bulletin Board;

• in negotiated transactions;

• through put or call option transactions;

• through short sales; or

• any combination of such methods of sale.

     The shares may be sold at market prices prevailing at the time of sale or at negotiated prices. Such transactions may or may not involve brokers or dealers. The selling shareholders have informed us that they have not entered into any agreements, understandings, or arrangements with any underwriters or broker-dealers regarding sale of the shares. They have also informed us that no one is acting as underwriter or coordinating broker in connection with the proposed sale of shares.

45

Sales to or through broker-dealers

     The selling shareholders may conduct such transactions either by selling shares directly to purchasers, or by selling shares to, or through, broker-dealers. Such broker-dealers may act either as an agent of a selling shareholder, or as a principal for the broker-dealer’s own account. Such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the selling shareholders and/or the purchasers of shares. This compensation may be received both if the broker-dealer acts as an agent or as a principal. This compensation might also exceed customary commissions.

Deemed underwriting compensation

     The selling shareholders and any broker-dealers that act in connection with the sale of shares might be deemed to be “underwriters” within the meaning of Section 2(a)(11) of the Securities Act of 1933. Any commissions received by such broker-dealers, and any profit on the resale of shares sold by them while acting as principals, could be deemed to be underwriting discounts or commissions under the Securities Act of 1933.

Indemnification

     We have agreed to indemnify each selling shareholder against certain liabilities, including liabilities arising under the Securities Act of 1933. The selling shareholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of shares against certain liabilities, including liabilities arising under the Securities Act of 1933.

Prospectus delivery requirements

     Because they may be deemed underwriters, the selling shareholders must deliver this prospectus and any supplements to this prospectus in the manner required by the Securities Act of 1933.

State requirements

     Some states require that any shares sold in that state only be sold through registered or licensed brokers or dealers. In addition, some states require that the shares have been registered or qualified for sale in that state, or that there exist an exemption from the registration or qualification requirement and that the exemption has been complied with.

Sales under rule 144

     Selling shareholders may also resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933. To do so, they must meet the criteria and conform to the requirements of Rule 144, including the minimum one year holding period.

Distribution arrangements with broker-dealers

     If a selling shareholder notifies us that any material arrangement has been entered into with a broker-dealer for the sale of shares through:

• a block trade;

• special offering;

• exchange distribution or secondary distribution; or

• a purchase by a broker or dealer,

we will then file, if required, a supplement to this prospectus under Rule 424(b) under the Securities Act of 1933.

     The supplement will disclose:

• the name of each such selling shareholder and of the participating broker-dealer(s);

46

• the number of shares involved;

• the price at which such shares were sold;

• the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable;

• that such broker-dealer(s) did not conduct any investigation to verify the information in this prospectus; and

• any other facts material to the transaction.

     The Securities and Exchange Commission may deem the selling shareholders and any underwriters, broker-dealers or agents that participate in the distribution of the common shares to be “underwriters” within the meaning of the Securities Act of 1933. The Securities and Exchange Commission may deem any profits on the resale of our common shares and any compensation received by any underwriter, broker-dealer or agent to be underwriting discounts and commissions under the Securities Act of 1933. Each selling shareholder has purchased the common shares in the ordinary course of its business, and at the time the selling shareholder purchased the common shares, it was not a party to any agreement or other understanding to distribute the securities, directly or indirectly.

     Under the Securities Exchange Act of 1934, any person engaged in the distribution of the common shares may not simultaneously engage in market-making activities with respect to the common shares for five business days prior to the start of the distribution. In addition, each selling shareholder and any other person participating in a distribution will be subject to the Securities Exchange Act of 1934, which may limit the timing of purchases and sales of common shares by the selling shareholder or any such other person.

LEGAL MATTERS

The validity of the common shares offered hereby will be passed upon for us by Harris + Harris LLP.

CHANGE IN CERTIFYING ACCOUNTANTS

     Due to the move of Carbiz’s senior management and head offices to Florida, a change in accountants to a U.S.-based firm was considered necessary. On October 3, 2005, our board of directors engaged Christopher, Smith, Leonard, Bristow & Stanell, P.A. to serve as our principal accountant and independent auditor following the resignation of the Canadian offices of Deloitte & Touche LLP on October 3, 2005. Christopher, Smith, Leonard, Bristow & Stanell, P.A. has been engaged to serve as our principal accountant and independent auditor for all periods following the fiscal year ended January 31, 2005.

     The reports of Deloitte & Touche LLP for the past two fiscal years did not contain an adverse opinion or a disclaimer of opinion or were modified as to uncertainty, audit scope or accounting principles. During our two most recent fiscal years, there have been no disagreements with Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope and procedure which, if not resolved to the satisfaction of Deloitte & Touche LLP, would have caused Deloitte & Touche LLP to make reference to the matter in their report.

EXPERTS

     The financial statements as of and for the years ended January 31, 2005 and 2004 included in this prospectus have been audited by Deloitte & Touche LLP, independent registered chartered accountants, as set forth in their reports appearing herein (which audit report expresses an unqualified opinion on the financial statements and includes a separate report titled Comments by Independent Registered Chartered Accountants on Canada-United States of America Reporting Differences describing conditions that raise substantial doubt about our ability to continue as a going concern as described in Note 1 to the financial statements, and relating to a change in accounting principal that had an effect on the comparability of the financial statements), and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

47

WHERE TO FIND ADDITIONAL INFORMATION

     We do not currently file reports with the Securities and Exchange Commission. We have filed a registration statement on Form SB-2 under the Securities Act of 1933 with the Securities and Exchange Commission with respect to our common shares offered pursuant to this prospectus. This prospectus, which forms a part of the registration statement, does not contain all of the information included in the registration statement and amendments thereof and the exhibits thereto, which may be read and copied at the SEC’s Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains a website that contains the registration statement of which this prospectus is a part. The address of the Securities and Exchange Commission’s website is http://www.sec.gov. Statements contained in this prospectus as to the intent of any contract or other document referred to are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to this registration statement, each such statement being qualified in all respects by such reference.

48

CARBIZ INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Financial Statements		Page
	Report of Independent Registered Chartered Accountants	F-2
	Consolidated Balance Sheets as of January 31, 2004 and 2005	F-5
	Consolidated Statements of Operations for the Years Ended January 31, 2004 and 2005	F-6
	Consolidated Statements of Changes in Capital Deficiency for the Years Ended January 31, 2004 and 2005	F-7
	Consolidated Statements of Cash Flows for the Years Ended January 31, 2004 and 2005	F-8
	Notes to Consolidated Financial Statements	F-9
Unaudited Financial Statements
	Consolidated Balance Sheets as of July 31, 2005 (unaudited) and January 31, 2005 (audited)	F-34
	Consolidated Statements of Operations (unaudited) for the Six-Months Ended July 31, 2005 and 2004	F-35
	Consolidated Statements of Cash Flow (unaudited) for the Six-Months Ended July 31, 2005 and 2004	F-36
	Notes to Consolidated Financial Statements	F-37

49

Consolidated Financial Statements of

CARBIZ INC.

January 31, 2005 and 2004

F-1

Deloitte & Touche LLP
5140 Yonge Street
Suite 1700
Toronto ON M2N 6L7
Canada

Tel: 416-601-6150
Fax: 416-643-8998
www.deloitte.ca

Report of Independent Registered Chartered Accountants

To the Board of Directors of
Carbiz Inc.

We have audited the consolidated balance sheets of Carbiz Inc. as at January 31, 2005 and 2004 and the consolidated statements of operations, changes in capital deficiency and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Carbiz Inc. as at January 31, 2005 and 2004 and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

On March 25, 2005, we reported separately to the shareholders of Carbiz Inc. on our audits, conducted in accordance with Canadian generally accepted auditing standards, of the consolidated financial statements for the same periods presented in accordance with Canadian generally accepted accounting principles.

Independent Registered Chartered Accountants

/s/ Deloitte & Touche LLP

Toronto, Canada
March 25, 2005 (except for Note 21, which is as at April 10, 2005)

F-2

Deloitte & Touche LLP
5140 Yonge Street
Suite 1700
Toronto ON M2N 6L7
Canada

Tel: 416-601-6150
Fax: 416-601-6151
www.deloitte.ca

Comments by Independent Registered Chartered Accountants on
Canada-United States of America Reporting Differences

The standards of the Public Company Accounting Oversight Board (United States) require the addition of an explanatory paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the financial statements. Although we conducted our audits in accordance with both Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), our report to the Board of Directors dated March 25, 2005 is expressed in accordance with Canadian reporting standards which do not permit a reference to such conditions and events in the auditors’ report when these are adequately disclosed in the financial statements.

The standards of the Public Company Accounting Oversight Board (United States) also require the addition of an explanatory paragraph when there are changes in accounting principle that have a material effect on the comparability of the Company’s financial statements, such as the change in functional currency described in Note 2 to the financial statements. Although we conducted our audits in accordance with both Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), our report to the Board of Directors dated March 25, 2005 is expressed in accordance with Canadian reporting standards which do not require a reference to such conditions and events in the auditors’ report when these are adequately disclosed in the financial statements.

Independent Registered Chartered Accountants

/s/ Deloitte & Touche LLP

Toronto, Canada
March 25, 2005 (except for Note 21, which is as at April 10, 2005)

F-3

CARBIZ INC.

Table of Contents

January 31, 2005 and 2004

(expressed in U.S. dollars)

	Page
Consolidated Balance Sheets	1
Consolidated Statements of Operations	2
Consolidated Statements of Changes in Capital Deficiency	3
Consolidated Statements of Cash Flows	4
Notes to the Consolidated Financial Statements	5-28

F-4

CARBIZ INC.

Consolidated Balance Sheets

January 31

(expressed in U.S. dollars)

		2005			2004
ASSETS
CURRENT
Cash and cash equivalents	$	130,520		$	86,331
Accounts receivable (Note 5)		452,881			63,074
Prepaids and other assets		74,413			60,943
Inventory		51,347			-
Deferred costs		144,468			144,664
		853,629			355,012
LONG-TERM RECEIVABLES (Note 5)		78,591			-
DEFERRED COSTS		65,766			58,154
FIXED ASSETS (Note 6)		535,788			882,868
INTANGIBLE ASSETS (Note 7)		-			23,640
	$	1,533,774		$	1,319,674
LIABILITIES
CURRENT
Accounts payable and accrued liabilities (Note 8)	$	1,044,157		$	834,651
Deferred revenue		164,937			156,041
Current portion of capital lease (Note 9)		12,833			9,547
Current portion of long-term debt (Note 10)		127,046			135,370
		1,348,973			1,135,609
DEFERRED REVENUE		438,439			387,691
CAPITAL LEASES (Note 9)		31,715			18,893
LONG-TERM DEBT (Note 10)		296,266			397,568
CONVERTIBLE DEBENTURE (Note 11)		501,966			-
		2,617,359			1,939,761
REDEEMABLE PREFERRED SHARES (Note 12)		-			297,147
CAPITAL DEFICIENCY
COMMON STOCK
41,002,014 and 33,422,358 Common Shares issued and
outstanding as at January 31, 2005 and 2004 respectively		14,185,863			13,462,160
WARRANTS		118,457			16,169
ADDITIONAL PAID-IN CAPITAL		6,264,383			5,470,342
OTHER COMPREHENSIVE LOSS		(385,197	)		(286,356	)
DEFICIT		(21,267,091	)		(19,579,549	)
		(1,083,585	)		(917,234	)
	$	1,533,774		$	1,319,674

APPROVED BY THE BOARD
/s/ Carl Ritter	Director
/s/ Richard Lye	Director

F-5

CARBIZ INC.

Consolidated Statements of Operations

Years ended January 31

(expressed in U.S. dollars)

		2005			2004
SALES	$	3,359,551		$	2,960,865
COST OF SALES		1,486,506			1,491,122
GROSS PROFIT		1,873,045			1,469,743
OPERATING EXPENSES		3,415,695			2,541,110
OPERATING LOSS		(1,542,650	)		(1,071,367	)
INTEREST AND OTHER EXPENSES (Note 16)		(144,892	)		(97,119	)
NET LOSS FOR THE YEAR		(1,687,542	)		(1,168,486	)
OTHER COMPREHENSIVE LOSS		(98,841	)		(26,524	)
COMPREHENSIVE LOSS FOR THE YEAR	$	(1,786,383	)	$	(1,195,010	)
NET LOSS PER SHARE
Basic and diluted (Note 13 (g))	$	(0.05	)	$	(0.04	)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING		37,370,738			31,323,146

F-6

CARBIZ INC.

Consolidated Statements of Changes in Capital Deficiency

Years ended January 31

(expressed in U.S. dollars)

												Additional		Other						Total
												Paid-in		Comprehensive			Accumulated			Capital
	Common Stock					Warrants						Capital		Loss			Deficit			Deficiency
	Shares			Amount		Number			Amount
Balance at February 1, 2003	30,772,546		$	13,375,568		-		$	-		$	5,306,729	$	(259,832	)	$	(18,411,063	)	$	11,402
Private placement (Note 13(b))	1,500,000			90,612		750,000			18,455			-		-			-			109,067
Exercise of stock options (Note 13(f))	1,343,000			134,544		-			-			-		-			-			134,544
Exercise of warrants (Note 13(b))	90,080			10,525		(90,800	)		(2,286	)		-		-			-			8,239
Cancellation of shares (Note 13(d))	(283,268	)		(149,089	)	-			-			149,089		-			-			-
Stock compensation expense	-			-		-			-			14,524		-			-			14,524
Foreign currency translation adjustment	-			-		-			-			-		(26,524	)		-			(26,524	)
Net loss for the year	-			-		-			-			-		-			(1,168,486	)		(1,168,486	)
Balance at January 31, 2004	33,422,358			13,462,160		659,920			16,169			5,470,342		(286,356	)		(19,579,549	)		(917,234	)
Private placement (Note 13(c))	1,980,217			296,210		1,980,217			91,567			-		-			-			387,777
Issuance of Agent’s Warrants (Note 13(c))	-			-		377,843			26,890			-		-			-			26,890
Issuance of Convertible Debenture (Note 11)	-			-		-			-			768,632		-			-			768,632
Conversion of redeemable
preferred shares (Note 12)	4,538,543			301,163		-			-			-		-			-			301,163
Exercise of stock options (Note 13(f))	423,136			47,530		-			-			-		-			-			47,530
Exercise of 2004 warrants (Note 13(b))	625,760			78,800		(625,760	)		(15,484	)		-		-			-			63,316
Expiry of 2004 warrants (Note 13(b))	-			-		(34,160	)		(685	)		685		-			-			-
Stock compensation expense	-			-		-			-			24,724		-			-			24,724
Foreign currency translation adjustment	-			-		-			-			-		(98,841	)		-			(98,841	)
Net loss for the year	-			-		-			-			-		-			(1,687,542	)		(1,687,542	)
Balance at January 31, 2005	41,002,014		$	14,185,863		2,358,060		$	118,457		$	6,264,383	$	(385,197	)	$	(21,267,091	)	$	(1,083,585	)

F-7

CARBIZ INC.

Consolidated Statements of Cash Flows

Years ended January 31

(expressed in U.S. dollars)

		2005			2004
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES
OPERATING
Net loss for the year	$	(1,687,542	)	$	(1,168,486	)
Items not affecting cash
Depreciation of fixed assets		489,670			554,882
Amortization of computer software development costs		25,456			11,791
Accretion of convertible debenture (Note 11)		46,750			-
Stock compensation		24,724			14,524
Net changes in working capital balances (Note 15)		(324,848	)		343,484
		(1,425,790	)		(243,805	)
INVESTING
Acquisition of fixed assets		(75,683	)		(17,404	)
FINANCING
Repayment of capital leases		(13,918	)		(3,846	)
Repayment of long-term debt		(140,427	)		(57,505	)
Issuance of convertible debenture (Note 11)		1,247,570			-
Issuance of common stock (Note 13)		407,056			233,395
Issuance of warrants (Note 13)		118,457			18,455
		1,618,738			190,499
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS		(73,076	)		16,808
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS		44,189			(53,902	)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR (Note 15)		86,331			140,233
CASH AND CASH EQUIVALENTS,
END OF YEAR (Note 15)	$	130,520		$	86,331

F-8

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

1.	BASIS OF PRESENTATION
	Carbiz Inc. (the “Company”) is a publicly traded company on the TSX Venture Exchange, formerly the Canadian Venture Exchange (CDNX). The Company was incorporated pursuant to the provisions of the Business Corporations Act of Ontario (“OBCA”) under the name “Data Gathering Capital Corp.” on March 31, 1998. On September 1, 1999, the Company changed its name by articles of amendment under the OBCA to Carbiz.com Inc., and then changed its name again on July 15, 2003 to Carbiz Inc.
	References to the Company typically include the Company’s consolidated subsidiaries. The Company’s operations are principally conducted through its two operating subsidiaries Carbiz USA Inc., a Delaware corporation, and Carbiz Auto Credit, Inc. (“CAC”). Collectively, Carbiz Inc., Carbiz USA Inc., and CAC are referred to herein as “Carbiz” or the “Company”.
	The Company is in the business of developing, marketing, distributing and supporting software and Internet products for the automotive sales finance industry. The Company also supplies a seasonal lead generation product that facilitates tax-refund loans which are primarily used for down payments on car loans. During the year ended January 31, 2005, the Company opened two new CAC dealerships, which sells and finances used vehicles.
	Going concern assumption
	While these financial statements have been prepared on the basis of accounting principles applicable to a going concern, several adverse conditions and events cast substantial doubt upon the validity of this assumption.
	The Company has incurred significant losses in the current year and in each of the past several years. In addition, the Company has a working capital deficiency of $495,344 as at January 31, 2005. The Company’s continued existence is dependent upon its ability to achieve profitable operations and to obtain additional financing. The Company believes that the new CAC dealerships, combined with its existing software, consulting and TaxMax businesses will improve its operating cash flows going forward. However, there can be no assurance that the Company will be able to achieve profitable operations, nor that financing efforts will be successful.
	If the going concern assumption were not appropriate to these financial statements, then adjustments would be necessary in the carrying values of assets and liabilities, the reported net loss and the balance sheet classifications used.
2.	CHANGE IN FUNCTIONAL CURRENCY
	Historically, the Canadian dollar has been the functional currency of the Company, and the financial statements were reported in Canadian dollars. During the year ended January 31, 2005, the Company determined that as a result of the continued move of its operations and personnel, combined with significant debt issuances in the United States, the functional currency of the Company had changed to U.S. dollars. In addition, the Company determined that it would report its financial statements in U.S. dollars. All amounts presented in these financial statements are expressed in U.S. dollars unless otherwise indicated.

F-9

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

2.	CHANGE IN FUNCTIONAL CURRENCY (continued)
	In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 52 “Foreign Currency Translation”, the Company has translated into U.S. dollars the financial statements as at and for the years ended January 31, 2005 and 2004. The method of translation used has resulted in the financial statements of prior years presented for comparison being translated as if the U.S. dollar had always been used as the reporting currency.
	Prior to November 1, 2004, the date on which the Company determined that its functional currency had changed to U.S. dollars, this translation was done using the current rate method. Under the current rate method, the Company’s assets and liabilities were translated to U.S. dollars at the exchange rate at the balance sheet date. Revenue, costs and expenses were translated at average rates prevailing during the periods. Translation adjustments arising prior to November 1, 2004 were reported as a component of other comprehensive income.
	Subsequent to November 1, 2004, this translation was done using the temporal method. Under the temporal method, the Company’s monetary assets and liabilities were translated to U.S. dollars at the exchange rate at the balance sheet date, while equity and non-monetary assets and liabilities were translated at their historical rates. Revenue, costs and expenses were translated at average rates prevailing during the periods. Translation adjustments arising subsequent to November 1, 2004 were reported as a component of net loss for the year.
3.	SUMMARY OF ACCOUNTING POLICIES
	These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect the following significant accounting policies:
	Principles of consolidation
	The consolidated financial statements include the accounts of the company and its subsidiary companies, which are located in Canada and the United States of America (“U.S.”). All intercompany transactions and balances have been eliminated.
	Cash and cash equivalents
	Cash and cash equivalents consist of cash balances with banks and investments in term deposits and money market instruments that are readily convertible into cash. This includes investments that have an original term to maturity of 90 days or less.
	Accounts receivable
	Accounts receivable shown is net of bad debt provisions. The amount includes short term notes received through the selling of used automobiles. The notes are for terms no greater than 80 weeks and require weekly or bi-weekly payments. Interest is calculated daily based on the balance outstanding at the time.

F-10

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

3.	SUMMARY OF ACCOUNTING POLICIES (continued)
	Allowance for doubtful accounts
	The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence.
	Inventory
	Inventory consists of used vehicles and is related to the CAC operations. Inventory is stated at the lower of cost or net realizable value. Cost is determined on a specific item basis.
	Fixed assets
	Fixed assets are stated at cost, net of accumulated depreciation and amortization. Expenditures for maintenance and repairs have been charged to the statement of operations as incurred. Depreciation is provided over the estimated useful life of the assets as follows:

Furniture and equipment	-	20% declining-balance
Computer equipment	-	30% declining-balance
Leasehold improvements	-	straight-line over the lesser of the useful life of the assets or term of the leases

The Company regularly reviews the carrying values of its fixed assets by comparing the carrying amount of the asset to the expected undiscounted future cash flows to be generated by the asset. If the carrying value exceeds the amount recoverable, a write-down is charged to the statement of operations based on the difference between the carrying value and the future discounted cash flows. Upon retirement or sale of an asset its cost and related accumulated depreciation or amortization are removed from the accounts and any gain or loss is recorded in income or expense.

Product development costs

The Company expenses research costs when they are incurred. Software development costs are expensed as incurred unless they meet the criteria for deferral and amortization required by GAAP. Development costs incurred prior to the establishment of technological feasibility are expensed, as they do not meet the criteria. Capitalized costs are amortized on a straight-line basis over the remaining economic life of the related product, which is three years. The Company reassesses the relevant criteria for deferral and amortization at each reporting date. There have been no costs capitalized and amortized for the periods presented.

F-11

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

3.	SUMMARY OF ACCOUNTING POLICIES (continued)
	Income taxes
	The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities, and measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce future income tax assets to the amount expected to be realized.
	Revenue recognition
	The Company’s revenue is derived from the sale of licenses, services and commissions, the sale of products to dealers in the automobile industry and the sale of used vehicles. The Company recognizes revenue in accordance with Statement of Position (“SOP”) 97-2, “Software Revenue Recognition”, issued by the American Institute of Certified Public Accountants (“AICPA”) in October 1997 as amended by SOP 98-9 issued in December 1998 for all software or software related revenue. For all non-software or non-software related revenue, the Company recognizes revenue in accordance with SEC Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition”, which was preceded by SAB 101, “Revenue Recognition in Financial Statements”. For contracts involving multiple deliverables, where the deliverables are governed by more than one authoritative accounting standard, the Company generally applies the FASB Emerging Issues Task Force (“EITF”) Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” to determine whether deliverables should be accounted for separately.
	(a)	Licenses
		The Company records product revenue from licenses when persuasive evidence of an arrangement exists, the software product has been shipped, there are no significant uncertainties surrounding product acceptance, the fees are fixed or determinable and collection is considered probable. For software license agreements in which customer acceptance is a condition of earning the license fees, revenue is not recognized until acceptance occurs. The Company uses the residual method to recognize revenue on delivered elements when a license agreement includes one or more elements to be delivered at a future date if evidence of the fair value of all undelivered elements exists. If an undelivered element for the arrangement exists under the license arrangement, revenue related to the undelivered element is deferred based on vendor-specific objective evidence (“VSOE”) of the fair value of the undelivered element.

F-12

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

3.	SUMMARY OF ACCOUNTING POLICIES (continued)
	Revenue recognition (continued)
	(a)	Licenses (continued)
		The majority of the Company’s license revenues is derived from arrangements where a customer will pay an initial set-up fee and then continue on either month-to-month or annual contracts which may be cancelled with appropriate notice. Upon cancellation, the software ceases to function as originally intended. In these cases, the initial set-up fees are deferred and amortized over the expected life of the relationship, which is four years. The month-to-month or annual fees are recognized on a monthly basis, subject to collection of such amounts being probable.
		Certain of the Company’s other license revenues are derived from arrangements where the customer purchases a perpetual software license. In these cases, the Company will enter into a multiple-element arrangement that includes the software license and the associated post contract support (“PCS”). The Company has established VSOE of the fair value of the undelivered PCS element based on the contracted price for renewal PCS included in the original multiple element sales arrangement, as substantiated by contractual terms and the Company’s significant PCS renewal experience. The Company’s multiple element sales arrangements generally include rights for the customer to renew PCS after the bundled term ends.
		The Company assesses whether payment terms are customary or extended in accordance with normal practice relative to the market in which the sale is occurring. The Company’s sales arrangements generally include standard payment terms. These terms effectively relate to all customers, products, and arrangements regardless of customer type, product mix or arrangement size.
	(b)	Services and Commissions
		The Company generates non-recurring revenue from consulting fees for implementation, installation, data conversion and training related to the use of the Company’s software and for other training seminars and consulting. When sold as part of a software license arrangement, these services are accounted for separately from the license revenue because the services are not essential to the functionality of the software, and the Company has established VSOE of their fair value.
		Revenue from services is recognized when a signed contract has been executed, the services have been delivered, fees are fixed or determinable, collectability is probable and when all obligations have been fulfilled. For services that extend over a period of time, revenue is recognized ratably over the term of the contract.

F-13

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

3.	SUMMARY OF ACCOUNTING POLICIES (continued)
	Revenue recognition (continued)
	(c)	Products
		The Company generates non-recurring revenue from the sale of various products to automotive dealerships. Revenue is recognized when a signed contract is executed, the product has been delivered, fees are fixed or determinable, collectability is probable and when all significant obligations have been fulfilled. Generally, this occurs at the time of shipment. The Company does not offer product warranties related to these sales.
	(d)	Used vehicle sales
		The Company recognizes revenue on the sale of automobiles at the time vehicles are delivered to the customer and title has passed. In cases where the Company finances the vehicles the interest is recognized over the term of the loan, which is generally 80 weeks, based on the principal outstanding at the time.
	Deferred revenue represents unearned income where payments are received in advance of revenue recognition. Where revenue is deferred, all direct and incremental costs incurred to earn the revenue are also deferred.
	Sales and marketing
	Sales and marketing expenses include payroll, employee benefits, equity compensation, and other headcount-related costs as well as expenses related to advertising, promotions, tradeshows, seminars, and other programs. Advertising costs are expensed as incurred. Advertising expense was $150,184 in fiscal 2005, and $82,106 in fiscal 2004.
	Foreign currency translation
	Subsequent to November 1, 2004 (see Note 2), the Company’s monetary assets and liabilities are translated to U.S. dollars at the exchange rate at the balance sheet date, while equity and non- monetary assets and liabilities are translated at their historical rates. Revenue, costs and expenses are translated at average rates prevailing during the periods. Translation adjustments are reported as a component of net loss for the year.
	Earnings per share
	Earnings per share are based on the weighted average number of common shares outstanding (basic) adjusted, to the extent they are dilutive, for outstanding stock options and stock purchase warrants (diluted). The calculation of diluted earnings per share excludes any potential conversion of warrants or options that would increase earnings per share or decrease a loss per share.

F-14

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

3.	SUMMARY OF ACCOUNTING POLICIES (continued)
	Leases
	Leases entered into by the Company as lessee that transfer substantially all the benefits and risks of ownership to the Company are recorded as capital leases and are included in capital assets and long- term debt. All other leases are classified as operating leases under which leasing costs are recorded as expenses in the period in which they are incurred.
	Stock-based compensation
	The Company accounts for stock-based compensation in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”. Pursuant to this accounting standard, the Company records deferred compensation for share options granted to employees at the date of grant based on the difference between the exercise price of the options and the market value of the underlying shares at that date. Deferred compensation is amortized to compensation expense over the vesting period of the underlying options. No compensation expense is recorded for stock options that are granted to employees and directors when the exercise price is equal to the fair market value of the shares at the time of the grant.
	Had the Company applied a fair value based method described by SFAS No. 123 “Accounting for Stock-based Compensation” and the corresponding amendments under SFAS No.148 “Accounting for Stock-based Compensation - Transition and Disclosure”, which recognizes the fair values of the stock options granted as compensation cost over the vesting period, compensation related to stock options would have effected the amounts indicated below for the following years:

		2005			2004
Net loss - as reported	$	(1,687,542	)	$	(1,168,486	)
Stock compensation expense recorded		24,724			14,524
Pro-forma stock compensation expense		(291,645	)		(62,163	)
Net loss - pro-forma	$	(1,954,463	)	$	(1,216,125	)
Basic and diluted loss per share:
As reported	$	(0.05	)	$	(0.04	)
Pro-forma	$	(0.05	)	$	(0.04	)

The fair value of stock options used to compute the pro-forma net loss and loss per common share disclosure is estimated at grant using the Black-Scholes option-pricing model with the following weighted averages assumptions:

	2005	2004
Expected dividend	0%	0%
Expected volatility	90%	90%
Risk-free interest rate	3.6%	3.9%
Expected option life in years	5	5

F-15

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

3.	SUMMARY OF ACCOUNTING POLICIES (continued)
	Stock-based compensation (continued)
	The weighted average fair value of stock options, calculated using the Black-Scholes option pricing model, granted during the year ended January 31, 2005 was $0.13 per option (2004 - $0.11 per option). The Black-Scholes option-pricing model was developed for use in estimating the fair value of options that have no vesting restrictions. In addition, option-pricing models require the input of highly subjective assumptions. Changes in the subjective input assumptions can materially affect the fair value estimates and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the stock options.
	During the years ended January 31, 2005 and 2004 stock options were granted to consultants in exchange for services performed. The Company accounts for stock options granted to consultants in accordance with SFAS 123 and SFAS 148. Accordingly the fair value of any stock options granted to consultants is recorded as stock compensation. The stock compensation expense recognized as a result of this was $24,724 in fiscal 2005 and $14,524 in fiscal 2004.
	Guarantees
	In November 2002, the FASB issued FASB Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of Others,” an interpretation of FASB Statement Nos. 5, 57 and 107, and rescission of FIN 34, “Disclosure of Indirect Guarantees of Indebtedness of Others.” FIN 45 elaborates on the disclosures to be made by the guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires that a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The provisions related to recognizing a liability at inception of the guarantee for the fair value of the guarantor’s obligations does not apply to product warranties or to guarantees accounted for as derivatives. The Company has not issued any guarantees.
	Comprehensive loss
	SFAS No. 130, “Reporting Comprehensive Income”, requires the reporting and display of comprehensive income and its components in financial statements. Other comprehensive loss, which includes only foreign currency translation adjustments, is shown on the Statements of Changes in Capital Deficiency.

F-16

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

3.	SUMMARY OF ACCOUNTING POLICIES (continued)
	Derivatives
	The Company’s net earnings and cash flows may be negatively impacted by fluctuating foreign exchange rates. To effectively manage this risk, the Company may enter into foreign currency swaps. The Company applies the recommendations of SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” and the corresponding amendments under SFAS 138 and 149. Pursuant to these accounting standards, for a derivative designated as an accounting hedge, the effective portions of the changes in the fair value of the derivative are recorded in other comprehensive income (loss) and are recognized in net earnings (loss) when the hedged item affects net earnings (loss). Ineffective portions of changes in the fair value of the hedge are recognized in net earnings (loss). If the derivative used is not designated as an accounting hedge relationship or if it becomes ineffective, changes in fair value of the derivative are recognized in net earnings (loss). During the years ended January 31, 2005 and 2004, the Company did not enter into any derivative instruments.
	Use of estimates
	In preparing the Company’s financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amount of assets, liabilities, and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used when accounting for items and matters such as the allowance for doubtful accounts, deferred revenue and related costs and contingencies.
4.	EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
	Share-based compensation
	In December 2004 the FASB issued SFAS No. 123R “Share Based Payment”. The new Statement is effective for fiscal years beginning on or after June 15, 2005. SFAS 123R addresses the accounting for transactions in which an enterprise receives services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. This Statement eliminates the ability to account for share-based compensation transactions using APB 25, and requires that such transactions be accounted for using a fair-value based method. As required by FAS 123R, the Company will be required to recognize an expense for compensation cost related to share-based payment arrangements including stock options and compensatory employee stock purchase plans. The new rules will be effective for the Company beginning February 1, 2006.
	The Company is currently evaluating option valuation methodologies and assumptions in light of the evolving accounting standards related to share-based payments, and also the impact of other aspects of SFAS 123R, including transitional adoption alternatives.

F-17

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

4.	EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS (continued)
	Inventory
	In November 2004, the FASB issued SFAS No. 151, “Inventory Costs” (“SFAS 151”). SFAS 151 requires that abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage), be recognized as current-period charges rather than capitalized as a component of inventory costs. In addition, SFAS 151 requires that allocation of fixed production overheads to inventory be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred in fiscal periods beginning after June 15, 2005. The guidance should be applied prospectively. The Company does not expect this standard to impact its consolidated financial statements.
	Earnings per share
	On September 30, 2004, the EITF reached a consenus on Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings Per Share” (“EITF 04-8), which addresses when the dilutive effect of contingently convertible debt instruments should be included in diluted earnings (loss) per share. EITF 04-8 requires that contingently convertible debt instruments be included in the computation of diluted earnings (loss) per share regardless of whether the market price trigger has been met. EITF 04-8 also requires that prior period diluted earnings (loss) per share amounts presented for comparative purposes be restated. EITF 04-8 is effective for reporting periods ending after December 15, 2004. As the Company is in a loss position, the adoption of EITF 04-8 did not have an impact on the Company’s diluted earnings (loss) per share.
	Variable interest entities
	In January 2003, the FASB issued interpretation No. 46 ("FIN 46"),"Consolidation of Variable Interest Entities". The primary objectives of this interpretation are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights ("variable interest entities") and how to determine when and which business enterprise (the "primary beneficiary") should consolidate the variable interest entity. This new model for consolidation applies to an entity in which either (i) the equity investors (if any) do not have a controlling financial interest; or (ii) the equity investment at risk is insufficient to finance that entity's activities without receiving additional subordinated financial support from other parties. In addition, FIN 46 requires that the primary beneficiary, as well as all other enterprises with a significant variable interest entity, make additional disclosures. Certain disclosure requirements of FIN 46 were effective for financial statements issued after January 31, 2003. In December 2003, the FASB issued FIN 46 (revised December 2003), "Consolidation of Variable Interest Entities" ("FIN 46-R") to address certain FIN 46 implementation issues. The effective dates and impact of FIN 46 and FIN 46-R are as follows: (i) Special-purpose entities ("SPEs") created prior to February 1, 2003. The Company must apply either the provisions of FIN 46 or early adopt the provisions of FIN 46-R at the end of the first interim or annual reporting period ending after December 15, 2003. (ii) Non-SPEs created prior to February 1, 2003. The Company is required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March 15, 2004. (iii) All entities, regardless of whether an SPE, that were created subsequent to January 31, 2003. The provisions of FIN 46 were applicable for variable interests in entities obtained after January 31, 2003. The Company does not have any arrangements with variable interest entities that will require consolidation of their financial information in the financial statements.

F-18

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

5. ACCOUNTS RECEIVABLE

		2005		2004
Trade receivables from product	$	121,009	$	84,536
Less: Allowance for doubtful accounts		15,067		21,462
		105,942		63,074
Notes receivable from vehicle sales		462,399		-
Less: Allowance for doubtful accounts		36,869		-
		425,530		-
Total accounts receivable		531,472		63,074
Long-term portion of notes receivable		78,591		-
Current portion of accounts receivable	$	452,881	$	63,074

During the year ended January 31, 2005, the Company earned $22,762 (2004 - $Nil) of financing income on the notes receivable. This amount has been included with revenue in these financial statements.

Activity in the allowance for doubtful accounts is as follows:

		Balance at						Balance
Year Ended		Beginning		Charged to		Write-offs		at End of
January 31,		of Period		Expenses		and Other		Period
2005	$	21,462	$	53,430	$	22,956	$	51,936
2004		15,031		14,541		8,110		21,462

F-19

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

6. FIXED ASSETS

				2005
				Accumulated		Net Book
		Cost		Depreciation		Value
Furniture and equipment	$	491,926	$	277,825	$	214,101
Computer equipment		1,216,360		908,995		307,365
Leasehold improvements		29,459		15,137		14,322
	$	1,737,745	$	1,201,957	$	535,788

				2004
				Accumulated		Net Book
		Cost		Depreciation		Value
Furniture and equipment	$	421,261	$	210,534	$	210,727
Computer equipment		1,110,940		721,215		389,725
Leasehold improvements		1,039,846		757,430		282,416
	$	2,572,047	$	1,689,179	$	882,868

7.	INTANGIBLE ASSETS
	Intangible assets represent software acquired through previous acquisitions. During the year ended January 31, 2005, the Company determined that due to technological changes there was no remaining value to these assets, and as such the remaining net book value was written off. As at January 31, 2004, the cost of these assets was $504,502, with accumulated amortization of $480,862. The net impairment charge of $23,640 is included in operating expenses.
8.	ACCOUNTS PAYABLE AND ACCRUED LIABILITES

		2005		2004
Accounts payable - trade	$	296,386	$	409,815
Accruals
Professional fees		475,502		194,539
Trade payables		181,372		165,936
Payroll related		60,770		59,425
Other		30,127		4,936
	$	1,044,157	$	834,651

F-20

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

9.	CAPITAL LEASES
	The Company has the following capital lease obligations, net of interest, for computer and office equipment:

2006	$	12,833
2007		10,828
2008		9,077
2009		8,769
2010		3,041
		44,548
Current portion		12,833
Long-term portion	$	31,715

10.	LONG-TERM DEBT
	The Company has a note payable to a U.S. public company. The note which is secured by the general assets of the Company, bears interest at the daily U.S. prime rate plus 1.5% per annum, with interest payable monthly and the principal due on specific dates.
	Principal repayments due in each of the next four years are as follows:

2006	$	127,046
2007		127,046
2008		127,046
2009		42,174
	$	423,312

F-21

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

11.	CONVERTIBLE DEBENTURE
	On October 12, 2004 (the “Closing Date”), the Company completed a Convertible Debenture financing for net proceeds of $1,223,848. The proceeds are primarily to be used to pursue an Over- the-Counter (“OTC-BB”) listing in the U.S. and to expand the Company’s CAC operations. Upon the successful listing of the Company’s common shares on the OTC-BB and concurrent delisting from the TSX Venture Exchange (the “Conversion Date”), the principal and interest amount of the debentures will be automatically converted into a minimum of 7,336,500 units (a “Unit”). Each Unit will consist of one common share and one Class A purchase warrant and one-half of one Class B purchase warrant. Each whole Class A Warrant will be exercisable into one common share at a price of $0.23 CDN per share and each whole class B purchase warrant will be exercisable into one common share at a price of $0.30 CDN per share. Both Class A and B warrants issued will be exercisable for a period of five years following the Closing Date. The Convertible Debentures are unsecured, bear interest at 5% per annum, beginning on May 1, 2005. Prior to May 1, 2005, the Convertible Debentures were non-interest bearing.
	Carbiz has engaged an agent for this debenture financing. In addition to a commission which has been included in the cost of issuance, on the Conversion Date the Agent shall receive warrants (the “Agent Warrants”) equal to an aggregate 10 percent of the number of Units to be issued on the Conversion Date. Each warrant shall be exercisable into two common shares upon payment of $0.22 CDN and $0.23 CDN respectively, for a period of five years following the Closing Date. Also, the Agent shall receive a 2 percent cash fee on the exercise of Warrants exercised within 12 months of the Conversion Date. The Agent Warrants and cash fee that may be incurred should the Company complete an OTC-BB listing have not been recorded in these financial statements.
	Should the Company be unable to obtain an OTC-BB listing by April 10, 2005, the Company shall issue to the subscribers, Class A Warrants and Class B Warrants equal in number to 2% of the number of each of the Class A Warrants and Class B Warrants to be issued upon conversion of the Convertible Debenture plus an additional 1% for each subsequent 30 day period (the “Additional Warrants”). The aggregate of the Additional Warrants is limited to 6% of the Class A Warrants and the Class B Warrants to be issued upon conversion of the Convertible Debenture. The subscriber retains these Additional Warrants in the event that the principal and interest of the Convertible Debentures are repaid.
	The Convertible Debenture contains a beneficial conversion feature represented by the excess of the fair value of common shares and warrants issuable on conversion of the Debenture, measured on the commitment date, over the amount of the proceeds to be allocated to the common shares upon conversion. The portion of the proceeds from the issuance of the Convertible Debenture allocated to the beneficial conversion feature of $768,632 is presented as additional paid in capital and results in a discount on the Convertible Debenture that is accreted over the term of the Debenture, which is five years. The accretion expense recorded during the year ended January 31, 2005, is $46,750.

F-22

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

12.	REDEEMABLE PREFERRED SHARES
	On December 6, 2002, the Company issued 4,000,000 Series 1 Preferred Shares for proceeds of $400,000 CDN. Each share was convertible into common shares on a one for one basis at the option of the holder, and yielded a cumulative 10% annual dividend rate. If not converted, the shares were repayable in cash on December 6, 2004.
	During the year ended January 31, 2005, the Redeemable Preferred Shares and accrued dividends were converted into 4,538,543 common shares in accordance with their conversion terms.
13.	COMMON SHARES
	(a)	Authorized
		The Company’s authorized share capital consists of the following:
		Unlimited number of common shares with voting rights Unlimited number of preference shares, issuable in series
	(b)	Fiscal 2004 private placement
		On September 26, 2003, the Company completed a private placement of 1,500,000 common shares and 750,000 Warrants for net proceeds of $109,067. The fair value of the warrants was determined to be $18,455. Each Warrant entitled the holder to purchase one additional common share at a price of $0.12 CDN per share, and expired one year after issuance.
		During the year ended January 31, 2004, 90,080 Warrants were exercised into common shares for cash proceeds of $8,239. During the year ended January 31, 2005, an additional 625,760 Warrants were exercised into common shares for cash proceeds of $63,316. The remaining 34,160 Warrants were not converted and expired.
	(c)	Fiscal 2005 private placement
		During the year ended January 31, 2005, the Company completed a series of private placements for an aggregate of 1,980,217 common shares and 1,980,217 Warrants for net proceeds of $387,777. The fair value of the warrants was determined to be $91,567. Each Warrant entitles the holder to purchase one additional common share at a price of $0.30 CDN per share, and expires one year after issuance. As part of the cost of these transactions, the Company issued 377,843 Agent Warrants with an estimated fair value of $26,890. The Agent Warrants are subject to the same conditions as the regular Warrants.
	(d)	Cancellation of shares
		During the year ended January 31, 2004, the Company reached a legal settlement with the former shareholders of a previous acquisition. As a result of this settlement, 283,268 common shares were cancelled at no cost. The weighted average cost of these shares has been added to additional paid-in capital.

F-23

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

13.	COMMON SHARES (continued)
	(e)	Escrowed shares
		On December 18, 1998, 5,059,566 common shares issued to certain shareholders were placed in escrow pursuant to the regulatory requirements. This agreement allows for the common shares held to be released on the basis of one common share for each $0.20 CDN of cash flow realized through the operations of the Company. Cash flow is defined as net income adjusted for depreciation, depletion, deferred taxes, amortization of goodwill and research and development costs. While in escrow these shares retain voting and equity rights in the Company, but cannot be traded. To date, none of these common shares have been released from escrow pursuant to these terms, but these shares have been included in the number of shares outstanding.
		During the year ended January 31, 2005, the Company changed the terms of the escrow agreement to allow for a time-based method of release. During the year ended January 31, 2005, a total of 505,956 shares have been released from escrow.
	(f)	Stock options
		Under the Stock Option Plan (1998), options may be granted to directors, officers, employees, and consultants of the Company at an exercise price determined by the Board of Directors provided that such exercise price should not be less than permitted under the rules of any stock exchange where the shares are listed. The period during which an option may be exercised (the “Option Period”) is determined by the Board at the time the option is granted, subject to any vesting limitations which may be imposed by the Board in its sole unfettered discretion at the time such option is granted. The options are exercisable during a period not to exceed 5 years from the date the option is granted unless otherwise specifically provided by the Board, and in any event, no option shall be exercisable for a period exceeding 10 years from the date the option is granted. Options are exercisable as determined by the Board at the date of the grant. All options granted in the year ended January 31, 2004 and 2005 vest four months after the date of grant. Shares covered by options granted with respect to any year may not exceed 10% of the issued and outstanding shares of the Company, calculated on a non-diluted basis.
		The following tables reflect the movement and status of the stock options:

	2005				2004
				Weighted				Weighted
				Average				Average
	Number of			Exercise	Number of			Exercise
Options outstanding	Options			Price (*)	Options			Price (*)
Balance, beginning of the year	2,800,533		$	0.15	2,879,383		$	0.11
Options granted during the year	1,921,891			0.22	1,269,150			0.20
Options cancelled during the year	(197,300	)		0.20	(5,000	)		0.08
Options exercised during the year	(435,136	)		0.12	(1,343,000	)		0.11
Balance, end of the year	4,089,988		$	0.18	2,800,533		$	0.15

F-24

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

13.	COMMON SHARES (continued)
	(f)	Stock options (continued)

		January 31, 2005
	Options Outstanding		Options Exercisable
		Weighted		Weighted
Exercise		Average Life		Average Life
Price (*)	Number (*)	(Years)	Number (*)	(Years)
$0.08	612,876	1.7	612,876	1.7
$0.12	324,000	3.8	324,000	3.8
$0.13	415,071	0.7	415,071	0.7
$0.16	637,891	4.9	-	-
$0.19	200,000	3.8	200,000	3.8
$0.24	1,900,150	4.1	1,900,150	4.1
	4,089,988	3.4	3,452,097	3.1

		(*)	The exercise price has been converted into U.S. dollars based on the foreign exchange rate as at January 31, 2005. The number of options presented reflects the most current conversion price information.
	(g)	Earnings per share
		For the years ended January 31, 2005 and 2004, all options to purchase shares were excluded in the diluted share calculation because they were anti-dilutive for earnings per share purposes.
14.	INCOME TAXES
	The reconciliation of income taxes computed at the blended (Canadian and U.S.) statutory tax rate to the Company’s effective tax rate is as follows:

		2005			2004
Loss before income taxes	$	(1,687,542	)	$	(1,168,486	)
Combined basic federal and provincial rates		39.02%			35.57%
Income tax benefit based on statutory rate		658,000			416,000
Permanent differences		(57,000	)		(28,000	)
Valuation allowance		(601,000	)		(388,000	)
Income tax benefit	$	-		$	-

F-25

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

14.	INCOME TAXES (continued)
	Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred income tax assets and liabilities are approximately as follows:
	Canada

		2005			2004
Non-capital loss carryforwards	$	1,103,000		$	773,000
Net capital loss carryforwards		80,000			80,000
Tax deductible financing costs		-			14,000
Capital assets		81,000			70,000
Total gross deferred tax assets		1,264,000			937,000
Valuation allowance		(1,264,000	)		(937,000	)
Income tax benefit	$	-		$	-

As at January 31, 2005, the Company has non-capital loss carryforwards (federal and provincial) which are available to offset taxable income in future years and expire approximately as follows:

Expiry Dates		Amount
2006	$	17,000
2007		125,000
2008		489,000
2009		817,000
2010		420,000
2011		520,000
2015		668,000
	$	3,056,000

As at January 31, 2005, the Company has net capital loss carryforwards of approximately $470,000 available to offset taxable capital gains in future years. These net capital loss carryforwards are available to carry forward indefinitely.

F-26

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

14.	INCOME TAXES (continued)
	United States

		2005			2004
Non-capital loss carryforwards	$	3,694,000		$	2,945,000
Tax method of accounting adjustments		-			153,000
Capital assets		8,000			231,000
Other temporary differences		9,000			2,000
Total gross deferred tax assets		3,711,000			3,331,000
Valuation allowance		(3,711,000	)		(3,331,000	)
Income tax benefit	$	-		$	-

As at January 31, 2005, the Company has U.S. net operating tax loss carryforwards which are available to offset taxable income and expire in future years as follows:

Expiry Dates		Amount
2019	$	273,000
2020		647,000
2021		2,159,000
2022		3,632,000
2023		487,000
2024		436,000
2025		1,943,000
	$	9,577,000

The use of the U.S. loss carryforwards will be limited in any given year as a result of previous changes in ownership.

F-27

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

15.	CASH FLOW INFORMATION
	(a)	Net change in working capital balances

		2005			2004
Accounts receivable	$	(441,772	)	$	43,918
Prepaids and other assets		(2,435	)		(4,102	)
Inventory		(48,591	)		-
Deferred costs		(2,589	)		35,488
Accounts payable and accrued liabilities		149,338			249,399
Deferred revenue		21,201			18,781
	$	(324,848	)	$	343,484

(b) Supplemental information

		2005		2004
Interest paid	$	31,110	$	39,211
Income taxes paid	$	-	$	-

	(c)	Non-cash transactions
		During the year ended January 31, 2005, the Company entered into certain capital leases. The resulting debt obligation and capital asset addition of $30,026 are considered non-cash transactions, and as such have not been included in the statement of cash flows.
16.	INTEREST AND OTHER EXPENSES

		2005		2004
Accretion of convertible debenture (Note 11)	$	46,750	$	-
Interest on preferred shares (Note 12)		18,111		29,048
Interest on long-term debt (Note 10)		26,593		37,825
Interest on capital leases (Note 9)		4,517		1,386
Other interest, bank charges and late fees		48,921		28,860
	$	144,892	$	97,119

F-28

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

17.	RELATED PARTY TRANSACTIONS
	The Company paid $45,252 (2004 - $44,493) for director, officers and property insurance to a company owned and operated by the spouse of a significant shareholder. At year-end, $19,362 (2004 - $35,450) of this amount was still outstanding. This transaction was measured at the exchange amount, which is the amount of consideration established and agreed to by both parties.
18.	COMMITMENTS AND CONTINGENCIES
	(a)	Future minimum annual payments under operating leases for equipment and premises (exclusive of realty taxes and other occupancy charges) are approximately as follows:

2006	$	207,000
2007		118,000
2008		116,000
2009		77,000
	$	518,000

	(b)	The Company has a $20,000 standby letter of credit for its leased premises, which will be reduced to nil in December 2005.
	(c)	Certain of the Company’s U.S. and Canadian government filings were not filed in accordance with the periods provided by statute. As such, the Company could be assessed certain penalties for lack of timely compliance.
19.	FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
	The carrying amount of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the limited term of these instruments. The carrying value of the long-term debt approximates fair value because the interest rate is tied to the daily U.S. prime rate. The carrying value of the convertible debenture approximates fair value because it was negotiated shortly before year-end.
	The Company is exposed to the following risks related to its financial assets and liabilities:
	Interest rate risk
	The Company currently has notes payable that incur interest based on the U.S. prime lending rate. The Company is therefore exposed to interest rate risk through fluctuations in the U.S. prime- lending rate. The Company does not use derivative instruments to reduce its exposure to interest rate risk.

F-29

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

19.	FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
	Credit risk
	Credit risk arises from the possibility that the Company’s customers may experience financial difficulty and be unable to fulfill their financial obligations. The risk is mitigated through proactive credit screening, a stringent collection policy, and the ability to restrict user access on certain products.
	Foreign currency risk
	The Company conducts most of its business in the United States of America. The Company’s exposure to foreign currency risk arises from purchases denominated in Canadian dollars. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. During the year ended January 31, 2005, the Company recorded a foreign exchange loss of $417,762 (2004 - $822,817).
20.	SEGMENTED INFORMATION
	The Company operates and manages its business in three segments, being its tax preparation services (“Taxmax”), used car sales and financing (“Carbiz Auto Credit” or “CAC”), and various software and consulting services offered to independent car dealerships (“Software and Other Products”). Approximately 99% of the Company’s revenue is generated in the United States of America (“USA”). In addition almost all of the Company’s assets are located in the USA.
	Taxmax generates revenues from two sources, being the sign up fees and the tax preparation fees. Sign up fees are received between October and December, with tax preparation fees being earned between January and April. As a majority of the tax preparation fees is earned subsequent to year end, a portion of the sign up fees and related expenses is deferred and recognized as the tax preparation services are rendered in the first quarter following the year end.
	CAC purchases automobiles through auctions and sells them to end users at two car lots located in the state of Florida. When required, the Company will also finance these sales with loans that are generally 65 weeks in length. The Company did not operate in the CAC segment during the year ended January 31, 2004.
	Software and other products consists of new sales and recurring monthly revenues for software products, and new sales and recurring monthly revenues of consulting products, and other related revenue from credit bureau fees, supply sales and forms programming.

F-30

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

20. SEGMENTED INFORMATION (continued)

		2005
				Carbiz			Software and
		Taxmax		Auto Credit			Other Products			Total
Sales	$	641,055	$	594,722		$	2,123,774		$	3,359,551
Cost of sales		331,725		300,977			853,804			1,486,506
Gross profit		309,330		293,745			1,269,970			1,873,045
Operating expenses (¹)		240,272		315,269			2,345,028			2,900,569
Income (loss) from
segments		69,058		(21,524	)		(1,075,058	)		(1,027,524	)
Depreciation and
amortization		-		-			-			(515,126	)
Operating loss	$	69,058	$	(21,524	)	$	(1,075,058	)	$	(1,542,650	)

		2004
				Software and
		Taxmax		Other Products			Total
Sales	$	798,567	$	2,162,298		$	2,960,865
Cost of sales		353,351		1,137,771			1,491,122
Gross profit		445,216		1,024,527			1,469,743
Operating expenses (¹)		307,640		1,666,797			1,974,437
Income (loss) from segments		137,576		(642,270	)		(504,694	)
Depreciation and amortization		-		-			(566,673	)
Operating loss	$	137,576	$	(642,270	)	$	(1,071,367	)

(¹) Excluding depreciation and amortization

The Company’s Chief Operating Decision Maker (“CODM”), which is the CEO, does not review each segment’s operations or financial position in any further detail than presented above.

F-31

CARBIZ INC.

Notes to the Consolidated Financial Statements

January 31, 2005 and 2004

(expressed in U.S. dollars)

21.	SUBSEQUENT EVENTS
	On February 28, 2005, the Company entered into a joint venture agreement with a member of the Company's Board of Directors. The purpose of this joint venture is to add five additional CAC centres in the state of Florida over five years. Under the agreement, the Company will contribute its intellectual property and permanent, non-exclusive license agreements in exchange for a 50% share of the joint venture. The partner will contribute $500,000 for the remaining 50% share. In April 2005, the joint venture signed a five-year lease for the premises of the first centre, at a price of $31,200 annually.
	As of April 10, 2005, the Company had not completed an OTC-BB filing as required under the terms of the Convertible Debenture (Note 11). Therefore, the holders of the Convertible Debentures will be issued certain Additional Warrants upon the Conversion Date. The Company is in the process of completing its OTC-BB filing.

F-32

Consolidated Financial Statements of

CARBIZ INC.

Period ending July 31, 2005 and 2004

F-33

Carbiz Inc.
Consolidated Balance Sheets
(unaudited)

		Period ended			Year ended
(expressed in U.S. dollars)		July 31, 2005			January 31, 2005
ASSETS
CURRENT
Cash and cash equivalents	$	56,309		$	130,520
Accounts receivable		562,142			452,881
Other receivable		195,000			-
Prepaids and other assets		84,956			74,413
Inventory		95,214			51,347
Deferred costs		25,900			144,468
		1,019,521			853,629
LONG-TERM RECEIVABLES		110,045			78,591
DEFERRED COSTS		26,629			65,766
FIXED ASSETS		458,674			535,788
	$	1,614,869		$	1,533,774
LIABILITIES
CURRENT
Accounts payable and accrued liabilities	$	931,121		$	1,044,157
Deferred revenue		220,427			164,937
Current portion of capital leases		8,442			12,833
Current portion of long-term debt		177,562			127,046
		1,337,552			1,348,973
DEFERRED REVENUE		177,528			438,439
CAPITAL LEASES		22,309			31,715
LONG-TERM DEBT		238,984			296,266
CONVERTIBLE DEBENTURE		578,197			501,966
		2,354,570			2,617,359
MINORITY INTEREST		236,995			--
CAPITAL DEFICIENCY
COMMON SHARES		14,197,260			14,185,863
41,090,514 and 41,002,014 Common Shares issued and
outstanding as at July 31, 2005 and Jan 31, 2005 respectively
WARRANTS		70,328			118,457
ADDITIONAL PAID-IN CAPITAL		6,562,512			6,264,383
OTHER COMPREHENSIVE LOSS		(385,197	)		(385,197	)
DEFICIT		(21,421,599	)		(21,267,091	)
		(976,696	)		(1,083,585	)
	$	1,614,869		$	1,533,774

The accompanying notes are an integral part of these consolidated financial statements.

F-34

Carbiz Inc.
Consolidated Statements of Operations
(unaudited)

		For the six months ended
		July 31
(expressed in U.S. dollars)		2005			2004
SALES	$	2,295,669		$	1,703,434
COST OF SALES		1,109,475			757,893
GROSS PROFIT		1,186,194			945,541
PERSONNEL EXPENSES		466,591			328,438
SELLING EXPENSES		262,417			296,729
OTHER OPERATING EXPENSES		506,030			994,558
		1,235,038			1,619,725
OPERATING LOSS		(48,844	)		(674,184	)
INTEREST AND OTHER EXPENSES		(118,669	)		(40,988	)
MINORITY INTEREST		13,005			0
NET LOSS	$	(154,508	)	$	(715,172	)
OTHER COMPREHENSIVE INCOME		0			26,022
COMPREHENSIVE LOSS FOR THE PERIOD	$	(154,508	)	$	(689,150	)
PROFIT (LOSS) PER SHARE
Basic and diluted	$	(0.00	)	$	(0.02	)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - Basic and diluted		41,082,691			35,575,358

The accompanying notes are an integral part of these consolidated financial statements.

F-35

Carbiz Inc.
Consolidated Statements of Cash Flow
(unaudited)

		For the six months ended
		July 31
(expressed in U.S. dollars)		2005			2004
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES
OPERATING
Net income (loss) for the period	$	(154,508	)	$	(715,172	)
Items not affecting cash
Depreciation of capital assets		71,099			366,388
Minority interest		(13,005	)		-
Loss on disposal of assets		19,181			-
Amortization of computer software development costs		-			3,890
Accretion of convertible debenture		76,231			-
Stock compensation		-			23,325
Net changes in working capital balances
Accounts receivable		(140,716	)		(136,254	)
Prepaids and other assets		(10,544	)		(21,790	)
Inventory		(43,867	)		(37,667	)
Deferred charges		157,705			137,251
Accounts payable and accrued liabilities		(113,037	)		18,342
Deferred revenue		(205,420	)		(59,798	)
		(356,881	)		(421,485	)
INVESTING
Acquisition of capital assets		(13,165	)		(24,558	)
FINANCING
Repayment of capital leases		(13,797	)		(3,843	)
Proceeds from Borrowing		50,000			-
Repayment of long-term debt		(56,766	)		(68,143	)
Investment from Joint Venture		305,000			-
Issuance of share capital		11,398			302,536
Issuance of warrants		-			149,842
		295,835			380,392
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS		-			18,142
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS		(74,211	)		(47,509	)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR		130,520			86,004
CASH AND CASH EQUIVALENTS,
END OF PERIOD	$	56,309		$	38,495

The accompanying notes are an integral part of these consolidated financial statements.

F-36

Carbiz Inc.
Notes to Consolidated Financial Statements (Unaudited)
(expressed in U.S. dollars)

1 - Organization and Business

     Carbiz Inc. (the “Company”) is a publicly traded company on the TSX Venture Exchange, formerly the Canadian Venture Exchange (CDNX). The Company was incorporated pursuant to the provisions of the Business Corporations Act of Ontario (“OBCA”) under the name “Data Gathering Capital Corp.” on March 31, 1998. On September 1, 1999, the Company changed its name by articles of amendment under the OBCA to Carbiz.com Inc., and then changed its name again on July 15, 2003 to Carbiz Inc.

     References to the Company typically include the Company’s consolidated subsidiaries. The Company’s operations are principally conducted through its two operating subsidiaries, Carbiz USA Inc., a Delaware corporation, and Carbiz Auto Credit, Inc. (“CAC”) and its joint venture, Carbiz Auto Credit JV1, LLC (“JV1”). Collectively, Carbiz Inc., Carbiz USA Inc., CAC and JV1 are referred to herein as “Carbiz”.

     The Company is in the business of developing, marketing, distributing and supporting, software, training and consulting services, mainly to the automotive Buy Here-Pay Here industry in the United States. The Company’s products fall into four primary categories: software products for operation of auto dealers, business model consulting and training for Buy Here-Pay Here operations, tax return processing for auto purchase down payment assistance, and direct auto sales and financing. During the six month period ended July 31, 2005 the Company operated two facilities called “Carbiz Auto Credit” (CAC) dealerships, which sells and finances used vehicles.

Going concern assumption
     While these financial statements have been prepared on the basis of accounting principles applicable to a going concern, several adverse conditions and events cast substantial doubt upon the validity of this assumption.

     The Company has incurred significant losses in the current period to date and each of the past several years. In addition, the Company has a working capital deficiency of $318,031 as at July 31, 2005. The Company’s continued existence is dependent upon its ability to achieve profitable operations and to obtain additional financing. However, there can be no assurance that the Company will be able to achieve profitable operations, nor that financing efforts will be successful.

     If the going concern assumption were not appropriate to these financial statements, then adjustments would be necessary in the carrying values of assets and liabilities, the reported net loss and the balance sheet classifications used.

2 - Change in Functional Currency

     Historically, the Canadian dollar has been the functional currency of the Company, and the financial statements were reported in Canadian dollars. During the year ended January 31, 2005, the Company determined that as a result of the continued move of its operations and personnel, combined with significant debt issuances in the United States, the functional currency of the Company had changed to U.S. dollars. In addition, the Company determined that it would report its financial statements in U.S. dollars. All amounts presented in these financial statements are expressed in U.S. dollars unless otherwise indicated.

     In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 52 “Foreign Currency Translation”, the Company has translated into U.S. dollars the financial statements at July 31, 2005 and January 31, 2005 and for the periods ended July 31, 2005 and 2004. The method of translation used has resulted in the financial statements of prior years presented for comparison being translated as if the U.S. dollar had always been used as the reporting currency.

     Prior to November 1, 2004, the date on which the Company determined that its functional currency had changed to U.S. dollars, this translation was done using the current rate method. Under the current rate method, the Company’s assets and liabilities were translated to U.S. dollars at the exchange rate at the balance sheet date. Revenue, costs and expenses were translated at average rates prevailing during the periods. Translation adjustments arising prior to November 1, 2004 were reported as a component of other comprehensive income.

     Subsequent to November 1, 2004, this translation was done using the temporal method. Under the temporal method, the Company’s monetary assets and liabilities were translated to U.S. dollars at the exchange rate at the balance sheet date, while equity and non-monetary assets and liabilities were translated at their historical rates. Revenue, costs and expenses were translated at average rates prevailing during the periods. Translation adjustments arising subsequent to November 1, 2004 were reported as a component of net loss for the year.

3 - Summary of Significant Accounting Policies

General
     The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 10 of Regulation S-X, Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended July 31, 2005 are not necessarily indicative of the

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results that may be expected for the year ended January 31, 2006. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on for the year ended January 31, 2005.

Use of Estimates
     In preparing the Company’s financial statements in accordance with Generally Accepted Accounting Principles of the United States, management is required to make estimates and assumptions that affect the reported amount of assets, liabilities, and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used when accounting for items and matters such as the allowance for doubtful accounts, deferred revenue and related costs and contingencies.

Accounts receivable
     Accounts receivable shown is net of bad debt provisions. The amount includes short term notes received through the selling of used automobiles. The notes are for terms no greater than 80 weeks and require weekly payments. Interest is calculated weekly based on the balance outstanding at the time. The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence.

Revenue recognition
     The Company’s revenue is derived from the sale of software related licenses, services and the sale of products to dealers in the automobile industry, and the sale of used vehicles.

a) Licenses
Software license revenue is recognized upon the execution of a license agreement, when the licensed product has been delivered, fees are fixed or determinable, collectability is probable and when all significant obligations have been fulfilled. For software license agreements in which customer acceptance is a condition of earning the license fees, revenue is not recognized until acceptance occurs. The majority of the Company’s license revenues are month-to-month contracts which may be cancelled with appropriate notice. In these cases, revenue is recognized monthly. For those license revenues that extend over a period of time, revenue is recognized ratably over the term of the contract.

b) Services
The Company generates recurring revenue from several sources, including the sale of maintenance and support on its software products. The Company also generates nonrecurring revenue from consulting fees for implementation, installation, data conversion and training related to the use of the Company’s software, and for other training seminars and consulting. Revenue is recognized when a signed contract has been executed, the services have been delivered, fees are fixed or determinable, and collectability is probable and when all significant obligations have been fulfilled. Therefore, for services that extend over a period of time, revenue is recognized ratably over the term of the contract.

c) Products
The Company generates non-recurring revenue from the sale of various products to automotive dealerships. Revenue is recognized when a signed contract is executed, the product has been delivered, fees are fixed or determinable, and collectability is probable and when all significant vendor obligations have been fulfilled. Generally, this occurs at the time of shipment. The Company does not offer product warranties related to these sales.

d) Used vehicle sales
The Company recognizes revenue on the sale of automobiles at the time vehicles are delivered to the customer and title has passed. In cases where the Company finances the vehicles the interest is recognized over the term of the loan, which is generally 65 weeks, based on the principal outstanding at the time.

     Deferred revenue represents unearned income where payments are received in advance of revenue recognition. Where revenue is deferred, all related costs incurred to earn the revenue are also deferred.

Stock-based compensation
     The Company accounts for stock-based compensation in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Pursuant to this accounting standard, the Company records deferred compensation for share options granted to employees at the date of grant based on the difference between the exercise price of the options and the market value of the underlying shares at that date. Deferred compensation is amortized to compensation expense over the vesting period of the underlying options. No compensation expense is recorded for stock options that are granted to employees and directors when the exercise price is equal to the fair market value of the shares at the time of the grant.

     Had the Company applied a fair value based method described by SFAS No.123 “Accounting for Stock-based Compensation” and the corresponding amendments under SFAS No.148 “Accounting for Stock-based Compensation – Transition and Disclosure,” which recognizes the fair values of the stock options granted as compensation cost over the vesting period, compensation related to stock options would have effected the amounts indicated below for the following periods:

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		For the six months ended
		July 31
		2005			2004
Net loss – as reported	$	(154,508	)	$	(715,172	)
Stock compensation expense recorded		-			23,325
Pro-forma stock compensation expense		(23,614	)		(182,302	)
Net loss – pro-forma	$	(178,122	)	$	(874,149	)
Basic and diluted loss per share:
As reported	$	(0.00	)	$	(0.02	)
Proforma	$	(0.00	)	$	(0.02	)

     The fair value of stock options used to compute the pro-forma net loss and loss per common share disclosure is estimated at grant using the Black-Scholes option-pricing model with the following weighted averages assumptions:

	2005	2004
Expected Dividend	0%	0%
Expected volatility	90%	90%
Risk-free interest rate	3.5%	3.7%
Expected option life in years	5	5

     The weighted average fair value of stock options, calculated using the Black-Scholes option pricing model, granted during the six months ended July 31, 2005 was $0.13 per option (2004 - $0.11) . The Black-Scholes option value model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, and requires the input of assumptions, including the expected stock price volatility. The options granted to employees have characteristics significantly different from those of traded options, and changes in the input assumptions can materially affect the fair value estimates. The Company uses the Black-Scholes option-pricing model, with the following weighted average assumptions, to measure the fair value of stock options issued during the period, which is allocated to compensation expense on a straight-line basis over the vesting period of the award.

     During the six months ended July 31, 2004 stock options were granted to consultants in exchange for services performed. The Company accounts for stock options granted to consultants in accordance with SFAS 123 and SFAS 148. Accordingly the fair value of any stock options granted to consultants is recorded as stock compensation. The stock compensation expense recognized as a result of this was $0 for the six months ended July 31, 2005 and $23,325 for the same period last year.

Comprehensive Income
     SFAS No. 130, “Reporting Comprehensive Income”, requires the reporting and display of comprehensive income and its components in financial statements. Other comprehensive income, which includes only foreign currency translation adjustments, is shown on the Consolidated Statements of Operations.

Recent Accounting Pronouncements
     In March 2005, the Financial Accounting Standards Board (FASB) issued Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (FIN 47). This interpretation clarifies the timing of liability recognition for legal obligations associated with the retirement of tangible long-lived assets when the timing and/or method of settlement of the obligation are conditional on a future event and where an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective for conditional asset retirement obligations occurring during fiscal years ending after December 15, 2005. The adoption of this interpretation is not expected to have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

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4 – Accounts Receivable

		Period ended		Year ended
(expressed in U.S. dollars)		July 31, 2005		January 31, 2005
Trade receivables from product	$	63,080	$	121,009
Less: Allowance for doubtful accounts		11,462		15,067
		51,618		105,942
Notes receivable from vehicle sales		711,129		462,399
Less: Allowance for doubtful accounts		90,560		36,869
		620,569		425,530
Total accounts receivable	$	672,187	$	531,472
Long-term portion of notes receivable	$	110,045	$	78,591
Current portion of accounts receivable	$	562,142	$	452,881

     During the six months ended July 31, 2005 and July 31, 2004, the Company earned $49,497 and $1,885 of financing income on the notes receivable respectively. These amounts have been included with revenue in these financial statements.

5 – Convertible Debenture

     On October 12, 2004 (the “Closing Date”), the Company completed a Convertible Debenture financing for net proceeds of $1,223,848. The proceeds are primarily to be used to pursue an Over-the-Counter (“OTC-BB”) listing in the U.S. and to expand the Company’s CAC operations. Upon the successful listing of the Company’s common shares on the OTC-BB and concurrent delisting from the TSX Venture Exchange (the “Conversion Date”), the principal and interest amount of the debentures will be automatically converted into a minimum of 7,336,500 units (a “Unit”). Each Unit will consist of one common share and one Class A purchase warrant and one-half of one Class B purchase warrant. Each whole Class A Warrant will be exercisable into one common share at a price of $0.23 CDN per share and each whole class B purchase warrant will be exercisable into one common share at a price of $0.30 CDN per share. Both Class A and B warrants issued will be exercisable for a period of five years following the Closing Date. The Convertible Debentures are unsecured, bear interest at 5% per annum, beginning on May 1, 2005. Prior to May 1, 2005, the Convertible Debentures are non-interest bearing.

     Carbiz has engaged an agent for this debenture financing. In addition to a commission which has been included in the cost of issuance, on the Conversion Date the Agent shall receive warrants (the “Agent Warrants”) equal to an aggregate 10 percent of the number of Units to be issued on the Conversion Date. Each warrant shall be exercisable into one common share upon payment of $0.22 CDN and one Class A Warrant upon payment of $0.23 CDN for a period of five years following the Closing Date. Also, the Agent shall receive a 2 percent cash fee on the exercise of Warrants exercised within 12 months of the Conversion Date. The Agent Warrants and cash fee that may be incurred should the Company complete an OTC-BB listing have not been recorded in these financial statements. Should the Company be unable to obtain an OTC-BB listing by April 10, 2005, the Company shall issue to the subscribers, Class A Warrants and Class B Warrants equal in number to 2% of the number of each of the Class A Warrants and Class B Warrants to be issued upon conversion of the Convertible Debenture plus an additional 1% for each subsequent 30 day period (the “Additional Warrants”). The aggregate of the Additional Warrants are limited to 6% of the Class A Warrants and the Class B Warrants to be issued upon conversion of the Convertible Debenture. The subscriber retains these Additional Warrants in the event that the principal and interest of the Convertible Debentures are repaid. The Convertible Debentures are financial instruments that contain both a debt and equity component. As a result, the Convertible Debentures were allocated to debt and equity based on a pro-rata allocation of the fair values of each component. The debt component of the Convertible Debentures will be accreted to their face value over their five-year term, with the resulting charge recorded to interest expense.

     During the six months ended July 31, 2005 and July 31, 2004, the Company recorded interest expense relating to the accretion of the debt component of $76,231 and $0 respectively.

6 – Related Party Transactions

     On February 28, 2005, the Company entered into a joint venture agreement (“JV1”) with a member of the Company's Board of Directors. The purpose of this joint venture is to add five additional Carbiz Auto Credit centers in the state of Florida over five years. Under the agreement, the Company will contribute its intellectual property and permanent, non-exclusive license agreements in exchange for a 50% share of the joint venture. The partner contributed $500,000 for the remaining 50% share. In April 2005, the joint venture signed a five-year lease for the premises of the first center, at a price of $31,200 annually.

     The Company accounts for the joint venture using FASB Statement No. 94 “Consolidation of All Majority-owned Subsidiaries—an amendment of ARB No. 51, with related amendments of APB Opinion No. 18 and ARB No. 43, Chapter 12.” Accordingly all assets and

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liabilities are fully consolidated. The 50% share of the joint venture not owned by the Company is presented on the Minority Interest line on the Consolidated Balance Sheets. Included in the current assets is an amount due, from a member of the Company’s Board of Directors, $195,000. This amount per the joint venture agreement will be paid in August of 2005.

     During the second quarter, the Company entered into a short-term loan agreement with a company owed by a significant shareholder. Under the terms of the financing the Company will receive $150,000. The loan proceeds are made up of three installments of $50,000 each, and the first was received in the month of July 2005. The remaining two draws are to be received in August and September 2005. Interest on the loan will be at a rate of 17.7% per annum. Repayment of the loan and interest will commence on October 1, 2005 and is expected to be fully repaid by August 1, 2006.

7 – Financial Instruments and Risk Management

     The carrying amount of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the limited term of these instruments. The carrying value of the long-term debt approximates fair value because the interest rate is tied to the daily U.S. prime rate. The carrying value of the convertible debenture approximates fair value because it was negotiated shortly before year-end.

The Company is exposed to the following risks related to its financial assets and liabilities:

Interest rate risk
     The Company currently has notes payable that incur interest based on the U.S. prime lending rate. The Company is therefore exposed to interest rate risk through fluctuations in the U.S. prime-lending rate. The Company does not use derivative instruments to reduce its exposure to interest rate risk.

Credit risk
     Credit risk arises from the possibility that the Company’s customers may experience financial difficulty and be unable to fulfill their financial obligations. The risk is mitigated through proactive credit screening, a stringent collection policy, and the ability to restrict user access on certain products.

Foreign currency risk
     The Company conducts most of its business in the United States of America. The Company’s exposure to foreign currency risk arises from purchases denominated in Canadian dollars. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. During the six months ended July 31, 2005 and July 31, 2004, the Company recorded a foreign exchange loss of $20,958 and a gain of $1,325 respectively.

8 – Segment Information

     The Company operates and manages its business in four segments, being its tax preparation services (“TaxMax”), used car sales and financing (“Carbiz Auto Credit” or “CAC”), the Company’s Joint Venture CAC locations, and various software and consulting services offered to independent car dealerships (“Software and Other Products”). Approximately 99% of the Company’s revenue is generated in the United States of America (“USA”). In addition almost all of the Company’s assets are located in the USA.

     TaxMax generates revenues from two sources, being the sign up fees and the tax preparation fees. Sign up fees are received between October and December, with tax preparation fees being earned between January and April. As a majority of the tax preparation fees are earned subsequent to year end, a portion of the sign up fees and related expenses are deferred and recognized as the tax preparation services are rendered in the first quarter following to the year end.

     CAC purchases automobiles through auctions and sells them to end users at two car lots located in the state of Florida. When required, the Company will also finance these sales with loans that are generally no greater than 80 weeks in length. The Company had just started operating the CAC segment during the first quarter ended April 30, 2004. The Company entered into a Joint Venture agreement during the first quarter ended April 30, 2005, see note 6.

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		For the six months ended
		July 31, 2005
				Carbiz Auto						Software and
		TaxMax		Credit			Joint Venture			Other Products		Total
Sales	$	375,984	$	700,020		$	18,800		$	1,200,865	$	2,295,669
Cost of Sales		156,727		509,393			12,682			430,673		1,109,475
Gross Profit		219,257		190,627			6,118			770,192		1,186,194
Operating Expenses (1)		112,231		277,784			31,990			741,934		1,163,939
Income (Loss) From
Segments	$	107,026	$	(87,157	)	$	(25,872	)	$	28,258		22,255
Depreciation &
Amortization												(71,099	)
Total Operating
Income (Loss)											$	(48,844	)

		For the six months ended
		July 31, 2004
				Carbiz Auto				Software and
		TaxMax		Credit		Joint Venture		Other Products			Total
Sales	$	473,283	$	143,057	$	-	$	1,087,094		$	1,703,434
Cost of Sales		238,791		72,232		-		446,870			757,893
Gross Profit		234,492		70,825		-		640,224			945,541
Operating Expenses (1)		176,074		66,273		-		1,007,100			1,249,447
Income (Loss) From
Segments	$	58,418	$	4,552	$	-	$	(366,876	)		(303,906	)
Depreciation &
Amortization											(370,278	)
Total Operating
Income (Loss)										$	(674,184	)

(1) Excluding depreciation and amortization

9 - Contingencies

     Certain of the Company’s U.S. and Canadian government filings were not filed in accordance with the periods provided by statute. As such, the Company could be assessed certain penalties for lack of timely compliance.

10 – Subsequent Events

     On October 6, 2005, the Company completed a non-brokered private placement of 5% convertible debentures for gross proceeds of Cdn$809,119.94 issued to certain of the executive officers and directors. Prior to the maturity date, the debentures convert automatically upon the listing of the Company’s common shares for trading on the Over-The-Counter Bulletin Board and the delisting of the Company’s common shares for trading on the TSX Venture Exchange. The debentures convert into units, with each unit comprised of one common share, one class A common share purchase warrant and one-half of one class B common share purchase warrant, at a price of Cdn$0.15 per unit. Each class A common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share. Each whole class B common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share. The maturity date for the debentures is April 6, 2006, and interest immediately accrues on the debentures. All of the proceeds from this private placement were used to repay the principal and accrued interest on certain other debentures that matured on October 6, 2005, because the debenture holders would not extend the maturity date of those debentures until April 6, 2006.

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Up to 44,807,860 Common Shares

 

CARBIZ INC.

___________________
Prospectus
___________________

November 2, 2005

PART II

Information Not Required in Prospectus

Item 24. Indemnification of Directors and Officers.

     Subject to the limitations contained in the Business Corporation Act (Ontario), our bylaws provide that our directors and officers, former directors or officers, or a person who acts or acted at our request as a director or officer of another body corporate of which we are or were a shareholder or creditor, and all of their heirs and legal representatives, shall be indemnified against all costs, charges and expenses reasonably incurred by such persons in connection with the defence of any civil, criminal or administrative action or proceeding to which they are made a party by reason of being or having held such positions, provided that the person seeking indemnity:

• acted honestly and in good faith with a view to our best interests; and

•   in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that his or her conduct was lawful.

provided, however, that nothing in the bylaws relieves any director or officer from the duty to act in accordance with the Business Corporation Act (Ontario) and the regulations thereunder or from liability for any breach thereof.

Item 25. Other Expenses of Issuance and Distribution.

     The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable in connection with the sale of the common shares being registered hereby. All amounts are estimates. No portion of these expenses will be paid by the selling shareholders.

Item	Amount
Registration Fees	$560
Legal fees and expenses	$80,000
Accounting fees and expenses	$80,000
Printing and engraving expenses	$1,000
Miscellaneous expenses	$1,000
Total	$162,560

Item 26. Recent Sales of Unregistered Securities.

     The following is a summary of the transactions by Carbiz during the last three years involving sales of our securities that were not registered under the Securities Act of 1933.

     On October 6, 2005, we completed a non-brokered private placement of Cdn$809,119.94 principal amount 5% convertible debentures to a group consisting of non-U.S. and U.S. purchasers. Prior to the maturity date, the debentures convert automatically upon the listing of our common shares for trading on the Over-The-Counter Bulletin Board and the delisting of our common shares for trading on the TSX Venture Exchange. The debentures convert into units, with each unit comprised of one common share, one class A common share purchase warrant and one-half of one class B common share purchase warrant, at a price of Cdn$0.15 per unit. Each class A common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share. Each whole class B common share purchase warrant may be exercised through October 6, 2010 for one common share at an exercise price of Cdn$0.15 per common share. The maturity date for the debentures is April 6, 2006, and interest immediately accrues on the debentures. All of the proceeds from this private placement were used to repay the principal and accrued interest on certain other debentures that matured on October 6, 2005, because the debenture holders would not extend the maturity date of those debentures until April 6, 2006. The debentures in this private placement were issued to the non-U.S. and U.S. purchasers in reliance upon the exemption from registration available

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under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such purchasers were each an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933.

     On July 29, 2005, we completed a non-brokered private placement of $150,000 principal amount promissory note that bears interest at a rate of 17.7% with a U.S. purchaser and a non-U.S. purchaser. The promissory note was issued to the U.S. purchaser in reliance upon the exemption from registration available under Section 4(2) under the Securities Act of 1933. The promissory note was issued to the non-U.S. purchaser in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933.

     On December 14, 2004, we granted an aggregate 637,891 options under our stock option plan to our directors and officers which are exercisable into common shares upon payment of Cdn$0.20 per share. These options expire on December 14, 2009. The options were issued to our directors and officers located inside the United States in reliance upon the exemption from registration available under Rule 701 promulgated under the Securities Act of 1933, and to our directors and officers located outside the United States in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933.

     On October 12, 2004, we completed a brokered private placement of 5% convertible debentures for net proceeds of Cdn$1,614,030 issued to a group consisting of non-U.S. and U.S. purchasers. The debentures were to convert automatically upon the listing of our common shares for trading on the Over-The-Counter Bulletin Board and the delisting of our common shares from trading on the TSX Venture Exchange. The debentures were to convert into units, with each unit comprised of one common share, one class A common share purchase warrant and one-half of one class B common share purchase warrant, at a price of Cdn$0.22 per unit. Each class A common share purchase warrant was to be exercisable through October 12, 2009 for one common share at an exercise price of Cdn$0.23 per common share. Each whole class B common share purchase warrant was to be exercisable through October 12, 2009 for one common share at an exercise price of Cdn$0.30 per common share. Interest did not accrue on the debentures until May 1, 2005. If the conditions necessary for the conversion of these debentures were not met by October 6, 2005, the debentures matured and the principal and accrued interest would be due and payable in full on that date.

     As a result of not achieving a listing on the Over-The-Counter Bulletin Board by October 6, 2005 and not having sufficient cash on hand to repay the debentures, we negotiated with our debenture holders for an extension of the maturity date until April 6, 2006 in order to allow us additional time to list our common shares for trading on the Over-The-Counter Bulletin Board and delist our common shares from trading on the TSX Venture Exchange. In exchange for the extension of the maturity date, we offered to lower the conversion rate of the debentures to Cdn$0.15 per unit and the exercise price for each of the class A common share purchase warrants and the class B common share purchase warrants to Cdn$0.15. The holders of Cdn$846,297.50 principal amount of our debentures sought to be paid the principal and interest on their debentures, while the remaining debenture holders agreed to the extension of the maturity date.

     In consideration for the services provided by an agent related to the private placement on October 12, 2004, the agent received a cash commission equal to 10% of the gross proceeds raised by the agent, which totaled $61,974. The agent is also entitled to receive a cash fee equal to 2% of the gross proceeds from the subsequent exercise within twelve months from the date the debentures are converted of any class A common share purchase warrants or class B common share purchase warrants that were issued upon conversion of debentures placed by the agent. In addition, the agent will receive that number of units that is equal to 10% of the number of units to be issued on the date the debentures are converted with respect to debentures placed by the agent. Each unit shall consist of one first common share purchase warrant and one second common share purchase warrant. Each first common share purchase warrant may be exercised to acquire one common share at a price of Cdn$0.22 per share on or before the date that is five years from the date the debentures are converted into units. Each second common share purchase warrant may be exercised to acquire one common share at a price of Cdn$0.23 per share on or before the date that is five years from the date the debentures are converted into units.

     The securities were issued to the non-U.S., the U.S. purchasers and the agent in reliance upon the exemption from registration available under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such persons were each an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933. The amendments to the convertible debentures were made in reliance upon the exemption from registration available under Section 3(a)(9) of the Securities Act of 1933.

II-2

     On September 16, 2004, we completed a non-brokered private placement of 91,000 units at a purchase price of Cdn$0.30 per unit to a group consisting of U.S. purchasers for gross proceeds of Cdn$27,300. Each unit consists of one common share and one common share purchase warrant, with each common share purchase warrant exercisable for one common share until September 16, 2005 upon payment by the holder of Cdn$0.30 per common share. The common shares and the common share purchase warrants were issued to the U.S. purchasers in reliance upon the exemption from registration available under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such purchasers were each an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933.

     On August 16, 2004, we completed a non-brokered private placement of 10% convertible debentures pursuant to which a total of Cdn$332,693 principal amount of debentures were issued to a group consisting of U.S. purchasers. The debentures matured in March 2005 with both principal and interest being convertible into our common shares. The principal is convertible at a price per share equal to the closing price of our shares on the TSX Venture Exchange on the day prior to conversion or the price of any financing completed by us prior to the maturity date, subject to a minimum conversion price of Cdn$0.22 per share. The interest is convertible on the maturity date at a price per share equal to the closing price of our shares on the TSX Venture Exchange on the day prior to the maturity date, subject to a minimum conversion price of Cdn$0.22 per share. The debentures were issued to the U.S. purchasers in reliance upon the exemption from registration available under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such purchasers were each an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933.

     On July 9, 2004, we completed a brokered private placement of 602,431 units at a purchase price of Cdn$0.30 per unit to a group consisting of non-U.S. and U.S. purchasers for gross proceeds of Cdn$180,729. Each unit consists of one common share and one common share purchase warrant, with each common share purchase warrant exercisable for one common share until July 9, 2005 upon payment by the holder of Cdn$0.30 per common share. The agents involved in the private placement were issued 302,387 common share purchase warrants, with each common share purchase warrant exercisable for one common share until July 9, 2006 upon payment by the holder of Cdn$0.30 per common share. The common shares and the common share purchase warrants were issued to the non-U.S. purchasers in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933, because such purchasers were located outside the United States. The common shares and the common share purchase warrants were issued to the U.S. purchasers and the agents in reliance upon the exemption from registration available under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such persons were each an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933.

     On July 9, 2004, we issued 75,456 common share purchase warrants to a U.S. person in consideration for consulting services rendered to us. Each common share purchase warrant is exercisable for one common share until July 9, 2006 upon payment by the holder of Cdn$0.30 per common share. The common share purchase warrants were issued to the U.S. person in reliance upon the exemption from registration available under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such person was an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933.

     On July 1, 2004, we granted an aggregate 584,000 options under our stock option plan to our directors and officers which are exercisable into common shares upon payment of Cdn$0.30 per share. These options expire on July 1, 2009. The options were issued to our directors and officers located inside the United States in reliance upon the exemption from registration available under Rule 701 promulgated under the Securities Act of 1933, and to our directors and officers located outside the United States in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933.

     On May 4, 2004, we completed a non-brokered private placement of 232,628 units at a purchase price of Cdn$0.30 per unit to a group consisting of non-U.S. purchasers and U.S. purchasers for gross proceeds of Cdn$69,788. Each unit consists of one common share and one common share purchase warrant, with each common share purchase warrant exercisable into one common share until May 4, 2005 upon payment by the holder of Cdn$0.30 per common share. The common shares and the common share purchase warrants were issued to the non-U.S. purchasers in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933, because such purchasers were located outside the United States. The common shares and common share purchase

II-3

warrants were issued to the U.S. purchasers in reliance upon the exemption from registration available under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such purchasers were each an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933.

     On April 1, 2004, we completed a non-brokered private placement of 1,054,157 units at a purchase price of Cdn$0.30 per unit to a group consisting of non-U.S. and U.S. purchasers for gross proceeds of Cdn$316,247. Each unit consists of one common share and one common share purchase warrant, with each common share purchase warrant exercisable into one common share until April 1, 2005 upon payment by the holder of Cdn$0.30 per common share. The common shares and the common share purchase warrants were issued to the non-U.S. purchasers in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933, because such purchasers were located outside the United States. The common shares and common share purchase warrants were issued to the U.S. purchasers in reliance upon the exemption from registration available under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such purchasers were each an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933.

     On March 31, 2004, we granted an aggregate 700,000 options under our stock option plan to our directors, officers, employees and consultants which are exercisable into common shares upon payment of Cdn$0.30 per share. These options expire on March 31, 2009. The options were issued to our directors and officers located inside the United States in reliance upon the exemption from registration available under Rule 701 promulgated under the Securities Act of 1933, and to our directors and officers located outside the United States in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933.

     On December 15, 2003, we granted an aggregate 745,150 options under our stock option plan to our directors, officers and a consultant which are exercisable into common shares upon payment of Cdn$0.30 per share. These options expire on December 15, 2008. The options were issued to our directors and officers located inside the United States in reliance upon the exemption from registration available under Rule 701 promulgated under the Securities Act of 1933, and to our directors and officers located outside the United States in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933.

     On November 28, 2003, we granted an aggregate 200,000 options under our stock option plan to our directors and officers which are exercisable into common shares upon payment of Cdn$0.24 per share. These options expire on November 28, 2008. The options were issued to our directors and officers located inside the United States in reliance upon the exemption from registration available under Rule 701 promulgated under the Securities Act of 1933, and to our directors and officers located outside the United States in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933.

     On September 26, 2003, we completed a non-brokered private placement of 1,500,000 units at a purchase price of Cdn$0.10 per unit to a group consisting of non-U.S. and U.S. purchasers for gross proceeds of Cdn$150,000. Each unit consists of one common share and one-half of one common share purchase warrant, with each whole common share purchase warrant exercisable into one common share until September 26, 2004 upon payment by the holder of Cdn$0.12 per common share. The common shares and the common share purchase warrants were issued to the non-U.S. purchasers in reliance upon the exclusion from registration available under Regulation S promulgated under the Securities Act of 1933, because such purchasers were located outside the United States. The common shares and common share purchase warrants were issued to the U.S. purchasers in reliance upon the exemption from registration available under Rule 506 of Regulation D promulgated under the Securities Act of 1933, because such purchasers were each an “accredited investor,” as such term is defined in Regulation D promulgated under the Securities Act of 1933.

     On December 6, 2002, we completed a non-brokered private placement of 4,000,000 series 1 preferred shares at a purchase price of Cdn$0.10 per share to a group consisting of non-U.S. purchasers for gross proceeds of Cdn$400,000. The preferred shares are convertible at the option of the holder at any time before December 6, 2004 at a price of Cdn$0.10 per share, plus accrued interest. Upon conversion, the principal amount of the shares, plus accrued interest shall be paid in full by us in cash or converted into common shares at a price of one common share for every Cdn$0.10 of principal and accrued interest represented by the holder’s convertible preferred shares. If the shares are not converted by December 6, 2004, the shares are repayable in cash plus accrued interest. The preferred shares were issued to the non-U.S. purchasers in reliance upon the exclusion from registration available under Regulation S, because such purchasers were located outside the United States.

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Item 27. Exhibits.

EXHIBIT INDEX

The following exhibits are filed as part of this Form SB-2:

Exhibit
Number	Description
3.1	Articles of Incorporation dated March 31, 1998
3.2	Articles of Amendment dated April 15, 1998
3.3	Articles of Amendment dated April 22, 1998
3.4	Articles of Amendment dated September 1, 1999
3.5	Articles of Amendment dated October 30, 2002
3.6	Articles of Amendment dated July 15, 2003
3.7	Bylaw No. 1
3.8	Bylaw No. 2
4.1	Specimen of Common Share Certificate
4.2	Specimen of Preferred Share Certificate
4.3	Form of 5% Convertible Debenture (October 2004)
4.4	Form of Amendment of Debenture Agreement
4.5	Form of 5% Convertible Debenture (October 2005)
4.6	Form of Class A Common Share Purchase Warrant
4.7	Form of Class B Common Share Purchase Warrant
4.8	Form of Agent’s First Common Share Purchase Warrant
4.9	Form of Agent’s Second Common Share Purchase Warrant
4.10	Investors’ Rights Agreement dated October 6, 2004 among Carbiz and certain investors
4.11	Investors’ Rights Agreement dated October 6, 2005 among Carbiz and certain investors
5.1	Legal Opinion of Harris + Harris LLP
10.1*	Management Agreement dated October 12, 1999 between Carbiz and 1043917 Ontario Inc.
10.2	Lease Agreement dated April 1, 2004 between Carbiz and Tony and Julie Katsamakis with respect to premises located in Palmetto, Florida
10.3	Lease Agreement dated December _____, 2003 between Carbiz and Herrig Enterprises L.L.C. with respect to premises located in Sarasota, Florida
10.4	Lease Agreement dated September 22, 2004 between Carbiz Auto Credit Inc. and D.O. & M.G. Investment, Inc. with respect to the premises located in St. Petersburg, Florida
10.5	Lease Agreement dated April 1, 2005 between Carbiz Auto Credit JV1, LLC and Wilfredo and Violeta Quintero with respect to the premises located in Tampa, Florida
10.6*	Stock Option Plan
10.7	Form of 5% Convertible Debenture Subscription Agreement (October 2004)
10.8	Placement Agent Agreement dated September 29, 2004 between Carbiz and Innovation Capital, LLC
10.9	First Amendment dated October 12, 2004 to Placement Agent Agreement between Carbiz and Innovation Capital, LLC
10.10	Operating Agreement dated March 16, 2005 of Carbiz Auto Credit JV1, LLC
10.11	Software License Agreement dated March 4, 2005 between Carbiz and Carbiz Auto Credit JV1, LLC
10.12	Promissory Note dated July 29, 2005 issued to Medipac International
10.13	Debenture Instructions
21.1	List of Subsidiaries
23.1	Consent of Deloitte & Touche LLP
23.2	Consent of Harris + Harris LLP (Included as part of Exhibit 5.1)
24.1	Power of Attorney (Included on the signature pages to the registration statement)
99.1	Form F-X

* Indicates a management contract or compensatory plan or arrangement

Item 28. Undertakings.

     Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the provisions described in Item 24, or

II-5

otherwise, Carbiz has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

     In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer of controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

     The undersigned registrant hereby undertakes that:

     (1) It will file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

               (i) Include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

               (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

               (iii) Include any additional or changed material information on the plan of distribution.

     (2) For determining liability under the Securities Act of 1933, registrant will treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

     (3) It will file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

II-6

SIGNATURES

     In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of the filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned in the City of Sarasota, State of Florida, on October 31, 2005.

CARBIZ INC.
By:	/s/ Carl Ritter
	Carl Ritter, Chief Executive Officer

POWER OF ATTORNEY

     We, the undersigned directors and officers of Carbiz Inc., do hereby constitute and appoint Carl Ritter and Stan Heintz, or either of them, our true and lawful attorneys and agents, to do any and all such acts and things in our name and on our behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said corporation to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this registration statement, including specifically, but without limitation, power and authority to sign for us or in any of our names and in the capacities indicated below any and all amendments (including post-effective amendments) to this registration statement, or any related registration statement under the Securities Act of 1933; and we do hereby ratify and confirm all that the said attorneys and agents, or either of them, shall do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this registration statement on Form SB-2 has been signed by the following persons in the capacities and on the dates stated:

Signature	Title	Date
/s/ Carl Ritter	Chief Executive Officer, Chairman and	October 31, 2005
Carl Ritter	a Director (Principal Executive Officer)
/s/ Aldo Sistilli	Chief Financial Officer and Vice	October 31, 2005
Aldo Sistilli	President Finance (Principal Financial
	and Accounting Officer)
/s/ Richard Lye	President, Corporate Secretary and a	October 31, 2005
Richard Lye	Director
		October 31, 2005
/s/ Ross Quigley	Director
Ross Quigley
		October 31, 2005
/s/ Theodore Popel	Director
Theodore Popel

AUTHORIZED REPRESENTATIVE

     Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned has signed this registration statement solely in the capacity of the duly authorized representative of Carbiz Inc. in the United States on November 1, 2005.

/s/ Carl Ritter

Carl Ritter

II-7

EXHIBIT INDEX

Exhibit
Number	Description
3.1	Articles of Incorporation dated March 31, 1998
3.2	Articles of Amendment dated April 15, 1998
3.3	Articles of Amendment dated April 22, 1998
3.4	Articles of Amendment dated September 1, 1999
3.5	Articles of Amendment dated October 30, 2002
3.6	Articles of Amendment dated July 15, 2003
3.7	Bylaw No. 1
3.8	Bylaw No. 2
4.1	Specimen of Common Share Certificate
4.2	Specimen of Preferred Share Certificate
4.3	Form of 5% Convertible Debenture (October 2004)
4.4	Form of Amendment of Debenture Agreement
4.5	Form of 5% Convertible Debenture (October 2005)
4.6	Form of Class A Common Share Purchase Warrant
4.7	Form of Class B Common Share Purchase Warrant
4.8	Form of Agent’s First Common Share Purchase Warrant
4.9	Form of Agent’s Second Common Share Purchase Warrant
4.10	Investors’ Rights Agreement dated October 6, 2004 among Carbiz and certain investors
4.11	Investors’ Rights Agreement dated October 6, 2005 among Carbiz and certain investors
5.1	Legal Opinion of Harris + Harris LLP
10.1*	Management Agreement dated October 12, 1999 between Carbiz and 1043917 Ontario Inc.
10.2	Lease Agreement dated April 1, 2004 between Carbiz and Tony and Julie Katsamakis with respect to premises located in Palmetto, Florida
10.3	Lease Agreement dated December _____, 2003 between Carbiz and Herrig Enterprises L.L.C. with respect to premises located in Sarasota, Florida
10.4	Lease Agreement dated September 22, 2004 between Carbiz Auto Credit Inc. and D.O. & M.G. Investment, Inc. with respect to the premises located in St. Petersburg, Florida
10.5	Lease Agreement dated April 1, 2005 between Carbiz Auto Credit JV1, LLC and Wilfredo and Violeta Quintero with respect to the premises located in Tampa, Florida
10.6*	Stock Option Plan
10.7	Form of 5% Convertible Debenture Subscription Agreement (October 2004)
10.8	Placement Agent Agreement dated September 29, 2004 between Carbiz and Innovation Capital, LLC
10.9	First Amendment dated October 12, 2004 to Placement Agent Agreement between Carbiz and Innovation Capital, LLC
10.10	Operating Agreement dated March 16, 2005 of Carbiz Auto Credit JV1, LLC
10.11	Software License Agreement dated March 4, 2005 between Carbiz and Carbiz Auto Credit JV1, LLC
10.12	Promissory Note dated July 29, 2005 issued to Medipac International
10.13	Debenture Instructions
21.1	List of Subsidiaries
23.1	Consent of Deloitte & Touche LLP
23.2	Consent of Harris + Harris LLP (Included as part of Exhibit 5.1)
24.1	Power of Attorney (Included on the signature pages to the registration statement)
99.1	Form F-X

* Indicates a management contract or compensatory plan or arrangement

EX-3.1

EX-3.2

EX-3.3

EX-3.4

EX-3.5

EX-3.6

EX-3.7

EX-3.8

EX-4.1

EX-4.2

EX-4.3

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUED UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATIONS UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND, IN THE CASE OF SUPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

NUMBER •
PRINCIPAL AMOUNT CDN$ •

CARBIZ INC.

Incorporated under the Business Corporations Act (Ontario)

CONVERTIBLE DEBENTURE

For value received, Carbiz Inc. (hereinafter referred to as the "Corporation") hereby acknowledges itself indebted to • (the "Holder"), and promises to pay to the Holder the amount of CDN$ • (the "Principal Amount"), such Principal Amount to be, paid to the Holder, in securities of the Corporation (subject to and in accordance with the terms, conditions and provisions of this Debenture), at the head office of the Corporation (7560 Commerce Court, Sarasota, Florida 34243), or at such other place or places within Florida as may be designated by the Corporation from time to time by notice in writing to the Holder, together, with all costs and expenses that may become payable to the Holder hereunder, The Corporation will pay interest on the Principal Amount outstanding from time to time at a rate equal to five per cent (5%) per annum commencing on May 1, 2005, such interest to be paid to the Holder in securities of the Corporation in accordance with the terms herein.

By its execution hereof, the Holder acknowledges and agrees to the terms and conditions hereof, including the terms and conditions set out in Schedule "A" hereto, which are incorporated herein by reference and form a part of this Debenture.

IN WITNESS WHEREOF, the Corporation and the Holder have caused this Debenture to be executed as of October 6, 2004.

CARBIZ INC.

Per:

Full Legal Name of Holder (please print)

(signature)

The Holder shall not trade this Debenture, except in accordance with applicable securities legislation.

SCHEDULE "A"

The following terms and conditions are applicable to the Convertible Debenture of Carbiz Inc., dated as of October 6, 2004, made in favour of the Holder.

ARTICLE 1
INTERPRETATION

1.1           Definitions

Whenever used in this Debenture, unless there is something in the subject matter or context inconsistent therewith, the following words and terms shall have the indicated meanings, respectively:

"1933 Act" means the United States Securities Act of 1933, as amended;

"this Debenture", "the Debenture", "Debenture", "hereto", "herein", "hereby", "hereunder", "hereof" and similar expressions refer to this convertible debenture and not to any particular Article, Section, Subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto and every debenture issued in replacement hereof;

"business day" means a day that is not a Saturday or Sunday or a civic or statutory holiday at the place where the Corporation has its registered office;

"Class A Warrant" means a Class A common share purchase warrant of the Corporation, each Class A Warrant entitling the holder thereof to acquire a Share at a price of CDN$0.23 per Share for a period of five years from October 6, 2004;

"Class B Warrant" means a Class B common share purchase warrant of the Corporation, each whole Class B Warrant entitling the holder thereof to acquire a Share at a price of CDN$0.30 per Share for a period of five years from October 6, 2004;

"Conversion Date" means the date on which the Corporation obtains a listing on the OTCBB and delists from the Exchange;

"Conversion Rate" means the automatic conversion on the Conversion Date of the Indebtedness into Units at a price of CDN$0.22 per Unit;

"Corporation" means Carbiz Inc., a body corporate incorporated under the laws of the Province of Ontario, and includes any successor corporation of the Corporation;

"Exchange" means the TSX Venture Exchange;

"Holder" means the Person from time to time registered as the holder of this Debenture and includes any assignees or successors to or of the Holder;

"Interest Amount" means the accrued and unpaid interest as at the Conversion Date;

"Indebtedness" means the Principal Amount and the Interest Amount;

"Investors' Rights Agreement" means the Investors' Rights Agreement dated as of the date hereof, entered into among the Corporation and each of the investors under the Corporation's offering of a minimum of US$750,000 and a maximum of US$2,000,000 principal amount of Debentures;

"OTCBB" means the United States Over the Counter Bulletin Board;

"Person" includes individuals, partnerships, corporations, companies and other business or legal entities;

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"Principal Amount" means the principal amount of this Debenture as set forth on the face page hereof;

"Shares" means common shares in the capital of the Corporation, as such shares exist at the close of business on the date of execution and delivery of this Debenture and shall include any and all shares resulting from any subdivision, redivision, reduction, combination or consolidation, merger, amalgamation or reorganization and any common shares of any company or corporation to which the Corporation may sell, lease or transfer or otherwise dispose of all or substantially all of its property and assets;

"Subscription Agreement" means the agreement, dated as of the date hereof, between the Corporation and the Holder, pursuant to which the Holder subscribed for and agreed to purchase the Debenture;

"Underlying Securities" means, collectively, the Shares comprising the Units, the Warrants and the Warrant Shares;

"Unit" means a unit of the Corporation, each Unit being comprised of one Share, one Class A Warrant and one-half of one Class B Warrant;

"Warrants" means, collectively, the Class A Warrants and the Class B Warrants; and

"Warrant Shares" means the Shares that are issuable upon exercise of the Warrants.

1.2            Interpretation

Whenever used in this Debenture, words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the neuter or the feminine genders and vice versa.

1.3            Headings, Etc.

The division of this Debenture into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Debenture.

1.4            Day Not a Business Day

In the event that any day on or before which any action is required to be taken hereunder is not a business day, then such action shall be required to be taken on or before the requisite time on the next succeeding day that is a business day.

1.5            Currency

All references to currency herein shall be to lawful money of the United States of America unless otherwise specifically noted.

ARTICLE 2
CONVERSION OF DEBENTURE

2.1            Conversion and Conversion Rate

(a)              Upon and subject to the terms and conditions set out in this Article 2, the Indebtedness shall automatically convert into Units at the Conversion Rate on the Conversion Date.

(b)              The Conversion Rate shall be subject to adjustment as provided in Section 2.2.

2.2            Exchange of Debenture

If, and whenever there is a merger, arrangement or amalgamation (statutory or otherwise) of the Corporation with or into another body corporate (any such event being called a "Reorganization"), and the Holder has not exercised its right of conversion in its entirety prior to the effective date or record date for such Reorganization, then the Holder

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shall exchange this Debenture for a post-Reorganization Debenture with substantially the same form and terms and the same Maturity Date as this Debenture.

2.3            No Requirement to Issue Fractional Shares

The Corporation shall not be required to issue fractional Shares upon the conversion of the Indebtedness into Shares pursuant to this Article 2. If any fractional interest in a Share would otherwise be deliverable upon the conversion of the Indebtedness, then the number of Shares to be issued shall be rounded down to the next whole number.

2.4            Cancellation of Converted Debenture

Upon conversion of the Indebtedness pursuant to this Article 2, this Debenture shall be cancelled and shall be of no further force or effect.

2.5            U.S. Legends

Unless the Warrant Shares or Shares underlying the Units are appropriately registered under the 1933 Act and any applicable state securities laws, the Holder understands and acknowledges that all of the Underlying Securities are "restricted securities" as defined in Rule 144 under the 1933 Act, and upon the original issuance of the Underlying Securities, and until such time as it is no longer required under applicable requirements of the 1933 Act or applicable state securities laws, all certificates representing the Underlying Securities and all certificates issued in exchange therefore or in substitution thereof, shall bear the following legend:

"THE SECURITIES REPRESENTED HEREBY [AND THE SECURITIES ISSUED UPON EXERCISE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

provided, that if the Underlying Securities are being sold pursuant to Rule 144 of the 1933 Act, the legend may be removed by delivery to the Corporation's registrar and transfer agent of an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the 1933 Act and applicable state securities laws.

2.6            Exercise of Warrants

The Holder acknowledges that any person who exercises a Warrant may be required to provide to the Corporation either:

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(a)

a written certification that the holder (i) acquired the Warrant directly from the Corporation pursuant to a written subscription agreement for the purchase of a Debenture; (ii) is exercising the Warrant, as applicable, solely for its own account and not on behalf of any other person; and (iii) was an "accredited investor", as such term is defined in Rule 501 (a) of Regulation D under the 1933 Act, both on the date the Debenture was acquired from the Corporation and on the date of exercise of the Warrant; or

(b)

a written opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available for the issuance of the Warrant Shares.

Unless the Warrant Shares are appropriately registered under the 1933 Act and applicable state securities laws, the Holder understands that the certificates representing the Warrant Shares will bear a legend restricting transfer without registration under the 1933 Act and applicable state securities laws unless an exemption from registration is available.

ARTICLE 3
COVENANTS

3.1            Investors' Rights Agreement

The Corporation hereby covenants and agrees with the Holder that it will abide by all the terms and conditions set forth in the Investors' Rights Agreement.

3.2            Maturity

In the event the Indebtedness has not been converted into Units as set out in Section 2.1 on or prior to the date that is one year from the date hereof (the "Anniversary Date"), then the Indebtedness and all accrued and unpaid interest shall be paid in cash on the Anniversary Date and the Corporation's obligations hereunder shall expire.

3.3            Stamp Tax

The Corporation shall pay any stamp or other taxes or charges imposed by the State of Florida in respect of this Debenture.

ARTICLE 4
MISCELLANEOUS

4.1            Discharge

Upon conversion of the Debenture in accordance with the terms hereof, the Holder shall deliver up this Debenture to the Corporation and shall execute and deliver to the Corporation such deeds and other documents as the Corporation may reasonably require to evidence the release and discharge of this Debenture.

4.2            Severability

If any covenant or provision herein is determined to be illegal, unenforceable or prohibited by applicable law, such illegality, unenforceability or prohibition shall not affect or impair the validity of any other covenant or provision herein.

4.3            Laws of Alberta

This Debenture shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein and shall be treated in all respects as an Alberta contract. The Holder hereby irrevocably submits to the jurisdiction of the courts of the Province of Alberta in respect of any action, suit or any other proceeding arising out of or relating to this Debenture.

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4.4            Notices

All notices, reports or other communications required or permitted by this Debenture shall be in writing and either delivered by hand, mail or by any form of electronic communication by means of which a written or typed copy is produced at the address of the recipient and shall be effective on actual receipt, unless sent (i) by mail in which case it shall be deemed to have been received and be effective on the date that is three business days following the date of mailing, or (ii) by electronic means in which case it is effective on the business day, next following the date of transmission. Such notices, reports or other communications shall be addressed to the relevant party, as follows:

(a)	if to the Corporation:
	Carbiz Inc.
	7560 Commerce Court Sarasota, Florida 34243
	Attention: Carl Ritter
	Telecopier No.: (941) 953-3580
(b)	if to the Holder, at the address of the Holder as set forth on the face page of the Subscription Agreement.

4.5            Enurement

This Debenture shall enure to the benefit of the Holder, its successors and assigns and shall be binding upon the Corporation and its successors and assigns.

4.6            Time of the Essence

Time shall be of the essence of this Agreement.

4.7            Maximum Rate Permitted by Law

Under no circumstances shall the Holder be entitled to receive nor shall it in fact receive a payment or partial payment of interest, fees or other amounts under or in relation to this Debenture at a rate that is prohibited by applicable law. Accordingly, notwithstanding anything herein or elsewhere contained, if and to the extent that under any circumstances, the effective annual rate of "interest" (as defined in Section 347 of the Criminal Code of Canada) received or to be received by a Holder (determined in accordance with such section) on any amount of "credit advanced" (as defined in that section) pursuant to these presents or any agreement or arrangement collateral hereto entered into in consequence or implementation hereof would, but for this Section 4.7, be a rate that is prohibited by applicable law, then the effective annual rate of interest, as so determined, received or to be received by the Holder on such amount of credit advanced shall be and be deemed to be adjusted to a rate that is one whole percentage point less than the lowest effective annual rate of interest that is so prohibited (the "adjusted rate"); and, if the Holder has received a payment or partial payment which would, but for this Section 4.7, be so prohibited then any amount or amounts so received by the Holder in excess of the lowest effective annual rate that is so prohibited shall and shall be deemed to have comprised a credit to be applied to subsequent payments on account of interest, fees or other amounts due to the Holder at the adjusted rate.

EX-4.4

AMENDMENT TO THE DEBENTURE AGREEMENT

This amendment to the Debenture Agreement is made as of the _____day of October, 2005.

BETWEEN:

CARBIZ INC., a corporation existing under the laws of the Province of Ontario (the “Corporation”)

AND:

______________________________, an individual residing in the State of Florida, United States of America (the “Holder”)

                    WHEREAS, the Holder and Carbiz have entered into a Debenture Agreement (the “Original Debenture”) dated October 6, 2004;

                    AND WHEREAS, pursuant to the terms of the Original Debenture, the Maturity Date upon which the Principal Amount of the Debenture is to be repaid, if the common shares of Carbiz have not been listed and posted for trading on the United States Over-the-Counter Bulletin Board, is October 6, 2005;

                    AND WHEREAS, as it is unlikely that the common shares of Carbiz will be listed and posted for trading on the United States Over-the-Counter Bulletin Board prior to the Maturity Date, Carbiz and the Holder have agreed to extend the Maturity Date for a further six month period;

                    NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto agree as follows:

1.                 All capitalized terms herein shall have the meanings assigned in the Original Debenture unless otherwise stated;

2.                 Section 3.2 of the Original Debenture shall be deleted in its entirety and replaced with the following:

“Maturity. In the event that the Indebtedness has not been converted into Units as set out in Section 2.1 on or prior to the date that is one year and six months from the date hereof (the “Maturity Date”), then the Indebtedness and all accrued and unpaid interest shall be paid in cash on the Maturity Date and the Corporation’s obligations hereunder shall expire."

3.                 Except as set out herein, the Original Debenture shall otherwise remain unamended and in full force and effect.

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4.                 Each party shall do all such further acts and execute and deliver all such further deeds and documents as may be reasonably required in order to give full effect to the intent expressed in this Agreement.

5.                 This Agreement and any document required to be signed by any or all of the parties to this Agreement may be so executed in counterpart and a complete set of counterpart execution pages shall be provided to each party and delivery of such counterparts may be effected by means of telecopier.

CARBIZ INC.	Name:
Per:	Per:

EX-4.5

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUED UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND, IN THE CASE OF SUPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

NUMBER •

PRINCIPAL AMOUNT CDN$•

CARBIZ INC.

Incorporated under the Business Corporations Act (Ontario)

CONVERTIBLE DEBENTURE

For value received, Carbiz Inc. (hereinafter referred to as the "Corporation") hereby acknowledges itself indebted to • (the "Holder"), and promises to pay to the Holder the amount of CDN$• (the "Principal Amount"), paid to the Holder, in securities of the Corporation (subject to and in accordance with the terms, conditions and provisions of this Debenture), at the head office of the Corporation (7560 Commerce Court, Sarasota, Florida 34243), or at such other place or places within Florida as may be designated by the Corporation from time to time by notice in writing to the Holder, together with all costs and expenses that may become payable to the Holder hereunder. The Corporation will pay interest on the Principal Amount outstanding from time to time at a rate equal to five per cent (5%) per annum commencing on October•, 2005, such interest to be paid to the Holder in securities of the Corporation in accordance with the terms herein.

By its execution hereof, the Holder acknowledges and agrees to the terms and conditions hereof, including the terms and conditions set out in Schedule "A" hereto, which are incorporated herein by reference and form a part of this Debenture.

IN WITNESS WHEREOF, the Corporation and the Holder have caused this Debenture to be executed as of October •, 2005.

CARBIZ INC.

Per:

Full Legal Name of Holder (please print)

 (signature)

The Holder shall not trade this Debenture, except in accordance with applicable securities legislation.

SCHEDULE "A"

The following terms and conditions are applicable to the Convertible Debenture of Carbiz Inc., dated as of October •, 2005 made in favour of the Holder. ,

ARTICLE 1
INTERPRETATION

1.1           Definitions

Whenever used in this Debenture, unless there is something in the subject matter or context inconsistent therewith, the following words and terms shall have the indicated meanings, respectively:

"1933 Act" means the United States Securities Act of 1933, as amended;

"this Debenture", "the Debenture", "Debenture", "hereto", "herein", "hereby", "hereunder", "hereof" and similar expressions refer to this convertible debenture and not to any particular Article, Section, Subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto and every debenture issued in replacement hereof;

"business day" means a day that is not a Saturday or Sunday or a civic or statutory holiday at the place where the Corporation has its registered office;

"Class A Warrant" means a Class A common share purchase warrant of the Corporation, each Class A Warrant entitling the holder thereof to acquire a Share at a price of CDN$0.15 per Share for a period of five years from October •, 2005 ;

"Class B Warrant" means a Class B common share purchase warrant of the Corporation, each whole Class B Warrant entitling the holder thereof to acquire a Share at a price of CDN$0.15 per Share for a period of five years from October •, 2005 ;

"Conversion Date" means the date on which the Corporation obtains a listing on the OTCBB and delists from the Exchange;

"Conversion Rate" means the automatic conversion on the Conversion Date of the Indebtedness into Units at a price of CDN$0.15 per Unit;

"Corporation" means Carbiz Inc., a body corporate incorporated under the laws of the Province of Ontario, and includes any successor corporation of the Corporation;

"Exchange" means the TSX Venture Exchange;

"Holder" means the Person from time to time registered as the holder of this Debenture and includes any assignees or successors to or of the Holder;

"Interest Amount" means the accrued and unpaid interest as at the Conversion Date;

"Indebtedness" means the Principal Amount and the Interest Amount;

"Investors’ Rights Agreement" means the Investors’ Rights Agreement dated as of the date hereof, entered into among the Corporation and each of the investors under the Corporation’s offering of a maximum of US$2,000,000 principal amount of Debentures;

"OTCBB" means the United States Over the Counter Bulletin Board;

"Person" includes individuals, partnerships, corporations, companies and other business or legal entities;

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"Principal Amount" means the principal amount of this Debenture as set forth on the face page hereof;

"Shares" means common shares in the capital of the Corporation, as such shares exist at the close of business on the date of execution and delivery of this Debenture and shall include any and all shares resulting from any subdivision, redivision, reduction, combination or consolidation, merger, amalgamation or reorganization and any common shares of any company or corporation to which the Corporation may sell, lease or transfer or otherwise dispose of all or substantially all of its property and assets;

"Subscription Agreement" means the agreement, dated as of the date hereof, between the Corporation and the Holder, pursuant to which the Holder subscribed for and agreed to purchase the Debenture;

"Underlying Securities" means, collectively, the Shares comprising the Units, the Warrants and the Warrant Shares;

"Unit" means a unit of the Corporation, each Unit being comprised of one Share, one Class A Warrant and one-half of one Class B Warrant;

"Warrants" means, collectively, the Class A Warrants and the Class B Warrants; and

"Warrant Shares" means the Shares that are issuable upon exercise of the Warrants.

1.2            Interpretation

Whenever used in this Debenture, words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the neuter or the feminine genders and vice versa.

1.3            Headings, Etc.

The division of this Debenture into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Debenture.

1.4            Day Not a Business Day

In the event that any day on or before which any action is required to be taken hereunder is not a business day, then such action shall be required to be taken on or before the requisite time on the next succeeding day that is a business day.

1.5            Currency

All references to currency herein shall be to lawful money of the United States of America unless otherwise specifically noted.

ARTICLE 2
CONVERSION OF DEBENTURE

2.1            Conversion and Conversion Rate

(a)	Upon and subject to the terms and conditions set out in this Article 2, the Indebtedness shall automatically convert into Units at the Conversion Rate on the Conversion Date.
(b)	The Conversion Rate shall be subject to adjustment as provided in Section 2.2.

2.2            Exchange of Debenture

If, and whenever there is a merger, arrangement or amalgamation (statutory or otherwise) of the Corporation with or into another body corporate (any such event being called a "Reorganization"), and the Holder has not exercised its right of conversion in its entirety prior to the effective date or record date for such Reorganization, then the Holder

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shall exchange this Debenture for a post-Reorganization Debenture with substantially the same form and terms and the same Maturity Date as this Debenture.

2.3            No Requirement to Issue Fractional Shares

The Corporation shall not be required to issue fractional Shares upon the conversion of the Indebtedness into Shares pursuant to this Article 2. If any fractional interest in a Share would otherwise be deliverable upon the conversion of the Indebtedness, then the number of Shares to be issued shall be rounded down to the next whole number.

2.4            Cancellation of Converted Debenture

Upon conversion of the Indebtedness pursuant to this Article 2 , this Debenture shall be cancelled and shall be of no further force or effect.

2.5            U.S. Legends

Unless the Warrant Shares or Shares underlying the Units are appropriately registered under the 1933 Act and any applicable state securities laws, the Holder understands and acknowledges that all of the Underlying Securities are "restricted securities" as defined in Rule 144 under the 1933 Act, and upon the original issuance of the Underlying Securities, and until such time as it is no longer required under applicable requirements of the 1933 Act or applicable state securities laws, all certificates representing the Underlying Securities and all certificates issued in exchange therefore or in substitution thereof, shall bear the following legend:

"THE SECURITIES REPRESENTED HEREBY [AND THE SECURITIES ISSUED UPON EXERCISE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

provided, that if the Underlying Securities are being sold pursuant to Rule 144 of the 1933 Act, the legend may be removed by delivery to the Corporation’s registrar and transfer agent of an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the 1933 Act and applicable state securities laws.

2.6            Exercise of Warrants

The Holder acknowledges that any person who exercises a Warrant may be required to provide to the Corporation either:

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(a)

a written certification that the holder (i) acquired the Warrant directly from the Corporation pursuant to a written subscription agreement for the purchase of a Debenture; (ii) is exercising the Warrant, as applicable, solely for its own account and not on behalf of any other person; and (iii) was an "accredited investor", as such term is defined in Rule 501(a) of Regulation D under the 1933 Act, both on the date the Debenture was acquired from the Corporation and on the date of exercise of the Warrant; or

(b)

a written opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available for the issuance of the Warrant Shares.

Unless the Warrant Shares are appropriately registered under the 1933 Act and applicable state securities laws, the Holder understands that the certificates representing the Warrant Shares will bear a legend restricting transfer without registration under the 1933 Act and applicable state securities laws unless an exemption from registration is available.

ARTICLE 3
COVENANTS

3.1            Investors’ Rights Agreement

The Corporation hereby covenants and agrees with the Holder that it will abide by all the terms and conditions set forth in the Investors’ Rights Agreement.

3.2            Maturity

In the event the Indebtedness has not been converted into Units as set out in Section 2.1 on or prior to March 31, 2006 (the "Maturity Date"), then the Indebtedness and all accrued and unpaid interest shall be paid in cash on the Maturity Date and the Corporation's obligations hereunder shall expire.

3.3            Stamp Tax

The Corporation shall pay any stamp or other taxes or charges imposed by the State of Florida in respect of this Debenture.

ARTICLE 4
MISCELLANEOUS

4.1            Discharge

Upon conversion of the Debenture in accordance with the terms hereof, the Holder shall deliver up this Debenture to the Corporation and shall execute and deliver to the Corporation such deeds and other documents as the Corporation may reasonably require to evidence the release and discharge of this Debenture.

4.2            Severability

If any covenant or provision herein is determined to be illegal, unenforceable or prohibited by applicable law, such illegality, unenforceability or prohibition shall not affect or impair the validity of any other covenant or provision herein.

4.3            Laws of Alberta

This Debenture shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein and shall be treated in all respects as an Alberta contract. The Holder hereby irrevocably submits to the jurisdiction of the courts of the Province of Alberta in respect of any action, suit or any other proceeding arising out of or relating to this Debenture.

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4.4            Notices

All notices, reports or other communications required or permitted by this Debenture shall be in writing and either delivered by hand, mail or by any form of electronic communication by means of which a written or typed copy is produced at the address of the recipient and shall be effective on actual receipt, unless sent (i) by mail in which case it shall be deemed to have been received and be effective on the date that is three business days following the date of mailing, or (ii) by electronic means in which case it is effective on the business day, next following the date of transmission. Such notices, reports or other communications shall be addressed to the relevant party, as follows:

(a)	if to the Corporation:
	Carbiz Inc.
	7560 Commerce Court Sarasota, Florida 34243
	Attention: Carl Ritter
	Telecopier No.: (941) 953-3580
(b)	if to the Holder, at the address of the Holder as set forth on the face page of the Subscription Agreement.

4.5            Enurement

This Debenture shall enure to the benefit of the Holder, its successors and assigns and shall be binding upon the Corporation and its successors and assigns.

4.6            Time of the Essence

Time shall be of the essence of this Agreement.

4.7            Maximum Rate Permitted by Law

Under no circumstances shall the Holder be entitled to receive nor shall it in fact receive a payment or partial payment of interest, fees or other amounts under or in relation to this Debenture at a rate that is prohibited by applicable law. Accordingly, notwithstanding anything herein or elsewhere contained, if and to the extent that under any circumstances, the effective annual rate of "interest" (as defined in Section 347 of the Criminal Code of Canada) received or to be received by a Holder (determined in accordance with such section) on any amount of "credit advanced" (as defined in that section) pursuant to these presents or any agreement or arrangement collateral hereto entered into in consequence or implementation hereof would, but for this Section 4.7, be a rate that is prohibited by applicable law, then the effective annual rate of interest, as so determined, received or to be received by the Holder on such amount of credit advanced shall be and be deemed to be adjusted to a rate that is one whole percentage point less than the lowest effective annual rate of interest that is so prohibited (the "adjusted rate"); and, if the Holder has received a payment or partial payment which would, but for this Section 4.7, be so prohibited then any amount or amounts so received by the Holder in excess of the lowest effective annual rate that is so prohibited shall and shall be deemed to have comprised a credit to be applied to subsequent payments on account of interest, fees or other amounts due to the Holder at the adjusted rate.

EX-4.6

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUED UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND, IN THE CASE OF SUPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

THE WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS EXERCISED BY 4:30 P.M. (EASTERN STANDARD TIME), ON OCTOBER 6, 2009 OR SUCH EARLIER DATE AS PROVIDED HEREIN.

CLASS A WARRANT CERTIFICATE

CARBIZ INC.
(Incorporated under the laws of Ontario)

CLASS A WARRANT CERTIFICATE
NO. __________________________________       ______________________________CLASS A WARRANTS entitling the holder to acquire, subject to adjustment, one Common Share at a price of CDN$0.15 per Common Share for each Warrant represented hereby.

THIS IS TO CERTIFY THAT ________________________________________________________ (hereinafter referred to as the "holder") is entitled to acquire in the manner and subject to the restrictions and adjustments set forth herein, at any time and from time to time until 4:30 p.m. (Eastern Standard Time) (the "Time of Expiry") on _______________ (the "Expiry Date"), one fully paid and non-assessable Common Share ("Common Share") without nominal or par value of Carbiz Inc. (the "Corporation") as such shares were constituted on _______________ for each Warrant represented hereby, at a price of CDN$0.15 per Common Share.  

The right to acquire Common Shares may only be exercised by the holder within the time set forth above by:  

(a)	duly completing and executing, in the manner indicated, the Exercise Form;
(b)	surrendering this Warrant Certificate to the Corporation at its principal office at 7560 Commerce Court, Sarasota, Florida 34243, together with the duly completed Exercise Form; and

(c) remitting cash, certified cheque, bank draft or money order in lawful money of Canada, payable to or to the order of the Corporation at par where this Warrant Certificate is so surrendered, for the aggregate purchase price of the Common Shares so subscribed for.

These Warrants shall be deemed to be surrendered only upon personal delivery hereof or, if sent by mail or other means of transmission, upon actual receipt thereof by the Corporation at the principal office referred to above.

Upon exercise and surrender of these Warrants, and payment of the exercise price to the Corporation, the person or persons in whose name or names the Common Shares issuable upon exercise of the Warrants are to be issued shall be deemed for all purposes to be the holder or holders of record of such Common Shares and the Corporation covenants that it will cause a certificate or certificates representing such Common Shares to be delivered or mailed to the person or persons at the address or addresses specified in the Exercise Form.

Certificates for the Common Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein, within five (5) Business Days after the surrender of this Warrant Certificate and payment as aforesaid. In the event of a purchase of a number of Common Shares fewer than the number which can be purchased upon exercise of the Warrants represented hereby, the registered holder of this Warrant Certificate shall be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Common Shares not then purchased. Under no circumstances is the Corporation obliged to issue fractional Common Shares.

The exercise price (and the number of Common Shares purchasable upon exercise in the case of paragraphs (d) and (e) below) shall be subject to adjustment from time to time in the events and in the manner provided for below.

(a)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall:
	(i)	issue Common Shares to all or substantially all of the holders of outstanding Common Shares as a stock dividend (other than the issue of Common Shares to holders of outstanding Common Shares pursuant to the exercise of an option to receive dividends in the form of Common Shares in lieu of dividends paid in the ordinary course on the outstanding Common Shares);
	(ii)	make a distribution on its outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible in either case without the payment of further consideration, into Common Shares other than the issue of Common Shares (or securities exchangeable for or convertible into Common Shares) to holders of outstanding Common Shares pursuant to the exercise of an option to receive dividends in the form of Common Shares (or securities exchangeable for or convertible into Common Shares) in lieu of dividends paid in the ordinary course on the outstanding Common Shares);
	(iii)	subdivide its outstanding Common Shares into a greater number of shares; or

	(iv)		consolidate its outstanding Common Shares into a smaller number of shares;
	(any of such events in the foregoing clauses (i), (ii), (iii) and (iv) being hereinafter called     a “Common Share Reorganization”), then the exercise price shall be adjusted, effective     immediately after the record date at which the holders of outstanding Common Shares are determined for the purpose of the Common Share Reorganization, by multiplying the exercise price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such record date before giving effect to such Common Share Reorganization, and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganization (including, in the case where securities exchangeable for or convertible, in either case without the payment of further consideration, into Common Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date).
(b)	If and whenever at any time after the date hereof and prior to the Time of Expiry, the Corporation shall issue rights, options or warrants to all or substantially all of the holders of the outstanding Common Shares, pursuant to which such shareholders are entitled, directly or indirectly, during a period expiring not more than 45 days after the record date for such issue (the “Rights Period”), to subscribe for or purchase Common Shares at a price per share (or at an exchange or conversion price per share at the date of issue of such securities in the case of securities exchangeable for or convertible into Common Shares) less than 95% of the Current Market Price for the Common Shares on such record date (any of such events being hereinafter called a “Rights Offering”), then the exercise price shall be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the exercise price in effect immediately prior to the end of the Rights Period by a fraction:
	(i)	the numerator of which shall be the aggregate of:
		(A)	the number of Common Shares outstanding as of the record date for the Rights Offering, and
		(B)	a number determined by dividing: (i) either (1) the product of the number of Common Shares issued or subscribed for during the Rights Period upon the exercise of the rights, warrants, or options distributed under the Rights Offering and the price per share at which such Common Shares are acquired; or, as the case may be, (2) the product of the exchange or conversion price of the securities distributed under the Rights Offering and the number of Common Shares for or into which such securities were exchanged or converted during the Rights Period; by (ii) the Current Market Price of the Common Shares as of the record date for the Rights Offering, and
	(ii)	the denominator of which shall be the number of Common Shares outstanding immediately after the end of the Rights Period (after giving effect to the Rights

		Offering, including the number of Common Shares actually issued or subscribed for during the Rights Period upon exercise of the rights, warrants or options (or securities derived therefrom) distributed under the Rights Offering).
(c)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall fix a record date for the issue or the distribution to all or substantially all of the holders of outstanding Common Shares of: (i) shares of the Corporation of any class other than Common Shares (other than the issue of shares to holders of Common Shares pursuant to the exercise of an option to receive dividends in the form of such shares in lieu of dividends paid in the ordinary course on the Common Shares); (ii) rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares (excluding those exercisable for a period expiring not more than 45 days after such record date at a price per share (or having a conversion or exchange price per share) of not less than 95% of the Current Market Price); or (iii) evidences of indebtedness; and if such issuance or distribution does not constitute a dividend paid in the ordinary course, a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the exercise price shall be adjusted effective immediately after such record date to a price determined by multiplying the exercise price in effect on such record date by a fraction:
	(i)	the numerator of which shall be:
		(A)	the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date; less
		(B)	the fair market value, as determined by action by the directors (whose determination shall be conclusive), to the holders of the Common Shares of the shares, rights, options, warrants, or evidences of indebtedness issued or distributed in the Special Distribution; and
	(ii)	the denominator of which shall be the number of Common Shares outstanding on such record date multiplied by the Current Market Price of the Common Shares on such record date.
(d)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall determine to transfer all or a portion of its assets to a subsidiary and to distribute shares of such subsidiary to holders of Common Shares, holders of Warrants on the record date of such distribution shall be entitled to receive, upon exercise of their Warrants, in addition to Common Shares, such number of shares in the subsidiary equal to the number of shares they would have received had they exercised the Warrants prior to such record date and continued to hold the Common Shares received upon the exercise of the Warrants, on such record date.
(e)	If and whenever at any time after the date hereof and prior to the Time of Expiry there shall be a reclassification of the Common Shares at any time outstanding or a change of

	the outstanding Common Shares into other shares or into other securities (other than a Common Share Reorganization), or a consolidation, amalgamation or merger of the Corporation with or into any other corporation or other entity (other than a consolidation, amalgamation or merger which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other shares), or a transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or other entity (any of such events being herein called a “Capital Reorganization”), the holder, upon any exercise of its right hereunder to purchase Common Shares after the effective date of such Capital Reorganization, shall be entitled to receive, and shall accept, for the same aggregate consideration, in lieu of the number of Common Shares to which the holder was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property which the holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the holder had been the registered holder of the number of Common Shares that the holder was theretofore entitled to acquire upon such exercise. If determined appropriate by the board of directors of the Corporation, appropriate adjustments shall be made following any such Capital Reorganization in the application of the provisions set forth herein, with respect to the rights and interest thereafter of the holder and the adjustments to the exercise price and/or number or type of shares, to the end that such provisions shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any of these Warrants.
(f)	If and whenever at any time after the date hereof and prior to the Time of Expiry a Common Share Reorganization shall occur and any such event results in an adjustment in the exercise price, the number of Common Shares purchasable pursuant to each of these Warrants shall be adjusted contemporaneously with the adjustment of the exercise price, by multiplying the number of Common Shares theretofore purchasable on the exercise thereof by a fraction the numerator of which shall be the exercise price in effect immediately prior to such adjustment and the denominator of which shall be the exercise price resulting from such adjustment.
(g)	The adjustments to the exercise price and number or type of shares of the Corporation provided for herein are cumulative and such adjustments shall be made successively whenever any of the relevant events referred to herein shall occur. For purposes of the adjustments set forth above, the following provisions shall apply:
	(i)	no adjustment in the exercise price shall be required unless such adjustment would result in a change of at least 1% in the prevailing exercise price and no adjustment shall be made pursuant to clause (e) in the number of Common Shares purchasable upon exercise of any of these Warrants unless a corresponding adjustment to the exercise price is required hereunder; provided, however, that any adjustments which, except for the provisions of this clause (g)(i) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment;

(ii)	if a dispute shall at any time arise with respect to adjustments provided for herein, such dispute shall be conclusively determined by the Corporation’s auditors (except in cases where any determination relating to adjustments is to be made by the board of directors of the Corporation), or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action of the directors and any such determination shall be binding upon the Corporation and the holder;
(iii)	in case the Corporation, after the date hereof and prior to the Time of Expiry, shall take any action affecting the outstanding Common Shares, other than an action described herein, which in the opinion of the board of directors of the Corporation would materially affect the rights of the holder, the exercise price or the number of Common Shares purchasable upon exercise of these Warrants (or both, as the case may be) shall be adjusted in such manner, if any, and at such time, as the directors in their sole discretion may determine to be equitable in the circumstances;
(iv)	if the Corporation shall set a record date to determine holders of outstanding Common Shares entitled to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the exercise price or the number of Common Shares purchasable upon exercise of any of these Warrants shall be required by reason of the setting of such record date;
(v)	“Current Market Price” of the Common Shares at any date means a price per share equal to the weighted average price at which the Common Shares have traded in board lots on the principal stock exchange on which the Common Shares are then traded, or if the Common Shares are not then listed on any stock exchange, on the over-the-counter market, during the period of 20 consecutive trading days immediately before such date;
(vi)	in the absence of a resolution of the directors fixing a record date for a Rights Offering or Special Distribution, the Corporation shall be deemed to have fixed as the record date therefor the date on which the Rights Offering or Special Distribution is effected;
(vii)	as a condition precedent to the taking of any action which would require any adjustment in any attribute of these Warrants, including the exercise price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any corporate action which may, in the opinion of counsel, be necessary in order that the Corporation have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all shares or other securities that the holder is entitled to receive on the total exercise hereof in accordance with the provisions hereof; and

	(viii)	“dividends paid in the ordinary course” means cash dividends declared payable on the Common Shares in any fiscal year of the Corporation to the extent that such cash dividends do not exceed, in the aggregate, the greatest of: (i) 200% of the aggregate amount of cash dividends declared payable by the Corporation on the outstanding Common Shares in its immediately preceding fiscal year; (ii) 300% of the arithmetic mean of the aggregate amounts of cash dividends declared payable by the Corporation on the outstanding Common Shares in its three immediately preceding fiscal years; and (iii) 100% of the aggregate consolidated net income of the Corporation, before extraordinary items, for its immediately preceding fiscal year.
(h)	In any case in which the terms of these Warrants shall require that an adjustment become effective as of a particular time, the Corporation may defer, until such time, issuing to the holder in respect of any Warrants exercised after the record date for the event giving rise to the adjustment and before such time the kind and amount of shares, other securities or property to which the holder would be entitled upon such exercise by reason of the relevant adjustment, provided, however that the Corporation shall deliver to the holder an appropriate instrument evidencing such holder’s right, upon the occurrence of any event requiring the adjustment, to the relevant adjustment.
(i)	At least 10 days prior to the effective date or record date, as the case may be, of any event which requires or might require an adjustment in any attribute of these Warrants, including the exercise price and the number of Common Shares that are purchasable upon the exercise thereof, the Corporation shall give notice to the holder of the particulars of such event and, if determinable, the required adjustment. In case any adjustment is not then determinable, the Corporation shall promptly after such adjustment is determinable give notice to the holder of the adjustment.

On the happening of each and every event referred to above that gives rise to an adjustment, the applicable provisions of these Warrants shall, ipso facto, be deemed to be amended accordingly and the Corporation shall take all necessary action so as to comply with such provisions as so amended.

The registered holder of this Warrant Certificate may, at any time prior to the Expiry Date, upon surrender of this Warrant Certificate to the Corporation at the principal office referred to above, exchange this Warrant Certificate for other Warrant Certificates entitling the holder to acquire, in the aggregate, the same number of Common Shares as may be acquired under this Warrant Certificate.

The holding of the Warrants evidenced by this Warrant Certificate shall not constitute the holder hereof a shareholder of the Corporation or entitle the holder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate.

The Corporation may at any time and from time to time, and shall on receipt of a written request signed in one or more counterparts by Warrant holders entitled to acquire in the aggregate not less than 25% of the aggregate number of Common Shares which could be acquired pursuant to all Warrants then unexercised and outstanding (a “Warrantholders' Request”), convene a meeting

of the Warrant holders. Every such meeting shall be held in the City of Calgary or at such other place as may be approved or determined by the Corporation.

At least twenty-one (21) business days' prior notice of any meeting of Warrant holders shall be given to the Warrant holders. Such notice shall state the time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be transacted thereat and shall contain such information as is reasonably necessary to enable the Warrant holders to make a reasoned decision on the matter, but it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions hereof.

An individual (who need not be a Warrant holder) designated in writing by the Corporation shall be chairman of the meeting and if no individual is so designated, or if the individual so designated is not present within fifteen (15) minutes from the time fixed for the holding of the meeting, the Warrant holders present in person or by proxy shall choose some individual present to be chairman.

Subject to the provisions hereof, at any meeting of the Warrant holders a quorum shall consist of Warrant holders present in person or by proxy and entitled to purchase at least 25% of the aggregate number of Common Shares which could be acquired pursuant to all the then outstanding Warrants, provided that at least two persons entitled to vote thereat are personally present. If a quorum of the Warrant holders shall not be present within thirty (30) minutes from the time fixed for holding any meeting, the meeting, if summoned by the Warrant holders or on a Warrantholders' Request, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a business day, in which case it shall be adjourned to the next following business day) at the same time and place and no notice of the adjournment need be given. Any business may be brought before or dealt with at an adjourned meeting which might have been dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless a quorum be present at the commencement of business. At the adjourned meeting the Warrant holders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened, notwithstanding that they may not be entitled to acquire at least 25% of the aggregate number of Common Shares which may be acquired pursuant to all then outstanding Warrants.

The chairman of any meeting at which a quorum of the Warrant holders is present may, with the consent of the meeting, adjourn any such meeting, and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on an extraordinary resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.

On every extraordinary resolution, and on any other question submitted to a meeting and after a vote by show of hands when demanded by the chairman or by one or more of the Warrant

holders, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by extraordinary resolution shall be decided by a majority of the votes cast on the poll.

On a show of hands, every person who is present and entitled to vote, whether as a Warrant holder or as proxy for one or more absent Warrant holders, or both, shall have one vote. On a poll each Warrant holder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each whole Common Share which he is entitled to acquire pursuant to the Warrant or Warrants then held or represented by it. A proxy need not be a Warrant holder. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Warrants, if any, held or represented by him.

In addition to all other powers conferred upon them by any other provisions hereof or by law, the Warrant holders at a meeting shall have the power, exercisable from time to time by extraordinary resolution:

(a)	to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Warrant holders against the Corporation whether such rights arise under this Warrant Certificate or otherwise;
(b)	to amend, alter or repeal any extraordinary resolution previously passed or sanctioned by the Warrant holders;
(c)	to enforce any of the rights of the Warrant holders in any manner specified in such extraordinary resolution or to refrain from enforcing any such covenant or right;
(d)	to waive any default on the part of the Corporation in complying with any provisions of this Warrant Certificate either unconditionally or upon any conditions specified in such extraordinary resolution;
(e)	to restrain any Warrant holder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Warrant Certificate or to enforce any of the rights of the Warrant holders;
(f)	to direct any Warrant holder who, as such, has brought any suit, action or proceeding to stay or to discontinue or otherwise to deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrant holder in connection therewith;
(g)	to assent to any change in or omission from the provisions contained in this Warrant Certificate or any ancillary or supplemental instrument which may be agreed to by the Corporation;
(h)	to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation; and

(i) to sanction any scheme for the reconstruction or reorganization of the Corporation or for the consolidation, amalgamation or merger of the Corporation with any other corporation or for the sale, leasing, transfer or other disposition of all or substantially all the property and assets of the Corporation.

The expression "extraordinary resolution" when used in this Warrant Certificate means, subject as hereinafter provided, a resolution proposed at a meeting of Warrant holders duly convened for that purpose and held in accordance with the provisions hereof at which there are present in person or by proxy Warrant holders entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants and passed by the affirmative votes of Warrant holders entitled to acquire not less than 66 2/3% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants represented at the meeting and voted on the poll upon such resolution.

If, at the meeting at which an extraordinary resolution is to be considered, Warrant holders entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy within thirty (30) minutes after the time appointed for the meeting, then the meeting, if convened by Warrant holders or on a Warrantholders' Request, shall be dissolved; but in any other case it shall stand adjourned to such day, being not less than fifteen (15) or more than sixty (60) days later, and to such place and time as may be appointed by the chairman. Not less than five (5) business days' prior notice shall be given of the time and place of such adjourned meeting. Such notice shall state that at the adjourned meeting the Warrant holders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the purposes for which the meeting was originally called or any other particulars. At the adjourned meeting the Warrant holders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided herein shall be an extraordinary resolution within the meaning of this Warrant Certificate notwithstanding that Warrant holders entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting.

Votes on an extraordinary resolution shall always be given on a poll and no demand for a poll on an extraordinary resolution shall be necessary.

All actions which may be taken and all powers that may be exercised by the Warrant holders at a meeting held as provided herein may also be taken and exercised by Warrant holders entitled to acquire at least 66 2/3% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants by an instrument in writing signed in one or more counterparts by such Warrant holders in person or by attorney duly appointed in writing, and the expression "extraordinary resolution" when used in this Warrant Certificate shall include an instrument so signed.

Any one or more of the powers or any combination of the powers in this Warrant Certificate stated to be exercisable by the Warrant holders by extraordinary resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time shall not be deemed to exhaust the right of the Warrant

holders to exercise such power or powers or combination of powers then or thereafter from time to time.

Minutes of all resolutions and proceedings at every meeting of Warrant holders shall be made and duly entered in books of the Corporation, and any such minutes as aforesaid, if signed by the chairman or the secretary of the meeting at which such resolutions were passed or proceedings had shall be prima facie evidence of the matters therein stated and, until the contrary if proved, every such meeting in respect of the proceedings of which minutes shall have been made shall be deemed to have been duly convened and held, and all resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and taken.

Every resolution and every extraordinary resolution passed in accordance with the provisions hereof at a meeting of Warrant holders shall be binding upon all the Warrant holders, whether present at or absent from such meeting, and every instrument in writing signed by Warrant holders in accordance with the provisions hereof shall be binding upon all the Warrant holders, whether signatories thereto or not, and each and every Warrant holder shall be bound to give effect accordingly to every such resolution and instrument in writing.

In determining whether Warrant holders holding Warrant Certificates evidencing the entitlement to acquire the required number of Common Shares are present at a meeting of Warrant holders for the purpose of determining a quorum or have concurred in any consent, waiver, extraordinary resolution, Warrantholders' Request or other action under this Warrant Certificate, Warrants owned legally or beneficially by the Corporation or any subsidiary of the Corporation shall be disregarded.

The Warrants evidenced by this Warrant Certificate may be transferred on the register kept at the offices of the Corporation by the registered holder hereof or its legal representative or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Corporation, upon compliance with the conditions prescribed herein (including compliance with applicable securities laws), payment of any applicable fees or charges and upon compliance with such reasonable requirements as the Corporation may prescribe and, upon any purported assignment being made in contravention of either the terms hereof or applicable securities law, this Warrant Certificate and the Warrants evidenced hereby shall become null and void and of no further force or effect.

If these Warrants are stolen, lost, mutilated or destroyed the Corporation may, on such reasonable terms as to indemnity or otherwise as it may impose, deliver replacement Warrants of like denomination, tenor and date as the Warrants so stolen, lost, mutilated or destroyed.

The Warrants represented hereby and securities which may be acquired hereunder have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or applicable state securities laws, and the Warrants evidenced by this Warrant Certificate may not be exercised unless the Common Shares issuable upon exercise of the Warrants are appropriately registered under the U.S. Securities Act and any applicable state securities laws or the Warrants are exercised pursuant to an applicable exemption from registration under the U.S. Securities Act and applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing to such effect in form and substance satisfactory to the

Corporation; provided that an “accredited investor”, as defined in Rule 501(a) of Regulation D under the U.S. Securities Act (an “Accredited Investor”), that acquired the Warrants directly from the Corporation upon the conversion of a Debenture of the Corporation that was originally purchased pursuant to a written subscription agreement between the Corporation and such Accredited Investor in the Corporation’s private placement of Debentures in the United States, will not be required to deliver an opinion of counsel in connection with the exercise of those Warrants.

Unless the Common Shares issuable upon exercise of these Warrants are appropriately registered under the U.S. Securities Act and any applicable state securities laws, all Common Shares issuable upon exercise of these Warrants with Box A or B checked on the Exercise Form, and all certificates issued in exchange therefor or in substitution thereof, shall bear the following legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA."

provided, that if any of the Common Shares issuable upon exercise of these Warrants are being sold pursuant to Rule 144 of the U.S. Securities Act, the legend may be removed by delivery to the Corporation’s registrar and transfer agent of an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act and state securities laws.

The Corporation represents and warrants that it is duly authorized to create and deliver these Warrants and to issue the Common Shares that may be issued hereunder and that this Warrant Certificate, when signed by the Corporation as herein provided, will be a valid obligation of the Corporation enforceable against the Corporation in accordance with the provisions hereof. The Corporation hereby covenants and agrees that, subject to the provisions hereof, it will cause the Common Shares from time to time duly subscribed for and purchased in the manner herein

provided, and the certificates evidencing such Common Shares, to be duly issued and delivered, and that at all times up to and including the Time of Expiry, while these Warrants remain outstanding, it shall have sufficient authorized capital to satisfy its obligations hereunder should the holder determine to exercise the right in respect of all the Common Shares for the time being purchasable pursuant to these Warrants. Certificates for Common Shares issued upon the exercise of these Warrants may bear such legend or legends as to transfer as may be considered necessary by the Corporation and its counsel, acting reasonably. All Common Shares issued upon the exercise of the right of purchase herein provided (upon payment therefor of the amount at which such Common Shares may at the time be purchased pursuant to the provisions hereof), shall be issued as fully paid and non-assessable Common Shares and the holders thereof shall not be liable to the Corporation or its creditors in respect thereof.

Time shall be of the essence hereof.

These Warrants shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein.

This Warrant Certificate shall not be valid for any purpose whatever unless and until it has been executed by the Corporation.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer on this ____ day of __________________, 200____.

CARBIZ INC.

Per:

TRANSFER OF WARRANTS

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to

(full name of Transferee) (address of Transferee)

_____________________Warrants of Carbiz Inc. (the “Corporation”), registered in the name of the undersigned on the records maintained by the Corporation and represented by the attached Warrant Certificate.

DATED the _____day of ___________, _____.

Signature Guaranteed (Signature of Warrant holder)

Instructions:

1.	The Signature of the Warrant holder must be the signature of the person whose name appears on the face page of this Warrant Certificate.
2.	If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.
3.	The signature on the Transfer Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange.

EXERCISE FORM

TO:     Carbiz Inc.

The undersigned hereby exercises the right pursuant to the Warrants represented by this Warrant Certificate to acquire _________________ Common Shares of Carbiz Inc. (the "Corporation"), as constituted on October 6, 2004 (or such number of other securities or property to which such Warrants entitle the undersigned in lieu thereof or in addition thereto under the terms and conditions referred to in this Warrant Certificate), in accordance with and subject to the terms and conditions referred to in this Warrant Certificate.

The Common Shares (or other securities or property) are to be issued as follows:

Name:

Address in full:

Number of Common Shares:

Social Insurance Number:

Note: The undersigned holder may not be required to complete this section of the Exercise Form. The Corporation recommends that the undersigned holder contact the Corporation in advance of any exercise of Warrants to determine whether this section applies and must be completed by the undersigned holder.

The undersigned hereby represents, warrants and certifies as follows (only one of the following must be checked):

A.	¨	The undersigned holder (i) acquired the Warrants directly from the Corporation upon the conversion of Debentures of the Corporation that were originally purchased pursuant to a written subscription agreement between the undersigned and the Corporation; (ii) is exercising the Warrants solely for its own account and not on behalf of any other person; and (iii) was an “accredited investor”, as that term is defined in Regulation D under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), both on the date the Debentures were purchased from the Corporation and on the date of exercise of the Warrants.
B.	¨	The undersigned holder has delivered to the Corporation an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issuance of the Common Shares issuable upon exercise of the Warrants.

- 2 -

The undersigned holder understands that the certificates representing the Common Shares will bear a legend restricting transfer without registration under the U.S. Securities Act and applicable state securities laws unless an exemption from registration is available.

Note: If further nominees intended, please attach (and initial) a schedule giving these particulars.

DATED this _____day of __________, _____.

Signature Guaranteed (Signature of Warrant holder)

(Print full name)

(Print full address)

(Social Insurance Number)

Instructions:

1.	The registered holder may exercise its right to receive Common Shares by completing this Exercise Form and surrendering this Warrant Certificate representing the Warrants being exercised to the Corporation at its principal office at 7560 Commerce Court, Sarasota, Florida 34243. Certificates for Common Shares will be delivered or mailed as soon as practicable, and in any event within five business days, after the exercise of the Warrants.
2.	If the Exercise Form indicates that Common Shares are to be issued to a person or persons other than the registered holder of the Warrant Certificate, the signature of such holder on the Exercise Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange. Common Shares will only be transferable in accordance with applicable laws.
3.	If the Exercise Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.
4.	If Box B is checked, any opinion tendered must be from counsel of recognized standing in form and substance satisfactory to the Corporation. Holders planning to deliver an opinion of counsel in connection with the exercise of Warrants should contact the Corporation in advance to determine whether any opinions to be tendered will be acceptable to the Corporation.

EX-4.7

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUED UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND, IN THE CASE OF SUPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

THE WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS EXERCISED BY 4:30 P.M. (EASTERN STANDARD TIME), ON OCTOBER 6, 2009 OR SUCH EARLIER DATE AS PROVIDED HEREIN.

CLASS B WARRANT CERTIFICATE

CARBIZ INC.
(Incorporated under the laws of Ontario)

CLASS B WARRANT CERTIFICATE
NO. _______________________________________       __________________________ CLASS B WARRANTS entitling the holder to acquire, subject to adjustment, one Common Share at a price of CDN$0.15 per Common Share for each Warrant represented hereby.

THIS IS TO CERTIFY THAT _______________________________(hereinafter referred to as the "holder") is entitled to acquire in the manner and subject to the restrictions and adjustments set forth herein, at any time and from time to time until 4:30 p.m. (Eastern Standard Time) (the "Time of Expiry") on _____________ (the "Expiry Date"), one fully paid and non-assessable Common Share ("Common Share") without nominal or par value of Carbiz Inc. (the "Corporation") as such shares were constituted on _____________ for each Warrant represented hereby, at a price of CDN$0.15 per Common Share.

The right to acquire Common Shares may only be exercised by the holder within the time set forth above by:

(a)	duly completing and executing, in the manner indicated, the Exercise Form;
(b)	surrendering this Warrant Certificate to the Corporation at its principal office at 7560 Commerce Court, Sarasota, Florida 34243, together with the duly completed Exercise Form; and

(c) remitting cash, certified cheque, bank draft or money order in lawful money of Canada, payable to or to the order of the Corporation at par where this Warrant Certificate is so surrendered, for the aggregate purchase price of the Common Shares so subscribed for.

These Warrants shall be deemed to be surrendered only upon personal delivery hereof or, if sent by mail or other means of transmission, upon actual receipt thereof by the Corporation at the principal office referred to above.

Upon exercise and surrender of these Warrants, and payment of the exercise price to the Corporation, the person or persons in whose name or names the Common Shares issuable upon exercise of the Warrants are to be issued shall be deemed for all purposes to be the holder or holders of record of such Common Shares and the Corporation covenants that it will cause a certificate or certificates representing such Common Shares to be delivered or mailed to the person or persons at the address or addresses specified in the Exercise Form.

Certificates for the Common Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein, within five (5) Business Days after the surrender of this Warrant Certificate and payment as aforesaid. In the event of a purchase of a number of Common Shares fewer than the number which can be purchased upon exercise of the Warrants represented hereby, the registered holder of this Warrant Certificate shall be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Common Shares not then purchased. Under no circumstances is the Corporation obliged to issue fractional Common Shares.

The exercise price (and the number of Common Shares purchasable upon exercise in the case of paragraphs (d) and (e) below) shall be subject to adjustment from time to time in the events and in the manner provided for below.

(a)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall:
	(i)	issue Common Shares to all or substantially all of the holders of outstanding Common Shares as a stock dividend (other than the issue of Common Shares to holders of outstanding Common Shares pursuant to the exercise of an option to receive dividends in the form of Common Shares in lieu of dividends paid in the ordinary course on the outstanding Common Shares);
	(ii)	make a distribution on its outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible in either case without the payment of further consideration, into Common Shares other than the issue of Common Shares (or securities exchangeable for or convertible into Common Shares) to holders of outstanding Common Shares pursuant to the exercise of an option to receive dividends in the form of Common Shares (or securities exchangeable for or convertible into Common Shares) in lieu of dividends paid in the ordinary course on the outstanding Common Shares);
	(iii)	subdivide its outstanding Common Shares into a greater number of shares; or

	(iv)	consolidate its outstanding Common Shares into a smaller number of shares;
	(any of such events in the foregoing clauses (i), (ii), (iii) and (iv) being hereinafter called     a “Common Share Reorganization”), then the exercise price shall be adjusted, effective     immediately after the record date at which the holders of outstanding Common Shares are determined for the purpose of the Common Share Reorganization, by multiplying the exercise price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such record date before giving effect to such Common Share Reorganization, and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganization (including, in the case where securities exchangeable for or convertible, in either case without the payment of further consideration, into Common Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date).
(b)	If and whenever at any time after the date hereof and prior to the Time of Expiry, the Corporation shall issue rights, options or warrants to all or substantially all of the holders of the outstanding Common Shares, pursuant to which such shareholders are entitled, directly or indirectly, during a period expiring not more than 45 days after the record date for such issue (the “Rights Period”), to subscribe for or purchase Common Shares at a price per share (or at an exchange or conversion price per share at the date of issue of such securities in the case of securities exchangeable for or convertible into Common Shares) less than 95% of the Current Market Price for the Common Shares on such record date (any of such events being hereinafter called a “Rights Offering”), then the exercise price shall be adjusted effective immediately after the end of the Rights Period to     a price determined by multiplying the exercise price in effect immediately prior to the     end of the Rights Period by a fraction:
	(i)	the numerator of which shall be the aggregate of:
		(A)	the number of Common Shares outstanding as of the record date for the Rights Offering, and
		(B)	a number determined by dividing: (i) either (1) the product of the number of Common Shares issued or subscribed for during the Rights Period upon the exercise of the rights, warrants, or options distributed under the Rights Offering and the price per share at which such Common Shares are acquired; or, as the case may be, (2) the product of the exchange or conversion price of the securities distributed under the Rights Offering and the number of Common Shares for or into which such securities were exchanged or converted during the Rights Period; by (ii) the Current Market Price of the Common Shares as of the record date for the Rights Offering, and
	(ii)	the denominator of which shall be the number of Common Shares outstanding immediately after the end of the Rights Period (after giving effect to the Rights

		Offering, including the number of Common Shares actually issued or subscribed for during the Rights Period upon exercise of the rights, warrants or options (or securities derived therefrom) distributed under the Rights Offering).
(c)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall fix a record date for the issue or the distribution to all or substantially all of the holders of outstanding Common Shares of: (i) shares of the Corporation of any class other than Common Shares (other than the issue of shares to holders of Common Shares pursuant to the exercise of an option to receive dividends in the form of such shares in lieu of dividends paid in the ordinary course on the Common Shares); (ii) rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares (excluding those exercisable for a period expiring not more than 45 days after such record date at a price per share (or having a conversion or exchange price per share) of not less than 95% of the Current Market Price); or (iii) evidences of indebtedness; and if such issuance or distribution does not constitute a dividend paid in the ordinary course, a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the exercise price shall be adjusted effective immediately after such record date to a price determined by multiplying the exercise price in effect on such record date by a fraction:
	(i)	the numerator of which shall be:
		(A)	the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date; less
		(B)	the fair market value, as determined by action by the directors (whose determination shall be conclusive), to the holders of the Common Shares of the shares, rights, options, warrants, or evidences of indebtedness issued or distributed in the Special Distribution; and
	(ii)	the denominator of which shall be the number of Common Shares outstanding on such record date multiplied by the Current Market Price of the Common Shares on such record date.
(d)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall determine to transfer all or a portion of its assets to a subsidiary and to distribute shares of such subsidiary to holders of Common Shares, holders of Warrants on the record date of such distribution shall be entitled to receive, upon exercise of their Warrants, in addition to Common Shares, such number of shares in the subsidiary equal to the number of shares they would have received had they exercised the Warrants prior to such record date and continued to hold the Common Shares received upon the exercise of the Warrants, on such record date.
(e)	If and whenever at any time after the date hereof and prior to the Time of Expiry there shall be a reclassification of the Common Shares at any time outstanding or a change of

	the outstanding Common Shares into other shares or into other securities (other than a Common Share Reorganization), or a consolidation, amalgamation or merger of the Corporation with or into any other corporation or other entity (other than a consolidation, amalgamation or merger which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other shares), or a transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or other entity (any of such events being herein called a “Capital Reorganization”), the holder, upon any exercise of its right hereunder to purchase Common Shares after the effective date of such Capital Reorganization, shall be entitled to receive, and shall accept, for the same aggregate consideration, in lieu of the number of Common Shares to which the holder was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property which the holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the holder had been the registered holder of the number of Common Shares that the holder was theretofore entitled to acquire upon such exercise. If determined appropriate by the board of directors of the Corporation, appropriate adjustments shall be made following any such Capital Reorganization in the application of the provisions set forth herein, with respect to the rights and interest thereafter of the holder and the adjustments to the exercise price and/or number or type of shares, to the end that such provisions shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any of these Warrants.
(f)	If and whenever at any time after the date hereof and prior to the Time of Expiry a Common Share Reorganization shall occur and any such event results in an adjustment in the exercise price, the number of Common Shares purchasable pursuant to each of these Warrants shall be adjusted contemporaneously with the adjustment of the exercise price, by multiplying the number of Common Shares theretofore purchasable on the exercise thereof by a fraction the numerator of which shall be the exercise price in effect immediately prior to such adjustment and the denominator of which shall be the exercise price resulting from such adjustment.
(g)	The adjustments to the exercise price and number or type of shares of the Corporation provided for herein are cumulative and such adjustments shall be made successively whenever any of the relevant events referred to herein shall occur. For purposes of the adjustments set forth above, the following provisions shall apply:
	(i)	no adjustment in the exercise price shall be required unless such adjustment would result in a change of at least 1% in the prevailing exercise price and no adjustment shall be made pursuant to clause (e) in the number of Common Shares purchasable upon exercise of any of these Warrants unless a corresponding adjustment to the exercise price is required hereunder; provided, however, that any adjustments which, except for the provisions of this clause (g)(i) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment;

(ii)	if a dispute shall at any time arise with respect to adjustments provided for herein, such dispute shall be conclusively determined by the Corporation’s auditors (except in cases where any determination relating to adjustments is to be made by the board of directors of the Corporation), or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action of the directors and any such determination shall be binding upon the Corporation and the holder;
(iii)	in case the Corporation, after the date hereof and prior to the Time of Expiry, shall take any action affecting the outstanding Common Shares, other than an action described herein, which in the opinion of the board of directors of the Corporation would materially affect the rights of the holder, the exercise price or the number of Common Shares purchasable upon exercise of these Warrants (or both, as the case may be) shall be adjusted in such manner, if any, and at such time, as the directors in their sole discretion may determine to be equitable in the circumstances;
(iv)	if the Corporation shall set a record date to determine holders of outstanding Common Shares entitled to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the exercise price or the number of Common Shares purchasable upon exercise of any of these Warrants shall be required by reason of the setting of such record date;
(v)	“Current Market Price” of the Common Shares at any date means a price per share equal to the weighted average price at which the Common Shares have traded in board lots on the principal stock exchange on which the Common Shares are then traded, or if the Common Shares are not then listed on any stock exchange, on the over-the-counter market, during the period of 20 consecutive trading days immediately before such date;
(vi)	in the absence of a resolution of the directors fixing a record date for a Rights Offering or Special Distribution, the Corporation shall be deemed to have fixed as the record date therefor the date on which the Rights Offering or Special Distribution is effected;
(vii)	as a condition precedent to the taking of any action which would require any adjustment in any attribute of these Warrants, including the exercise price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any corporate action which may, in the opinion of counsel, be necessary in order that the Corporation have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all shares or other securities that the holder is entitled to receive on the total exercise hereof in accordance with the provisions hereof; and

	(viii)	“dividends paid in the ordinary course” means cash dividends declared payable on the Common Shares in any fiscal year of the Corporation to the extent that such cash dividends do not exceed, in the aggregate, the greatest of: (i) 200% of the aggregate amount of cash dividends declared payable by the Corporation on the outstanding Common Shares in its immediately preceding fiscal year; (ii) 300% of the arithmetic mean of the aggregate amounts of cash dividends declared payable by the Corporation on the outstanding Common Shares in its three immediately preceding fiscal years; and (iii) 100% of the aggregate consolidated net income of the Corporation, before extraordinary items, for its immediately preceding fiscal year.
(h)	In any case in which the terms of these Warrants shall require that an adjustment become effective as of a particular time, the Corporation may defer, until such time, issuing to the holder in respect of any Warrants exercised after the record date for the event giving rise to the adjustment and before such time the kind and amount of shares, other securities or property to which the holder would be entitled upon such exercise by reason of the relevant adjustment, provided, however that the Corporation shall deliver to the holder an appropriate instrument evidencing such holder’s right, upon the occurrence of any event requiring the adjustment, to the relevant adjustment.
(i)	At least 10 days prior to the effective date or record date, as the case may be, of any event which requires or might require an adjustment in any attribute of these Warrants, including the exercise price and the number of Common Shares that are purchasable upon the exercise thereof, the Corporation shall give notice to the holder of the particulars of such event and, if determinable, the required adjustment. In case any adjustment is not then determinable, the Corporation shall promptly after such adjustment is determinable give notice to the holder of the adjustment.

On the happening of each and every event referred to above that gives rise to an adjustment, the applicable provisions of these Warrants shall, ipso facto, be deemed to be amended accordingly and the Corporation shall take all necessary action so as to comply with such provisions as so amended.

The registered holder of this Warrant Certificate may, at any time prior to the Expiry Date, upon surrender of this Warrant Certificate to the Corporation at the principal office referred to above, exchange this Warrant Certificate for other Warrant Certificates entitling the holder to acquire, in the aggregate, the same number of Common Shares as may be acquired under this Warrant Certificate.

The holding of the Warrants evidenced by this Warrant Certificate shall not constitute the holder hereof a shareholder of the Corporation or entitle the holder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate.

The Corporation may at any time and from time to time, and shall on receipt of a written request signed in one or more counterparts by Warrant holders entitled to acquire in the aggregate not less than 25% of the aggregate number of Common Shares which could be acquired pursuant to all Warrants then unexercised and outstanding (a “Warrantholders' Request”), convene a meeting

of the Warrant holders. Every such meeting shall be held in the City of Calgary or at such other place as may be approved or determined by the Corporation.

At least twenty-one (21) business days' prior notice of any meeting of Warrant holders shall be given to the Warrant holders. Such notice shall state the time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be transacted thereat and shall contain such information as is reasonably necessary to enable the Warrant holders to make a reasoned decision on the matter, but it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions hereof.

An individual (who need not be a Warrant holder) designated in writing by the Corporation shall be chairman of the meeting and if no individual is so designated, or if the individual so designated is not present within fifteen (15) minutes from the time fixed for the holding of the meeting, the Warrant holders present in person or by proxy shall choose some individual present to be chairman.

Subject to the provisions hereof, at any meeting of the Warrant holders a quorum shall consist of Warrant holders present in person or by proxy and entitled to purchase at least 25% of the aggregate number of Common Shares which could be acquired pursuant to all the then outstanding Warrants, provided that at least two persons entitled to vote thereat are personally present. If a quorum of the Warrant holders shall not be present within thirty (30) minutes from the time fixed for holding any meeting, the meeting, if summoned by the Warrant holders or on a Warrantholders' Request, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a business day, in which case it shall be adjourned to the next following business day) at the same time and place and no notice of the adjournment need be given. Any business may be brought before or dealt with at an adjourned meeting which might have been dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless a quorum be present at the commencement of business. At the adjourned meeting the Warrant holders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened, notwithstanding that they may not be entitled to acquire at least 25% of the aggregate number of Common Shares which may be acquired pursuant to all then outstanding Warrants.

The chairman of any meeting at which a quorum of the Warrant holders is present may, with the consent of the meeting, adjourn any such meeting, and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on an extraordinary resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.

On every extraordinary resolution, and on any other question submitted to a meeting and after a vote by show of hands when demanded by the chairman or by one or more of the Warrant

holders, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by extraordinary resolution shall be decided by a majority of the votes cast on the poll.

On a show of hands, every person who is present and entitled to vote, whether as a Warrant holder or as proxy for one or more absent Warrant holders, or both, shall have one vote. On a poll each Warrant holder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each whole Common Share which he is entitled to acquire pursuant to the Warrant or Warrants then held or represented by it. A proxy need not be a Warrant holder. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Warrants, if any, held or represented by him.

In addition to all other powers conferred upon them by any other provisions hereof or by law, the Warrant holders at a meeting shall have the power, exercisable from time to time by extraordinary resolution:

(a)	to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Warrant holders against the Corporation whether such rights arise under this Warrant Certificate or otherwise;
(b)	to amend, alter or repeal any extraordinary resolution previously passed or sanctioned by the Warrant holders;
(c)	to enforce any of the rights of the Warrant holders in any manner specified in such extraordinary resolution or to refrain from enforcing any such covenant or right;
(d)	to waive any default on the part of the Corporation in complying with any provisions of this Warrant Certificate either unconditionally or upon any conditions specified in such extraordinary resolution;
(e)	to restrain any Warrant holder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Warrant Certificate or to enforce any of the rights of the Warrant holders;
(f)	to direct any Warrant holder who, as such, has brought any suit, action or proceeding to stay or to discontinue or otherwise to deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrant holder in connection therewith;
(g)	to assent to any change in or omission from the provisions contained in this Warrant Certificate or any ancillary or supplemental instrument which may be agreed to by the Corporation;
(h)	to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any shares or other securities of the Corporation; and

(i) to sanction any scheme for the reconstruction or reorganization of the Corporation or for the consolidation, amalgamation or merger of the Corporation with any other corporation or for the sale, leasing, transfer or other disposition of all or substantially all the property and assets of the Corporation.

The expression "extraordinary resolution" when used in this Warrant Certificate means, subject as hereinafter provided, a resolution proposed at a meeting of Warrant holders duly convened for that purpose and held in accordance with the provisions hereof at which there are present in person or by proxy Warrant holders entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants and passed by the affirmative votes of Warrant holders entitled to acquire not less than 66 2/3% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants represented at the meeting and voted on the poll upon such resolution.

If, at the meeting at which an extraordinary resolution is to be considered, Warrant holders entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy within thirty (30) minutes after the time appointed for the meeting, then the meeting, if convened by Warrant holders or on a Warrantholders' Request, shall be dissolved; but in any other case it shall stand adjourned to such day, being not less than fifteen (15) or more than sixty (60) days later, and to such place and time as may be appointed by the chairman. Not less than five (5) business days' prior notice shall be given of the time and place of such adjourned meeting. Such notice shall state that at the adjourned meeting the Warrant holders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the purposes for which the meeting was originally called or any other particulars. At the adjourned meeting the Warrant holders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided herein shall be an extraordinary resolution within the meaning of this Warrant Certificate notwithstanding that Warrant holders entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting.

Votes on an extraordinary resolution shall always be given on a poll and no demand for a poll on an extraordinary resolution shall be necessary.

All actions which may be taken and all powers that may be exercised by the Warrant holders at a meeting held as provided herein may also be taken and exercised by Warrant holders entitled to acquire at least 66 2/3% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants by an instrument in writing signed in one or more counterparts by such Warrant holders in person or by attorney duly appointed in writing, and the expression "extraordinary resolution" when used in this Warrant Certificate shall include an instrument so signed.

Any one or more of the powers or any combination of the powers in this Warrant Certificate stated to be exercisable by the Warrant holders by extraordinary resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time shall not be deemed to exhaust the right of the Warrant

holders to exercise such power or powers or combination of powers then or thereafter from time to time.

Minutes of all resolutions and proceedings at every meeting of Warrant holders shall be made and duly entered in books of the Corporation, and any such minutes as aforesaid, if signed by the chairman or the secretary of the meeting at which such resolutions were passed or proceedings had shall be prima facie evidence of the matters therein stated and, until the contrary if proved, every such meeting in respect of the proceedings of which minutes shall have been made shall be deemed to have been duly convened and held, and all resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and taken.

Every resolution and every extraordinary resolution passed in accordance with the provisions hereof at a meeting of Warrant holders shall be binding upon all the Warrant holders, whether present at or absent from such meeting, and every instrument in writing signed by Warrant holders in accordance with the provisions hereof shall be binding upon all the Warrant holders, whether signatories thereto or not, and each and every Warrant holder shall be bound to give effect accordingly to every such resolution and instrument in writing.

In determining whether Warrant holders holding Warrant Certificates evidencing the entitlement to acquire the required number of Common Shares are present at a meeting of Warrant holders for the purpose of determining a quorum or have concurred in any consent, waiver, extraordinary resolution, Warrantholders' Request or other action under this Warrant Certificate, Warrants owned legally or beneficially by the Corporation or any subsidiary of the Corporation shall be disregarded.

The Warrants evidenced by this Warrant Certificate may be transferred on the register kept at the offices of the Corporation by the registered holder hereof or its legal representative or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Corporation, upon compliance with the conditions prescribed herein (including compliance with applicable securities laws), payment of any applicable fees or charges and upon compliance with such reasonable requirements as the Corporation may prescribe and, upon any purported assignment being made in contravention of either the terms hereof or applicable securities law, this Warrant Certificate and the Warrants evidenced hereby shall become null and void and of no further force or effect.

If these Warrants are stolen, lost, mutilated or destroyed the Corporation may, on such reasonable terms as to indemnity or otherwise as it may impose, deliver replacement Warrants of like denomination, tenor and date as the Warrants so stolen, lost, mutilated or destroyed.

The Warrants represented hereby and securities which may be acquired hereunder have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or applicable state securities laws, and the Warrants evidenced by this Warrant Certificate may not be exercised unless the Common Shares issuable upon exercise of the Warrants are appropriately registered under the U.S. Securities Act and any applicable state securities laws or the Warrants are exercised pursuant to an applicable exemption from registration under the U.S. Securities Act and applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing to such effect in form and substance satisfactory to the

Corporation; provided that an “accredited investor”, as defined in Rule 501(a) of Regulation D under the U.S. Securities Act (an “Accredited Investor”), that acquired the Warrants directly from the Corporation upon the conversion of a Debenture of the Corporation that was originally purchased pursuant to a written subscription agreement between the Corporation and such Accredited Investor in the Corporation’s private placement of Debentures in the United States, will not be required to deliver an opinion of counsel in connection with the exercise of those Warrants.

Unless the Common Shares issuable upon exercise of these Warrants are appropriately registered under the U.S. Securities Act and any applicable state securities laws, all Common Shares issuable upon exercise of these Warrants and all certificates issued in exchange therefor or in substitution thereof, shall bear the following legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA."

provided, that if any of the Common Shares issuable upon exercise of these Warrants are being sold pursuant to Rule 144 of the U.S. Securities Act, the legend may be removed by delivery to the Corporation’s registrar and transfer agent of an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act and state securities laws.

The Corporation represents and warrants that it is duly authorized to create and deliver these Warrants and to issue the Common Shares that may be issued hereunder and that this Warrant Certificate, when signed by the Corporation as herein provided, will be a valid obligation of the Corporation enforceable against the Corporation in accordance with the provisions hereof. The Corporation hereby covenants and agrees that, subject to the provisions hereof, it will cause the Common Shares from time to time duly subscribed for and purchased in the manner herein provided, and the certificates evidencing such Common Shares, to be duly issued and delivered,

and that at all times up to and including the Time of Expiry, while these Warrants remain outstanding, it shall have sufficient authorized capital to satisfy its obligations hereunder should the holder determine to exercise the right in respect of all the Common Shares for the time being purchasable pursuant to these Warrants. Certificates for Common Shares issued upon the exercise of these Warrants may bear such legend or legends as to transfer as may be considered necessary by the Corporation and its counsel, acting reasonably. All Common Shares issued upon the exercise of the right of purchase herein provided (upon payment therefor of the amount at which such Common Shares may at the time be purchased pursuant to the provisions hereof), shall be issued as fully paid and non-assessable Common Shares and the holders thereof shall not be liable to the Corporation or its creditors in respect thereof.

Time shall be of the essence hereof.

These Warrants shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein.

This Warrant Certificate shall not be valid for any purpose whatever unless and until it has been executed by the Corporation.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer on this ____ day of __________________, 200____.

CARBIZ INC.

Per:

TRANSFER OF WARRANTS

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to

(full name of Transferee) (address of Transferee)

_____________________Warrants of Carbiz Inc. (the “Corporation”), registered in the name of the undersigned on the records maintained by the Corporation and represented by the attached Warrant Certificate.

DATED the _____day of ___________, _____.

Signature Guaranteed (Signature of Warrant holder)

Instructions:

1.	The Signature of the Warrant holder must be the signature of the person whose name appears on the face page of this Warrant Certificate.
2.	If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.
3.	The signature on the Transfer Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange.

EXERCISE FORM

TO:     Carbiz Inc.

The undersigned hereby exercises the right pursuant to the Warrants represented by this Warrant Certificate to acquire _________________Common Shares of Carbiz Inc. (the "Corporation"), as constituted on October 6, 2004 (or such number of other securities or property to which such Warrants entitle the undersigned in lieu thereof or in addition thereto under the terms and conditions referred to in this Warrant Certificate), in accordance with and subject to the terms and conditions referred to in this Warrant Certificate.

The Common Shares (or other securities or property) are to be issued as follows:

Name:

Address in full:

Number of Common Shares:

Social Insurance Number:

Note: The undersigned holder may not be required to complete this section of the Exercise Form. The Corporation recommends that the undersigned holder contact the Corporation in advance of any exercise of Warrants to determine whether this section applies and must be completed by the undersigned holder.

The undersigned hereby represents, warrants and certifies as follows (only one of the following must be checked):

A.	¨	The undersigned holder (i) acquired the Warrants directly from the Corporation upon the conversion of Debentures of the Corporation that were originally purchased pursuant to a written subscription agreement between the undersigned and the Corporation; (ii) is exercising the Warrants solely for its own account and not on behalf of any other person; and (iii) was an “accredited investor”, as that term is defined in Regulation D under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), both on the date the Debentures were purchased from the Corporation and on the date of exercise of the Warrants.
B.	¨	The undersigned holder has delivered to the Corporation an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issuance of the Common Shares issuable upon exercise of the Warrants.

- 2 -

The undersigned holder understands that the certificates representing the Common Shares will bear a legend restricting transfer without registration under the U.S. Securities Act and applicable state securities laws unless an exemption from registration is available.

Note: If further nominees intended, please attach (and initial) a schedule giving these particulars.

DATED this _____day of __________, _____.

Signature Guaranteed (Signature of Warrant holder)

(Print full name)

(Print full address)

(Social Insurance Number)

Instructions:

1.	The registered holder may exercise its right to receive Common Shares by completing this Exercise Form and surrendering this Warrant Certificate representing the Warrants being exercised to the Corporation at its principal office at 7560 Commerce Court, Sarasota, Florida 34243. Certificates for Common Shares will be delivered or mailed as soon as practicable, and in any event within five business days, after the exercise of the Warrants.
2.	If the Exercise Form indicates that Common Shares are to be issued to a person or persons other than the registered holder of the Warrant Certificate, the signature of such holder on the Exercise Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange. Common Shares will only be transferable in accordance with applicable laws.
3.	If the Exercise Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.
4.	If Box B is checked, any opinion tendered must be from counsel of recognized standing in form and substance satisfactory to the Corporation. Holders planning to deliver an opinion of counsel in connection with the exercise of Warrants should contact the Corporation in advance to determine whether any opinions to be tendered will be acceptable to the Corporation.

EX-4.8

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUED UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

THE WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS EXERCISED BY 4:30 P.M. (FLORIDA TIME), ON • OR SUCH EARLIER DATE AS PROVIDED HEREIN.

AGENT'S FIRST WARRANT CERTIFICATE

CARBIZ INC.
(Incorporated under the laws of Ontario)

WARRANT CERTIFICATE          
NO. _________________________ __________________AGENT'S WARRANTS entitling the holder to acquire, subject to the provisions hereof, one Common Share at a price of CDN$0.22 per Common Share for each Warrant represented hereby.

THIS IS TO CERTIFY THAT ______________________________ (hereinafter referred to as the "holder") is entitled to acquire in the manner and subject to the restrictions and adjustments set forth herein, at any time and from time to time until 4:30 p.m. (Florida time) (the "Time of Expiry") on * (the "Expiry Date"), one fully paid and non-assessable Common Share ("Common Share") without nominal or par value of Carbiz Inc. (the "Corporation") as such shares were constituted on • for each Warrant represented hereby, at a price of CDN$0.22 per Common Share.  

1.           Exercise of Warrant

The right to acquire Common Shares may only be exercised by the holder within the time set forth above by:

(a)	duly completing and executing, in the manner indicated, the Exercise Form;
(b)	surrendering this Warrant Certificate to the Corporation at its principal office at 7560 Commerce Court, Sarasota, Florida 34243 together with the duly completed Exercise Form; and
(c)	remitting cash, certified cheque, bank draft or money order, payable to or to the order of the Corporation at par where this Warrant Certificate is so surrendered, for the aggregate purchase price of the Common Shares so subscribed for.

These Warrants shall be deemed to be surrendered only upon personal delivery hereof or, if sent by mail or other means of transmission, upon actual receipt thereof by the Corporation at the principal office referred to above. Upon exercise and surrender of these Warrants, and payment of the exercise price to the Corporation, the person or persons in whose name or names the Common Shares issuable upon exercise of the Warrants are to be issued shall be deemed for all purposes to be the holder or holders of record of such Common Shares and the Corporation covenants that it will cause a certificate or certificates representing such Common Shares to be delivered or mailed to the person or persons at the address or addresses specified in the Exercise Form.

Certificates for the Common Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein, within five (5) Business Days after the surrender of this Warrant Certificate and payment as aforesaid. In the event of a purchase of a number of Common Shares fewer than the number which can be purchased upon exercise of the Warrants represented hereby, the registered holder of this Warrant Certificate shall be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Common Shares not then purchased. Under no circumstances is the Corporation obliged to issue fractional Common Shares.

2.           Cashless Exercise

Subject to the provisions hereof, at any time or from time to time prior to the Time of Expiry, the holder shall also have the right to exercise this Warrant or any portion thereof (a "Cashless Exercise"), without payment by the holder of the Exercise Price in cash or any other consideration (other than the surrender of rights to receive Common Shares hereunder), as provided herein. Upon a Cashless Exercise with respect to a particular number of Common Shares (the "Exchanged Common Shares"), the Company shall deliver to the holder (without payment by the holder of the Exercise Price in cash or any other consideration (other than the surrender of rights to receive Common Shares hereunder)) that number of Common Shares computed using the following formula:

X= Y(A-B) 
      A

2

Where:	X =	the number of Common Shares to be delivered to the holder;
	Y =	the number of Exchanged Common Shares;
	A =	the Current Market Price of the Common Shares as determined in accordance with section 3(g)(v) below.
	B =	the Exercise Price (as adjusted through the Cashless Exercise Date)

A Cashless Exercise may be effected by the holder by the surrender of this Warrant as provided herein, together with a written statement specifying that the holder thereby intends to effect a Cashless Exercise and indicating the number of Exchanged Common Shares which are covered by the Cashless Exercise. Such Cashless Exercise shall be effective upon receipt by the Company of this Warrant, together with the aforesaid written statement, or on such later date as is specified therein (the "Cashless Exercise Date"). The Company shall issue to the holder as of the Cashless Exercise Date a certificate for the Common Shares issuable upon the Cashless Exercise and, if applicable, a new warrant of like tenor evidencing the balance of the Common Shares remaining subject to this Warrant.

3.           Adjustments

The exercise price (and the number of Common Shares purchasable upon exercise in the case of paragraphs (d) and (e) below) shall be subject to adjustment from time to time in the events and in the manner provided for below.

(a)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall:
	(i)	issue Common Shares to all or substantially all of the holders of outstanding Common Shares as a stock dividend (other than the issue of Common Shares to holders of outstanding Common Shares pursuant to the exercise of an option to receive dividends in the form of Common Shares in lieu of dividends paid in the ordinary course on the outstanding Common Shares);
	(ii)	make a distribution on its outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible in either case without the payment of further consideration, into Common Shares other than the issue of Common Shares (or securities exchangeable for or convertible into Common Shares) to holders of outstanding Common Shares pursuant to the exercise of an option to receive dividends in the form of Common Shares (or securities exchangeable for or convertible into Common Shares) in lieu of dividends paid in the ordinary course on the outstanding Common Shares);
	(iii)	subdivide its outstanding Common Shares into a greater number of shares; or
	(iv)	consolidate its outstanding Common Shares into a smaller number of shares;

	(any of such events in the foregoing clauses (i), (ii), (iii) and (iv) being hereinafter called a "Common Share Reorganization"), then the exercise price shall be adjusted, effective immediately after the record date at which the holders of outstanding Common Shares are determined for the purpose of the Common Share Reorganization, by multiplying the exercise price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such record date before giving effect to such Common Share Reorganization, and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganization (including, in the case where securities exchangeable for or convertible, in either case without the payment of further consideration, into Common Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date).
(b)	If and whenever at any time after the date hereof and prior to the Time of Expiry, the Corporation shall issue rights, options or warrants to all or substantially all of the holders of the outstanding Common Shares, pursuant to which such shareholders are entitled, directly or indirectly, during a period expiring not more than 45 days after the record date for such issue (the "Rights Period"), to subscribe for or purchase Common Shares at a price per share (or at an exchange or conversion price per share at the date of issue of such securities in the case of securities exchangeable for or convertible into Common Shares) less than 95% of the Current Market Price for the Common Shares on such record date (any of such events being hereinafter called a "Rights Offering"), then the exercise price shall be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the exercise price in effect immediately prior to the end of the Rights Period by a fraction:
	(i)	the numerator of which shall be the aggregate of:
		(A)	the number of Common Shares outstanding as of the record date for the Rights Offering, and
		(B)	a number determined by dividing: (i) either (1) the product of the number of Common Shares issued or subscribed for during the Rights Period upon the exercise of the rights, warrants, or options distributed under the Rights Offering and the price per share at which such Common Shares are acquired; or, as the case may be, (2) the product of the exchange or conversion price of the securities distributed under the Rights Offering and the number of Common Shares for or into which such securities were exchanged or converted during the Rights Period; by (ii) the Current Market Price of the Common Shares as of the record date for the Rights Offering, and
	(ii)	the denominator of which shall be the number of Common Shares outstanding immediately after the end of the Rights Period (after giving effect to the Rights Offering, including the number of Common Shares actually issued or subscribed

		for during the Rights Period upon exercise of the rights, warrants or options (or securities derived therefrom) distributed under the Rights Offering).
(c)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall fix a record date for the issue or the distribution to all or substantially all of the holders of outstanding Common Shares of: (i) shares of the Corporation of any class other than Common Shares (other than the issue of shares to holders of Common Shares pursuant to the exercise of an option to receive dividends in the form of such shares in lieu of dividends paid in the ordinary course on the Common Shares); (ii) rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares (excluding those exercisable for a period expiring not more than 45 days after such record date at a price per share (or having a conversion or exchange price per share) of not less than 95% of the Current Market Price); or (iii) evidences of indebtedness; and if such issuance or distribution does not constitute a dividend paid in the ordinary course, a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a "Special Distribution"), the exercise price shall be adjusted effective immediately after such record date to a price determined by multiplying the exercise price in effect on such record date by a fraction:
	(i)	the numerator of which shall be:
		(A)	the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date; less
		(B)	the fair market value, as determined by action by the directors (whose determination shall be conclusive), to the holders of the Common Shares of the shares, rights, options, warrants, or evidences of indebtedness issued or distributed in the Special Distribution; and
	(ii)	the denominator of which shall be the number of Common Shares outstanding on such record date multiplied by the Current Market Price of the Common Shares on such record date.
(d)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall determine to transfer all or a portion of its assets to a subsidiary and to distribute shares of such subsidiary to holders of Common Shares, holders of Warrants on the record date of such distribution shall be entitled to receive, upon exercise of their Warrants, in addition to Common Shares, such number of shares in the subsidiary equal to the number of shares they would have received had they exercised the Warrants prior to such record date and continued to hold the Common Shares received upon the exercise of the Warrants, on such record date.
(e)	If and whenever at any time after the date hereof and prior to the Time of Expiry there shall be a reclassification of the Common Shares at any time outstanding or a change of the outstanding Common Shares into other shares or into other securities (other than a

5

	Common Share Reorganization), or a consolidation, amalgamation or merger of the Corporation with or into any other corporation or other entity (other than a consolidation, amalgamation or merger which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other shares), or a transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or other entity (any of such events being herein called a "Capital Reorganization"), the holder, upon any exercise of its right hereunder to purchase Common Shares after the effective date of such Capital Reorganization, shall be entitled to receive, and shall accept, for the same aggregate consideration, in lieu of the number of Common Shares to which the holder was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property which the holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the holder had been the registered holder of the number of Common Shares that the holder was theretofore entitled to acquire upon such exercise. If determined appropriate by the board of directors of the Corporation, appropriate adjustments shall be made following any such Capital Reorganization in the application of the provisions set forth herein, with respect to the rights and interest thereafter of the holder and the adjustments to the exercise price and/or number or type of shares, to the end that such provisions shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any of these Warrants.
(f)	If and whenever at any time after the date hereof and prior to the Time of Expiry a Common Share Reorganization shall occur and any such event results in an adjustment in the exercise price, the number of Common Shares purchasable pursuant to each of these Warrants shall be adjusted contemporaneously with the adjustment of the exercise price, by multiplying the number of Common Shares theretofore purchasable on the exercise thereof by a fraction the numerator of which shall be the exercise price in effect immediately prior to such adjustment and the denominator of which shall be the exercise price resulting from such adjustment.
(g)	The adjustments to the exercise price and number or type of shares of the Corporation provided for herein are cumulative and such adjustments shall be made successively whenever any of the relevant events referred to herein shall occur. For purposes of the adjustments set forth above, the following provisions shall apply:
	(i)	no adjustment in the exercise price shall be required unless such adjustment would result in a change of at least 1% in the prevailing exercise price and no adjustment shall be made pursuant to clause (e) in the number of Common Shares purchasable upon exercise of any of these Warrants unless a corresponding adjustment to the exercise price is required hereunder; provided, however, that any adjustments which, except for the provisions of this clause (g)(i) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment;
	(ii)	if a dispute shall at any time arise with respect to adjustments provided for herein, such dispute shall be conclusively determined by the Corporation's auditors

6

	(except in cases where any determination relating to adjustments is to be made by the board of directors of the Corporation), or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action of the directors and any such determination shall be binding upon the Corporation and the holder;
(iii)	in case the Corporation, after the date hereof and prior to the Time of Expiry, shall take any action affecting the outstanding Common Shares, other than an action described herein, which in the opinion of the board of directors of the Corporation would materially affect the rights of the holder, the exercise price or the number of Common Shares purchasable upon exercise of these Warrants (or both, as the case may be) shall be adjusted in such manner, if any, and at such time, as the directors in their sole discretion may determine to be equitable in the circumstances;
(iv)	if the Corporation shall set a record date to determine holders of outstanding Common Shares entitled to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the exercise price or the number of Common Shares purchasable upon exercise of any of these Warrants shall be required by reason of the setting of such record date;
(v)	"Current Market Price" of the Common Shares at any date means a price per share equal to the weighted average price at which the Common Shares have traded in board lots on the principal stock exchange on which the Common Shares are then traded, or if the Common Shares are not then listed on any stock exchange, on the over-the-counter market, during the period of 20 consecutive trading days immediately before such date;
(vi)	in the absence of a resolution of the directors fixing a record date for a Rights Offering or Special Distribution, the Corporation shall be deemed to have fixed as the record date therefor the date on which the Rights Offering or Special Distribution is effected;
(vii)	as a condition precedent to the taking of any action which would require any adjustment in any attribute of these Warrants, including the exercise price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any corporate action which may, in the opinion of counsel, be necessary in order that the Corporation have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all shares or other securities that the holder is entitled to receive on the total exercise hereof in accordance with the provisions hereof; and
(viii)	"dividends paid in the ordinary course" means cash dividends declared payable on the Common Shares in any fiscal year of the Corporation to the extent that such

7

		cash dividends do not exceed, in the aggregate, the greatest of: (i) 200% of the aggregate amount of cash dividends declared payable by the Corporation on the outstanding Common Shares in its immediately preceding fiscal year; (ii) 300% of the arithmetic mean of the aggregate amounts of cash dividends declared payable by the Corporation on the outstanding Common Shares in its three immediately preceding fiscal years; and (iii) 100% of the aggregate consolidated net income of the Corporation, before extraordinary items, for its immediately preceding fiscal year.
(h)	In any case in which the terms of these Warrants shall require that an adjustment become effective as of a particular time, the Corporation may defer, until such time, issuing to the holder in respect of any Warrants exercised after the record date for the event giving rise to the adjustment and before such time the kind and amount of shares, other securities or property to which the holder would be entitled upon such exercise by reason of the relevant adjustment, provided, however that the Corporation shall deliver to the holder an appropriate instrument evidencing such holder's right, upon the occurrence of any event requiring the adjustment, to the relevant adjustment.
(i)	At least 10 days prior to the effective date or record date, as the case may be, of any event which requires or might require an adjustment in any attribute of these Warrants, including the exercise price and the number of Common Shares that are purchasable upon the exercise thereof, the Corporation shall give notice to the holder of the particulars of such event and, if determinable, the required adjustment. In case any adjustment is not then determinable, the Corporation shall promptly after such adjustment is determinable give notice to the holder of the adjustment.

On the happening of each and every event referred to above that gives rise to an adjustment, the applicable provisions of these Warrants shall, ipso facto, be deemed to be amended accordingly and the Corporation shall take all necessary action so as to comply with such provisions as so amended.

4.           Fractional Shares

No fractional Common Shares shall be issuable upon the exercise of these Warrants, and if the number of Common Shares to be issued upon exercise of these Warrants is other than a whole number, then the number of Common Shares to be issued shall be rounded down to the next whole number.

5.           Transfer of Warrants

The Warrants evidenced by this Warrant Certificate are non-transferable and, upon any purported assignment being made in contravention of either the terms hereof or applicable securities law, this Warrant Certificate and the Warrants evidenced hereby shall become null and void and of no further force or effect. Notwithstanding the foregoing, the holder may assign all or part of this Warrant to a shareholder, partner, member, or Affiliate (as that term is defined in Rule 405 of Regulation C under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")) of such holder; provided, however, that any transfer to any such party is

8

permitted only if such party is not: (i) a competitor of the Carbiz, Inc.; (ii) a holder of 5% or more of the equity of a competitor of Carbiz, Inc., or (iii) an entity of which 5% or more of its securities are held by a competitor of Carbiz, Inc.; provided further that no party may be assigned any portion of this Warrant unless Carbiz, Inc. is given written notice by the assigning party at the time of such assignment stating the name, address and tax identification number of the assignee(s) and identifying the securities of Carbiz, Inc. as to which are being assigned; and provided further that any such assignee shall receive such assigned Warrants subject to all the terms and conditions of this Warrant, including without limitation the provisions of this Section 5.

6.           Exchange, Loss of Warrants

The registered holder of this Warrant Certificate may, at any time prior to the Expiry Date, upon surrender of this Warrant Certificate to the Corporation at the principal office referred to above, exchange this Warrant Certificate for other Warrant Certificates entitling the holder to acquire, in the aggregate, the same number of Common Shares as may be acquired under this Warrant Certificate.

If these Warrants are stolen, lost, mutilated or destroyed the Corporation may, on such reasonable terms as to indemnity or otherwise as it may impose, deliver replacement Warrants of like denomination, tenor and date as the Warrants so stolen, lost, mutilated or destroyed.

7.           United States Matters

The Warrants represented hereby and securities which may be acquired hereunder have not been registered under the U.S. Securities Act or applicable state securities laws, and the Warrants evidenced by this Warrant Certificate may not be exercised unless the Common Shares issuable upon exercise of the Warrants are appropriately registered under the U.S. Securities Act and any applicable state securities laws or the Warrants are exercised pursuant to an applicable exemption from registration under the U.S. Securities Act and applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing to such effect in form and substance satisfactory to the Corporation; provided that an "accredited investor", as defined in Rule 501 (a) of Regulation D under the U.S. Securities Act, that acquired the Warrants directly from the Corporation will not be required to deliver an opinion of counsel in connection with the exercise of such Warrants.

Unless the Common Shares issuable upon exercise of these Warrants are appropriately registered under the U.S. Securities Act and any applicable state securities laws, all Common Shares issuable upon exercise of these Warrants with Box A or Box B checked on the Exercise Form, and all certificates issued in exchange thereof or in substitution thereof, shall bear the following legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED

9

BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA."

provided, that if any of the Common Shares issuable upon exercise of these Warrants are being sold pursuant to Rule 144 of the U.S. Securities Act, the legend may be removed by delivery to the Corporation's registrar and transfer agent of an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws.

8.           Miscellaneous

The Corporation represents and warrants that it is duly authorized to create and deliver these Warrants and to issue the Common Shares that may be issued hereunder and that this Warrant Certificate, when signed by the Corporation as herein provided, will be a valid obligation of the Corporation enforceable against the Corporation in accordance with the provisions hereof. The Corporation hereby covenants and agrees that, subject to the provisions hereof, it will cause the Common Shares from time to time duly subscribed for and purchased in the manner herein provided, and the certificates evidencing such Common Shares, to be duly issued and delivered, and that at all times up to and including the Time of Expiry, while these Warrants remain outstanding, it shall have sufficient authorized capital to satisfy its obligations hereunder should the holder determine to exercise the right in respect of all the Common Shares for the time being purchasable pursuant to these Warrants. Certificates for Common Shares issued upon the exercise of these Warrants may bear such legend or legends as to transfer as may be considered necessary by the Corporation and its counsel, acting reasonably. All Common Shares issued upon the exercise of the right of purchase herein provided (upon payment therefor of the amount at which such Common Shares may at the time be purchased pursuant to the provisions hereof), shall be issued as fully paid and non-assessable Common Shares and the holders thereof shall not be liable to the Corporation or its creditors in respect thereof.

The holding of the Warrants evidenced by this Warrant Certificate shall not constitute the holder hereof a shareholder of the Corporation or entitle the holder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate.

Time shall be of the essence hereof.

These Warrants shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein.

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This Warrant Certificate shall not be valid for any purpose whatever unless and until it has been executed by the Corporation.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer on this _____________ day of  ____________________ , 2004.

CARBIZ INC.

Per: _______________________________________

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TRANSFER OF WARRANTS

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to

(full name of Transferee) (address of Transferee)

_______________________ Warrants of Carbiz Inc. (the "Corporation"), registered in the name of the undersigned on the records maintained by the Corporation and represented by the attached Warrant Certificate.

DATED the________day of ___________________, ______________.

Signature Guaranteed (Signature of Warrant holder) Instructions:

1.	The Signature of the Warrant holder must be the signature of the person whose name appears on the face page of this Warrant Certificate.
2.	If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.
3.	The signature on the Transfer Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange.

EXERCISE FORM

TO:           Carbiz Inc.

The undersigned hereby exercises the right pursuant to the Warrants represented by this Warrant Certificate to acquire ____________________________ Common Shares of Carbiz Inc. (the "Corporation"), as constituted on [• ] (or such number of other securities or property to which such Warrants entitle the undersigned in lieu thereof or in addition thereto under the terms and conditions referred to in this Warrant Certificate), in accordance with and subject to the terms and conditions referred to in this Warrant Certificate.

The Common Shares (or other securities or property) are to be issued as follows:

Name:

Address in full:

Number of Common Shares:

Social Insurance Number:

Note: The undersigned holder may not be required to complete this section of the Exercise Form. The Corporation recommends that the undersigned holder contact the Corporation in advance of any exercise of Warrants to determine whether this section applies and must be completed by the undersigned holder.

The undersigned hereby represents, warrants and certifies as follows (only one of the following must be checked):

A. ¨	The undersigned holder (i) acquired the Warrants directly from the Corporation (ii) is exercising the Warrants solely for its own account and not on behalf of any other person; and (iii) was an "accredited investor", as that term is defined in Regulation D under the U.S. Securities Act, both on the date the Warrants were acquired from the Corporation and on the date of exercise of the Warrants.
B. ¨	The undersigned holder has delivered to the Corporation an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issuance of the Common Shares issuable upon exercise of the Warrants.

The undersigned holder understands that the certificates representing the Common Shares will bear a legend restricting transfer without registration under the U.S. Securities Act and applicable state securities laws unless an exemption from registration is available.

Note: If further nominees intended, please attach (and initial) a schedule giving these _________________ particulars.

DATED this ______day of __________, _____

Signature Guaranteed (Signature of Warrant holder)

(Print full name)

(Print full address)

 (Social Insurance Number)

Instructions:

1.	The registered holder may exercise its right to receive Common Shares by completing this Exercise Form and surrendering this Warrant Certificate representing the Warrants being exercised to the Corporation at its principal office at 7560 Commerce Court, Sarasota, Florida 34243. Certificates for Common Shares will be delivered or mailed as soon as practicable, and in any event within five business days, after the exercise of the Warrants.
2.	If the Exercise Form indicates that Common Shares are to be issued to a person or persons other than the registered holder of the Warrant Certificate, the signature of such holder on the Exercise Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange. Common Shares will only be transferable in accordance with applicable laws.
3.	If the Exercise Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.
4.	If Box B is checked, any opinion tendered must be from counsel of recognized standing in form and substance satisfactory to the Corporation. Holders planning to deliver an opinion of counsel in connection with the exercise of Warrants should contact the Corporation in advance to determine whether any opinions to be tendered will be acceptable to the Corporation.

EX-4.9

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUED UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

THE WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS EXERCISED BY 4:30 P.M. (FLORIDA TIME), ON • OR SUCH EARLIER DATE AS

AGENT’S SECOND WARRANT CERTIFICATE

CARBIZ INC.
(Incorporated under the laws of Ontario)

WARRANT CERTIFICATE
NO. ____________________________________       __________________________ AGENT'S WARRANTS entitling the holder to acquire, subject to the provisions hereof, one Common Share at a price of CDN$0.23 per Common Share for each Warrant represented hereby.

THIS IS TO CERTIFY THAT _______________________________(hereinafter referred to as the "holder") is entitled to acquire in the manner and subject to the restrictions and adjustments set forth herein, at any time and from time to time until 4:30 p.m. (Florida time) (the "Time of Expiry") on • (the "Expiry Date"), one fully paid and non-assessable Common Share ("Common Share") without nominal or par value of Carbiz Inc. (the "Corporation") as such shares were constituted on • for each Warrant represented on Share.

1.             Exercise of Warrant

The right to acquire Common Shares may only be exercised by the holder within the time set forth above by:

(a)	duly completing and executing, in the manner indicated, the Exercise Form;
(b)	surrendering this Warrant Certificate to the Corporation at its principal office at 7560 Commerce Court, Sarasota, Florida 34243 together with the duly completed Exercise Form; and
(c)	remitting cash, certified cheque, bank draft or money order, payable to or to the order of the Corporation at par where this Warrant Certificate is so surrendered, for the aggregate purchase price of the Common Shares so subscribed for.

These Warrants shall be deemed to be surrendered only upon personal delivery hereof or, if sent by mail or other means of transmission, upon actual receipt thereof by the Corporation at the principal office referred to above. Upon exercise and surrender of these Warrants, and payment of the exercise price to the Corporation, the person or persons in whose name or names the Common Shares issuable upon exercise of the Warrants are to be issued shall be deemed for all purposes to be the holder or holders of record of such Common Shares and the Corporation covenants that it will cause a certificate or certificates representing such Common Shares to be delivered or mailed to the person or persons at the address or addresses specified in the Exercise Form.

Certificates for the Common Shares subscribed for will be mailed to the persons specified in the Exercise Form at their respective addresses specified therein, within five (5) Business Days after the surrender of this Warrant Certificate and payment as aforesaid. In the event of a purchase of a number of Common Shares fewer than the number which can be purchased upon exercise of the Warrants represented hereby, the registered holder of this Warrant Certificate shall be entitled to receive without charge a new Warrant Certificate in respect of the balance of the Common Shares not then purchased. Under no circumstances is the Corporation obliged to issue fractional Common Shares.

2.             Cashless Exercise

Subject to the provisions hereof, at any time or from time to time prior to the Time of Expiry, the holder shall also have the right to exercise this Warrant or any portion thereof (a "Cashless Exercise"), without payment by the holder of the Exercise Price in cash or any other consideration (other than the surrender of rights to receive Common Shares hereunder), as provided herein. Upon a Cashless Exercise with respect to a particular number of Common Shares (the "Exchanged Common Shares"), the Company shall deliver to the holder (without payment by the holder of the Exercise Price in cash or any other consideration (other than the surrender of rights to receive Common Shares hereunder)) that number of Common Shares computed using the following formula:

X = Y (A - B) 
       A

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Where:	X =	the number of Common Shares to be delivered to the holder;
	Y =	the number of Exchanged Common Shares;
	A =	the Current Market Price of the inCommon Shares as determined accordance with section 3(g)(v) below.
	B =	the Exercise Price (as adjusted through the Cashless Exercise Date)

A Cashless Exercise may be effected by the holder by the surrender of this Warrant as provided herein, together with a written statement specifying that the holder thereby intends to effect a Cashless Exercise and indicating the number of Exchanged Common Shares which are covered by the Cashless Exercise. Such Cashless Exercise shall be effective upon receipt by the Company of this Warrant, together with the aforesaid written statement, or on such later date as is specified therein (the "Cashless Exercise Date"). The Company shall issue to the holder as of the Cashless Exercise Date a certificate for the Common Shares issuable upon the Cashless Exercise and, if applicable, a new warrant of like tenor evidencing the balance of the Common Shares remaining subject to this Warrant.

3.             Adjustments

The exercise price (and the number of Common Shares purchasable upon exercise in the case of paragraphs (d) and (e) below) shall be subject to adjustment from time to time in the events and in the manner provided for below.

(a)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall:
	(i)	issue Common Shares to all or substantially all of the holders of outstanding Common Shares as a stock dividend (other than the issue of Common Shares to holders of outstanding Common Shares pursuant to the exercise of an option to receive dividends in the form of Common Shares in lieu of dividends paid in the ordinary course on the outstanding Common Shares);
	(ii)	make a distribution on its outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible in either case without the payment of further consideration, into Common Shares other than the issue of Common Shares (or securities exchangeable for or convertible into Common Shares) to holders of outstanding Common Shares pursuant to the exercise of an option to receive dividends in the form of Common Shares (or securities exchangeable for or convertible into Common Shares) in lieu of dividends paid in the ordinary course on the outstanding Common Shares);
	(iii)	subdivide its outstanding Common Shares into a greater number of shares; or
	(iv)	consolidate its outstanding Common Shares into a smaller number of shares;

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	(any of such events in the foregoing clauses (i), (ii), (iii) and (iv) being hereinafter called a "Common Share Reorganization"), then the exercise price shall be adjusted, effective immediately after the record date at which the holders of outstanding Common Shares are determined for the purpose of the Common Share Reorganization, by multiplying the exercise price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such record date before giving effect to such Common Share Reorganization, and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganization (including, in the case where securities exchangeable for or convertible, in either case without the payment of further consideration, into Common Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date).
(b)	If and whenever at any time after the date hereof and prior to the Time of Expiry, the Corporation shall issue rights, options or warrants to all or substantially all of the holders of the outstanding Common Shares, pursuant to which such shareholders are entitled, directly or indirectly, during a period expiring not more than 45 days after the record date for such issue (the "Rights Period"), to subscribe for or purchase Common Shares at a price per share (or at an exchange or conversion price per share at the date of issue of such securities in the case of securities exchangeable for or convertible into Common Shares) less than 95% of the Current Market Price for the Common Shares on such record date (any of such events being hereinafter called a "Rights Offering"), then the exercise price shall be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the exercise price in effect immediately prior to the end of the Rights Period by a fraction:
	(i)	the numerator of which shall be the aggregate of:
		(A)	the number of Common Shares outstanding as of the record date for the Rights Offering, and
		(B)	a number determined by dividing: (i) either (1) the product of the number of Common Shares issued or subscribed for during the Rights Period upon the exercise of the rights, warrants, or options distributed under the Rights Offering and the price per share at which such Common Shares are acquired; or, as the case may be, (2) the product of the exchange or conversion price of the securities distributed under the Rights Offering and the number of Common Shares for or into which such securities were exchanged or converted during the Rights Period; by (ii) the Current Market Price of the Common Shares as of the record date for the Rights Offering, and
	(ii)	the denominator of which shall be the number of Common Shares outstanding immediately after the end of the Rights Period (after giving effect to the Rights Offering, including the number of Common Shares actually issued or subscribed

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		for during the Rights Period upon exercise of the rights, warrants or options (or securities derived therefrom) distributed under the Rights Offering).
(c)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall fix a record date for the issue or the distribution to all or substantially all of the holders of outstanding Common Shares of: (i) shares of the Corporation of any class other than Common Shares (other than the issue of shares to holders of Common Shares pursuant to the exercise of an option to receive dividends in the form of such shares in lieu of dividends paid in the ordinary course on the Common Shares); (ii) rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares (excluding those exercisable for a period expiring not more than 45 days after such record date at a price per share (or having a conversion or exchange price per share) of not less than 95% of the Current Market Price); or (iii) evidences of indebtedness; and if such issuance or distribution does not constitute a dividend paid in the ordinary course, a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a "Special Distribution"), the exercise price shall be adjusted effective immediately after such record date to a price determined by multiplying the exercise price in effect on such record date by a fraction:
	(i)	the numerator of which shall be:
		(A)	the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date; less
		(B)	the fair market value, as determined by action by the directors (whose determination shall be conclusive), to the holders of the Common Shares of the shares, rights, options, warrants, or evidences of indebtedness issued or distributed in the Special Distribution; and
	(ii)	the denominator of which shall be the number of Common Shares outstanding on such record date multiplied by the Current Market Price of the Common Shares on such record date.
(d)	If and whenever at any time after the date hereof and prior to the Time of Expiry the Corporation shall determine to transfer all or a portion of its assets to a subsidiary and to distribute shares of such subsidiary to holders of Common Shares, holders of Warrants on the record date of such distribution shall be entitled to receive, upon exercise of their Warrants, in addition to Common Shares, such number of shares in the subsidiary equal to the number of shares they would have received had they exercised the Warrants prior to such record date and continued to hold the Common Shares received upon the exercise of the Warrants, on such record date.
(e)	If and whenever at any time after the date hereof and prior to the Time of Expiry there shall be a reclassification of the Common Shares at any time outstanding or a change of the outstanding Common Shares into other shares or into other securities (other than a

5

	Common Share Reorganization), or a consolidation, amalgamation or merger of the Corporation with or into any other corporation or other entity (other than a consolidation, amalgamation or merger which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other shares), or a transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or other entity (any of such events being herein called a "Capital Reorganization"), the holder, upon any exercise of its right hereunder to purchase Common Shares after the effective date of such Capital Reorganization, shall be entitled to receive, and shall accept, for the same aggregate consideration, in lieu of the number of Common Shares to which the holder was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property which the holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the holder had been the registered holder of the number of Common Shares that the holder was theretofore entitled to acquire upon such exercise. If determined appropriate by the board of directors of the Corporation, appropriate adjustments shall be made following any such Capital Reorganization in the application of the provisions set forth herein, with respect to the rights and interest thereafter of the holder and the adjustments to the exercise price and/or number or type of shares, to the end that such provisions shall thereafter correspondingly be made applicable as nearly as may reasonably be possible in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any of these Warrants.
(f)	If and whenever at any time after the date hereof and prior to the Time of Expiry a Common Share Reorganization shall occur and any such event results in an adjustment in the exercise price, the number of Common Shares purchasable pursuant to each of these Warrants shall be adjusted contemporaneously with the adjustment of the exercise price, by multiplying the number of Common Shares theretofore purchasable on the exercise thereof by a fraction the numerator of which shall be the exercise price in effect immediately prior to such adjustment and the denominator of which shall be the exercise price resulting from such adjustment.
(g)	The adjustments to the exercise price and number or type of shares of the Corporation provided for herein are cumulative and such adjustments shall be made successively whenever any of the relevant events referred to herein shall occur. For purposes of the adjustments set forth above, the following provisions shall apply:
	(i)	no adjustment in the exercise price shall be required unless such adjustment would result in a change of at least 1% in the prevailing exercise price and no adjustment shall be made pursuant to clause (e) in the number of Common Shares purchasable upon exercise of any of these Warrants unless a corresponding adjustment to the exercise price is required hereunder; provided, however, that any adjustments which, except for the provisions of this clause (g)(i) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment;
	(ii)	if a dispute shall at any time arise with respect to adjustments provided for herein, such dispute shall be conclusively determined by the Corporation’s auditors

6

	(except in cases where any determination relating to adjustments is to be made by the board of directors of the Corporation), or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action of the directors and any such determination shall be binding upon the Corporation and the holder;
(iii)	in case the Corporation, after the date hereof and prior to the Time of Expiry, shall take any action affecting the outstanding Common Shares, other than an action described herein, which in the opinion of the board of directors of the Corporation would materially affect the rights of the holder, the exercise price or the number of Common Shares purchasable upon exercise of these Warrants (or both, as the case may be) shall be adjusted in such manner, if any, and at such time, as the directors in their sole discretion may determine to be equitable in the circumstances;
(iv)	if the Corporation shall set a record date to determine holders of outstanding Common Shares entitled to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the exercise price or the number of Common Shares purchasable upon exercise of any of these Warrants shall be required by reason of the setting of such record date;
(v)	"Current Market Price" of the Common Shares at any date means a price per share equal to the weighted average price at which the Common Shares have traded in board lots on the principal stock exchange on which the Common Shares are then traded, or if the Common Shares are not then listed on any stock exchange, on the over-the-counter market, during the period of 20 consecutive trading days immediately before such date;
(vi)	in the absence of a resolution of the directors fixing a record date for a Rights Offering or Special Distribution, the Corporation shall be deemed to have fixed as the record date therefor the date on which the Rights Offering or Special Distribution is effected;
(vii)	as a condition precedent to the taking of any action which would require any adjustment in any attribute of these Warrants, including the exercise price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any corporate action which may, in the opinion of counsel, be necessary in order that the Corporation have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all shares or other securities that the holder is entitled to receive on the total exercise hereof in accordance with the provisions hereof; and
(viii)	"dividends paid in the ordinary course" means cash dividends declared payable on the Common Shares in any fiscal year of the Corporation to the extent that such

7

		cash dividends do not exceed, in the aggregate, the greatest of: (i) 200% of the aggregate amount of cash dividends declared payable by the Corporation on the outstanding Common Shares in its immediately preceding fiscal year; (ii) 300% of the arithmetic mean of the aggregate amounts of cash dividends declared payable by the Corporation on the outstanding Common Shares in its three immediately preceding fiscal years; and (iii) 100% of the aggregate consolidated net income of the Corporation, before extraordinary items, for its immediately preceding fiscal year.
(h)	In any case in which the terms of these Warrants shall require that an adjustment become effective as of a particular time, the Corporation may defer, until such time, issuing to the holder in respect of any Warrants exercised after the record date for the event giving rise to the adjustment and before such time the kind and amount of shares, other securities or property to which the holder would be entitled upon such exercise by reason of the relevant adjustment, provided, however that the Corporation shall deliver to the holder an appropriate instrument evidencing such holder’s right, upon the occurrence of any event requiring the adjustment, to the relevant adjustment.
(i)	At least 10 days prior to the effective date or record date, as the case may be, of any event which requires or might require an adjustment in any attribute of these Warrants, including the exercise price and the number of Common Shares that are purchasable upon the exercise thereof, the Corporation shall give notice to the holder of the particulars of such event and, if determinable, the required adjustment. In case any adjustment is not then determinable, the Corporation shall promptly after such adjustment is determinable give notice to the holder of the adjustment.

On the happening of each and every event referred to above that gives rise to an adjustment, the applicable provisions of these Warrants shall, ipso facto, be deemed to be amended accordingly and the Corporation shall take all necessary action so as to comply with such provisions as so amended.

4.             Fractional Shares

No fractional Common Shares shall be issuable upon the exercise of these Warrants, and if the number of Common Shares to be issued upon exercise of these Warrants is other than a whole number, then the number of Common Shares to be issued shall be rounded down to the next whole number.

5.             Transfer of Warrants

The Warrants evidenced by this Warrant Certificate are non-transferable and, upon any purported assignment being made in contravention of either the terms hereof or applicable securities law, this Warrant Certificate and the Warrants evidenced hereby shall become null and void and of no further force or effect. Notwithstanding the foregoing, the holder may assign all or part of this Warrant to a shareholder, partner, member, or Affiliate (as that term is defined in Rule 405 of Regulation C under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") of such holder; provided, however, that any transfer to any such party is

8

permitted only if such party is not: (i) a competitor of the Carbiz, Inc.; (ii) a holder of 5% or more of the equity of a competitor of Carbiz, Inc., or (iii) an entity of which 5% or more of its securities are held by a competitor of Carbiz, Inc.; provided further that no party may be assigned any portion of this Warrant unless Carbiz, Inc. is given written notice by the assigning party at the time of such assignment stating the name, address and tax identification number of the assignee(s) and identifying the securities of Carbiz, Inc. as to which are being assigned; and provided further that any such assignee shall receive such assigned Warrants subject to all the terms and conditions of this Warrant, including without limitation the provisions of this Section 5.

6.             Exchange, Loss of Warrants

The registered holder of this Warrant Certificate may, at any time prior to the Expiry Date, upon surrender of this Warrant Certificate to the Corporation at the principal office referred to above, exchange this Warrant Certificate for other Warrant Certificates entitling the holder to acquire, in the aggregate, the same number of Common Shares as may be acquired under this Warrant Certificate.

If these Warrants are stolen, lost, mutilated or destroyed the Corporation may, on such reasonable terms as to indemnity or otherwise as it may impose, deliver replacement Warrants of like denomination, tenor and date as the Warrants so stolen, lost, mutilated or destroyed.

7.             United States Matters

The Warrants represented hereby and securities which may be acquired hereunder have not been registered under the U.S. Securities Act or applicable state securities laws, and the Warrants evidenced by this Warrant Certificate may not be exercised unless the Common Shares issuable upon exercise of the Warrants are appropriately registered under the U.S. Securities Act and any applicable state securities laws or the Warrants are exercised pursuant to an applicable exemption from registration under the U.S. Securities Act and applicable state securities laws and the Corporation has received an opinion of counsel of recognized standing to such effect in form and substance satisfactory to the Corporation; provided that an "accredited investor", as defined in Rule 501(a) of Regulation D under the U.S. Securities Act, that acquired the Warrants directly from the Corporation will not be required to deliver an opinion of counsel in connection with the exercise of such Warrants.

Unless the Common Shares issuable upon exercise of these Warrants are appropriately registered under the U.S. Securities Act and any applicable state securities laws, all Common Shares issuable upon exercise of these Warrants with Box A or Box B checked on the Exercise Form, and all certificates issued in exchange thereof or in substitution thereof, shall bear the following legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE

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TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA."

provided, that if any of the Common Shares issuable upon exercise of these Warrants are being sold pursuant to Rule 144 of the U.S. Securities Act, the legend may be removed by delivery to the Corporation’s registrar and transfer agent of an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws.

8.             Miscellaneous

The Corporation represents and warrants that it is duly authorized to create and deliver these Warrants and to issue the Common Shares that may be issued hereunder and that this Warrant Certificate, when signed by the Corporation as herein provided, will be a valid obligation of the Corporation enforceable against the Corporation in accordance with the provisions hereof. The Corporation hereby covenants and agrees that, subject to the provisions hereof, it will cause the Common Shares from time to time duly subscribed for and purchased in the manner herein provided, and the certificates evidencing such Common Shares, to be duly issued and delivered, and that at all times up to and including the Time of Expiry, while these Warrants remain outstanding, it shall have sufficient authorized capital to satisfy its obligations hereunder should the holder determine to exercise the right in respect of all the Common Shares for the time being purchasable pursuant to these Warrants. Certificates for Common Shares issued upon the exercise of these Warrants may bear such legend or legends as to transfer as may be considered necessary by the Corporation and its counsel, acting reasonably. All Common Shares issued upon the exercise of the right of purchase herein provided (upon payment therefor of the amount at which such Common Shares may at the time be purchased pursuant to the provisions hereof), shall be issued as fully paid and non-assessable Common Shares and the holders thereof shall not be liable to the Corporation or its creditors in respect thereof.

The holding of the Warrants evidenced by this Warrant Certificate shall not constitute the holder hereof a shareholder of the Corporation or entitle the holder to any right or interest in respect thereof except as expressly provided in this Warrant Certificate.

Time shall be of the essence hereof.

These Warrants shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein.

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This Warrant Certificate shall not be valid for any purpose whatever unless and until it has been executed by the Corporation.

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer on this ____ day of __________________, 2004.

CARBIZ INC.

Per:

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EXERCISE FORM

TO:      Carbiz Inc.

The undersigned hereby exercises the right pursuant to the Warrants represented by this Warrant Certificate to acquire _________________Common Shares of Carbiz Inc. (the "Corporation"), as constituted on • (or such number of other securities or property to which such Warrants entitle the undersigned in lieu thereof or in addition thereto under the terms and conditions referred to in this Warrant Certificate), in accordance with and subject to the terms and conditions referred to in this Warrant Certificate.

The Common Shares (or other securities or property) are to be issued as follows:

Name:

Address in full:

Number of Common Shares:

Social Insurance Number:

Note: The undersigned holder may not be required to complete this section of the Exercise Form. The Corporation recommends that the undersigned holder contact the Corporation in advance of any exercise of Warrants to determine whether this section applies and must be completed by the undersigned holder.

The undersigned hereby represents, warrants and certifies as follows (only one of the following must be checked):

A.	¨	The undersigned holder (i) acquired the Warrants directly from the Corporation (ii) is exercising the Warrants solely for its own account and not on behalf of any other person; and (iii) was an "accredited investor", as that term is defined in Regulation D under the U.S. Securities Act, both on the date the Warrants were acquired from the Corporation and on the date of exercise of the Warrants.
B.	¨	The undersigned holder has delivered to the Corporation an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issuance of the Common Shares issuable upon exercise of the Warrants.

The undersigned holder understands that the certificates representing the Common Shares will bear a legend restricting transfer without registration under the U.S. Securities Act and applicable state securities laws unless an exemption from registration is available.

Note: If further nominees intended, please attach (and initial) a schedule giving these particulars.

DATED this _____day of __________, _____.

Signature Guaranteed (Signature of Warrant holder)

(Print full name)

(Print full address)

(Social Insurance Number)

Instructions:

1.	The registered holder may exercise its right to receive Common Shares by completing this Exercise Form and surrendering this Warrant Certificate representing the Warrants being exercised to the Corporation at its principal office at 7560 Commerce Court, Sarasota, Florida 34243. Certificates for Common Shares will be delivered or mailed as soon as practicable, and in any event within five business days, after the exercise of the Warrants.
2.	If the Exercise Form indicates that Common Shares are to be issued to a person or persons other than the registered holder of the Warrant Certificate, the signature of such holder on the Exercise Form must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange. Common Shares will only be transferable in accordance with applicable laws.
3.	If the Exercise Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the Warrant Certificate must be accompanied by evidence of authority to sign satisfactory to the Corporation.
4.	If Box B is checked, any opinion tendered must be from counsel of recognized standing in form and substance satisfactory to the Corporation. Holders planning to deliver an opinion of counsel in connection with the exercise of Warrants should contact the Corporation in advance to determine whether any opinions to be tendered will be acceptable to the Corporation.

EX-4.10

CARBIZ INC.

INVESTORS’ RIGHTS AGREEMENT

THIS INVESTORS’ RIGHTS AGREEMENT (the “Agreement”) is entered into as of October 6, 2004, by and among Carbiz, Inc., a corporation formed under the laws of the Province of Ontario, Canada (the “Corporation”), and the Schedule of Investors listed on Schedule A attached hereto (each an “Investor”, collectively, the “Investors”).

RECITALS

WHEREAS the Corporation and each of the Investors are parties to a certain subscription agreement dated as of the date hereof (each a “Subscription Agreement”, collectively, the “Subscription Agreements”), whereby the Corporation will sell, and each Investor will purchase, a Debenture of the Corporation (each a “Debenture”, collectively, the “Debentures”) that is convertible into units (the “Units”) of the Corporation, with each Unit consisting of one Common Share (the “Common Share”), one Class A Warrant (the “Class A Warrant”) and one-half of one Class B Warrant (the “Class B Warrant”), (the Class A Warrants and the Class B Warrants collectively, the “Warrants”), subject to the terms and conditions of such Agreement;

AND WHEREAS the obligations of the Corporation and the Investors under the Subscription Agreements are conditioned, among other things, upon the execution and delivery of this Agreement by the Corporation and the Investors;

NOW THEREFORE, in consideration of the foregoing recitals and the mutual premises hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

1.	Certain Definitions: As used in this Agreement, the following terms shall have the respective meanings:
	1.1	Closing Date. The term “Closing Date” means October 6, 2004 or such other date as may be determined by the Corporation in accordance with the Subscription Agreements.
	1.2	Conversion Date. The term “Conversion Date” means the date on which the Corporation obtains a listing on the United States Over The Counter Bulletin Board and delists from the TSX Venture Exchange.
	1.3	Conversion Rate. The term “Conversion Rate” means the automatic conversion on the Conversion Date of the principal amount of the Debenture and all accrued and unpaid interest of the Debenture as of the Conversion Date into Units at a price CDN$0.22 per Unit.

	1.4	Holder. For purposes of this Agreement, the term “Holder” or “Holders” means any person or persons owning of record Registrable Securities that have not been sold to the public or pursuant to Rule 144 promulgated under the U.S. Securities Act, or any assignee of record of such Registrable Securities to whom rights under this Agreement have been duly assigned in accordance with this Agreement; provided, however, that a holder of Excluded Securities shall not be a Holder with respect to such Excluded Securities for purposes of Section 2.1 of this Agreement.
	1.5	Qualified Public Offering. The term “Qualified Public Offering” means a firm commitment underwritten public offering with gross proceeds to the Corporation of at least US$10,000,000 (prior to any payment of any underwriter discounts and commissions) pursuant to a registration statement filed under the U.S. Securities Act.
	1.6	Registrable Securities. The term “Registrable Securities” means: (i) any of the Common Shares (including the Common Shares underlying the Warrants (the “Warrant Shares”)) issued pursuant to the terms and conditions of the Subscription Agreements and (ii) any Common Shares of the Corporation issued (or issuable upon the conversion or exercise of any warrant, right or other security which is issued) as a dividend or other distribution with respect to, in exchange for or in replacement of, all such Common Shares or Warrant Shares described in clause (i) of this Section 1.6; excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which rights under this Agreement are not assigned in accordance with this Agreement or any Registrable Securities sold to the public or sold pursuant to Rule 144 promulgated under the U.S. Securities Act (the “Excluded Securities”).
	1.7	Registration. The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the U.S. Securities Act, and the declaration or ordering of effectiveness of such registration statement.
	1.8	SEC. The term “SEC” means the United States Securities and Exchange Commission.
	1.9	U.S. Exchange Act. The term “U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
	1.10	U.S. Securities Act. The term “U.S. Securities Act” means the United States Securities Act of 1933, as amended.
2.	Registration Rights.
	2.1	Automatic Registration. The Corporation shall prepare and file with the SEC a registration statement (the “Registration Statement”) and such other documents, including a prospectus, as may be necessary, in order to comply with the provisions of the U.S. Securities Act and applicable state securities laws, so as to

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	permit the public sale of the Registrable Securities. The Corporation shall file the Registration Statement no later than thirty (30) days after the Conversion Date, and use its best efforts to have the Registration Statement declared effective within one hundred eighty (180) days after the Closing Date.
2.2	Expenses. All expenses incurred in connection with a registration pursuant to this Section 2, including without limitation registration and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Corporation, shall be borne by the Corporation; provided, however, the Holder shall be solely responsible for the fees of any counsel or advisor retained by Holder in connection with such registration and any transfer taxes or brokerage discounts, selling commissions or selling fees applicable to Registrable Securities sold by the Holder pursuant thereto.
2.3	Obligations of the Corporation. The Corporation hereby covenants and agrees as follows:
	(a)	it shall use its best efforts to keep the Registration Statement effective until the twelve (12) month anniversary of the Conversion Date or, if earlier, until the distribution contemplated in the Registration Statement has been completed;
	(b)	it shall prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the U.S. Securities Act with respect to the disposition of all securities covered by the Registration Statement;
	(c)	it shall furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the U.S. Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration;
	(d)	it shall use its best efforts to register and qualify the securities covered by such Registration Statement under such other securities or “blue sky” laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Corporation shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; and
	(e)	it shall notify each Holder of Registrable Securities covered by such Registration Statement at any time when a prospectus relating thereto is required to be delivered under the U.S. Securities Act of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary

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		to make the statements therein not misleading in the light of the circumstances then existing.
2.4	Furnish Information. It shall be a condition precedent to the obligations of the Corporation to take any action pursuant to this Section 2 that the selling Holders shall furnish to the Corporation such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to timely effect the registration of their Registrable Securities.
2.5	Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.
2.6	Black-Out Period. Without limiting the other provisions of this Section 2, each Holder agrees that, if so requested by the Corporation upon a good faith determination by the Corporation’s board of directors (the “Board”) that the imposition of a “Suspension Period” is necessary to enable the Corporation to pursue the objectives described in this Section 2.6, not to effect any offer or sale of securities pursuant to the Registration Statement, or otherwise, or engage in any hedging or other transaction intended to reduce or transfer the risk of ownership for any period (not to exceed 45 days) reasonably deemed necessary (i) by the Corporation or any underwriter in connection with the offering of securities by the Corporation for its own account or (ii) by the Corporation in connection with any proposal or plan by the Corporation to engage in any material financing or material acquisition or disposition by the Corporation or any subsidiary thereof of the securities or substantially all of the assets of any other person (other than in the ordinary course of business), any tender offer or any merger, consolidation, corporate reorganization, strategic partnership arrangement or restructuring or other similar transaction (each, a “Business Combination”) material to the Corporation and its subsidiaries taken as a whole. Any period during which the Corporation fails to keep the Registration Statement effective and usable for resales of securities, or requires pursuant to this Section 2.6 that the Holders not effect sales of securities pursuant to the Registration Statement, is hereafter referred to as a “Suspension Period”. A Suspension Period shall commence on the date set forth in a written notice by the Corporation to the Holders that the Registration Statement is no longer effective or that the prospectus included in the Registration Statement is no longer usable for resales of securities or, in the case of a suspension pursuant to this Section 2.6, and shall end on the date when each Holder of securities covered by the Registration Statement either receives copies of the supplemented or amended prospectus contemplated by Section 2.3 or is advised in writing by the Corporation that use the prospectus or sales may be resumed. The Corporation may only impose a Suspension Period on the Holders two (2) times during any twelve (12) month period. The obligation under Section

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	2.3 to keep the Registration Statement effective shall not include any period of time such Registration Statement was subject to a Suspension Period.
2.7	Indemnification.
	(a)	By the Corporation. To the extent permitted by law, the Corporation will indemnify and hold harmless each Holder, the partners, officers and directors of each Holder, and each person, if any, who controls such Holder within the meaning of the U.S. Securities Act or U.S. Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the U.S. Securities Act, the U.S. Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a “Violation”):
		(i)	any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto;
		(ii)	the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or
		(iii)	any violation or alleged violation by the Corporation of the U.S. Securities Act, the U.S. Exchange Act, any federal or state securities law or any rule or regulation promulgated under the U.S. Securities Act, the U.S. Exchange Act or any federal or state securities law in connection with the offering covered by the Registration Statement.
		The Corporation will reimburse each such Holder, partner, officer or director, or controlling person for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 2.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Corporation (which consent shall not be unreasonably withheld), nor shall the Corporation be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, officer, director or controlling person of such Holder.

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(b)

By Selling Holders. To the extent permitted by law, each selling Holder will indemnify and hold harmless the Corporation, each of its directors, each of its officers who have signed the Registration Statement, each person, if any, who controls the Corporation within the meaning of the U.S. Securities Act, or any of such other Holder’s partners, directors or officers or any person who controls such Holder within the meaning of the U.S. Securities Act or the U.S. Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Corporation or any such director, officer, controlling person or other such Holder, partner or director, officer or controlling person of such other Holder may become subject under the U.S. Securities Act, the U.S. Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Corporation or any such director, officer, controlling person or other Holder, partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 2.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further, that the total amounts payable in indemnity by a Holder under this Section 2.7(b) in respect of any Violation shall not exceed the net proceeds received by such Holder in the registered offering out of which such Violation arises.

(c)

Notice. Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the

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	commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.7.
(d)	Defect Eliminated in Final Prospectus. The foregoing indemnity agreements of the Corporation and Holders are subject to the condition that, insofar as they relate to any Violation made in a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time the Registration Statement becomes effective or the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”), such indemnity agreement shall not inure to the benefit of any person if a copy of the Final Prospectus (i) was furnished to the indemnified party and (ii) was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the U.S. Securities Act.
(e)	Contribution. In order to provide for just and equitable contribution to joint liability under the U.S. Securities Act in any case in which either     (i) any Holder exercising rights under this Agreement, or any controlling     person of any such Holder, makes a claim for indemnification pursuant to this Section 2.7 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 2.7 provides for indemnification in such case, or     (ii) contribution under the U.S. Securities Act may be required on the part     of any such selling Holder or any such controlling person in circumstances for which indemnification is provided under this Section 2.7; then, and in each such case, the Corporation and such Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such Holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by and sold under the Registration Statement bears to the public offering price of all securities offered by and sold under the Registration Statement, and the Corporation and other selling Holders are responsible for the remaining portion; provided, however, that, in any such case, (A) no such Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to the Registration Statement and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the U.S. Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

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	(f)	Survival. The obligations of the Corporation and Holders under this Section 2.7 shall survive the completion of any offering of Registrable Securities in the Registration Statement, and otherwise.
2.8	“Market Stand-Off” Agreement.
	(a)	Each Holder hereby agrees that he, she or it shall not, to the extent requested by the managing underwriter of a Qualified Public Offering in which Securities (as defined below) are sold, directly or indirectly, offer, sell, pledge, contract to sell, transfer the economic risk of ownership in, make any short sale, grant any option to purchase or otherwise dispose of any Securities of the Corporation or any securities convertible into or exchangeable or exercisable for or any other rights to purchase or acquire Securities, including, without limitation, Securities which may be deemed to be beneficially owned by each Holder in accordance with the rules and regulations of the SEC and Securities which may be issued upon exercise of an option or warrant, or enter into any Hedging Transaction (as defined below) relating to Securities (each of the foregoing referred to as a “Disposition”) for a period of 180 days after the effective date of the registration statement relating to such Qualified Public Offering (the “Lock-Up Period”) unless the managing underwriter otherwise agrees; provided, however, such restrictions shall apply only if all of the Corporation’s executive officers, directors and holders of five percent (5%) or more of the Corporation’s voting Securities (collectively, “Other Restricted Sellers”) enter into similar agreements; provided, further, however, that the undersigned shall be permitted to participate on a pro rata basis in any early release from the Lock-Up Period of any Other Restricted Seller by the managing underwriter. The foregoing restriction is expressly intended to preclude the undersigned from engaging in any Hedging Transaction or other transaction which is designed to or reasonably expected to lead to or result in a Disposition during the Lock- Up Period even if the Securities would be disposed of by someone other than the undersigned. “Hedging Transaction” means any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Securities. For purposes of this paragraph 2.8(a), “Securities” shall means any equity securities of the Corporation that are, or that are convertible or exercisable directly or indirectly into, voting common shares or non-voting common shares of the Corporation.
	(b)	Each Holder hereby agrees to execute and deliver in a timely manner an agreement in customary form proposed by such managing underwriter confirming the foregoing covenants.

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		(c)	In order to enforce the foregoing covenants, the Corporation may impose stop transfer instructions with respect to the Securities of the Holder (and the securities of every other person subject to the foregoing restriction) until the end of such period.
	2.9	Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, the Corporation agrees to:
		(a)	make and keep public information available, as those terms are understood and defined in Rule 144 under the U.S. Securities Act, at all times when the Corporation is subject to the reporting requirements of the U.S. Exchange Act;
		(b)	use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Corporation under the U.S. Securities Act and the U.S. Exchange Act when the Corporation is subject to the U.S. Exchange Act; and
		(c)	as long as a Holder owns any Registrable Securities, to furnish to the Holder forthwith upon request a written statement by the Corporation as to its compliance with the reporting requirements of said Rule 144, a copy of the most recent annual or quarterly report of the Corporation and such other reports and documents of the Corporation as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing a Holder to sell any such securities without registration when the Corporation is subject to the U.S. Exchange Act.
	2.10	Termination of Registration Rights. The registration rights granted pursuant to this Agreement shall terminate as to a Holder on the date on which all of such Holder’s Registrable Securities can be sold under Rule 144 promulgated under the U.S. Securities Act.
3.	Right of First Offer.
	3.1	Right of First Offer. In the event that a minimum of US$1,000,000 in gross proceeds are raised through the offering of the Debentures pursuant to the Subscription Agreements, the Investor shall have a right of first offer (the “Right of First Offer”) to purchase such Investor’s Pro Rata Share of all or part of any Subsequent Financing.
	3.2	Pro Rata Share. For purposes of this Section 3, each Investor’s “Pro Rata Share” shall be equal to the fraction obtained by dividing (a) the sum of the total number of Common Shares issued or issuable upon the exercise of any stock options or warrants then held by such Investor or upon the conversion of any convertible securities then held by such Investor by (b) the sum of the total

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	number of Common Shares issued or issuable upon exercise upon any options or warrants then outstanding or the upon the conversion of any convertible securities then outstanding.
3.3	Subsequent Financing. For purposes of this Section 3, “Subsequent Financing” shall mean any private equity or private equity linked financing completed by the Corporation within twelve (12) months after the Closing Date; provided, however, that a Subsequent Financing shall not include:
	(a)	the Common Shares, Warrants and Warrant Shares issued pursuant to the terms and conditions of the Subscription Agreements;
	(b)	Common Shares, options or other rights to purchase Common Shares issued or granted to employees, officers, directors and consultants of the Corporation pursuant to one or more employee stock plans or agreements approved by the Board;
	(c)	securities issued or issuable to financial institutions or lessors in connection with real estate leases, commercial credit arrangements, equipment financings or similar transactions approved by the Board, including, but not limited to, equipment leases or bank lines of credit;
	(d)	securities issued as a dividend or distribution on, or in connection with a split of or recapitalization of, any of the capital stock of the Corporation;
	(e)	securities issued by the Corporation pursuant to strategic partnership, joint venture or other similar arrangements approved by the Board where the primary purpose of the arrangement is not to raise capital;
	(f)	securities issued pursuant to a registration statement filed by the Corporation under the U.S. Securities Act;
	(g)	securities issued by the Corporation pursuant to an acquisition of another corporation or other entity by the Corporation by merger, purchase of all or substantially all of the capital stock or assets, or other reorganization; or
	(h)	securities issued pursuant to currently outstanding options, warrants or other rights to acquire securities of the Corporation.
3.4	Procedure. The Corporation shall provide notice (the “Notice”) to the Investor of the terms and conditions of any such Subsequent Financing and the Investor shall have ten (10) business days to respond with its indication to participate in such Subsequent Financing. If no response is received within such ten (10) business day period, the Investor shall be deemed to have refused to participate in the Subsequent Financing. If the Investor indicates its desire to participate in the Subsequent Financing, the closing shall occur after an additional five (5) business day period, on the same terms and conditions set forth in the Notice from the

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		Corporation. No commissions shall be payable in connection with an Investor’s exercise of its Right of First Offer under any such Subsequent Financing.
	3.5	Waiver of Right of First Offer. The Right of First Offer may be waived as to any Subsequent Financing on behalf of all Investors, by Investors holding a majority of the Registrable Securities then held by all Investors or their permitted assignees or transferees.
	3.6	Termination and Assignment. The Right of First Offer granted in this Section 3 shall expire twelve (12) months from the Closing Date. The Right of First Offer is non-assignable except to any permitted transferee pursuant to Section 5.1 of this Agreement.
	3.7	Corporation Right to Terminate Subsequent Financing. Notwithstanding the foregoing, the Corporation may in its sole discretion terminate any Subsequent Financing in respect of which the Corporation has provided Notice at any time prior to the consummation thereof. The foregoing provision shall apply even in the event one or more Investors have exercised their Rights of First Offer hereunder, provided, however, that no Subsequent Financing shall have been consummated.
4.	Sale of Additional Securities.
	4.1	Sale of Securities Below Purchase Price. In the event the Corporation issues or sells Common Shares within twelve (12) months after the Closing Date at a price per Common Share below CDN$0.22 or issues or sells securities exercisable or convertible into Common Shares of the Corporation at a price per Common Share below CDN$0.22 (the “Down Round Financing”), the Investor shall be issued an additional number of Common Shares (at no additional cost to the Investor) for each Retained Share of the Investor, such that the Investor’s blended purchase price per Retained Share shall be equal to the price per share under the Down Round Financing. Such additional Common Shares shall be issued by the Corporation to the Investor within ten (10) days of the closing of such Down Round Financing. For purposes of this Section 4, “Retained Shares” shall mean all Common Shares acquired by the Investor upon conversion of the Debenture (excluding any Common Shares issued upon exercise of any of the Warrants).
	4.2	Down Round Financing. For purposes of this Section 4, “Down Round Financing” shall include all securities issued by the Corporation other than:
		(a)	Common Shares, Warrants or Warrant Shares issued pursuant to the terms and conditions of the Subscription Agreements;
		(b)	Common Shares, options or other rights to purchase Common Shares issued or granted to employees, officers, directors and consultants of the Corporation pursuant to one or more employee stock plans or agreements approved by the Board;

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		(c)	securities of the Corporation issued or issuable to financial institutions or lessors in connection with real estate leases, commercial credit arrangements, equipment financings or similar transactions approved by the Board, including, but not limited to, equipment leases or bank lines of credit;
		(d)	securities issued as a dividend or distribution on, or in connection with a split of or recapitalization of, any of the capital stock of the Corporation;
		(e)	securities issued by the Corporation pursuant to strategic partnership, joint venture or other similar arrangements approved by the Board where the primary purpose of the arrangement is not to raise capital;
		(f)	securities of the Corporation issued pursuant to a registration statement filed by the Corporation under the U.S. Securities Act;
		(g)	securities issued by the Corporation pursuant to an acquisition of another corporation or other entity by the Corporation by merger, purchase of all or substantially all of the capital stock or assets, or other reorganization; or
		(h)	securities of the Corporation issued pursuant to currently outstanding options, warrants or other rights to acquire securities of the Corporation.
5.	General Provisions.
	5.1	Assignment. Notwithstanding anything herein to the contrary, unless otherwise consented to in writing by the Corporation, the rights of a Holder under this Agreement may be assigned only to (A) a shareholder, partner, member, Affiliate (as that term is defined in Rule 405 of Regulation C under the U.S. Securities Act), or beneficiary of such Holder; (B) a spouse, child, parent or beneficiary of the estate of such Holder or (C) a trust for the benefit of the persons set forth in (A) or (B); provided, however, that any transfer to any Affiliate is permitted only if such Affiliate is not: (i) a competitor of the Corporation; (ii) a holder of 5% or more of the equity of a competitor of the Corporation, or (iii) an entity of which 5% or more of its securities are held by a competitor of the Corporation; provided further that no party may be assigned any of the foregoing rights unless the Corporation is given written notice by the assigning party at the time of such assignment stating the name, address and tax identification number of the assignee(s) and identifying the securities of the Corporation as to which the rights in question are being assigned; and provided further that any such assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement, including without limitation the provisions of this Section 5.
	5.2	Amendment of Rights. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Corporation and two-thirds (2/3) of all Registrable Securities then held by all

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	Investors or their permitted assignees or transferees (except with respect to Section 3 where only a majority of all Registrable Securities then held by all Investors or their permitted assignees or transferees is required). Any amendment or waiver effected in accordance with this Section 5.2 shall be binding upon each Holder and the Corporation.
5.3	Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if: (i) upon delivery if personally delivered to the party to be notified, (ii) three (3) days following deposit in the mail by registered or certified mail, return receipt requested, postage prepaid, or (iii) when receipt is confirmed as evidenced by a transmittal report if sent via facsimile to the appropriate facsimile number listed on the signature pages attached hereto. Any party hereto may designate a new address by ten (10) days advance written notice to the other parties in the matter set forth above.
5.4	Entire Agreement. This Agreement constitutes and contains the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties respecting the subject matter hereof.
5.5	Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein. The parties hereto hereby submit to the exclusive jurisdiction and venue of the courts of Alberta.
5.6	Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, then such provision(s) shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.
5.7	Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their successors and assigns, any rights or remedies under or by reason of this Agreement.
5.8	Successors and Assigns. Subject to the provisions of Section 5.1, the provisions of this Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of the parties hereto.
5.9	Captions. The captions to sections of this Agreement have been inserted for identification and reference purposes only and shall not be used to construe or interpret this Agreement.

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5.10	Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
5.11	Costs and Attorneys’ Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated hereunder, the prevailing party shall recover all of such party’s costs and attorneys’ fees incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom.
5.12	Adjustments in Securities and Certain Other Changes. Wherever in this Agreement there is a reference to a specific number of securities of the Corporation of any class or series, then, upon the occurrence of any subdivision, combination or dividend of such class or series of securities, the specific number of securities so referenced in this Agreement shall automatically be proportionally adjusted to reflect the affect on the outstanding securities of such class or series of securities by such subdivision, combination or dividend.
5.13	Aggregation of Securities. All securities held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

[Signature Page Follows]

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SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

                        IN WITNESS WHEREOF, the parties hereto have executed this Investors’ Rights Agreement as of the date and year first above written.

CORPORATION:

CARBIZ INC.,

A corporation formed under the laws of the province of Ontario, Canada

Carl Ritter, Chief Executive Officer

Address: ___________________________________________

___________________________________________________

Facsimile Number: ____________________________________

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

INVESTORS:

By: _______________________________________________

Its: _______________________________________________

Print Name: _________________________________________

__________________________________________________

Address: ___________________________________________

Facsimile Number: ____________________________________

ii

EXHIBIT A

SCHEDULE OF INVESTORS

Investor Amount of Debenture Address

EX-4.11

CARBIZ INC.

INVESTORS’ RIGHTS AGREEMENT

THIS INVESTORS’ RIGHTS AGREEMENT (the “Agreement”) is entered into as of October 6, 2005, by and among Carbiz, Inc., a corporation formed under the laws of the Province of Ontario, Canada (the “Corporation”), and the Schedule of Investors listed on Schedule A attached hereto (each an “Investor”, collectively, the “Investors”).

RECITALS

WHEREAS the Corporation and each of the Investors are parties to a certain subscription agreement dated as of the date hereof (each a “Subscription Agreement”, collectively, the “Subscription Agreements”), whereby the Corporation will sell, and each Investor will purchase, a Debenture of the Corporation (each a “Debenture”, collectively, the “Debentures”) that is convertible into units (the “Units”) of the Corporation, with each Unit consisting of one Common Share (the “Common Share”), one Class A Warrant (the “Class A Warrant”) and one-half of one Class B Warrant (the “Class B Warrant”), (the Class A Warrants and the Class B Warrants collectively, the “Warrants”), subject to the terms and conditions of such Agreement;

AND WHEREAS the obligations of the Corporation and the Investors under the Subscription Agreements are conditioned, among other things, upon the execution and delivery of this Agreement by the Corporation and the Investors;

NOW THEREFORE, in consideration of the foregoing recitals and the mutual premises hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

1.	Certain Definitions: As used in this Agreement, the following terms shall have the respective meanings:
	1.1	Closing Date. The term “Closing Date” means October 6, 2005 or such other date as may be determined by the Corporation in accordance with the Subscription Agreements.
	1.2	Conversion Date. The term “Conversion Date” means the date on which the Corporation obtains a listing on the United States Over The Counter Bulletin Board and delists from the TSX Venture Exchange.
	1.3	Conversion Rate. The term “Conversion Rate” means the automatic conversion on the Conversion Date of the principal amount of the Debenture and all accrued and unpaid interest of the Debenture as of the Conversion Date into Units at a price CDN$0.15 per Unit.

	1.4	Holder. For purposes of this Agreement, the term “Holder” or “Holders” means any person or persons owning of record Registrable Securities that have not been sold to the public or pursuant to Rule 144 promulgated under the U.S. Securities Act, or any assignee of record of such Registrable Securities to whom rights under this Agreement have been duly assigned in accordance with this Agreement; provided, however, that a holder of Excluded Securities shall not be a Holder with respect to such Excluded Securities for purposes of Section 2.1 of this Agreement.
	1.5	Qualified Public Offering. The term “Qualified Public Offering” means a firm commitment underwritten public offering with gross proceeds to the Corporation of at least US$10,000,000 (prior to any payment of any underwriter discounts and commissions) pursuant to a registration statement filed under the U.S. Securities Act.
	1.6	Registrable Securities. The term “Registrable Securities” means: (i) any of the Common Shares (including the Common Shares underlying the Warrants (the “Warrant Shares”)) issued pursuant to the terms and conditions of the Subscription Agreements and (ii) any Common Shares of the Corporation issued (or issuable upon the conversion or exercise of any warrant, right or other security which is issued) as a dividend or other distribution with respect to, in exchange for or in replacement of, all such Common Shares or Warrant Shares described in clause (i) of this Section 1.6; excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which rights under this Agreement are not assigned in accordance with this Agreement or any Registrable Securities sold to the public or sold pursuant to Rule 144 promulgated under the U.S. Securities Act (the “Excluded Securities”).
	1.7	Registration. The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the U.S. Securities Act, and the declaration or ordering of effectiveness of such registration statement.
	1.8	SEC. The term “SEC” means the United States Securities and Exchange Commission.
	1.9	U.S. Exchange Act. The term “U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
	1.10	U.S. Securities Act. The term “U.S. Securities Act” means the United States Securities Act of 1933, as amended.
2.	Registration Rights.
	2.1	Automatic Registration. The Corporation shall prepare and file with the SEC a registration statement (the “Registration Statement”) and such other documents, including a prospectus, as may be necessary, in order to comply with the provisions of the U.S. Securities Act and applicable state securities laws, so as to permit the public sale of the Registrable Securities. The Corporation shall file the

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	Registration Statement no later than thirty (30) days after the Closing Date, and use its best efforts to have the Registration Statement declared effective within one hundred eighty (180) days after the Closing Date.
2.2	Expenses. All expenses incurred in connection with a registration pursuant to this Section 2, including without limitation registration and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Corporation, shall be borne by the Corporation; provided, however, the Holder shall be solely responsible for the fees of any counsel or advisor retained by Holder in connection with such registration and any transfer taxes or brokerage discounts, selling commissions or selling fees applicable to Registrable Securities sold by the Holder pursuant thereto.
2.3	Obligations of the Corporation. The Corporation hereby covenants and agrees as follows:
	(a)	it shall use its best efforts to keep the Registration Statement effective until the twelve (12) month anniversary of the Conversion Date or, if earlier, until the distribution contemplated in the Registration Statement has been completed;
	(b)	it shall prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the U.S. Securities Act with respect to the disposition of all securities covered by the Registration Statement;
	(c)	it shall furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the U.S. Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration;
	(d)	it shall use its best efforts to register and qualify the securities covered by such Registration Statement under such other securities or “blue sky” laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Corporation shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; and
	(e)	it shall notify each Holder of Registrable Securities covered by such Registration Statement at any time when a prospectus relating thereto is required to be delivered under the U.S. Securities Act of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary

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		to make the statements therein not misleading in the light of the circumstances then existing.
2.4	Furnish Information. It shall be a condition precedent to the obligations of the Corporation to take any action pursuant to this Section 2 that the selling Holders shall furnish to the Corporation such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to timely effect the registration of their Registrable Securities.
2.5	Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.
2.6	Black-Out Period. Without limiting the other provisions of this Section 2, each Holder agrees that, if so requested by the Corporation upon a good faith determination by the Corporation’s board of directors (the “Board”) that the imposition of a “Suspension Period” is necessary to enable the Corporation to pursue the objectives described in this Section 2.6, not to effect any offer or sale of securities pursuant to the Registration Statement, or otherwise, or engage in any hedging or other transaction intended to reduce or transfer the risk of ownership for any period (not to exceed 45 days) reasonably deemed necessary (i) by the Corporation or any underwriter in connection with the offering of securities by the Corporation for its own account or (ii) by the Corporation in connection with any proposal or plan by the Corporation to engage in any material financing or material acquisition or disposition by the Corporation or any subsidiary thereof of the securities or substantially all of the assets of any other person (other than in the ordinary course of business), any tender offer or any merger, consolidation, corporate reorganization, strategic partnership arrangement or restructuring or other similar transaction (each, a “Business Combination”) material to the Corporation and its subsidiaries taken as a whole. Any period during which the Corporation fails to keep the Registration Statement effective and usable for resales of securities, or requires pursuant to this Section 2.6 that the Holders not effect sales of securities pursuant to the Registration Statement, is hereafter referred to as a “Suspension Period”. A Suspension Period shall commence on the date set forth in a written notice by the Corporation to the Holders that the Registration Statement is no longer effective or that the prospectus included in the Registration Statement is no longer usable for resales of securities or, in the case of a suspension pursuant to this Section 2.6, and shall end on the date when each Holder of securities covered by the Registration Statement either receives copies of the supplemented or amended prospectus contemplated by Section 2.3 or is advised in writing by the Corporation that use the prospectus or sales may be resumed. The Corporation may only impose a Suspension Period on the Holders two (2) times during any twelve (12) month period. The obligation under Section 2.3 to keep the Registration Statement effective shall not include any period of time such Registration Statement was subject to a Suspension Period.

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2.7	Indemnification.
	(a)	By the Corporation. To the extent permitted by law, the Corporation will indemnify and hold harmless each Holder, the partners, officers and directors of each Holder, and each person, if any, who controls such Holder within the meaning of the U.S. Securities Act or U.S. Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the U.S. Securities Act, the U.S. Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a “Violation”):
		(i)	any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto;
		(ii)	the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or
		(iii)	any violation or alleged violation by the Corporation of the U.S. Securities Act, the U.S. Exchange Act, any federal or state securities law or any rule or regulation promulgated under the U.S. Securities Act, the U.S. Exchange Act or any federal or state securities law in connection with the offering covered by the Registration Statement.
		The Corporation will reimburse each such Holder, partner, officer or director, or controlling person for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 2.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Corporation (which consent shall not be unreasonably withheld), nor shall the Corporation be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, officer, director or controlling person of such Holder.
	(b)	By Selling Holders. To the extent permitted by law, each selling Holder will indemnify and hold harmless the Corporation, each of its directors, each of its officers who have signed the Registration Statement, each

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person, if any, who controls the Corporation within the meaning of the U.S. Securities Act, or any of such other Holder’s partners, directors or officers or any person who controls such Holder within the meaning of the U.S. Securities Act or the U.S. Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Corporation or any such director, officer, controlling person or other such Holder, partner or director, officer or controlling person of such other Holder may become subject under the U.S. Securities Act, the U.S. Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Corporation or any such director, officer, controlling person or other Holder, partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 2.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further, that the total amounts payable in indemnity by a Holder under this Section 2.7(b) in respect of any Violation shall not exceed the net proceeds received by such Holder in the registered offering out of which such Violation arises.

(c)

Notice. Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability

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	that it may have to any indemnified party otherwise than under this Section 2.7.
(d)	Defect Eliminated in Final Prospectus. The foregoing indemnity agreements of the Corporation and Holders are subject to the condition that, insofar as they relate to any Violation made in a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time the Registration Statement becomes effective or the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”), such indemnity agreement shall not inure to the benefit of any person if a copy of the Final Prospectus (i) was furnished to the indemnified party and (ii) was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the U.S. Securities Act.
(e)	Contribution. In order to provide for just and equitable contribution to joint liability under the U.S. Securities Act in any case in which either (i) any Holder exercising rights under this Agreement, or any controlling person of any such Holder, makes a claim for indemnification pursuant to this Section 2.7 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 2.7 provides for indemnification in such case, or (ii) contribution under the U.S. Securities Act may be required on the part of any such selling Holder or any such controlling person in circumstances for which indemnification is provided under this Section 2.7; then, and in each such case, the Corporation and such Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such Holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by and sold under the Registration Statement bears to the public offering price of all securities offered by and sold under the Registration Statement, and the Corporation and other selling Holders are responsible for the remaining portion; provided, however, that, in any such case, (A) no such Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to the Registration Statement and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the U.S. Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.
(f)	Survival. The obligations of the Corporation and Holders under this Section 2.7 shall survive the completion of any offering of Registrable Securities in the Registration Statement, and otherwise.

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2.8	“Market Stand-Off” Agreement.
	(a)	Each Holder hereby agrees that he, she or it shall not, to the extent requested by the managing underwriter of a Qualified Public Offering in which Securities (as defined below) are sold, directly or indirectly, offer, sell, pledge, contract to sell, transfer the economic risk of ownership in, make any short sale, grant any option to purchase or otherwise dispose of any Securities of the Corporation or any securities convertible into or exchangeable or exercisable for or any other rights to purchase or acquire Securities, including, without limitation, Securities which may be deemed to be beneficially owned by each Holder in accordance with the rules and regulations of the SEC and Securities which may be issued upon exercise of an option or warrant, or enter into any Hedging Transaction (as defined below) relating to Securities (each of the foregoing referred to as a “Disposition”) for a period of 180 days after the effective date of the registration statement relating to such Qualified Public Offering (the “Lock-Up Period”) unless the managing underwriter otherwise agrees; provided, however, such restrictions shall apply only if all of the Corporation’s executive officers, directors and holders of five percent (5%) or more of the Corporation’s voting Securities (collectively, “Other Restricted Sellers”) enter into similar agreements; provided, further, however, that the undersigned shall be permitted to participate on a pro rata basis in any early release from the Lock-Up Period of any Other Restricted Seller by the managing underwriter. The foregoing restriction is expressly intended to preclude the undersigned from engaging in any Hedging Transaction or other transaction which is designed to or reasonably expected to lead to or result in a Disposition during the Lock- Up Period even if the Securities would be disposed of by someone other than the undersigned. “Hedging Transaction” means any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Securities. For purposes of this paragraph 2.8(a), “Securities” shall means any equity securities of the Corporation that are, or that are convertible or exercisable directly or indirectly into, voting common shares or non-voting common shares of the Corporation.
	(b)	Each Holder hereby agrees to execute and deliver in a timely manner an agreement in customary form proposed by such managing underwriter confirming the foregoing covenants.
	(c)	In order to enforce the foregoing covenants, the Corporation may impose stop transfer instructions with respect to the Securities of the Holder (and the securities of every other person subject to the foregoing restriction) until the end of such period.

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	2.9	Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, the Corporation agrees to:
		(a)	make and keep public information available, as those terms are understood and defined in Rule 144 under the U.S. Securities Act, at all times when the Corporation is subject to the reporting requirements of the U.S. Exchange Act;
		(b)	use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Corporation under the U.S. Securities Act and the U.S. Exchange Act when the Corporation is subject to the U.S. Exchange Act; and
		(c)	as long as a Holder owns any Registrable Securities, to furnish to the Holder forthwith upon request a written statement by the Corporation as to its compliance with the reporting requirements of said Rule 144, a copy of the most recent annual or quarterly report of the Corporation and such other reports and documents of the Corporation as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing a Holder to sell any such securities without registration when the Corporation is subject to the U.S. Exchange Act.
	2.10	Termination of Registration Rights. The registration rights granted pursuant to this Agreement shall terminate as to a Holder on the date on which all of such Holder’s Registrable Securities can be sold under Rule 144 promulgated under the U.S. Securities Act.
3.	Right of First Offer.
	3.1	Right of First Offer. In the event that a minimum of US$1,000,000 in gross proceeds are raised through the offering of the Debentures pursuant to the Subscription Agreements, the Investor shall have a right of first offer (the “Right of First Offer”) to purchase such Investor’s Pro Rata Share of all or part of any Subsequent Financing.
	3.2	Pro Rata Share. For purposes of this Section 3, each Investor’s “Pro Rata Share” shall be equal to the fraction obtained by dividing (a) the sum of the total number of Common Shares issued or issuable upon the exercise of any stock options or warrants then held by such Investor or upon the conversion of any convertible securities then held by such Investor by (b) the sum of the total number of Common Shares issued or issuable upon exercise upon any options or warrants then outstanding or the upon the conversion of any convertible securities then outstanding.
	3.3	Subsequent Financing. For purposes of this Section 3, “Subsequent Financing” shall mean any private equity or private equity linked financing completed by the

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	Corporation within twelve (12) months after the Closing Date; provided, however, that a Subsequent Financing shall not include:
	(a)	the Common Shares, Warrants and Warrant Shares issued pursuant to the terms and conditions of the Subscription Agreements;
	(b)	Common Shares, options or other rights to purchase Common Shares issued or granted to employees, officers, directors and consultants of the Corporation pursuant to one or more employee stock plans or agreements approved by the Board;
	(c)	securities issued or issuable to financial institutions or lessors in connection with real estate leases, commercial credit arrangements, equipment financings or similar transactions approved by the Board, including, but not limited to, equipment leases or bank lines of credit;
	(d)	securities issued as a dividend or distribution on, or in connection with a split of or recapitalization of, any of the capital stock of the Corporation;
	(e)	securities issued by the Corporation pursuant to strategic partnership, joint venture or other similar arrangements approved by the Board where the primary purpose of the arrangement is not to raise capital;
	(f)	securities issued pursuant to a registration statement filed by the Corporation under the U.S. Securities Act;
	(g)	securities issued by the Corporation pursuant to an acquisition of another corporation or other entity by the Corporation by merger, purchase of all or substantially all of the capital stock or assets, or other reorganization; or
	(h)	securities issued pursuant to currently outstanding options, warrants or other rights to acquire securities of the Corporation.
3.4	Procedure. The Corporation shall provide notice (the “Notice”) to the Investor of the terms and conditions of any such Subsequent Financing and the Investor shall have ten (10) business days to respond with its indication to participate in such Subsequent Financing. If no response is received within such ten (10) business day period, the Investor shall be deemed to have refused to participate in the Subsequent Financing. If the Investor indicates its desire to participate in the Subsequent Financing, the closing shall occur after an additional five (5) business day period, on the same terms and conditions set forth in the Notice from the Corporation. No commissions shall be payable in connection with an Investor’s exercise of its Right of First Offer under any such Subsequent Financing.
3.5	Waiver of Right of First Offer. The Right of First Offer may be waived as to any Subsequent Financing on behalf of all Investors, by Investors holding a majority of the Registrable Securities then held by all Investors or their permitted assignees or transferees.

	3.6	Termination and Assignment. The Right of First Offer granted in this Section 3 shall expire twelve (12) months from the Closing Date. The Right of First Offer is non-assignable except to any permitted transferee pursuant to Section 5.1 of this Agreement.
	3.7	Corporation Right to Terminate Subsequent Financing. Notwithstanding the foregoing, the Corporation may in its sole discretion terminate any Subsequent Financing in respect of which the Corporation has provided Notice at any time prior to the consummation thereof. The foregoing provision shall apply even in the event one or more Investors have exercised their Rights of First Offer hereunder, provided, however, that no Subsequent Financing shall have been consummated.
4.	Sale of Additional Securities.
	4.1	Sale of Securities Below Purchase Price. In the event the Corporation issues or sells Common Shares within twelve (12) months after the Closing Date at a price per Common Share below CDN$0.15 or issues or sells securities exercisable or convertible into Common Shares of the Corporation at a price per Common Share below CDN$0.15 (the “Down Round Financing”), the Investor shall be issued an additional number of Common Shares (at no additional cost to the Investor) for each Retained Share of the Investor, such that the Investor’s blended purchase price per Retained Share shall be equal to the price per share under the Down Round Financing. Such additional Common Shares shall be issued by the Corporation to the Investor within ten (10) days of the closing of such Down Round Financing. For purposes of this Section 4, “Retained Shares” shall mean all Common Shares acquired by the Investor upon conversion of the Debenture (excluding any Common Shares issued upon exercise of any of the Warrants).
	4.2	Down Round Financing. For purposes of this Section 4, “Down Round Financing” shall include all securities issued by the Corporation other than:
		(a)	Common Shares, Warrants or Warrant Shares issued pursuant to the terms and conditions of the Subscription Agreements;
		(b)	Common Shares, options or other rights to purchase Common Shares issued or granted to employees, officers, directors and consultants of the Corporation pursuant to one or more employee stock plans or agreements approved by the Board;
		(c)	securities of the Corporation issued or issuable to financial institutions or lessors in connection with real estate leases, commercial credit arrangements, equipment financings or similar transactions approved by the Board, including, but not limited to, equipment leases or bank lines of credit;

11

		(d)	securities issued as a dividend or distribution on, or in connection with a split of or recapitalization of, any of the capital stock of the Corporation;
		(e)	securities issued by the Corporation pursuant to strategic partnership, joint venture or other similar arrangements approved by the Board where the primary purpose of the arrangement is not to raise capital;
		(f)	securities of the Corporation issued pursuant to a registration statement filed by the Corporation under the U.S. Securities Act;
		(g)	securities issued by the Corporation pursuant to an acquisition of another corporation or other entity by the Corporation by merger, purchase of all or substantially all of the capital stock or assets, or other reorganization; or
		(h)	securities of the Corporation issued pursuant to currently outstanding options, warrants or other rights to acquire securities of the Corporation.
5.	General Provisions.
	5.1	Assignment. Notwithstanding anything herein to the contrary, unless otherwise consented to in writing by the Corporation, the rights of a Holder under this Agreement may be assigned only to (A) a shareholder, partner, member, Affiliate (as that term is defined in Rule 405 of Regulation C under the U.S. Securities Act), or beneficiary of such Holder; (B) a spouse, child, parent or beneficiary of the estate of such Holder or (C) a trust for the benefit of the persons set forth in (A) or (B); provided, however, that any transfer to any Affiliate is permitted only if such Affiliate is not: (i) a competitor of the Corporation; (ii) a holder of 5% or more of the equity of a competitor of the Corporation, or (iii) an entity of which 5% or more of its securities are held by a competitor of the Corporation; provided further that no party may be assigned any of the foregoing rights unless the Corporation is given written notice by the assigning party at the time of such assignment stating the name, address and tax identification number of the assignee(s) and identifying the securities of the Corporation as to which the rights in question are being assigned; and provided further that any such assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement, including without limitation the provisions of this Section 5.
	5.2	Amendment of Rights. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Corporation and two-thirds (2/3) of all Registrable Securities then held by all Investors or their permitted assignees or transferees (except with respect to Section 3 where only a majority of all Registrable Securities then held by all Investors or their permitted assignees or transferees is required). Any amendment or waiver effected in accordance with this Section 5.2 shall be binding upon each Holder and the Corporation.

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5.3	Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if: (i) upon delivery if personally delivered to the party to be notified, (ii) three (3) days following deposit in the mail by registered or certified mail, return receipt requested, postage prepaid, or (iii) when receipt is confirmed as evidenced by a transmittal report if sent via facsimile to the appropriate facsimile number listed on the signature pages attached hereto. Any party hereto may designate a new address by ten (10) days advance written notice to the other parties in the matter set forth above.
5.4	Entire Agreement. This Agreement constitutes and contains the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties respecting the subject matter hereof.
5.5	Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein. The parties hereto hereby submit to the exclusive jurisdiction and venue of the courts of Alberta.
5.6	Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, then such provision(s) shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.
5.7	Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their successors and assigns, any rights or remedies under or by reason of this Agreement.
5.8	Successors and Assigns. Subject to the provisions of Section 5.1, the provisions of this Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of the parties hereto.
5.9	Captions. The captions to sections of this Agreement have been inserted for identification and reference purposes only and shall not be used to construe or interpret this Agreement.
5.10	Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
5.11	Costs and Attorneys’ Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated hereunder, the prevailing party shall recover all of such party’s costs and attorneys’ fees incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom.

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5.12

Adjustments in Securities and Certain Other Changes. Wherever in this Agreement there is a reference to a specific number of securities of the Corporation of any class or series, then, upon the occurrence of any subdivision, combination or dividend of such class or series of securities, the specific number of securities so referenced in this Agreement shall automatically be proportionally adjusted to reflect the affect on the outstanding securities of such class or series of securities by such subdivision, combination or dividend.

5.13

Aggregation of Securities. All securities held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

[Signature Page Follows]

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SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

IN WITNESS WHEREOF, the parties hereto have executed this Investors’ Rights Agreement as of the date and year first above written.

CORPORATION:      

CARBIZ INC.,      

A corporation formed under the laws of the province of Ontario, Canada      

_____________________________________

Carl Ritter, Chief Executive Officer      

Address:  _____________________________

_____________________________________

Facsimile Number:  ______________________

SIGNATURE PAGE TO INVESTORS’ RIGHTS AGREEMENT

INVESTORS:

By:  ________________________________

Its:  ________________________________

Print Name:  __________________________

Address:  ____________________________

____________________________________

Facsimile Number:  _____________________

ii

EXHIBIT A

SCHEDULE OF INVESTORS

Investor	Amount of Debenture	Address
Carl Ritter	CDN$11,721
Ross Quigley	CDN$161,348.94
Carol Ritter	CDN $50,000
Medipac International Inc.	CDN$586,050.00

EX-5.1

November 2, 2005

Carbiz Inc.
7405 North Tamiami Trail,
Sarasota, Florida
34243.

Dear Sirs/Mesdames:

Carbiz Inc. - Registration Statement on Form SB-2

               We have acted as local Ontario counsel on behalf of Carbiz Inc. in connection with the preparation and filing under the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations promulgated thereunder, of a Registration Statement on Form SB-2 as amended to date (the “Registration Statement”), including the prospectus constituting Part 1 thereof (the “Prospectus”) by Carbiz Inc. (the “Corporation”), a corporation incorporated under the laws of the Province of Ontario. The Registration Statement relates to the selling, from time to time, by selling securityholders of the Corporation of up to 44,807,860 common shares of the Corporation, which includes:

(i)	10,623,815 common shares (the “Debenture Shares”) that will be issuable upon conversion of the Corporation’s 5% convertible debentures (the “5% Debentures”) (as described in the Prospectus);
(ii)	11,254,541 common shares that would be issuable upon the exercise of the Corporation’s Class A Common Share Purchase Warrants (as described in the Prospectus), issuable upon conversion of the Corporation’s 5% Debentures (the “Class A Purchase Warrants”);
(iii)	5,627,259 common shares that would be issuable upon exercise of the Corporation’s Class B Common Share Purchase Warrants (as described in the Prospectus), issuable upon conversion of the Corporation’s 5% Debentures (the “Class B Purchase Warrants”);
(iv)	428,296 common shares that would be issuable upon exercise of certain warrants issuable upon conversion of the Corporation’s 5% Debentures (the “Other Purchase Warrants”); and
(v)	16,873,949 common shares (“the Shares”) that are currently issued and outstanding and held by the selling shareholders (as defined in the Prospectus);

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               We have examined originals or copies, certified or otherwise identified to our satisfaction, of all such agreements, documents, records, certificates and other statements of corporate officers and other representatives of the Corporation as we have considered necessary or relevant to form a basis for this opinion. In such examination, we have assumed the genuiness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies and the legal capacity of all individuals who have executed such documents. We have, when relevant facts material to our opinion were not independently established by us, relied, to the extent, we deemed such reliance proper, upon written or oral statements of officers and other representatives of the Corporation.

               We are solicitors qualified to practice law in the Province of Ontario and we express no opinions as to any laws or any matters governed by any laws other than the laws of the Province of Ontario and the federal laws of Canada applicable therein which are in effect on the date hereof.

               We are of the opinion that the Shares have been duly authorized for issuance by the Corporation and the Class A Warrant Shares, Class B Warrant Shares, the Debenture Shares and Other Warrant Shares issuable upon due exercise of the Class A Purchase Warrants, Class B Purchase Warrants 5% Debentures and Other Purchase Warrants, respectively, in accordance with their respective terms have been validly allotted and reserved for issuance, and the Shares are, and the Class A Warrant Shares, Class B Warrant Shares, Debenture Shares and Other Warrant Shares when issued upon due exercise of the Class A Purchase Warrants, Class B Purchase Warrants, 5% Debentures and Other Purchase Warrants respectively, in accordance with their respective terms will be outstanding as fully paid and non-assessable common shares in the capital of the Corporation.

               This opinion is rendered solely to the addressee listed above in connection with the filing of the Registration Statement and may not be used or relied upon for any other purpose or used or relied upon by any other person, nor quoted from or referred to in any documents without our prior written consent.

               We hereby consent to the inclusion of this opinion in the Registration Statement and the filing of this opinion with the United States Securities and Exchange Commission as an exhibit to the Registration Statement, and to the references to our firm’s name under the headings “Limitation on Enforcement of Civil Judgments” and “Legal Matters” in the Prospectus. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations promulgated thereunder.

Yours truly,

/s/ Harris + Harris LLP

EX-10.1

               THIS CONSULTING AGREEMENT made and effective the 12th day of October,1999.

BETWEEN:

CARBIZ.COM INC., a corporation incorporated under the laws of the Province of Ontario,

(hereinafter called the "Corporation")

OF THE FIRST PART;

- and -

1043917 ONTARIO INC., a corporation incorporated under the laws of the Province of Ontario,

(hereinafter called the "Consultant")

OF THE SECOND PART;

and -

CARL RITTER, of the City of Toronto, in the Province of Ontario, (hereinafter called the "Covenantor")

OF THE THIRD PART.

               WHEREAS the Corporation desires to hire the Consultant as an independent contractor and the Consultant desires to provide services to the Corporation as a consultant;

               AND WHEREAS the Covenantor is a principal of the Consultant;

               NOW THEREFORE IN CONSIDERATION of the premises and respective covenants hereinafter set forth, the sum of two ($2.00) dollars paid by each of the parties hereto to the other and other good and valuable consideration (the receipt and sufficiency whereof is hereby acknowledged), the parties hereby agree as follows:

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l.             Relationship

               The Corporation hereby retains the Consultant as an independent contractor to serve as a consultant for the Corporation and the Consultant hereby agrees to such engagement upon the terms and conditions of this Agreement.

2.             Duties

(a)	The Consultant shall perform services and duties for the Corporation as reasonably requested by Corporation including without limitation those services and duties as are set out in Schedule "A" hereto. The Consultant agrees to provide the Covenantor at such times as Covenantor considers reasonable in the circumstances to perform such services and duties. The Consultant acknowledges and agrees that the Consultant and the Covenantor will not be obliged to perform their services according to any predetermined timetable and that the Consultant and Covenantor may devote such time to the Corporation as is required in the circumstances.
(b)	Unless prevented by ill health or other sufficient cause, the Consultant and the Covenantor shall devote, during the Term (as hereinafter defined), such time and attention to the business of the Corporation as the Consultant and the Covenantor consider appropriate in the circumstances.
(c)	The Consultant and the Covenantor shall use their best efforts to promote the interests of the Corporation.

3.             Term

                Unless sooner terminated as provided for herein, this Agreement shall remain in force and effect for an initial term commencing on the date first above written and ending on January 31, 2005 (the "Term"). This Agreement may be renewed on the terms and conditions that the Corporation, the Consultant and the Covenantor consider reasonable in the circumstances.

4.             Compensation and Benefits

(a)	Commencing as of the date first above written until January 31, 2000 (prorated as applicable to take in consideration a part of a week), the Corporation shall pay to the Consultant a fee (the "Consulting Fee") of two thousand three hundred and seven dollars and seventy cents ($2,307.70) Dollars per week, in advance.
(b)	Commencing on February 1, 2000, until and including January 31, 2001, the Corporation shall pay to the Consultant a Consulting Fee of one hundred and sixtyfive thousand ($165,000.00) dollars per annum plus GST, payable weekly, in advance;

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(c) Commencing on February 1, 2001, until and including January 31, 2002, the Corporation shall pay to the Consultant a Consulting Fee of one hundred seventythree thousand two hundred and fifty ($173,250.00) dollars per annum plus GST, payable weekly, in advance;

(d)	Commencing on February 1, 2002, until and including January 31, 2003, the Corporation shall pay to the Consultant a Consulting Fee of one hundred and eighty-one thousand nine hundred and twelve dollars and fifty cents ($181,912.50) per annum plus GST, payable weekly, in advance;
(e)	Commencing on February 1, 2003, until and including January 31, 2004, the Corporation shall pay to the Consultant a Consulting Fee of one hundred and ninety-one thousand and eight dollars and thirteen cents ($191,008.13) per annum plus GST, payable weekly, in advance;
(f)	Commencing on February 1, 2004, until and including January 31, 2005, the Corporation shall, pay to the Consultant a Consulting Fee of two hundred thousand five hundred and fifty-eight dollars and fifty-three cents ($200,558.53) per annum plus GST, payable weekly, in advance;
(g)	The Consultant shall be entitled to reimbursement of all actual reasonable expenses incurred by the Consultant in connection with its duties hereunder including without limiting the generality of the foregoing a car allowance of $500.00 per month (plus GST), provided that a proper statement itemizing such expenses and proper vouchers and receipts in support of same is submitted by the Consultant to the Corporation from time to time in accordance with any accounting practices adopted by the Corporation.
(h)	The Corporation agrees to review on an annual basis commencing April 1, 2001 the Consulting Fee and car allowance payable under this Agreement and, if the Corporation agrees that it is reasonable in the circumstances, to increase the Consulting Fee and/or car allowance.

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(i)

The Corporation acknowledges and agrees that the Covenantor is entitled, upon providing the Corporation with reasonable notice, to not provide services nor attend at the offices of the Corporation for a period of four (4) weeks in such duration as the Covenantor requests (ie daily or weekly) in any 365-day period during the Term.

(j)

The Consultant and the Covenantor jointly and severally agree to indemnify and save harmless the Corporation from and against any penalties, fines, costs, losses, damages and expenses that the Corporation may sustain or incur as a result of the Corporation not making any statutory remittances with respect to the Covenantor including without limitation, unemployment insurances premiums, workers compensation payment and income tax deductions.

5.             Termination

(a)	The Corporation may at any time, by giving written notice to the Consultant, terminate this Agreement if the Consultant or the Covenantor does any of the following:
	(i)	commits a breach of trust;
	(ii)	is grossly negligent in the performance of its duties;
	(iii)	becomes incompetent; and/or,
	(iv)	commits a material breach of any provision of this Agreement.
	Termination shall be effective when notice is given at which time this Agreement shall automatically terminate along with the rights and obligations contained herein, including the payment of any fee or benefit and all other monies due up to the date of Termination; except that the provisions set forth in Sections 6 and 7 hereof shall survive after termination and shall continue in full force and effect.
(b)	If during the Term the Covenantor dies, this Agreement shall be considered to terminate as of the date of his death. In such event, the Consultant shall be paid:
	(i)	its Consulting Fee until the date of death of the Covenantor; and
	(ii)	any benefit to which the Consultant or the Covenantor is otherwise entitled as of the date of his death and all other monies due up to the date of termination.

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(c)

The Corporation may at any time, by giving the Consultant two (2) years notice in writing, terminate this Agreement. During the two-year notice period, the Consultant shall receive its Consulting Fee and all amounts that are payable to the Consultant under the terms of this Agreement. The Corporation may also, in lieu of two-years notice, terminate this Agreement by delivering to the Consultant a termination notice along with an amount, in cash or certified cheque, equivalent to two years of the Consulting Fee payable to the Consultant commencing from the date said termination notice is delivered along with all other amounts payable to the Consultant during said two-year period pursuant to the terms of this Agreement. The Corporation agrees that the two-year notice period is reasonable in the circumstances.

(d)

The Consultant and the Covenantor may jointly terminate this Agreement at any time during the Term n (including any renewals or extensions thereof) on three months' notice to the Corporation.

6.              Confidentiality

(a)	The Consultant acknowledges that in providing its consulting services to the Corporation, the Consultant and the Covenantor will require and be exposed to information about certain matters which are confidential to the Corporation or its Subsidiaries and not known to the public or to the competitors (the "Confidential Materials and Information"), and which Confidential Materials and Information are the exclusive property of the Corporation, and includes without limitation the following:
	(i)	Confidential methods of operation, which includes all information related to the Corporation's or its Subsidiaries unique marketing programs, unique products, unique methods, unique service systems, unique software programs and trade secrets;
	(ii)	All information regarding the Corporation's or its Subsidiaries' existing customers and clients, including customer lists, contracts, prices, invoices, computer print outs and other similar information;
	(iii)	All information concerning the Corporation's or its Subsidiaries' potential customers and clients, including mailing lists, prospect cards and other similar information;
	(iv)	Any information which gives the Corporation or its Subsidiaries an opportunity to obtain an advantage over competitors;
	(v)	Financial Information, including the Corporation's or its Subsidiaries' costs, sales, income, profits and other similar information;

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	(vi)	Business opportunities, including all ventures considered by the Corporation or its Subsidiaries, whether or not such ventures are pursued;
	(vii)	Personnel information, including the names of employees and applicable remuneration and benefit policy; and,
	(viii)	Computer programs and procedures relating to the Corporation's or its Subsidiaries' business including without limitation, source codes.
(b)	Each of the Consultant and the Covenantor acknowledges that the Confidential Materials and Information referred to in Subparagraph 6 (a) could be used to the detriment of the Corporation. Accordingly, throughout the Term, including any renewals or extensions thereof, the Consultant and the Covenantor jointly and severally undertake not to disclose to any third party and treat in strict confidence all Confidential Materials and Information, except for disclosures necessary by the Consultant to properly discharge its duties under this Agreement. Further, after the termination of this Agreement, regardless of how that termination should occur, the Consultant and the Covenantor jointly and severally undertake, without time limitation, not to disclose to any third party to treat in strict confidence all Confidential Materials and Information.
(c)	Each of the Consultant and the Covenantor jointly and severally understands and agrees that the restrictions and covenants contained in this Section 6 constitute a material inducement of the Corporation to enter into this Agreement, and that the Corporation would not enter into this Agreement absence such inducement. Each of the Consultant and the Covenantor jointly and severally agrees that the restrictions and covenants contained in this Section 6 shall be construed independent of any other provision of this Agreement, and the existence of any claim or cause of action by the Consultant or the Covenantor against the Corporation, whether predicated under this Agreement or otherwise, shall not constitute a defence to the enforcement by the Corporation of the said restrictions and covenants contained in this paragraph. Further, any clause or provision of this Section 6 that may be found unenforceable shall be considered to be severable from the rest of this Section 6, which remaining portion shall continue in full force and effect in accordance with the terms of this Section 6 and the Agreement.
(d)	Each of the Consultant and the Covenantor jointly and severally acknowledges, agrees and understands that, without prejudice to any and all remedies to the Corporation, an injunction is (but is not the only) effective remedy for any breach of the Consultant's and the Covenantor's covenants under this paragraph, and that the Corporation would suffer irreparable harm and injury in the event of any such breach. Accordingly, each of the Consultant and the Covenantor jointly and severally hereby agrees that the Corporation may apply for and have injunctive relief, including an interim or

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interlocutory injunction, in any Court of competent jurisdiction to enforce any of the provisions in this Section 6 upon the breach or threaten breach thereof Each of the Consultant and the Covenantor jointly and severally further agrees that the Corporation may apply for and is entitled to said injunctive relief without having to prove damages, and is entitled to all costs and expenses, including legal costs.

7.              Non-Competition

(1)	In this Agreement, the following expressions shall have the following meanings, namely:
	(a)	“Business" means the creation, marketing, leasing, licensing, distribution, sale and maintenance of various software products for use in the automotive industry;
	(b)	"Prohibited Period" means each of the following time periods:
		(i)	one (1) year from the date of termination of this Agreement; and/or
		(ii)	two (2) years from the date of termination of this Agreement; and/or
		(iii)	three (3) years from the date of termination of this Agreement; and/or
		(iv)	four (4) years from the date of termination of this Agreement; and/or
		(v)	five (5) years from the date of termination of this Agreement; and/or during the Term.
	(c)	"Prohibited Area" means each of the following areas:
		(i)	within the Province of Ontario;
		(ii)	within the Regional Municipalities of York, Simcoe, Peel, Durham and the Municipality of Metropolitan Toronto;
		(iii)	all that portion of the Province of Ontario lying within a radius of 40 miles of the City of Toronto city hall;
		(iv)	all that portion of the Province of Ontario lying within a radius of miles of the City of Toronto city hall.
	(d)	"person" includes any individual, firm, partnership, joint venture, company,

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		corporation, syndicate, association, government or any department or agency thereof, trustee or any other entity or organization and the heirs, executors, administrators or other legal representatives of an individual; and words importing "person" have similar meanings;
	(e)	"related" and "associated" shall have the meanings ascribed thereto in the Income Tax Act (Canada);
	(f)	"Specified Capacity" means:
		(a)	an individual or proprietor;
		(b)	as a co-owner, partner with or shareholder of any other person;
		(c)	as an employee, officer or director of any other person;
		(d)	as manager for any other person;
		(e)	as agent for any other person;
		(f)	as a co-adventurer, joint venturer or participator in interest with any person;
		(g)	as advisor to any other person;
	provided always that nothing in this Agreement shall prohibit the Consultant or the Covenantor from holding shares, debentures or other securities listed on a recognized stock exchange.
(2)	Each of the Consultant and the Covenantor jointly and severally covenants and agrees with the Corporation that it\he will not, during the Term, including any renewals or extensions thereof, and at any time during the Prohibited Period:
		(i)	in any Specified Capacity carry on or be engaged in the Business within the Prohibited Area;
		(ii)	in any other manner whatsoever, carry on, be engaged in, concerned with or interested in the Business within the Prohibited Area;
		(iii)	lend money to, advise, guarantee the debts or obligations of any person engaged in the Business within the Prohibited Area; or
		(iv)	authorized his name, or any part thereof, being used or employed by or

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		associated with any person engaged in the Business within the Prohibited Area.
	(v)	in any Specified Capacity, solicit the customers of the Corporation or its Subsidiaries (as hereinafter defined) as such customers exist and/or are known to the Consultant or the Covenantor as of the date that the Consultant ceases to be retained by the Corporation nor shall he assist, engage in or solicit in any Specified Capacity or in any manner whatsoever, any individual, firm, partnership, corporation or other entity, soliciting the customers of the Corporation or its Subsidiaries as they exist as of date that the Consultant ceases to be retained by the Corporation with a view to competing with the Corporation or its Subsidiaries.
	(vi)	in any Specified Capacity hire or take or caused to be hired or taken away, any employee or former employee of the Corporation or its Subsidiaries who was employed by the Corporation or its Subsidiaries during the five (5) years preceding the date the Consultant ceases to be retained by the Corporation.
(3)	The covenant or covenants in Subsection 7(2) and Subparagraphs 7(2)(i) to 7(2)(vi), inclusive, shall be construed as if it is or they are divided into separate and distinct covenants in respect of each party hereto, each Prohibited Period, each Specified Capacity and each geographical area, and each such distinct covenant shall constitute a separate covenant severable from all other such distinct covenants. Without prejudice to the generality of the foregoing:
	(a)	insofar as any such covenant relates to a Specified Capacity, it shall be separate and severable from such other covenants insofar as it relates to any other Specified Capacity so that if any covenant is determined to be unenforceable or declared invalid in whole or in part for any reason whatsoever, it shall be deemed not to affect or impair the enforceability or validity of any other covenant or any part thereof,
	(b)	insofar as any such covenant relates to a Prohibited Period, each time period included in the definition of Prohibited Period as set forth in Subsection 7(l)(b) hereof shall produce a separate and distinct covenant of the Consultant and the Covenantor for each such time period; so that if any of such covenants (being less than all of them) are determined to be void, unenforceable or ineffective as a consequence of that time period being too long or for any other reason whatsoever, then such determination shall not affect or impair the validity of any of the remaining covenants; and
	(c)	insofar as any such covenant relates to a Prohibited Area, each geographical area included in the definition of Prohibited Area as set forth in Subsection 7(l)(c) of this Agreement shall produce a separate and distinct covenant of the

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		Consultant and the Covenantor for each such geographical area; so that if any of such covenants (being less than all of them) are determined to be void or unenforceable as a consequence of that area being too large or for any other reason whatsoever, then such determination shall not affect or impair the validity of any of the remaining covenants.
(4)	The Consultant and the Covenantor acknowledge, agree, and understand that, without prejudice to any and all remedies available to the Corporation, an injunction is the only effective remedy for any breach of the Consultant's and the Covenantor's covenants under this paragraph and that the Corporation would suffer irreparable harm and injury in the event of any such breach. Accordingly, the Consultant and the Covenantor hereby agree that the Corporation may apply for and have injunctive relief, including an interim or interlocutory injunction, in any court of competent jurisdiction, to enforce any of the provisions in this paragraph upon the breach or threatened breach thereof. The Consultant and the Covenantor further agree that the Corporation may apply for and is entitled to said injunctive relief without having to prove damages, and is entitled to all costs and expenses, including reasonable legal costs.
(5)	The Consultant and the Covenantor understand and agree that the restrictions and covenants contained in this paragraph are reasonable in the circumstances and constitute a material inducement to the Corporation to enter into this Agreement, and that the Corporation would not enter into this Agreement absent such inducement. The Consultant and the Covenantor agree that the restrictions and covenants contained in this paragraph shall be construed independent of any other provision of this Agreement, and the existence of any claim or cause of action by the Consultant against the Corporation, whether predicated under this Agreement or otherwise, shall not constitute a defence to the enforcement by the Corporation of the said restrictions and covenants contained in this paragraph Further, any clause or provision of this paragraph that may be found unenforceable shall be considered to be severable from the rest of this paragraph, which remaining portions shall continue in full force and effect in accordance of the terms of this paragraph and Agreement.
(6)	For the purposes of this Agreement, "Subsidiaries" mean Data Gathering Service Inc., Aftersale Income Management Inc., 626872 Ontario Limited and any affiliated, related or subsidiary companies (as the terms are defined in the Ontario Business Corporations Act and any successor legislation) presently existing or formed during the Term (including any renewals or extensions thereof) and their respective successors and assigns.

8.             Waiver of Breach
                The waiver by any party of a breach of any provision of this Agreement by another party shall not operate or be construed as a waiver of any subsequent breach by any party.

9.             Assignment
                The Corporation shall have the tight to assign this Agreement to its successors and all covenants and agreements hereunder shall enure to the benefit of and be enforceable by or against its said successors. The term "successor" shall include any party which buys all or substantially all of the Corporation's assets, or all of its shares, or with which it amalgamates, merges or consolidates, or any subsidiary or associate of the Corporation.

10.           Severability
                If any term or covenant of this Agreement or the application thereof to any party or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term or covenant to the party or circumstance other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and obligation of this Agreement shall be separately valid and enforceable to the fullest extent permitted by law.

11.           Notices
                Any notice required or permitted to be given under this Agreement shall be in writing and shall be given by prepaid registered mail or personal delivery. Such notice shall be sent or delivered to the Consultant at his residence as indicated in the records of the Corporation or office of employment and to the Corporation at: 180 Lesmill Road, Don Mills, Ontario, M3B 2T5, and shall be deemed to be given at the time of said personal delivery or, if mailed, on the third business day following the date of mailing.

12.           Entire Agreement
                This Agreement contains the entire agreement of the parties and way not be changed without the mutual written approval of the Corporation, the Consultant and the Covenantor.

13.           Interpretation Not Affected by Headings or Party Drafting
                Each party hereto acknowledges that it and its legal counsel have reviewed and participated in settling the terms of this Agreement, and the parties hereby agree that any rule of construction to the effect that any ambiguity is to be resolved against the drafting party shall not be applicable in the interpretation of this Agreement.

14.           Accounting Calculations
                All accounting calculations herein shall be performed by the accountants of the Corporation in accordance with generally accepted accounting principles.

15.           Governing Law
                This Agreement and the performance or breach hereof shall be governed by the procedural and substantive laws in effect in the Province of Ontario, Canada.

16.           Currency
                All references to currency shall mean lawful money of Canada.

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17.           Rules and Regulations
                Except to the extent inconsistent with this Agreement the Consultant shall be bound by the reasonable rules and regulations implemented by the Corporation from time to time,

18.           Counterparts
                This Agreement may be executed in several counterparts, each of which so executed shall be deemed to be an original, and such counterparts together shall constitute but one and the same instrument.

19.           Joint and Several Liability
                All representations, warranties, covenants, undertalangs, indemnities, guarantees, acknowledgments, understandings, obligations and agreements of the Consultant and the Covenantor contained in this Agreement, the Schedules attached hereto and in any agreement, certificate, instrument or document related to this Agreement are made jointly and severally by the Consultant and the Covenantor.

20.           Enurement
                This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns.

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                IN WITNESS WHEREOF the parties have executed this Agreement on the date first above written.

SIGNED, SEALED AND DELIVERED	)
in the presence of:	)
	)
	)
/s/ Signature	)	/s/ Carl Ritter
Witness:	)	CARL RITTER
	)
	)
	)
	)
	)
	)
	)

CARBIZ.COM INC.

Per: /s/ Signature

Name:
Title: Director

I HAVE AUTHORITY TO BIND THE CORPORATION

1043917 ONTARIO INC.

Per: /s/ Carl Ritter

Name: Carl Ritter
Title: President

I HAVE AUTHORITY TO BIND THE CORPORATION

SCHEDULE “A”

Management of the operations of the Corporation.

Responsible for: Strategic planning and implementation. Identifying potential acquistions.

Will hold the office of Chairman, CEO and President during the term of this contract.

EX-10.2

COMMERCIAL LEASE

THIS LEASE, made on the 1st day of April, 2004, by and between Tony Katsamakis and Julie Katsamakis, property owners, (hereinafter referred to as "Landlord"), and CarBiz Auto Credit Inc., a Florida Corporation (hereinafter referred to as "Tenant"), a wholly owned subsidiary of CarBiz USA Inc.:

1. PREMISES. The Landlord, for and in consideration of the rents, covenants, agreements, and stipulations hereinafter mentioned, does lease and rent, unto said Tenant, and said Tenant hereby agrees to lease and take upon the terms and conditions hereinafter mentioned, the property (hereinafter called "premises" or "demised premises"), located at 314 8th Avenue, West, Palmetto, Florida 34221, in the County of Manatee, State of Florida.

2. TERM. To have and to hold the premises for a term beginning on the 1st day of April, 2004, and ending on the 31^st day of March, 2009, at midnight, unless renewed, extended, or sooner terminated as hereinafter provided.

3. RENTAL. On the commencement of the term, Tenant agrees to pay to Landlord, Promptly on the first day of each month, a monthly rental in the amount of Three Thousand Dollars ($3,000.00) .

Tenant agrees to pay Landlord, upon the signing of this Lease, a Security deposit of Three Thousand Dollars ($3,000.00) to secure Tenant's performance of all Tenant's obligations under this lease.

If Landlord's right to receive payment under this Lease is disputed, or Tenant receives a request to change the payee, Tenant may not withhold payments required under this Lease, and during the term of Lease, unless notified by Landlord in writing (pursuant to paragraph XX) or unless notified by law, all payments will be made to the Landlord, Tony and Julie Katsamakis.

4. OPTION TO RENEW: Prior to the expiration of the Term of this lease, Landlord shall first offer to release the Premises to Tenant by delivering notice thereof to Tenant not less than one hundred eighty days (180) prior to the expiration of the Term, with the Fixed Rent during such renewal term to be equal to the then fair market rental value of the Premises, and otherwise on the same terms and conditions set forth herein. Following the receipt by Tenant of such notice, Landlord and Tenant shall negotiate in good faith to determine the fair market value of the Premises, and for a period of sixty (60) days following Tenant's receipt of such notice, Landlord shall not offer the Premises for let to any other party. In the event that Landlord and Tenant are unable to agree on the fair market value within sixty (60) days of Tenant's receipt of such notice, the right of first offer set forth in this Section shall be null and void and Landlord shall have the right to let the Premises, following the expiration of the Term.

5. LATE CHARGE. All rents are due on or before the first of the month. There are penalties for late payments. The late charge is computed at 12% annually after the tenth of each month that payment is delinquent.

6. TENANT'S USE. Tenant shall have the right to use and/or occupy the Premises as a used car retail establishment, in accordance, to the rules and regulations specified by the City of Palmetto's conditional use permit.

7. RESPECTIVE OBLIGATIONS:

               A. Tenant agrees that this is a triple net lease, and that Tenant accordingly shall be responsible for all obligations which are normally imposed on the owner of real estate with respect to the Premises which may accrue during the Term including, without limitation, responsibility to pay the rent, monthly sales tax, annual real estate taxes, and for all utilities, including gas, heat, electric, water, and other public utilities furnished it or consumed by it, in or upon the demised premises during the term hereof. Tenant will keep the interior of the demised premises and appurtenances, including plate glass, electrical wiring, plumbing, heating and air conditioning installations, and any other system or equipment upon the Premises in good order and repair (excepting reasonable wear and tear), and in a clean, safe and healthy condition (excepting however, all repairs made necessary by reason of the happening of fire and other unavoidable casualty normally covered by insurance) at its own cost and expense. Tenant shall be responsible for all repairs required, excepting the roof, exterior walls, structural foundations, and:

See Additional provisions paragraph 36 for further respective obligations.

               B. The Landlord shall, at its own cost and expense, maintain the exterior of the building, the roof and structural members of the building of which the demised premises form a part. Landlord shall keep the improvements on the Premises free from water and sewage back-up or overflow with the exception of damage by fire, casualty, war, or acts of God. However, if any of the aforementioned repairs are made necessary by reason of Tenant's use and occupancy of the demised premises in a manner inconsistent with the reasonable use and occupancy thereof, or the negligence of the Tenant, its agents, servants, employees and invites, or by reason of alterations made by the Tenant, then and in any of said events, such repairs shall be made by the Tenant at its own cost and expense.

See Additional provisions paragraph 36 for further respective obligations.

8. SURRENDER. The Tenant will deliver up and surrender to the Landlord possession of the demised premises upon the expiration of this Lease or its termination in any way, in as good condition and repair as the same shall be at the commencement of said term (loss by fire, casualty, act of God, and ordinary wear and decay only excepted) and deliver the keys to the office of the Landlord or Landlord's agent. Either Tenant or Landlord may terminate this Lease at the expiration of said Lease or any extension thereof by giving the other party sixty (60) days written notice prior to the expiration date. Tenant will permit Landlord at any time within sixty (60) days prior to the expiration of this lease, to place upon the premises any usual "For Lease" signs, and permit persons desiring to lease the same to inspect the Premises thereafter.

9. TRADE FIXTURES. All trade fixtures and equipment, owned by the Tenant, and installed or placed by it upon the demised premises, may be removed by the Tenant at the expiration of this Lease, provided Tenant has paid all rent and complied with all of the conditions contained in this Lease on the part of the Tenant to be kept and performed. Tenant agrees to repair any damage to the building or Premises occasioned by the removing of such trade fixtures.

10. DAMAGE OR DESTRUCTION BY FIRE, WAR OR ACTS OF GOD. If the premises are destroyed or damaged by fire, acts of war, or acts of God (including earthquake, hurricane or flood), to such an extent that they are rendered unfit for occupancy in whole or in substantial part, Landlord has the option of rebuilding or repairing the same by giving written notice to Tenant within thirty (30) days after the occurrence of such damage of its intention to rebuild or repair the premises or the part so damaged. If Landlord elects to rebuild or repair the premises and does so without unnecessary delay, Tenant shall be bound by this Lease, except that during such period, the rent of the premises shall be abated in the same proportion that the portion of the premises rendered unfit for occupancy by Tenant shall bear to the whole of the leased premises.

A total destruction of the building in which the Premises may be situated shall terminate this lease.

In the event of a partial destruction of the premises during the term, which is beyond Tenant's reasonable control, from any other cause, except in the case where the premises is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant's agents, employees or invitees, as previously discussed, Landlord shall forthwith repair the same, provided that such repairs can be made within sixty (60) days under existing governmental laws and regulations, but such partial destruction shall not terminate this lease. Tenant shall be relieved from paying rent and other charges during any portion of the Lease term that the premises are inoperable or unfit for occupancy, or use, in whole or in part, for Tenant's purposes, except in the case where the premises is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant's agents, employees or invitees, as previously discussed. In making the repairs called for in this paragraph, Landlord shall not be liable for any delays resulting from strikes, governmental restrictions, inability to obtain necessary materials or labor or other matters which are beyond the reasonable control of Landlord.

In the event said repairs cannot be made within sixty (60) days or Landlord shall not elect to make such repairs that cannot be made within sixty (60) days, this lease may be terminated at the option of either party.

In the event that the building in which the demised premises may be situated is destroyed to an extent of not less than two-thirds of the replacement cost, Landlord may elect to terminate this lease whether the demised premises be injured or not.

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11. ASSIGNMENT. If this Lease be assigned or the demised premises or any part thereof be sublet or occupied by anybody other than Tenant, Landlord will, providing Tenant is not in Default of terms of Lease, require the Subletee or assignee to execute an instrument in writing fully assuming all of the agreements and obligations imposed upon Tenant under this Lease, whereupon Tenant shall be discharged from any further liability hereunder.

However, no assignment or subletting shall be made without Landlord's prior written consent and approval of prospective Sublette or assignee. Any such assignment or subletting without the written consent shall be void and, at the option of Landlord, may terminate this Lease. Nothing herein contained shall be construed as obligating the Landlord to give its written consent.

12. COVENANT OF TITLE, LEINS AND ENCUMBRANCES:

               A. Tenant shall have no authority to create any lien, charge, encumbrance or recording upon the Premises. If any mechanic's, or other liens, or order for the payment of money, shall be filed against the demised premises, or any building or improvements thereon, by reason of change and alteration or addition made or alleged to have been made, by or for the Tenant, or the cost or expense thereof, or any contracts relating thereto, the Tenant shall cause the same to be canceled and discharged of record, by bond or otherwise, at the election and expense of the Tenant, and shall also defend on behalf of the Landlord, at the Tenant's sole cost and expense, any action, suit or proceeding which may be brought thereon for the enforcement of such lien, charge or orders, and the Tenant will pay any damage and satisfactorily discharge any judgment entered therein, and save harmless the Landlord from any claim, attorney fees or damage therefore.

               B. If any mechanic's or other lien, or order for payment of money, shall be filed against the demised premises, or on any building or improvements thereon, for any of the reasons provided in this section, and shall not be removed by the Tenant within ten (10) days after notice given by the Landlord, the Landlord shall have the right to remove same by payment or otherwise, and all sums expended by the Landlord for such removal, including counsel fees, shall be paid by the Tenant unto the Landlord upon demand, and shall be deemed to be additional rent due under this Lease.

               C. Landlord has good title to the Premises, free and clear of all liens, encumbrances, easements, tenancies or restrictions (excepting the City of Palmetto's Conditional Use Permit) that would prevent, interfere with or in any way affect Tenant's business operations in or on the Premises.

13. GOVERNMENT REGULATIONS. Subject to the provisions that this section shall not be applicable to the roof and/or structural parts of the demised premises, Tenant agrees at its own cost and expense, during the term of this Lease, to comply with all orders, rules, regulations and requirements of every kind and nature relating to the premises, now or hereafter in force and effect of the federal, state, county, municipal or other governmental authorities, applicable to the manner of Tenant's use and occupancy thereof, or alterations made by the Tenant, and the Tenant will pay all costs and expenses incidental to such compliance and will indemnify and save harmless the Landlord free of expense or damage by reason of any notice, violations or penalties filed against or imposed upon the premises, or against the Landlord as owner thereof, because of the failure of the Tenant to comply with the provisions of this section. Should the Tenant fail to comply with any of the provisions contained in this section, the Landlord may, after ten (10) days notice to the Tenant, comply therewith, and the cost and expense of so doing may be paid by the Landlord, or may be charged against the Tenant as additional rent, becoming due upon demand. Tenant agrees to indemnify and save harmless the Landlord from and against any and all judgments, decrees, penalties, costs and expenses, by reason of such non-compliance.

14. INSURANCE AND HOLD HARMLESS:

               A. The Tenant will, during the term of this Lease, indemnify the Landlord and hold it harmless against all claims, demands, and judgments for loss, damage or injury to property or person resulting or occurring by reason of the use and occupancy of the demised premises. Tenant agrees that, at its own cost and expense, it shall procure and continue in force, with the Landlord named as additional insured, general garage liability insurance against any and all claims for injuries to persons or property occurring in, upon or about the demised premises, including all damage from signs, glass, awnings, fixtures or other appurtenances, now or hereafter upon the demised premises, during the term of this Lease, such insurance at all times to be in an amount not less than $1,000,000 limit for each

3

occurrence. Such insurance shall be written in the company or companies authorized to engage in the business of general liability insurance in the State of Florida, and there shall be delivered to the Landlord customary certificates evidencing such paid insurance, which certificates are to be issued by the insurance companies.

               B. The policies of insurance provided herein are to be provided by the Tenant, and should be for a period of not less than twelve (12) months, it being understood and agreed that fifteen (15) days prior to the expiration of any policy of insurance the Tenant will deliver to the Landlord a renewal or new policy to take the place of the policy expiring, with further understanding that should the Tenant fail to furnish policies as is provided in this Lease, and at the times herein provided, the Landlord may obtain such insurance and the premiums on such insurance shall be deemed additional rent to be paid by the Tenant unto the Landlord upon demand.

               C. The Landlord will, during the term of this Lease, keep in force commercial property coverage for the building against loss by fire and damage (not including flood insurance) in an amount equal to full replacement value. Any policy kept in force by the Landlord will not list the Tenant as an additional insured. All insurance policies shall be placed with reputable and solvent insurance companies licensed to do business in the state of Florida.

               D. The Tenant shall be responsible, at it's own expense, for fire, theft, flood, or extended coverage insurance on all of its commercial liability, personal property, inventory, and removable trade fixtures, located in or on the premises.

               E. If the Premises is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant's agents, employees or invitees, rent shall not be diminished or abated while such damages are under repair, and Tenant shall be responsible for the costs of repair or replacement not covered by insurance.

15. DEFAULT AND LANDLORD REMEDY. Should the Tenant allow any payment hereinabove to become delinquent and remain delinquent for thirty (30) days after the same is due, or fail to promptly perform any of the covenants herein made, then this Lease shall be in default and the Landlord shall have the right to re-enter and take possession of the premises, and/or this Lease may be terminated at Landlord's option. Bankruptcy of Tenant or any assignment for the benefit of creditors shall likewise operate as a termination of the Tenant's right of possession of the premises and shall not waive Landlord's right or stop Landlord from repossessing the premises for subsequent defaults, and in any such events, the Tenant agrees to peacefully surrender possession of the premises to the Landlord. It is further agreed that in the event Tenant fails to pay the rental above required or should it default in any of its other covenants with Landlord set forth herein so that it becomes necessary for Landlord to employ an attorney to collect rents or to recover possession of the premises or to enforce any covenant made by the Tenant hereunder, then Tenant shall pay all costs of collection and expenses of recovery of possession or costs and expenses of any action so required, including reasonable attorneys' fees through appeal. The remedies provided herein are cumulative to those provided by law, and the right of the Landlord to declare the term at an end and to reenter the premises, and shall not in any manner affect the right of the landlord to terminate and declare the Lease void and ended.

16. LANDLORD ENTRY. The Landlord may, during the term of this Lease, at reasonable times, enter to inspect the premises, or to make any alterations or repairs to the demised premises that may be necessary for its safety or preservation, and may show the premises and building to others, and at any time within three (3) months immediately preceding the expiration of said term may affix to any suitable part of said premises a notice for leasing or selling the premises or building and cause the said notice to remain affixed without hindrance or molestation. Such notice shall not be placed on the show windows or entrance of the demised premises.

17. NOTICES. Until Tenant is notified otherwise in writing, the checks for rental accruing hereunder shall be forwarded to the Landlord, Tony and Julie Katsamakis, at 601 E. Lincolnway, Cheyenne, WY, 82001, and all notices given to the Landlord hereunder, shall be forwarded to the Landlord at the above address, by registered or certified mail, return receipt requested. Until Landlord is notified otherwise in writing, all notices given to the Tenant hereunder shall be forwarded to Tenant at Carbiz USA Inc., 7405 N. Tamiarni Trail, Sarasota, FL, 34243, by registered or certified mail, return receipt requested. Notice shall be deemed given when the same is deposited in the United States registered or certified mail with sufficient postage prepaid thereon to carry the letter to its addressed destination.

18. BINDING ON SUCCESSORS. That the respective rights and obligations hereunder shall inure to, and be

4

binding upon, the respective heirs distributes, devisees, legal and personal representatives, assigns, grantees and successors in interest of the Landlord, and shall inure to, and be binding upon, the permitted assigns and successors in interest of the Tenant.

19. DAMAGE TO PREMISES. The Landlord shall not be liable for any damages done or occasioned by or from plumbing, gas, water, steam or other pipes, or sewage or the bursting, leaking or running of any cistern, tank, wash stand, water closet or waste pipe in, above, upon or about said premises, nor for damage occasioned by water being upon or coming through the roof, skylight, doors, or otherwise, nor for any damage arising from the acts and negligence of Tenants or other occupants or adjoining or contiguous property, unless such damage is occasioned by the negligence of the Landlord.

20. SUBORDINATION AND ATTORNMENT. This Lease shall be subject and subordinate at all times to the lien of all mortgages and trust deeds in any amount or amounts whatsoever now or hereafter placed on or against the Building or the Premises or on or against Landlord's interest or estate therein, all without the necessity of having further instruments executed on the part of Tenant to effectuate such subordination; provided that in the event of a foreclosure of any such mortgage or trust deed or any other action or proceeding for the enforcement thereof, or of any sale or exchange of property, this Lease will not be barred, terminated, cut off, abated, or foreclosed, nor will the rights and possession of Tenant hereunder be disturbed if there shall exist no Event of Default with respect to the payment of Rent or any other Event of Default hereunder.

Tenant shall attorn to the purchaser at any such foreclosure, sale or other action or proceeding or, if requested, enter into a new lease for the balance of the Term then remaining upon the same terms and provisions as are in this Lease contained. Tenant agrees to execute and deliver upon demand such further instruments evidencing such subordination of this Lease to the lien of any such mortgages or trust deeds as may be required by Landlord.

If Landlord's right to receive payment under this Lease is disputed, or Tenant receives a request to change the payee, Tenant "may not" withhold payments required under this Lease, and during the term of Lease, unless notified by Landlord in writing (pursuant to paragraph XX) or unless notified by law, all payments will be made to the Landlord, Tony and Julie Katsamakis.

21. SIGNS. Notwithstanding any provisions to the contrary, Tenant shall have the right to install and maintain at its own expense a store front sign with Tenant's insignia and trade name subject to the prior written approval of the Landlord; provided, however, that nothing herein contained shall be construed to permit Tenant to affix any sign to the roof of the premises. Landlord shall not unreasonably withhold its consent to Tenant's placement of the sign on the store front if such sign is in general conformity with the signs as they exist within the Commercial Arcade.

22. GOVERNING LAW. This Lease shall be enforced in accordance with the laws of the State of Florida. Tenant, guests and invitees of either Tenant or guests will not use the premises in such a manner that violates any law, ordinance, statutes or requirement of any municipal, state or federal authority now in force, or which may hereafter be in force, pertaining to the Premises.

23. CAPTIONS. Any headings preceding the text of the several paragraphs and subparagraphs hereof, are inserted solely for convenience of reference and shall not constitute a part of this Lease, nor shall they affect its meaning, construction, or effect.

24. EMINENT DOMAIN. Tenant shall not be entitled to any award made in any eminent domain proceedings with respect to the land or building included within the demised premises for its leasehold interest therein; provided, further, that nothing herein contained shall be construed to affect the right to the Tenant to recover for any loss or damage which it may suffer by reason of loss of business, interruption of business, which may result from such condemnation or eminent domain proceedings.

25. ALTERATIONS/IMPROVEMENTS. Tenant agrees that during the term of this Lease it will make no structural improvements or alterations to the demised premises without first obtaining the prior written consent of the Landlord. Tenant, at Tenant's own expense, shall have the right following Landlord's written consent, to remodel, and make additions, improvements and replacements of and to all or part of the Premises, provided any and all improvements become the Landlord's sole and absolute property.

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Unless authorized by law, Tenant will not, without Landlords prior written consent, alter, re-key or install any locks to the Premises or install or alter any burglar alarm system. Tenant will provide Landlord with a key or keys capable of unlocking all such re-keyed or new locks as well as instructions on how to disarm any altered or new burglar alarm system. Except as provided by law or as authorized by the prior written consent of Landlord.

26. RECORDATION. This Lease shall not be recorded.

27. FORCE MAJEURE. Landlord shall be excused for the period of any delay in the performance of any obligations hereunder when prevented from so doing by cause or causes beyond Landlord's control which shall include, without limitation, all labor disputes, civil commotion, war, war-like operations, invasions, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, fire or other casualty, inability to obtain any material, services or financing or through acts of God.

28. ASSESSMENTS. The parties acknowledge that any assessments or impositions, whether by state, municipal, district, school, or otherwise, which are imposed in addition to real property taxes (such as solid waste disposal assessments), are solely the responsibility of Tenant and not the Landlord.

29. NO CONTINUING WAIVER No waiver of any default hereunder shall be implied from any omission by either party to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver, and then only for the time and to the extent therein stated. No delay or omission by either party hereto to exercise any right or power accruing upon any noncompliance or default by the other party with respect to any of the terms hereof, or otherwise accruing hereunder, shall impair any such right or power or be construed to be a waiver thereof. One or more waivers of any breach of any covenant, term or condition of this lease shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition. The consent or approval by a party to any act by the other party requiring the former party's consent or approval shall not be deemed to waive or render unnecessary such former party's consent or approval to any subsequent similar acts by the other party.

30. INVALID PROVISION. If anyone or more of the provisions contained in this Lease shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof, and this Lease shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

31. EXCULPATION. Notwithstanding anything contained in this Lease to the contrary, Tenant agrees that Tenant shall look solely to the estate and interest of Landlord in the Commercial subject, however, to the rights of any landlord under any ground lease or superior lease or the holder of any mortgage on the Commercial Arcade, for the satisfaction of any right of Tenant, for the collection of any judgment or other judicial process or arbitration award requiring the payment of money by landlord in the event of any default or breach by Landlord with respect to any of the terms, conditions or provisions of this Lease to be performed and/or observed by Landlord, and no other property or assets of Landlord or any partner (whether general partner or limited partner), officer, director, principal (disclosed or undisclosed), agent, incorporation, shareholder, or affiliate of Landlord shall be subject to levy, lien, execution, attachment or other enforcement procedure for the satisfaction of the rights and remedies of Tenant under or in respect of this Lease or under law, or the use and occupancy of the demised premises by Tenant. or any other liability of Landlord to Tenant.

The term "Landlord" as used in this Lease means the landlord, only for the time being, of the demised premises. So long as all sums held in escrow by Landlord are paid over to any purchaser of said premises,

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Landlord shall be and is hereby relieved of all covenants and obligations of Landlord hereunder after the date of transfer of said demised premises, and it shall be construed without further agreement between the parties that the transferee has assumed and agree to carry out any and all covenants and obligations of Landlord hereunder from the date of such transfer.

32. ENVIRONMENTAL, HAZARDOUS WASTE AND RADON GAS:

               A. Tenant covenants and agrees to comply with all applicable environmental and other federal, state and local governmental statutes, ordinances, rules and regulations relating to the presence of hazardous substances, hazardous wastes, pollutants or contaminants. Tenant agrees and does hereby indemnify Landlord and hold it harmless from any loss, damage, or expense, including reasonable attorney's fees and costs and expenses of any appeal, which Landlord may incur or suffer by reason of any claim or liability arising from Tenant's noncompliance with applicable laws and the terms of this paragraph. Tenant specifically covenants and agrees that no hazardous substances, hazardous waste or waste byproducts, pollutants or contaminants, shall be dumped in any trash receptacle, or otherwise, in, on, or about the Premises.

These covenants and indemnities shall survive the termination of this Lease.

               B. RADON GAS. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit. This notice is given pursuant to Florida Statutes Sec. 404.056(8) .

               C. As of the starting date of this Lease, Landlord assures that no part of the Premises contain Hazardous Materials (hereafter defined) or asbestos containing materials ("ACM"). If any testing or examination indicates the presence of Hazardous Materials or ACM, Tenant will give Landlord 30 days notice to remove or remedy the Hazardous Materials or ACM and to restore the Premises and/or Easements. If, within 30 days of receipt of notice, Landlord has not completed the removal, remediation or restoration, Tenant may terminate this Lease upon 30 days notice to Landlord. All removal, remediation or restoration of the Premises shall be performed in compliance with all applicable laws, rules, regulations and ordinances governing same.

               Hazardous Materials is defined to include, without limitation, (1) polychlorinated biphenyl compounds ("PCB") or any material composed of or containing PCB, (2) any hazardous, toxic or dangerous waste, substance or material as from time to time defined by any federal, state or local environmental, health or safety statute, ordinance, code, rule, regulation, order or decree now or hereafter in force and (3) mold or other biological agents in a form that poses a threat to the health or safety of occupants of the Premises.

33. QUIET ENJOYMENT. Landlord covenants that if and so long as Tenant shall faithfully perform the covenants and agreements of this Lease, Tenant shall and may (subject to the exceptions, reservations, terms and conditions of this Lease) peaceably and quietly have, hold and enjoy the Premises for the Term free of any interference by Landlord or anyone claiming through or by Landlord except those to which this Lease is expressly made subject and subordinate.

34. WAIVER OF JURY: Parties hereby knowingly, voluntarily, and intentionally waive any right they may have to a jury trial in respect to any litigation (including but not limited to any claims, cross-claims, or third party claims) arising under, or in connection with this lease, the premises or the transactions contemplated herein. Tenant hereby certifies that neither Landlord, or its representative or agent or counsel has represented, expressly or otherwise, that Landlord would not, in the event of such litigation, seek to enforce this waiver or right to jury trial provision. Tenant acknowledges that Landlord has been induced to enter into this lease by the provision of this paragraph.

35. TENANT AS CORPORATE ENTITY: If Tenant is a corporation, each person executing this lease represents and warrants that he or she is duly authorized to sign, execute and deliver this lease on behalf of the corporation. Those persons further represent that the terms of this lease are binding upon the corporation.

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Upon execution of this lease, Landlord requests a certified copy, along with affixing the corporate seal upon the corporate resolution authorizing this lease be attached to this document.

36. ADDITIONAL PROVISIONS. Upon commencement of this Lease:

               A. Landlord will reexcavate the overflow water drainage ditch. Tenant agrees to maintain and keep the ditch excavation and retention pond clear of all weeds, leaves, tires, trash or any other debris so that the overflow water may drain freely to the street.

               B. Landlord will trim or cut back all trees on the Premises. Tenant agrees to maintain the pruning and removal of debris created by any trees on Premises in the future.

               C. Landlord will repair broken fence boards, and remove landscaping growth on our side of the wooden fence. Tenant will maintain fence and repairs.

               D. Landlord will install new air conditioning/heating unit and will rebuild/remodel HVAC closet. Tenant will maintain unit with annual HVAC check, change of air filters according to manufacturer's recommendation, and vacuuming of metal grate. Tenant agrees to keep air flow free of any restrictions or debris in, on or around HVAC closet or air return area.

               E. Landlord will repair interior base trim where trim is broken near HVAC closet Landlord will repair exterior/interior trim at the base of main entry door, and base trim where missing in main office.

               F. Tenant at its own cost, expense, discretion will install and/or maintain existing landscaping, including sprinkler system.

               G. Tenant will at its own cost, be responsible for restoring and/or maintaining the current burglar alarm system.

               H. Landlord will replace the small refrigerator in the reception area. Tenant will maintain the appliance

               I. Landlord will initially have the exterior of the building and roof pressure washed and defungacide. Tenant will maintain annual pressure washes and defungacing of the roof. Protection of the Tenants vehicle inventory from over spray will be Tenant's responsibility.

               J. Tenant at its own discretion of use and cost will maintain exterior pole lighting.

               K Initially, Landlord will make any necessary repairs made to asphalt parking lot. Tenant will maintain asphalt lot, including sealing.

37. ENTIRE AGREEMENT: The foregoing constitutes the entire agreement between the parties and may be modified only by a written agreement signed by both parties.

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BY THEIR signatures below, Landlord and Tenant indicate their consent to the terms of this Lease, and Tenant acknowledges receipt of an executed copy of this lease.

LANDLORD:		TENANT:
/s/ Tony Katsamakis	04/19/04	Carbiz Auto Credit, Inc.
Tony Katsamakis	Date
/s/ Julie Katsamakis	04/19/04	By: /s/ Carl W. Ritter
Julie Katsamakis	Date
		Name: Carl W. Ritter
		Title: CEO
		Date: 04/19/04
		AFFIX CORPORATE SEAL:

EX-10.3

COMMERCIAL LEASE

               THIS COMMERCIAL LEASE /AGREEMENT (hereinafter "Lease") is made this _____day of December, 2003, by and between HERRIG ENTERPRISES, L.L.C., ("Landlord"), whose mailing address is 7560 Commerce Court, Sarasota, Florida 34243, and CARBIZ USA INC., a Florida corporation, whose mailing address is 7560 Commerce Court, Sarasota, Florida 34243 ("Tenant"). The parties agree as follows:

               1.       PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord that certain real property located at 7405 North Tamiami Trail, Sarasota, FL 34243, Manatee County, Florida, and legally described as Lots 28, 29 and 30, Whitfield Estates, as per plat thereof recorded in Plat Book 4, Page 48 of the Public Records of Manatee County, Florida (the "Premises").

               2.      CONDITION PRECEDENT. This Lease shall be strictly conditioned on Landlord's acquiring legal title to the Premises within ninety (90) days from the date of execution hereof. Accordingly, as of the Effective Date (defined below), Landlord shall have legal title and full authority to enter into this Lease. If Landlord is unable to acquire legal title to the Premises, regardless of the reason for such inability, upon delivery of written notice thereof to Tenant, this Lease shall be null and void.

               3.      TERM. At Landlord's sole expense, Landlord shall complete or cause the completion of those improvement, addition and renovation items described more fully on Exhibit "A" to this Lease in a good and workmanlike manner (the "Buildout"). The term of this Lease and Tenant's obligation to pay rent shall commence as of the date Landlord delivers to Tenant full possession of the Premises in broom clean condition with the Buildout completed, with all building systems (including, without limitation, HVAC, electrical and plumbing) in good and working condition, together with a copy of the final certificate of occupancy therefor (the "Effective Date"). The Lease term shall be for a period of five (5) years, beginning on the Effective Date (hereinafter, the "Original Term").

               4.      RENT. Tenant shall pay Landlord annual rent of $75,000.00, plus applicable sales taxes, which shall be paid in monthly installments of $6,250.00, plus applicable sales taxes imposed by the State of Florida, in advance on the first day of each month, without demand and without set off or deduction of any kind, commencing on the Effective Date. During the Original

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Term, the rent shall increase by one percent (1%) on the second annual anniversary of the Effective Date and then two percent (2%) on each annual anniversary of the Effective Date thereafter. Unless otherwise designated by Landlord, rent shall be made payable to Landlord and be delivered to Landlord at Landlord's address first set forth above, or at such other place as the Landlord may designate from time to time. Rent shall be delivered by hand delivery, overnight courier or first class U.S. Mail. If rent is sent by first class U.S. mail, there shall be a presumption that Landlord received it three business days after the postmark by the U.S. Post Office, provided that the envelope in which it was sent was properly addressed with the proper postage prepaid.

               5.      ADVANCED RENT. [Intentionally Omitted]

               6.      OPTION TO EXTEND TERM. Provided Tenant is not in default of any of Tenant's obligations hereunder, Tenant shall have the option to renew this Lease for one (1) additional term of five (5) years, (hereinafter the "Option Term"), by providing Landlord with written notice of Tenant's exercise of each such option no less than four (4) months prior to the expiration of the Original Term. Rent during the Option Term shall also increase by an amount to be agreed upon by the parties.

               7.      QUIET POSSESSION. Landlord shall, on the commencement date of the Original Term, place Tenant in quiet possession of the Premises and shall secure the Tenant in the quiet possession thereof against all persons lawfully claiming possession while this Lease is in effect.

               8.      USE. The Premises are to be used exclusively for general office purposes, (hereinafter the "Permitted Uses"), and no other purposes. Tenant may not use the Premises or permit the Premises to be used for any unlawful purpose or in any manner that violates any applicable codes, ordinances or regulations of any governmental agencies having jurisdiction thereof. If Tenant uses the Premises for any purposes other than the Permitted Uses without Landlord's prior written consent, Landlord shall have the option to terminate this Lease or exercise any other remedies available under this Lease or under applicable law.

               9.      CONDITION OF PREMISES. Subject to any exceptions contained in this Lease, Tenant accepts the Premises "AS IS". Tenant acknowledges that prior to executing this Lease, Tenant has had ample opportunity to examine the Premises, has thoroughly examined and inspected the Premises, including the

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building and grounds that comprise the Premises, and acknowledges that the Premises are in good order, repair, and in a safe, clean, and tenantable condition, and acceptable for the Permitted Uses. Tenant further acknowledges that there is adequate parking on, or in the vicinity of, the Premises for the Permitted Uses.

               10.      SIGNAGE. Tenant, at Tenant's sole expense, may erect or place on or about the Premises any signage desired by Tenant, subject however, to the following conditions:

                              (a)      Any and all signage installed or erected shall be done so in compliance with all applicable laws, codes, ordinances and governmental regulations relating thereto, including but not limited to those related to location and size, and Tenant will discharge, at Tenant's expense, any violations related thereto.

                              (b)      The structural integrity of the Premises shall not be adversely affected.

                              (c)      The proper functioning of any of the mechanical, electrical, sanitary or other systems of the building shall not be adversely affected.

                              (d)      Before installing any signage or erecting any structures in connection therewith, Tenant, at Tenant's expense, will procure any and all necessary governmental permits.

                              (e)      Tenant will provide Landlord with certificates of insurance verifying that all laborers performing work at the Premises are covered by workmen's compensation insurance and general liability insurance.

                              (f)      Upon termination of this Lease, other than termination in connection with Landlord's breach of this Lease, condemnation or damage or destruction as a result of one or more circumstances or events not within Tenant's control, Landlord shall have the option to require Tenant, at Tenant's expense, to promptly remove any or all signage installed or erected, and, to the extent that it was damaged by the signage or its removal, to restore that portion of the Premises from which the signage was removed to the same condition as existed before such signage was installed, excepting reasonable wear and tear and alterations approved by Landlord following such installation.

                              (g)      Upon termination of this Lease, regardless of reason, Landlord shall have the option to retain any poles or

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housing installed by Tenant in connection with the signage installed.

                              (h)      Tenant shall indemnify and hold Landlord harmless from and against any and all liability, damages, expenses, fees, penalties, actions, causes of action, suits, costs, claims or judgments arising, either directly or indirectly, as a result of injury to persons or property occasioned or resulting from Tenant's signage, or arising out of Tenant's breach of any provisions relating to signage.

               11.      SECURITY DEPOSIT. Upon the Effective Date, Tenant shall authorize Landlord's transfer of that amount currently held as a security deposit by Landlord under the Existing Lease (defined below) to act as a security deposit under this Lease. As of the date the parties entered into this Lease, that sum is $5,061.64, Landlord confirms that it is in possession of this sum under the Existing Lease and agrees that, upon Tenant's authorization to transfer the sum to act as security deposit under this Lease, Landlord shall hold it as "security" for damages to the Premises and for the faithful performance by Tenant of the terms hereof. In addition to the amount transferred from the Existing Lease, upon execution of this Lease Tenant shall also deposit with Landlord as additional security, the sum of $1,625.86, thereby making the total security deposit $6,687.50. Further, on or before January 19, 2004, Tenant shall also deposit with Landlord as additional security, the additional sum of $13,375.00, thereby making the total security deposit $20,062.50. Landlord shall not be obligated to hold the security deposit in an interest bearing account, Tenant shall not be entitled to interest on such deposit, and the security deposit may be commingled with Landlord's other funds. No later than thirty (30) days after Tenant's surrender of the Premises at the expiration or earlier termination of this Lease or otherwise, the security deposit (subject to deductions, if any, previously made throughout the Lease term by Landlord as a result of Tenant's failure to comply with the terms of this Lease) shall be returned to Tenant, without interest, provided that Tenant is not in breach of the terms of this Lease at the time this Lease expires or is terminated. The security deposit may not be applied to rent without Landlord's written consent.

               12.      LATE PAYMENTS. If rent or any other sums due to be paid by Tenant are not received by Landlord within ten (10) calendar days of their due date, (the "Grace Period"), then Tenant shall pay a late charge equal to ten percent (10%) of the rent or other amounts past due, or one-hundred dollars

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($100.00), whichever is greater, in order to offset any administrative and other expenses incurred by Landlord as a result of Tenant's failure to timely pay rent. Late charges may only be waived by Landlord in writing, and Landlord's acceptance of rent after its due date shall not constitute a waiver by Landlord of Landlord's right to subsequently demand and collect late charges. If Tenant delivers rent by first class U.S. mail, there shall be a presumption that Landlord received it no earlier than three (3) business days after the postmark by the U.S. Post Office, provided that the envelope in which it was sent was properly addressed with the proper postage prepaid. Tenant acknowledges that Tenant shall be exclusively responsible for rental payments that are lost in the mail or misdelivered by the U.S. Postal Service.

               13.      RETURNED CHECKS. If any check of Tenant is dishonored for any reason, Tenant shall be responsible for a bad check fee of $35.00, or such other fee as is authorized by Florida law, whichever is greater. Landlord has no duty to redeposit or resubmit dishonored checks, and Landlord may demand that all subsequent payments be paid in cash or certified funds. In addition, the rental payment associated with a dishonored check shall be deemed received by Landlord only at such time as when the check is subsequently honored or when the Tenant replaces the check with cash or certified funds.

               14.      REAL PROPERTY TAXES. As additional rent, Tenant shall reimburse Landlord for all ad valorem real property taxes assessed against the Premises, including without limitation, those real property taxes assessed under Manatee County tax account numbers 6762100003 and 6762000005. Tenant shall discharge such obligation by paying Landlord, on a monthly basis, an amount equal to 1/12 of the undiscounted ad valorem real property taxes assessed against the Premises for the most recent tax year, together with applicable sales taxes imposed by the State of Florida. Such amounts shall be due and payable at the same time as other monthly rental payments due under this Lease. Upon Landlord's receipt of the actual tax bills or assessments for the Premises, Tenant shall immediately pay any deficiency for any underpayment or receive a credit for any overpayment related to prior monthly payments, upon Landlord's notice to Tenant thereof. Such adjustments shall be based on the discounted tax amount for real property taxes and Tenant's responsibility therefore shall be based only on the portion of the tax year for which this Lease is in effect.

               15.      PERSONAL PROPERTY TAXES. Tenant shall be responsible for any and all ad valorem personal property taxes assessed

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against all fixtures, equipment and personal property located or placed on the Premises.

               16.      UTILITIES. Tenant shall make arrangements for and be responsible for the payment for all utilities required by Tenant in conjunction with Tenant's occupancy and use of the Premises, including without limitation, electricity, water, sewer, garbage disposal and telephone service.

               17.      PERSONAL PROPERTY. Tenant agrees that any personal property brought into the Premises is done so at Tenant's expense and risk. At the expiration of this Lease, provided this Lease goes to term and Tenant is not in default of any of its obligations hereunder, Tenant shall be entitled to remove Tenant's personal effects, books or records related to Tenant's business operations, and all equipment, furniture, and personal property belonging to Tenant. Fixtures, equipment and other items which cannot be removed without damaging the Premises may be removed, but Tenant shall be required to repair all damage to the Premises caused by such removal and to restore the Premises to the condition they were in prior to the installation of the property so removed, excepting reasonable wear and tear, and condemnation and uninsured damage or destruction as a result of one or more circumstances or events not within Tenant's control and alterations approved by Landlord prior to such installation.

               18.      MAINTENANCE AND REPAIR. During the term of this Lease and any renewal hereof, Tenant will, at Tenant's sole expense, keep and maintain all areas of the Premises in a sanitary condition, in compliance with all applicable laws, and in good order and repair, reasonable wear and tear excepted. Landlord shall be responsible only for repairs and maintenance to the roof, foundation, and structural elements of the Premises, provided however, that Tenant shall reimburse Landlord for the expense thereof if the need for maintenance, repair or replacement is the direct result of damage caused by the negligent or intentional acts of Tenant. Otherwise, Tenant shall be responsible for any and all other maintenance associated with the Premises, whether routine or non-routine in nature, including without limitation, any necessary maintenance or repair of the plumbing, electrical, cooling and heating systems. However, Tenant shall be responsible only for that amortized portion of the cost of any item that must be replaced based upon the useful life of that item, as determined by reference to guidelines published by the United States Internal Revenue Service ("IRS") and any IRS-rendered formal advisory tax opinions, final judicial decisions of tax courts and IRS regulations, and Tenant's payment of any such amount shall be amortized over that portion of the

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Lease term (including the term related to any exercised or unexercised extension options) remaining at the time of replacement. As a condition of Tenant's obligation to pay any portion of such expenditures, Tenant shall have the right to request reasonable documentation of all expenses incurred by Landlord for which Landlord is to be reimbursed in whole or in part. Tenant also agrees to secure a service contract for the maintenance of the cooling and heating systems. Tenant shall promptly notify Landlord of any need for repairs or maintenance for which Landlord is responsible. In the event Tenant fails to comply with its maintenance and repair obligations as set forth in this paragraph, then Landlord may, but shall not be obligated to, perform any such maintenance or repairs, in which case Tenant shall reimburse Landlord for the cost of such maintenance or repair immediately upon demand therefor by Landlord.

               19.      LANDSCAPING. Tenant, at Tenant's expense, shall be responsible for mowing the lawn and reasonably maintaining the landscaping located on or around the Premises. Without limitation, Tenant shall also be responsible for trimming all existing trees, bushes and shrubs, but may not remove any trees, bushes or shrubs without Landlord's prior written consent.

               20.      PARKING. Tenant, at Tenant's expense, shall be responsible for all routine maintenance and repair to the sidewalks, walkways and parking areas, located on or around the Premises other than parking lot resurfacing or repaving, which shall be the sole obligation of Landlord.

               21.      NO LIABILITY. Landlord shall not be liable for any losses or damages, whether direct, incidental or consequential, incurred by Tenant due to the operational failure of the heating, cooling, roof, plumbing or other systems located on the Premises, or for any interruption of Tenant's business operations, regardless of the cause of such interruption, including but not limited to interruptions caused by necessary repairs, maintenance or replacement of any such systems, provided however, that Landlord shall not be relieved of liability for damages caused as a proximate result of Landlord's failure to meet any of its maintenance obligations after having been given written notice thereof by Tenant and a reasonable opportunity to perform such obligations.

               22.      WASTE AND NUISANCE. Tenant shall not commit, or suffer to be committed, any waste on the Premises, nor shall Tenant maintain, commit, or permit the maintenance or commission of any nuisance on the Premises or use the Premises for any unlawful purpose. Tenant also covenants to use the Premises and operate

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Tenant's business in compliance with all local, state or federal laws, and Tenant agrees to maintain the Premises consistent therewith.

               23.      ALTERATIONS AND IMPROVEMENTS. Tenant shall not alter or improve the Premises without the prior written consent of Landlord, provided, however, that Tenant shall be permitted to reasonably decorate the interior of the Premises, to include, without limitation, installing or attaching to the Premises artwork and other ordinary wall decor, such as, again, without limitation, pictures, maps, white boards, bulletin boards, interior signage, educational diplomas and the like. Before making any alterations or improvements, Tenant will submit to Landlord plans and specifications setting forth in detail any proposed alterations, improvements, and work to be performed. Landlord's approval of Tenant's plans shall not, unless expressly set forth therein, be deemed to create any obligation on the part of the Landlord to do any work, to pay for the cost of any work or materials, or to authorize Tenant to make any other alterations in or about the Premises. In the event consent is given by Landlord, and unless otherwise specified by Landlord in writing, any and all alterations, additions, improvements, and fixtures made or placed in or on the Premises shall be made at Tenant's sole expense, and upon the natural expiration or sooner termination of this Lease, shall belong to Landlord without compensation to Tenant. In the alternative, Landlord shall have the option to require Tenant, at Tenant's expense, to promptly remove any or all of such alterations, additions, improvements, and fixtures and to restore the Premises to the same condition as existed before such alterations, additions, improvements, and fixtures were installed or made, excepting reasonable wear and tear, condemnation and uninsured damage or destruction as a result of one or more circumstances or events not within Tenant's control. In all cases, any alterations, additions, improvements, and fixtures shall be installed or made subject to the following conditions:

(a)      The outside appearance and structural integrity of the Premises shall not be adversely affected.

(b)      The proper functioning of any of the mechanical, electrical, sanitary or other systems of the building shall not be adversely affected.

(c)      Before making any alterations or improvements, Tenant, at Tenant's expense, will procure any and all necessary governmental permits.

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(d)      Tenant will provide Landlord with certificates of insurance verifying that all laborers performing work at the Premises are covered by workmen's compensation insurance and general liability insurance.

(e)      All alterations or improvements shall be made in compliance with applicable laws and requirements of public authorities, and Tenant will discharge, at Tenant's expense, any violations related thereto.

(f)      Tenant shall indemnify and hold Landlord harmless from and against any and all liability, damages, expenses, fees, penalties, actions, causes of action, suits, costs, claims or judgments arising, either directly or indirectly, as a result of injury to persons or property occasioned or resulting from Tenant's alterations or improvements.

               24.      BUILD-OUT. Landlord agrees to effect the Buildout of the Premises in order to make the Premises more suitable for Tenant's business operations. In connection therewith, Landlord agrees to pay for such improvements or renovations to the Premises, and notwithstanding anything to the contrary in this Lease, Landlord will not require Tenant to restore any portion of the Premises to its condition prior to such Buildout.

               25.      CONSTRUCTION LIENS. Tenant shall not permit any liens to be attached to any interest in the Premises for labor, services or materials furnished thereto pursuant to a contract with Tenant. In the event any liens are filed, Tenant, at Tenant's sole expense, shall discharge same within thirty (30) days thereafter by making payment or by filing a bond as required by law. Without limitation of the foregoing, if Tenant fails to discharge any liens filed, Landlord may transfer such liens to a bond posted by Landlord pursuant to the provisions of Chapter 713, Florida Statutes, and recover from Tenant all costs - of such bond. Notwithstanding anything contained herein to the contrary, in accordance with Florida Statutes, section 713.10, the interest of Landlord shall not be subject to liens for improvements made by Tenant. If Tenant makes any improvements to the Premises, before such improvements are made, Tenant shall notify all contractors making improvements, as well as any other suppliers of goods, labor, or services, of the provisions of this Lease related to liens.

               26.      INSURANCE. Prior to taking possession of the Premises and at all times while this Lease is in effect, Tenant shall secure and agrees to maintain policies of insurance that provide the following insurance coverages from an insurance company or

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companies duly licensed to sell insurance in the State of Florida reasonably acceptable to Landlord:

(a)      Liability insurance in the amount of $2,000,000 aggregate coverage limitation, with a per occurrence coverage limitation of $1,000,000 for loss from an accident resulting in bodily injury to or death of persons, and a coverage limitation of $1,000,000 for loss from an accident resulting in damage to or destruction of property; and

(b)      Contents coverage in an amount adequate to cover the full replacement cost of all of the assets, fixtures, goods, wares, merchandise and other personal property brought onto the Premises by Tenant. Such coverage shall also include a waiver of any rights of subrogation Tenant may have against Landlord.

(c)      Workers' compensation insurance, as required by governing law, covering any and all employees of Tenant.

On each policy of insurance required to be maintained by Tenant, with the exception of Tenant's workers' compensation policy, Landlord shall be named as an additional insured. Immediately upon securing the above coverages, Tenant shall furnish Landlord with a certificate of insurance, which shall state that insurance coverage may not be canceled or materially altered without at least thirty (30) days written notice to Landlord. If Tenant fails to secure or maintain the required insurance coverages, Landlord may, but shall have no obligation to, secure such insurance in Tenant's name or as the agent of Tenant and may charge the cost of same to Tenant as additional rent, which shall be due and payable immediately upon Tenant's receipt of notice of same being due and payable.

As additional rent, Tenant shall also reimburse Landlord for the cost of fire, hazard, and extended casualty coverage insurance for the Premises in an amount not less than one hundred percent (100%) of the replacement cost of the Premises and other improvements on the Premises, provided that insurance in that percentage can be obtained, and, if not, then to the highest percentage that can be obtained less than the said one hundred percent. Such reimbursement shall be made by Tenant within ten (10) days of Landlord providing Tenant with an invoice or statement related thereto. In the event any period of such insurance coverage exceeds the term of this Lease (or any extension hereof), then Tenant shall only be obligated to reimburse Landlord for the pro rata share of such insurance that relates to the period in which this Lease is in effect. If,

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prior to the date Landlord binds such fire, hazard, and extended casualty insurance coverage, or the date 30 days prior to the scheduled renewal date of such insurance policies obtained by Landlord, whichever is earlier, Tenant furnishes Landlord with a bona fide quote for such insurance coverage, for the same coverage limits obtained by Landlord and from a carrier comparably rated to the carrier selected by Landlord, and such quote is more than 10% less than the cost of insurance secured by Landlord, then Tenant shall only be obligated to reimburse Landlord based on the cost of Tenant's quote.

               27.      DANGEROUS MATERIALS. Tenant shall not keep or have on the Premises any article or thing of a dangerous, inflammable, or explosive character in quantities prohibited by law.

               28.      DESTRUCTION TO PREMISES. If the Premises are damaged or destroyed by fire, flood, or other casualty, Tenant shall give immediate written notice thereof to Landlord. If such destruction or damage renders the Premises wholly untenantable and the Premises cannot be restored to substantially the same condition as they were in prior to the damage or destruction within 120 days of the damage or destruction, Landlord shall have the option to either terminate this Lease or to rebuild or repair the Premises to substantially the same condition in which they existed prior to such damage, and Landlord shall notify Tenant of its decision regarding restoration within thirty (30) days following such damage or destruction. In the event that the Premises cannot be restored to the same condition in which they existed prior to such damage within 120 days, and Landlord elects not to terminate the Lease, Tenant shall have the option to terminate the Lease. In any event, if the Premises are rendered wholly untenantable as a result of fire, flood or other casualty or as a result of Landlord's breach of its obligations under this Lease, rent and all other charges due from Tenant to Landlord shall abate as of the date of such destruction and shall resume upon restoration and delivery of the Premises to Tenant. If such destruction or damage renders the Premises partially untenantable, or wholly untenantable and the Premises can be restored to substantially the same condition as they were in prior to the damage or destruction within 120 days of the damage or destruction, then Landlord shall rebuild or repair the Premises to substantially the same condition in which they existed prior to such damage. The rent payable to Landlord during any period where the Premises are partially untenantable shall be adjusted equitably as of the date of such damage or destruction. Notwithstanding anything herein to contrary, Landlord shall not be obligated to rebuild or restore the

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Premises, and Tenant shall not be entitled to any abatement of rent if the damage or destruction to the Premises is caused by the willful act or uninsured negligence of Tenant, its agents, invitees or servants. Further, Landlord shall not be required to rebuild or repair the Premises if the casualty causing the damage or destruction to the Premises occurs during the final four (4) months of the Lease and Tenant has not previously exercised Tenant's right, if any, to extend the then existing term of this Lease.

               29.      CONDEMNATION. If during the term of this Lease, the Premises are wholly taken for any public or quasi-public use under any law, ordinance, or regulation or by right of eminent domain, or should be sold to the condemning authority under threat of condemnation, this Lease shall terminate and the rent shall be abated during the unexpired portion of this Lease, effective as of the date of the taking of the Premises by the condemning authority. If during the term of this Lease, the Premises are partially taken for any public or quasi-public use under any law, ordinance, or regulation or by right of eminent domain, or should be sold to the condemning authority under threat of condemnation, Landlord shall have the option to terminate this Lease, to equitably abate the rent for the portion of the Premises that was taken, or to restore or reconstruct the Premises if such restoration and reconstruction shall make the Premises reasonably tenantable and suitable for the uses for which they were leased. In any event, if reasonable access to the building located on the Premises or more than twenty-five percent (25%) of associated parking is taken, rent shall abate as of the date of such taking, and Landlord and Tenant shall both have the right to terminate this Lease as of the date of the taking. Landlord and Tenant shall each be entitled to receive and retain such separate awards and portions of lump-sum awards as may be allocated to their respective interests in any condemnation proceedings.

               30.      INDEMNITY REGARDING USE OF PREMISES. Tenant agrees to indemnify, hold harmless and defend Landlord from and against any and all losses, claims, liabilities, and expenses, including reasonable attorney fees, if any, which Landlord may suffer or incur as a proximate result of Tenant's use of the Premises; Tenant's failure to maintain or make repairs to the Premises; any alterations, improvements or repairs made to or on the Premises by Tenant, and; any actions of Tenant, Tenant's business invitees or guests. Landlord shall not be liable for any damage or injury to Tenant, or any other person, or for any property damage occurring on the Premises, or any part thereof

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unless such damage is the proximate result of an unlawful or intentional act of Landlord, provided however, that Landlord shall not be relieved of liability for damages caused as a proximate result of Landlord's failure to meet any of its maintenance obligations after having been given written notice thereof by Tenant and a reasonable opportunity to perform such obligations.

               31.      ADDITIONAL RENT. Any and all amounts due and payable by Tenant under this Lease, including but not limited to sales taxes, late fees, bad check charges, and interest, shall be deemed and considered additional rent.

               32.      EXCUSE. Neither Landlord nor Tenant shall be required to perform any term, condition, or covenant in this Lease so long as such performance is delayed or prevented by any acts of God, strikes, lockouts, material or labor restrictions by any governmental authority, civil riot, floods, and any other cause not reasonably within the control of the Landlord or Tenant and which by the exercise of due diligence Landlord or Tenant is unable, wholly or in part, to prevent or overcome.

               33.      DEFAULT. If Tenant defaults in the payment of any installment of rent or of any other sum due to Landlord, and such default continues for a period of ten (10) days after the due date, or Grace Period if applicable, the amounts past due, plus any applicable late or other charges in connection therewith, shall bear interest at the rate of eighteen percent (18%) per annum. Similarly, all other sums which may become due to Landlord from Tenant under the terms of this Lease, or which are paid by Landlord because of Tenant's failure to perform Tenant's obligations hereunder, shall also bear interest at the rate of eighteen percent (18%) per annum from the due date until paid, or, in the case of sums paid by Landlord because of Tenant's default hereunder, from the date such payments are made by Landlord until the date Landlord is reimbursed by Tenant therefor. Upon Tenant's defaults on any of Tenant's obligations under this Lease, Tenant shall be given a written notice setting forth such default. Tenant shall have three (3) days to cure any default if the default is related to the non-payment of rent or any other sums due hereunder, and twenty (20) days to cure any default that is non-monetary or is related to Tenant's other obligations under this Lease, provided that if the nature of such default is that it cannot be cured within twenty (20) days, Tenant shall have a reasonable time to effect such cure under the circumstances. Upon Tenant's failure to cure any default within the time required by this Lease after having been given proper notice thereof, or in the event that any other person or

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entity other than Tenant shall secure possession of the Premises or any part thereof by reason of any receivership, bankruptcy proceedings, or other operation of law in any manner whatsoever, Landlord may, at Landlord's option:

(a)      Declare this Lease to be terminated without further notice to Tenant, and immediately retake possession of the Premises and remove all persons and property therefrom, without being deemed guilty of any manner of trespass, and sue Tenant for all damages incurred as a result of Tenant's default, including all rent due or to become due; or

(b)      Retake possession of the Premises for the account of Tenant, and relet the Premises or any portion thereof for all or any part of the remainder of then remaining term, to a party satisfactory to Landlord, and at such monthly rental as Landlord may with reasonable diligence be able to secure and on any such terms and conditions as Landlord shall deem advisable, in which event the rents received by Landlord from reletting shall be applied first to the payment of such expenses incurred by Landlord in reentering and reletting the Premises, and then to the payment of rent due and to become due under this Lease, and the balance, if any, shall be paid over to Tenant, who shall remain liable for any deficiency; or

(c)      Landlord may stand by and do nothing and shall have the right to sue Tenant as each installment of rent becomes due; or

(d)      Accelerate the balance of installments of rent due and immediately sue Tenant for same.

In addition to any other loss or damage that Landlord sustains because of Tenant's default, Tenant shall also pay any and all costs and expenses incurred by Landlord as a result of Tenant's breach, including reasonable attorney fees and costs incurred in connection with enforcing or construing this Lease, regardless of whether or not suit is initiated. Similarly, in the event that Tenant sustains any loss or damage because of Landlord's default, Landlord shall pay any and all costs and expenses incurred by Tenant as a result of Landlord's breach, including reasonable attorney fees and costs incurred in connection with enforcing or construing this Lease, regardless of whether or not suit is initiated. In addition to any other remedies set forth in this Lease, Landlord shall also be entitled to any remedies available to Landlord pursuant to F.S. 83.08, et. seq.

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               34.      WAIVER OF DEFAULT. In the event either party defaults or breaches any term, condition, or covenant of this Lease, the non-breaching party's failure to insist or demand strict performance or observance thereof in any particular instance or instances, or the non-breaching party's failure to exercise any remedy or option conferred upon Landlord as a result of such default, shall not operate or be construed as a waiver or limitation by the non-breaching party of such party's right to subsequently enforce such term, condition, or covenant, or of such party's right to subsequently exercise any such remedy or option related thereto.

               35.      CUMULATIVE RIGHTS. All rights and remedies of each party under this Lease, at law and in equity shall be cumulative, and a party's exercise or election of any right or remedy shall not exclude or waive any other right or remedy at law or equity. Such rights and remedies may be exercised and enforced concurrently and whenever and as often as occasion therefore arises.

               36.      HOLDOVER BY TENANT. If Tenant remains in possession of the Premises without the consent of the Landlord after the natural expiration or sooner termination of this Lease, then Tenant shall be deemed a Tenant at sufferance and be liable to Landlord for one hundred fifty percent (150%) rent during any holdover period.

               37.      ABANDONMENT. If at any time during the term of this Lease Tenant abandons the Premises or any part thereof, and provided that Tenant is either not fulfilling its maintenance or its payment obligations under this Lease, Landlord may, at Landlord's option, enter the Premises by any means without being liable for any prosecution therefor and without becoming liable to Tenant for damages or for any payment of any kind whatever, and may, at Landlord's discretion, as agent for Tenant, relet the Premises or any part thereof for the whole or any part of the then unexpired term, and may receive and collect all rent payable by virtue of such reletting, and at Landlord's option, may hold Tenant liable for any difference between the rent that would have been payable under this Lease during the balance of the unexpired term if this Lease had continued in force and the net rent for such period realized by Landlord by means of such reletting. If Landlord's right of re-entry is exercised following abandonment of the premises by Tenant, then the Landlord may consider any personal property belonging to the Tenant and left on the premises to have also been abandoned, in which case Landlord may dispose of all such personal property in any manner Landlord shall deem proper and Landlord shall not

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incur any liability for doing so. Landlord may also sell any such property belonging to Tenant, on Tenant's account, to pay for any deficiency in amounts owed pursuant to this Lease. In the event Landlord sells or otherwise disposes of Tenant's personal property in accordance with this paragraph, Landlord shall not be relieved of any liability to third parties having an interest in such personal property if Landlord has actual or constructive notice of such interest prior to disposition.

               38.      RULES AND REGULATIONS. Tenant agrees that Tenant, its employees, agents, and invitees will abide by all reasonable rules and regulations from time to time established by Landlord by written notice to Tenant. The initial copy of such rules and regulations are attached hereto as Exhibit "B", but Tenant acknowledges that such rules and regulations are subject to change and agrees to abide by such changes, provided that they are reasonable under the circumstances and do not proscribe or materially interfere with Tenant's use of the Premises.

               39.      SUBORDINATION OF LEASE. Tenant agrees that this Lease is and at all times shall be subject and subordinate to the lien of any mortgage now or hereafter encumbering the Premises, or the land or building of which the Premises constitutes a part. Tenant agrees to execute, acknowledge, and deliver free of charge any reasonable and truthful instrument of subordination required or requested by Landlord or any mortgagee of Landlord, and a signed writing acknowledging the status of this Lease. Upon the transfer of any or all of Landlord's interest in this Lease or the Premises, or both, regardless of whether such transfer is characterized as voluntary or by operation of law, conditional or unconditional, absolute or as security for performance of an obligation, Tenant agrees to promptly execute, acknowledge and deliver to such transferee such reasonable estoppels, attornment agreements and similar items as such transferee may require. Upon the absolute transfer of the Premises to any party assuming Landlord's obligations hereunder, the person or entity executing this Lease as Landlord shall thereupon be relieved of any and all further obligations to Tenant hereunder.

               40.      RECORDABILITY. This Lease, or any copies hereof, may not be recorded without Landlord's prior written consent.

               41.      TRANSFER OF LANDLORD'S INTEREST. The term "Landlord" as used in this Lease shall denote only the owner for the time being or mortgagee in possession for the time being of the Premises. In the event the Premises are sold, each time the Premises are sold the selling Landlord shall be relieved of all

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obligations and liability under this Lease except for those obligations or liabilities for which Tenant has previously asserted a claim or demand for to Landlord in writing.

               42.      FINANCIAL STATEMENTS. Upon Landlord's request, of if requested by Landlord's mortgagee or prospective lender, Tenant shall prepare and furnish to Landlord an income statement for Tenant's most recent fiscal year and balance sheet effective as of the end of such fiscal year. Such statements shall be provided within 10 days of Landlord's request, or within four (4) months after the end of such fiscal year, whichever is later.

               43.      ASSIGNABILITY/SUBLETTING. Tenant may not assign, sublease or transfer any interest in this Lease or privilege pertinent thereto without the prior written consent of Landlord, which shall not be unreasonably withheld. Further, any consent to an assignment shall not release Tenant without Landlord's written consent. In the event Tenant requests Landlord to approve an assignment, sublease or transfer, Tenant shall reimburse Landlord the reasonable costs in determining the proposed assignee's, sublessee's or transferee's acceptability, together with reasonable attorney fees related thereto, which reimbursement shall be a condition of approval.

               44.      INSPECTION AND ACCESS TO PREMISES. Landlord and Landlord's agents shall have the right upon reasonable notice to Tenant and at all reasonable times while Tenant is in possession of the Premises, to enter upon the Premises for the purpose of inspecting the Premises, preventing waste, and making such repairs as Landlord may reasonably consider necessary (but without any obligation to do so except as expressly provided for herein), and showing the Premises to prospective buyers, mortgagees, or tenants. Landlord's notice to Tenant prior to entering the Premises shall not be required in the event of an emergency. Landlord shall also have the right to post "for sale" or "for rent" signs on the Premises during the final six months of the Lease. In addition, Tenant shall allow Landlord to enter upon the Premises upon reasonable notice and at all reasonable times for the purpose of installing or servicing electrical wiring, telephone cables, water and sewer lines, or other similar transmission lines, which cross the Premises or may otherwise be used to render service to any adjoining property owned or subsequently acquired by Landlord. Landlord will use and will cause those entering the Premises to perform such inspections to use reasonable efforts not to materially disrupt or interfere with Tenant's operations at the Premises.

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               45.      SURRENDER UPON TERMINATION. Tenant agrees to, and shall, upon the natural expiration or sooner termination of this Lease, promptly surrender and deliver the Premises to Landlord without demand therefor in good condition, excepting ordinary wear and tear, condemnation or uninsured damage or destruction as a result of one or more circumstances or events not within Tenant's control.

               46.      RADON. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed Federal and State guidelines have been found in buildings in Florida. Additional information regarding radon "and radon testing may be obtained from your County Public Health Unit.

               47.      SEVERABILITY. If any portion of this Lease shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Lease is invalid or unenforceable, but that by limiting such provision, it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

               48.      CONSTRUCTION. Both parties acknowledge that they participated in the negotiation and drafting of this Lease, and therefore, any terms hereof shall not be construed against either party by virtue of either party having drafted the provision being construed.

               49.      ENTIRE AGREEMENT. This Lease contains the entire agreement of the parties and supersedes any prior understandings or written or oral agreements between the parties pertaining to the subject matter of this Lease. There are no other promises or conditions between the parties in any other agreement, whether oral or written. This Lease may be modified or amended only by a written instrument executed by both parties. No amendment, modification, or alteration of the terms of this Lease shall be binding unless it is in writing, dated subsequent to the date hereof, and duly executed by the parties to this Lease.

               50.      EXISTING LEASE VOIDED. As of the Effective Date, (unless an alternate date is mutually agreed upon by the parties in writing prior to such time), that certain Lease Agreement between the parties dated July 1, 2001, related to the real property described as Lots 1-9, University Park of Commerce, Section One, as per plat thereof recorded in Plat Book 23, Pages 185 thru 188, of the Public Records of Manatee County, Florida

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(the "Existing Lease"), shall terminate automatically without further action by the parties.

               51.      GOVERNING LAW. This Lease shall be construed in accordance with the laws of the state of Florida and venue of any proceeding shall be in Manatee County, Florida.

               52.      ATTORNEY FEES. In the event either party breaches any of the terms of this Lease and the non-breaching party employs an attorney to collect any sums due or to protect or enforce such non-breaching party's rights hereunder, regardless of whether formal legal proceedings are commenced, the non-breaching party shall be entitled to recover reasonable attorney's fees so incurred -and, in the event that Landlord is the non-breaching party, such fees may be demanded as additional rent. If litigation between the parties arises out of this Lease or the tenancy created herein, the prevailing party in such litigation shall be entitled to recover all costs incurred, including but not limited to, costs involved in collection, court costs, and attorney fees at all stages of all proceedings, including bankruptcy and appeal.

               53.      NOTICES. All notices provided to be given under this Agreement shall be hand delivered, sent by overnight courier, or sent by certified mail return receipt requested, addressed to Tenant at the Premises, and to Landlord at Landlord's address first set forth above. Either party may change such addresses from time to time by providing written notice to the other party in accordance with the provisions hereof.

               54.      CONFIDENTIALITY. Landlord agrees to keep all nonpublic information concerning Tenant that Landlord might directly or indirectly acquire in connection with this Lease or the relationship of the parties, including, without limitation, information related to Tenant's operations, its business strategies, its financial details or circumstances, its directors, officers or its personnel, in the strictest confidence and not to disclose any portion of such information other than as required to comply with a subpoena, and then, only to the extent necessary in the opinion of Landlord's counsel, expressed in writing, to effect compliance. This Lease is entered by the parties as of the day and year first written above.

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"Landlord" "Tenant"

HERRIG ENTERPRISES, L.L.C.		CARBIX USA INC.
By:	/s/ Steven F. Herrig	By:	/s/ Carl Ritter
Steven F. Herrig			Carl Ritter
Title:	CEO		Chief Executive Officer

Exhibit A

Build-Out Requirements

               1. The interior of the Premises will be reconfigured in accordance with those certain building plans prepared by The ADP Group dated ______, 2003, (the "Initial Plans"). In the event the Initial Plans are modified prior to the Commencement of construction, then Landlord will perform the Buildout in accordance with any modified plans, provided however, that (a) any modified plans will be in substantial conformity with the Initial Plans, and; (b) the cost of construction as called for by any modified plans shall not exceed 105% of the cost of construction as called for by the Initial Plans.

               2. All interior walls will be painted.

               3. New commercial grade carpet will be installed in all areas other than those that are currently tiled, such as the kitchen and bathrooms.

               4. Ceiling tiles will be replaced as needed.

               5. Any changes specified in the Initial Plans related to compliance with current building codes. (Tenant represents that no changes other than those set forth in the Initial Plans are required to meet current building codes.)

               6. Electrical service will be modified as needed to provide adequate power to offices and server room.

               7. Network and phone wiring will be provided as specified in the Initial Plans.

               8. Landlord will perform changes to the driveway and the exterior portion of the Premises as specified in the Initial Plans.

               9. Landlord will construct an outside patio with canopy as specified in the Initial Plans.

               10. Landlord will remove the concrete lattice, paint the exterior of the building and install canopies as specified in the Initial Plans.

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Exhibit B

RULES AND REGULATIONS

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EX-10.4

REAL ESTATE LEASE

This Lease agreement (this "Lease”) is between D.O. & M.G. INVESTMENT, INC. ("Landlord"), CARBIZ AUTO CREDIT, INC. ("Tenant"). The parties agree as follows.

PREMISES. Landlord, in consideration of the lease payments provided in this Lease, leases approximately 1000 sq. ft. of office space (the "Premises") on approximately 18000 square feet of land located at 2324 Central Avenue, St. Peterburg, FL.

TERM. The lease term will begin November 1, 2004 and will continue for five years ending October 31, 2009. An option to renew for an additional five year term will be negotiated at the conclusion of the five year lease.

LEASE PAYMENTS. Lease payments in the amount of $2300.00 plus 7% sales tax ($161.00) a total of $2461.00 per month,, plus a portion of the property taxes are to be paid to D.O. & M.G. Investment, Inc. Property Taxes attributed to 2324 Central Avenue to be paid by lessee. Estimated property taxes are $3,138.59 with adjustments to made in November of each year. Lease rate increase of 2% effective for the 4th and 5th years. This Lease is a Net.Net.Net. lease to Lessor.

POSSESSION. Tenant shall be entitled to possession on the first day of October, 2004, and shall yield possession to Landlord on the last day of the term of this Lease, unless otherwise agreed by both parties in writing. At the expiration of the term, Tenant shall remove its goods and effects and peaceably yield up the Premises to Landlord in as good a condition as when delivered to tenant, ordinary wear and tear excepted.

USE OF PREMISES. Tenant may use the Premises only for normal daily business activities related to USED CAR LOT SALES AND FINANCING. The premises may be used for any other purpose only with prior written consent of Landlord which shall not be unreasonably withheld. Tenant shall notify Landlord of any anticipated extended absence from the premises not later than the first day of the extended absence.

STORAGE. Tenant shall be entitled to store items of personal property in the rented space during the term of this Lease. Landlord shall not be liable for loss of, or damage to, such stored items.

LANDLORD:	D.O. & M.G. INVESTMENT, INC.
	P.O. Box 7185
	St. Petersburg; FL 33734
TENANT:	CARBIZ AUTO CREDIT, INC.
	(CARBIZ U.S.A, INC.)
	7405 Tamiami Trail North
	Sarasota, FL 34243

Such addresses may be changed from time to time by either Party by providing nofice as set forth above. Notices mailed in accordance with the above provisions shall be deemed received on the third day after posting.    

GOVERNING LAW. This Lease shall be construed in accordance with the taws of the State of Florida.      

ENTIRE AGREEMENT/AMENDMENT. This Lease Agreement contains the entire agreement of the parties and there are no other promises, conditions, understandings or other agreements, whether oral or written, relating to the subject matter of this Lease. This Lease may be modified or amended in writing, if writing is signed by the party obligated under the amendment.    

SEVERABILITY. If any portion of this Lease shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Lease is invalid or unenforceable, but that by limiting such provision, it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

NON-SUFFICIENT FUNDS. Tenant shall be charged $25.00 for each check that is returned to Landlord for lack of sufficient funds.

REMODELING OR STRUCTURAL IMPROVEMENTS. Tenant shall have the obligation to conduct any construction or remodeling (at Tenant's expense) that may be required to use the Premises as specified above. Tenant may also construct such fixtures on the Premises (at Tenant's expense) that appropriately facilitate its use for such purposes. Such construction shall be undertaken and such fixtures may be erected only with the prior written consent of the Landlord which shall not be unreasonably withheld.

Tenant shall not install awnings or advertisements on any part of the Premises without Landlord's prior written consent. At the and of the lease term, Tenant shall be entitled to remove (or at the request of Landlord shall remove) such fixtures, and shall restore the Premises to substantially the same condition of the Premises at the commencement of this Lease.

Lessor is responsible that any existing structural, electrical, or plumbing meats the appropriate building codes and ordinances. Lessor is responsible for any needed casts to make the structural, electrical, or plumbing in compliance with such building codes and ordinances.

ACCESS BY LANDLORD TO PREMISES. Subject to Tenant's consent (which shall not be unreasonably withheld), Landlord shall have the right to enter the Premises to make inspections, provide necessary services, or show the unit to prospective buyers, mortgages, tenants, or workers. However, Landlord does not assume any liability for the care or supervision of the Premises. As provided by law, in the case of an emergency, Landlord may enter the Premises without Tenant's consent. During the last three months of this Lease, or any extension of this Lease, Landlord shall be allowed to

display the usual "To Let" signs and show the Premises to prospective tenants.

INDEMNITY REGARDING USE OF PREMISES. To the extent permitted by law, Tenant agrees to indemnify, hold harmless, and defend Landlord from and against any and all losses, claims, liabilities, and expenses, including reasonable attorney fees, it any, which Landlord may suffer or incur in connection with Tenant's possession, use or misuse of the Premises, except Landlord's act or negligence.

DANGEROUS MATERIALS. Tenant shall not keep or have on the Premises any article or thing of a dangerous, flammable, or explosive character that might substantially increase the danger of fire on the Premises, or that might be considered hazardous by a responsible insurance company, unless the prior written consent of Landlord is obtained and proof of adequate insurance protection is provided by Tenant to Landlord.

COMPLIANCE WITH REGULATIONS. Tenant shall promptly comply with all laws, ordinances, requirements and regulations of the federal, state, county, municipal and other authorities, and the fire insurance underwriters. However, Tenant shall not by this provision be required to make alterations to the exterior of the building or alterations of a structural nature.

ARBITRATION. Any controversy or claim relating to this, contract, including the construction or application if this contract, will be settled by binding arbitration under the rules of the American Arbitration Association, and any judgment granted by the arbitrator(s) may be enforced in any court of proper jurisdiction.

ASSIGNABILITY/SUBLETTING. Tenant may not assign or sublease any interest in the Premises nor effect a change in the majority ownership of the Tenant (from the ownership existing at the inception of this lease), nor assign, mortgage or pledge this Lease, without the prior written consent of Landlord, which shall riot be unreasonably withheld.

NOTICE. Notices under this Lease shall not be deemed valid unless given or served in writing and forwarded by mail, postage prepaid, addressed as follows:

Lessor shall, at its expense, maintain in good condition and repair, the HVAC and mechanical equipment, the roof, foundation, structural supports, underground or otherwise.

Lessee shall be responsible far all maintenance to the building, including signage structure, except as mentioned above.

DESTRUCTION OR CONDEMNATION OF PREMISES. If the Premises are partially destroyed by fire or other casualty to an extent that prevents the conducting of Tenant's use of the Premises in a normal manner, and if the damage is reasonably repairable within sixty days after the occurrence of the destruction, and if the cost of repair is less than $2.000.00, Landlord shall repair the Premises and a just proportion of the lease payments shall abate during the period of the repair according to the extent to which the Premises have be rendered untenentable. However, if the damage is not repairable within sixty days, or if the cost of repair is $2,000.00 or more, or if Landlord is prevented from repairing the damage by forces beyond Landlord's control, or if the property is condemned, this lease shall terminate upon twenty days' written notice of such event or condition by either party and any unearned rent paid in advance by Tenant shall be apportioned and refunded to it, Tenant shall give Landlord immediate notice of any damage to the Premises.

DEFAULTS. Tenant shall be in default of this Lease if Tenant fails to fulfill any lease obligation or term by which Tenant is bound. Subject to any governing provisions of law to the contrary, if Tenant fails to cure any financial obligation within 10 days (or any other obligation within 10 days) after written notice of such default is provided by Landlord to Tenant, Landlord may take possession of the Premises without further notice (to the extent permitted by law), and without prejudicing Landlord's rights to damages. In the alternative, Landlord may elect to cure any default and the cost of such action shall be added to Tenant's financial obligations under this Lease. Tenant shall pay all costs, damages, and expenses (including reasonable attorney fees and expenses) suffered by Landlord by reason of Tenant's defaults. All sums of money or charges required to be paid by Tenant under this Lease shall be additional rent whether or not such sums or charges are designated as "additional rent", The rights provided by this paragraph are cumulative in nature and are in addition to any other rights afforded by law.

HOLDOVER. If Tenant maintains possession of the Premises far any period after the termination of the Lease ("Holdover Period"). Tenant shall pay to Landlord lease payment(s) during the Holdover Period at a rate equal to double the normal payment rate set forth in the Renewal Terms paragraph.

CUMULATIVE RIGHTS. The rights of the parties under this Lease are cumulative and shall not be construed as exclusive unless otherwise reauired by law.

ADDENDUM TO LEASE

D.Q. & M.G. Investment, Inc., Landlord agrees to the following repairs to 2324 Central Avenue, St. Petersburg, FL, agreeable to Lessee within reasonable cost and time. Repairs to be concluded by October 30th, 2004.

Paint inside of office - 1 coat of white paint

Repair of roof leak

Ensure air-conditioning is functioning

New flooring installed - commercial pvc tile as in premise at pressent

Bathrooms to be more cosmetically appealing

WAIVER. The failure of either party to enforce any provisions of this Lease shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this tease.

BINDING EFFECT. The provisions of this Lease shall be binding upon and inure to the benefit of bath parties and their respective legal representatives, successors, and assigns.

LANDLORD:
/s/ B. Guliuhaus, D.O. & M.G. Investment Inc.	Date:	9/21/2004
TENANT:
/s/ Carl Ritter	Date:	9/22/2004
Carl Ritter, C.E.O.

EX-10.5

EX-10.6

DATA GATHERING CAPITAL CORP.

STOCK OPTION PLAN

1. The Plan

          A stock option plan (the “Plan”), pursuant to which options to purchase common shares, or such other shares as may be substituted therefor (“Shares”), in the capital of Data Gathering Capital Corp. (the “Corporation”) may be granted to the directors, officers and employees of the Corporation and to consultants retained by the Corporation, is hereby established on the terms and conditions set forth herein.

2. Purpose

          The purpose of this Plan is to advance the interests of the Corporation by encouraging the directors, officers and employees of the Corporation and consultants retained by the Corporation to acquire Shares, thereby: (i) increasing the proprietary interests of such persons in the Corporation; (ii) aligning the interests of such persons with the interests of the Corporation’s shareholders generally; (iii) encouraging such persons to remain associated with the Corporation and (iv) furnishing such persons with an additional incentive in their efforts on behalf of the Corporation.

3. Administration

          (a) This Plan shall be administered by the board of directors of the Corporation (the “Board”).

          (b) Subject to the terms and conditions set forth herein, the Board is authorized to provide for the granting, exercise and method of exercise of Options (as defined in paragraph 3(d) below), all on such terms (which may vary between Options granted from time to time) as it shall determine. In addition, the Board shall have the authority to: (i) construe and interpret this Plan and all option agreements entered into hereunder; (ii) prescribe, amend and rescind rules and regulations relating to this Plan and (iii) make all other determinations necessary or advisable for the administration of this Plan. All determinations and interpretations made by the Board shall be binding on all Participants (as hereinafter defined) and on their legal, personal representatives and beneficiaries.

          (c) Notwithstanding the foregoing or any other provision contained herein, the Board shall have the right to delegate the administration and operation of this Plan, in whole or in part, to a committee of the Board or to the President or any other officer of the Corporation. Whenever used herein, the term “Board” shall be deemed to include any committee or officer to which the Board has, fully or partially, delegated responsibility and/or authority relating to the Plan or the administration and operation of this Plan pursuant to this Section 3.

          (d) Options to purchase the Shares granted hereunder (“Options”) shall be evidenced by (i) an agreement, signed on behalf of the Corporation and by the person to whom an Option is granted, which agreement shall be in such form as the Board shall approve, or (ii) a written notice or other instrument, signed by the Corporation, setting forth the material attributes of the Options.

4. Shares Subject to Plan

          (a) Subject to Section 15 below, the securities that may be acquired by Participants upon the exercise of Options shall consist of authorized but unissued Shares. Whenever used herein, the term “Shares” shall be deemed to include any other securities that may be acquired by a Participant upon the exercise of an Option the terms of which have been modified in accordance with Section 15 below.

          (b) The aggregate number of Shares reserved for issuance under this Plan, or any other plan of the Corporation, shall not exceed ten percent of the total number of issued and outstanding Shares (calculated

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on a non-diluted basis) unless the Corporation receives the permission of the stock exchange or exchanges on which the Shares are then listed to exceed such threshold.

          (c) If any Option granted under this Plan shall expire or terminate for any reason without having been exercised in full, any unpurchased Shares to which such Option relates shall be available for the purposes of the granting of Options under this Plan.

5. Maintenance of Sufficient Capital

          The Corporation shall at all times during the term of this Plan ensure that the number of Shares it is authorized to issue shall be sufficient to satisfy the Corporation’s obligations under all outstanding Options granted pursuant to this Plan.

6. Eligibility and Participation

          (a) The Board may, in its discretion, select any of the following persons to participate in this Plan:

(i)	directors of the Corporation;
(ii)	officers of the Corporation;
(iii)	employees of the Corporation; and
(iv)	consultants retained by the Corporation, provided such consultants have performed and/or continue to perform services for the Corporation on an ongoing basis or are expected to provide a service of value to the Corporation;

(any such person having been selected for participation in this Plan by the Board is herein referred to as a “Participant”).

          (b) The Board may from time to time, in its discretion, grant an Option to any Participant, upon such terms, conditions and limitations as the Board may determine, including the terms, conditions and limitations set forth herein, provided that Options granted to any Participant shall be approved by the shareholders of the Corporation if the rules of any stock exchange on which the Shares are listed require such approval.

7. Exercise Price

          The Board shall, at the time an Option is granted under this Plan, fix the exercise price at which Shares may be acquired upon the exercise of such Option provided that such exercise price shall not be less than that from time to time permitted under the rules of any stock exchange or exchanges on which the Shares are then listed.

8. Number of Optioned Shares

          The number of Shares that may be acquired under an Option granted to a Participant shall be determined by the Board as at the time the Option is granted, provided that the aggregate number of Shares reserved for issuance to any one Participant under this Plan or any other plan of the Corporation, shall not exceed five percent of the total number of issued and outstanding Shares (calculated on a non-diluted basis) unless the Corporation receives the permission of the stock exchange or exchanges on which the Shares are listed to exceed such threshold.

9. Term

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          The period during which an Option may be exercised (the “Option Period”) shall be determined by the Board at the time the Option is granted, subject to any vesting limitations which may be imposed by the Board in its sole unfettered discretion at the time such Option is granted and Sections 11, 12 and 16 below, provided that:

(a)	no Option shall be exercisable for a period exceeding five (5) years from the date the Option is granted unless otherwise specifically provided by the Board, and in any event, no Option shall be exercisable for a period exceeding ten (10) years from the date the Option is granted;
(b)	no Option in respect of which shareholder approval is required under the rules of any stock exchange or exchanges on which the Shares are then listed shall be exercisable until such time as the Option has been approved by the shareholders of the Corporation; and
(c)	the Board may, subject to the receipt of any necessary regulatory approvals, in its sole discretion, accelerate the time at which any Option may be exercised, in whole or in part.

10. Method of Exercise of Option

          (a) Except as set forth in Sections 11 and 12 below or as otherwise determined by the Board, no Option may be exercised unless the holder of such Option is, at the time the Option is exercised, a director, officer, employee or consultant of the Corporation.

          (b) Options that are otherwise exercisable in accordance with the terms thereof may be exercised in whole or in part from time to time.

          (c) Any Participant (or his legal, personal representative) wishing to exercise an Option shall deliver to the Corporation, at its principal office in the City of Calgary, Alberta:

(i)	a written notice expressing the intention of such Participant (or his legal, personal representative) to exercise his Option and specifying the number of Shares in respect of which the Option is exercised; and
(ii)	a cash payment, certified cheque or bank draft, representing the full purchase price of the Shares in respect of which the Option is exercised.

          (d) Upon the exercise of an Option as aforesaid, the Corporation shall use reasonable efforts to forthwith deliver, or cause the registrar and transfer agent of the Shares to deliver, to the relevant Participant (or his legal, personal representative) or to the order thereof, a certificate representing the aggregate number of fully paid and non-assessable Shares in respect of which the Option has been duly exercised.

11. Ceasing to be a Director, Officer, Employee or Consultant

          If any Participant shall cease to hold the position or positions of director, officer, employee or consultant of the Corporation (as the case may be) for any reason other than death or permanent disability, his Option will terminate at 4:00 p.m. (Calgary time) on the earlier of the date of the expiration of the Option Period and 30 days after the date such Participant ceases to hold the position or positions of director, officer, employee or consultant of the Corporation as the case may be.

          Neither the selection of any person as a Participant nor the granting of an Option to any Participant under this Plan shall: (i) confer upon such Participant any right to continue as a director, officer, employee or consultant of the Corporation, as the case may be; or (ii) be construed as a guarantee that the Participant will continue as a director, officer, employee or consultant of the Corporation, as the case may be.

12. Death or Permanent Disability of a Participant

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          In the event of the death or permanent disability of a Participant, any Option previously granted to him shall be exercisable until the end of the Option Period or until the expiration of 12 months after the date of death or permanent disability of such Participant, whichever is earlier, and then, in the event of death or permanent disability, only:

(a)	by the person or persons to whom the Participant’s rights under the Option shall pass by the Participant’s will or applicable law; and
(b)	to the extent that he was entitled to exercise the Option as at the date of his death or permanent disability.

13. Rights of Participants

          No person entitled to exercise any Option granted under this Plan shall have any of the rights or privileges of a shareholder of the Corporation in respect of any Shares issuable upon exercise of such Option until such Shares have been paid for in full and issued to such person.

14. Proceeds from Exercise of Options

          The proceeds from any sale of Shares issued upon the exercise of Options shall be added to the general funds of the Corporation and shall thereafter be used from time to time for such corporate purposes as the Board may determine and direct.

15. Adjustments

          (a) The number of Shares subject to the Plan shall be increased or decreased proportionately in the event of the subdivision or consolidation of the outstanding Shares of the Corporation, and in any such event a corresponding adjustment shall be made to the number of Shares deliverable upon the exercise of any Option granted prior to such event without any change in the total price applicable to the unexercised portion of the Option, but with a corresponding adjustment in the price for each Share that may be acquired upon the exercise of the Option. In case the Corporation is reorganized or merged or consolidated or amalgamated with another corporation, appropriate provisions shall be made for the continuance of the Options outstanding under this Plan and to prevent any dilution or enlargement of the same.

          (b) Adjustments under this Section 15 shall be made by the Board, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. No fractional Shares shall be issued upon the exercise of an Option following the making of any such adjustment.

16. Change of Control

          Notwithstanding the provisions of section 11 or any vesting restrictions otherwise applicable to the relevant Options, in the event of a sale by the Corporation of all or substantially all of its assets or in the event of a change of control of the Corporation, each Participant shall be entitled to exercise, in whole or in part, the Options granted to such Participant hereunder, either during the term of the Option or within 90 days after the date of the sale or change of control, whichever first occurs.

          For the purpose of this Plan change of control of the Corporation means and shall be deemed to have occurred upon:

(a)	the acceptance by the holders of Shares of the Corporation, representing in the aggregate, more than 50 percent of all issued Shares of the Corporation, of any offer, whether by way of a takeover bid or otherwise, for all or any of the outstanding Shares of the Corporation; or
(b)	the acquisition, by whatever means, by a person (or two or more persons who, in such acquisition, have acted jointly or in concert or intend to exercise jointly or in concert any voting rights attaching to the Shares acquired), directly or indirectly, of beneficial ownership

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	of such number of Shares or rights to Shares of the Corporation, which together with such person’s then owned Shares and rights to Shares, if any, represent (assuming the full exercise of such rights to voting securities) more than 50 percent of the combined voting rights of the Corporation’s then outstanding Shares; or
(c)	the entering into of any agreement by the Corporation to merge, consolidate, amalgamate, initiate an arrangement or be absorbed by or into another corporation; or
(d)	the passing of a resolution by the Board or shareholders of the Corporation to substantially liquidate the assets or wind-up the Corporation’s business or significantly rearrange its affairs in one or more transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or re-arrangement (except where such re-arrangement is part of a bona fide reorganization of the Corporation in circumstances where the business of the Corporation is continued and where the shareholdings remain substantially the same following the re-arrangement); or
(e)	individuals who were members of the Board of the Corporation immediately prior to a meeting of the shareholders of the Corporation involving a contest for or an item of business relating to the election of directors, not constituting a majority of the Board following such election.

17. Transferability

          All benefits, rights and Options accruing to any Participant in accordance with the terms and conditions of this Plan shall be non-transferrable and non-assignable unless specifically provided herein. During the lifetime of a Participant, any Options granted hereunder may only be exercised by the Participant and in the event of the death or permanent disability of a Participant, by the person or persons to whom the Participant’s rights under the Option pass by the Participant’s will or applicable law.

18. Amendment and Termination of Plan

          The Board may, at any time, suspend or terminate this Plan. The Board may also, at any time, amend or revise the terms of this Plan, subject to the receipt of all necessary regulatory approvals, provided that no such amendment or revision shall alter the terms of any Options theretofore granted under this Plan.

19. Necessary Approvals

          The obligation of the Corporation to issue and deliver Shares in accordance with this Plan and Options granted hereunder is subject to applicable securities legislation and to the receipt of any approvals that may be required from any regulatory authority or stock exchange having jurisdiction over the securities of the Corporation. If Shares cannot be issued to a Participant upon the exercise of an Option for any reason whatsoever, the obligation of the Corporation to issue such Shares shall terminate and any funds paid to the Corporation in connection with the exercise of such Option will be returned to the relevant Participant as soon as practicable.

20. Stock Exchange Rules

          This Plan and any option agreements entered into hereunder shall comply with the requirements from time to time of the stock exchange or exchanges on which the Shares are listed.

21. Right to Issue Other Shares

          The Corporation shall not by virtue of this Plan be in any way restricted from declaring and paying stock dividends, issuing further Shares, varying or amending its share capital or corporate structure or conducting its business in any way whatsoever.

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22. Notice

          Any notice required to be given by this Plan shall be in writing and shall be given by registered mail, postage prepaid or delivered by courier or by facsimile transmission addressed, if to the Corporation, at its principal address in Toronto, Ontario (being Carl Ritter, Attention: The President); or if to a Participant, to such Participant at his address as it appears on the books of the Corporation or in the event of the address of any such Participant not so appearing then to the last known address of such Participant; or if to any other person, to the last known address of such person.

23. Gender

          Whenever used herein words importing the masculine gender shall include the feminine and neuter genders and vice versa.

24. Interpretation

          This Plan will be governed by and construed in accordance with the laws of the Province of Alberta.

          Dated this 21st day of April, 1998.

DATA GATHERING CAPITAL CORP.

Per:

EX-10.7

Carbiz Inc.

7405 N. Tamiami Trail
Sarasota, Florida 34243

Offering of 5% Convertible Debentures

NOTICE TO PROSPECTIVE PURCHASERS IN FLORIDA

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES ACT IN RELIANCE UPON AN EXEMPTION THEREFROM. ANY SALE MADE PURSUANT TO SUCH EXEMPTION IS VOIDABLE BY A FLORIDA PURCHASER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER OR AN ESCROW AGENT IN PAYMENT FOR SUCH SECURITIES. HOWEVER, THIS RIGHT IS NOT AVAILABLE TO ANY PURCHASER WHO IS A BANK, TRUST COMPANY, SAVINGS INSTITUTION, INSURANCE COMPANY, SECURITIES DEALER, INVESTMENT COMPANY AS DEFINED IN THE INVESTMENT COMPANY ACT OF 1940, PENSION OR PROFIT-SHARING TRUST OR QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933.

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SUBSCRIPTION FOR 5% DEBENTURES

TO:	Carbiz Inc. (the "Corporation")
AND TO:	Innovation Capital, LLC (the “Agent”)

The undersigned (the "Subscriber") hereby irrevocably subscribes for and agrees to purchase a convertible debenture (the "Debenture") of the Corporation for the aggregate consideration set forth below, representing a value as set forth below, each upon and subject to the terms and conditions set forth in the "Terms and Conditions of Subscription for Debentures of Carbiz Inc." attached hereto and forming a part hereof (together, the "Subscription Agreement").

	Amount of Debenture subscribed for:
______________________________________________ Full Legal Name of Subscriber (please print)
	US $ ________________________________________________
By: ___________________________________________
Authorized Signature
	Aggregate Consideration: US $ ___________________________
______________________________________________ Official Title or Capacity (please print) ______________________________________________
Name of Signatory (please print name of individual whose
signature appears above if different than name of Subscriber) ______________________________________________
Subscriber's Address (including postal code)
______________________________________________
Telephone Number (including area code)
Register the Debenture as follows: ______________________________________________	Deliver the Debenture as follows: ______________________________________________
Name ______________________________________________	Name ______________________________________________
Account reference, if applicable ______________________________________________	Account reference, if applicable ______________________________________________
Address (including postal code) ______________________________________________	Contact Name ______________________________________________
	Address (including postal code)
______________________________________________	______________________________________________
	Telephone Number (including area code)
______________________________________________

ACCEPTANCE: The Corporation hereby accepts the above subscription on the terms and conditions contained in this Subscription Agreement.

CARBIZ INC.		Date: _______________, 2004
Per:			No:
	Carl Ritter –Chief Executive Officer

This is the first page of an agreement comprised of 7 pages (excluding schedules).

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TERMS AND CONDITIONS OF THE SUBSCRIPTION FOR
DEBENTURES OF CARBIZ INC.

1.	Definitions. In this Subscription Agreement:
	(a)	"1933 Act" means the United States Securities Act of 1933, as amended;
	(b)	“1934 Act” means the United States Securities Act of 1934, as amended;
	(c)	"Agent" means Innovation Capital, LLC;
	(d)	"Agent’s First Warrant" means the first common share purchase warrant of the Corporation comprising an Agent’s Unit, each Agent’s First Warrant entitling the holder thereof to acquire a Share at a price of CDN$0.22 per Share for a period of five years from the Conversion Date;
	(e)	"Agent’s Second Warrant" means the second common share purchase warrant of the Corporation comprising an Agent’s Unit, each Agent’s Second Warrant entitling the holder thereof to acquire a Share at a price of CDN$0.23 per Share for a period of five years from the Conversion Date;
	(f)	"Agent’s Units" means units of the Corporation that may be issued to an Agent, each Agent’s Unit being comprised of one Agent’s First Warrant and one Agent’s Second Warrant;
	(g)	"Agent’s Warrants" means, collectively, the Agent’s First Warrants and the Agent’s Second Warrants;
	(h)	"Class A Warrant" means a Class A common share purchase warrant of the Corporation, each Class A Warrant entitling the holder thereof to acquire a Share at a price of CDN$0.23 per Share for a period of five years from the Closing Date;
	(i)	"Class B Warrant" means a Class B common share purchase warrant of the Corporation, each whole Class B Warrant entitling the holder thereof to acquire a Share at a price of CDN$0.30 per Share for a period of five years from the Closing Date;
	(j)	"Closing Date" means October 6, 2004 or such other date as may be determined by the Corporation;
	(k)	"Conversion Date" the date on which the Corporation obtains a listing on the OTCBB and delists from the Exchange;
	(l)	"Conversion Rate" means the automatic conversion on the Conversion Date of the Indebtedness into Units at a price of CDN$0.22 per Unit;
	(m)	“Exchange” means the TSX Venture Exchange;
	(n)	"Interest Amount" means all accrued and unpaid interest as at the Conversion Date;
	(o)	“Indebtedness” means the Principal Amount and the Interest Amount;

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	(p)	"Offering" means the offering by the Corporation of a minimum of US$750,000 and a maximum of US$2,000,000 principal amount of Debentures;
	(q)	"OTCBB" means the United States Over the Counter Bulletin Board;
	(r)	"Person" includes individuals, partnerships, corporations, companies and other business or legal entities;
	(s)	"Principal Amount" means the principal amount of this Debenture as set forth on the face page hereof;
	(t)	"Registration Statement" means a registration statement on Form S-1 or Form SB-2, if available, for a US registration covering the resale of the Shares included in the Units and the Warrant Shares;
	(u)	"Shares" means common shares in the capital of the Corporation, as such shares exist at the close of business on the date of execution and delivery of this Debenture and shall include any and all shares resulting from any subdivision, redivision, reduction, combination or consolidation, merger, amalgamation or reorganization and any common shares of any company or corporation to which the Corporation may sell, lease or transfer or otherwise dispose of all or substantially all of its property and assets;
	(v)	"Underlying Securities" means, collectively, the Shares comprising the Units, the Warrants and the Warrant Shares;
	(w)	"Unit" means a unit of the Corporation, each Unit being comprised of one Share, one Class A Warrant and one-half of one Class B Warrant;
	(x)	"Warrants" means, collectively, the Class A Warrants and the Class B Warrants; and
	(y)	"Warrant Shares" means the Shares that are issuable upon exercise of the Warrants.
2.	Acknowledgements of the Subscriber. The Subscriber acknowledges that:
	(a)	this subscription is subject to rejection or acceptance by the Corporation in whole or in part, and is effective only upon acceptance by the Corporation;
	(b)	the Debenture subscribed for it hereunder forms part of a larger issuance and sale by the Corporation of a minimum of US$750,000 and a maximum of US$2,000,000 principal amount of Debentures;
	(c)	the Debenture, at the election of the Corporation, shall bear a rate of interest equal to five (5%) percent per annum with interest payable beginning on May 1, 2005;
	(d)	on the Conversion Date, the Indebtedness shall automatically convert into Units at the Conversion Rate;
	(e)	in the event of any alteration of the Shares, including any subdivision, consolidation or reclassification, and in the event of any form of reorganization of the Corporation, including any amalgamation, merger or arrangement, the holders of Warrants and Agent’s Warrants shall, upon exercise of the Warrants or Agent’s Warrants, as the case may be, following the occurrence of any of those events, be entitled to receive the same number and kind of securities that they would have been entitled to receive had their

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		Warrants or Agent’s Warrants, as the case may be, been exercised immediately prior to the occurrence of any such event;
	(f)	the Corporation shall file the Registration Statement no later than thirty (30) days after the Conversion Date, and use its best efforts to have the Registration Statement declared effective within one hundred eighty (180) days after the Closing Date;
	(g)	in the event that the Corporation does not obtain an OTCBB listing within 180 days after the Closing Date, the Corporation shall issue to the Subscriber additional Warrants equal to two-percent (2%) of the number of Warrants to be issued upon conversion of the Debentures plus an additional one-percent (1%) for each subsequent 30 day period; provided, however, in no event shall the amount of such additional Warrants be in excess of six percent (6%) of the Warrants to be issued upon conversion of the Debenture;
	(h)	the terms and conditions of the Registration Statement and other rights and preferences of the Subscriber shall be contained in a certain Investors’ Rights Agreement of even date herewith among the Corporation and all the subscribers in the Offering;
	(i)	in consideration for the services of the Agent under this Offering, the Agent shall receive a cash commission of ten percent (10%) of the gross proceeds raised by the Agent under the Offering. In addition, the Agent will receive that number of Agent’s Units that is equal in number to ten percent (10%) of the number of Units to be issued on the Conversion Date in respect of Debentures placed by the Agent under the Offering. The Agent shall also be entitled to receive a cash fee equal to 2% of the gross proceeds from the subsequent exercise within twelve months from the Conversion Date of any Warrants that were issued upon conversion of Debentures placed by the Agent under the Offering;
	(j)	the Offering is subject to the receipt of all regulatory approvals including, without limitation, the approval of the Exchange; and
	(k)	the Subscriber is responsible for obtaining such legal advice as it considers appropriate in connection with the execution, delivery and performance by it of this Subscription Agreement.
3.	REPRESENTATIONS OF THE SUBSCRIBER - GENERAL

(a) By executing this subscription, the Subscriber represents and warrants to and covenants with the Corporation and the Agent (and acknowledges that the Corporation, the Agent and their counsel are relying thereon) that:

(i)

if an individual, the Subscriber is of the full age of majority and is legally competent to execute and deliver this Subscription Agreement and each of the instruments to be delivered by the Subscriber hereunder, to perform all of its obligations hereunder and thereunder, and to take all actions required pursuant hereto and thereto;

(ii)

if the Subscriber is not an individual, it has the requisite power, authority, legal capacity and competence to execute and deliver this Subscription Agreement and each of the instruments to be delivered by the Subscriber hereunder, to perform all of its obligations hereunder and thereunder, and to take all actions required pursuant hereto and thereto and, all necessary approvals of its directors, partners, shareholders, trustees or otherwise with respect to such matters have been given or obtained;

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(iii)	if the Subscriber is a body corporate, it is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation;
(iv)	this Subscription Agreement and such other instruments to be delivered hereunder have been duly and validly authorized, executed and delivered by, and constitute a legal, valid, binding and enforceable obligation of the Subscriber;
(v)	the execution, delivery and performance by the Subscriber of this Subscription Agreement and the completion of the transactions contemplated hereby do not and will not result in a violation of any law, regulation, order or ruling applicable to the Subscriber, and do not and will not constitute a breach of or default under any of the Subscriber's constating documents (if the Subscriber is not an individual) or any agreement to which the Subscriber is a party or by which it is bound;
(vi)	it has been independently advised as to the restrictions on resale imposed by applicable securities legislation with respect to the Debenture and the Underlying Securities received upon conversion of the Indebtedness and confirms that no representation has been made to it by or on behalf of the Corporation respecting such restrictions and it is the Subscriber’s responsibility to find out what those restrictions are and to comply with them before selling such securities;
(vii)	the Subscriber has been advised to consult its own legal and financial advisors with respect to the suitability of the Debenture as an investment for the Subscriber and the resale restrictions and "hold periods" to which the Debenture and the Underlying Securities are subject under applicable securities legislation, and, except for the representations of the Corporation expressly contained herein, has not relied upon any statements made by or purporting to have been made on behalf of the Corporation in deciding to subscribe for the Debenture hereunder;
(viii)	it is aware of the risks and other characteristics of the Debenture and the Underlying Securities received upon conversion of the Indebtedness and of the fact that the Subscriber may not be able to resell the Debenture and any Underlying Securities received upon conversion of the Indebtedness except in accordance with the applicable securities legislation and regulatory policy;
(ix)	it will not resell any Debenture or any Underlying Securities received upon conversion of the Indebtedness except in accordance with the provisions of applicable securities legislation;
(x)	the Subscriber understands that no securities commission, stock exchange, governmental agency, regulatory body or similar regulatory authority has made any finding or determination or expressed any opinion with respect to the merits of investing in, nor has any such stock exchange or governmental agency, authority, regulatory body, securities commission, or other entity made any recommendation or endorsement with respect to, the merits of investing in the Debenture and there is no government or other insurance covering the Debenture;
(xi)	it has not received, nor has it requested, nor does it have any need to receive, any offering memorandum or any other document (other than financial statements or any other document the content of which is prescribed by statute or regulation) describing the business and affairs of the Corporation which has been prepared for delivery to, and review by, prospective purchasers in order to assist them in making an investment decision in respect of the Debentures and it has not become aware of any advertisement

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		in printed media of general and regular paid circulation, radio or television with respect to the distribution of the Debentures or any Underlying Securities received upon conversion of the Indebtedness;
	(xii)	if required by applicable securities legislation, policy or order or by any securities commission or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Corporation in filing, such reports, undertakings and other documents with respect to the distribution of the Debenture and any Underlying Securities received upon conversion of the Indebtedness as may be required;
	(xiii)	this Subscription is made unconditionally as a result of the undersigned's desire to participate in the future development of the Corporation; and
	(xiv)	if it is a corporation, syndicate, partnership or other form of unincorporated organization, it pre-existed the offering of the Debentures and has a bona fide purpose other than investment in the Debenture.
4.	REPRESENTATIONS OF THE SUBSCRIBER - EXEMPTIONS

(a) By executing this subscription, the Subscriber represents and warrants to and covenants with the Corporation and the Agent (and acknowledges that the Corporation, the Agent and their counsel are relying thereon) that:

(i)	the Subscriber is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D under the 1933 Act (which definition is reproduced in Schedule “A” attached hereto) by reason of the Subscriber’s business and financial experience and the business and financial experience of those persons retained to advise it with respect to the investment in the Debenture and the Underlying Securities, and has executed and delivered to the Corporation a Representation Letter in the form attached hereto as Schedule “A” indicating that the Subscriber fits within one of the categories of "accredited investor" set forth in such definition;
(ii)	the Subscriber acknowledges that it is not purchasing the Debenture or the Underlying Securities as a result of any “general solicitation” or “general advertising”, as those terms are used in Regulation D under the 1933 Act, including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over television or radio or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;
(iii)	the Subscriber confirms that it has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment in the Debenture and Underlying Securities and is capable of assessing the proposed investment in the Debenture and the Underlying Securities as a result of the Subscriber's own experience or as a result of advice received from a person registered under applicable securities legislation and it is able, without impairing its financial condition, to bear the economic risks of, and understand a complete loss of, its investment;
(iv)	it understands that the Debenture and any Underlying Securities received upon conversion of the Indebtedness have not been and will not be registered under the 1933 Act or any applicable state securities laws;
(v)	except for the representations of the Corporation expressly contained herein, the Subscriber has relied solely upon publicly available information relating to the

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	Corporation and not upon any verbal or written representation as to fact or otherwise made by or on behalf of the Corporation;
(vi)	it understands that the distribution of the Debentures and the Underlying Securities is being made in reliance upon a private placement exemption from registration under the 1933 Act and under the securities laws of certain states. Accordingly, the Debenture and the Underlying Securities will be “restricted securities” within the meaning of Rule 144 under the 1933 Act, and therefore may not be offered or sold by the undersigned, directly or indirectly, in the United States without registration under the United States federal and state securities laws, except in compliance with certain limited exemptions thereunder;
(vii)	the undersigned understands and acknowledges that there may be material tax consequences to the undersigned of an acquisition or disposition of the Debenture and any Underlying Securities received upon conversion of the Indebtedness and that the undersigned should consult the undersigned’s own tax advisors respecting the United States federal, state and local and foreign tax consequences of acquiring, owning and disposing of such Debenture and any Underlying Securities received upon conversion of the Indebtedness;
(viii)	the undersigned understands that the Corporation’s financial statements are prepared in accordance with Canadian generally accepted accounting principles, which differ in some respects from United States generally accepted accounting principles, and thus may not be comparable to financial statements of United States corporations;
(ix)	the undersigned has had access to such information concerning the Corporation as the undersigned has considered necessary in connection with the undersigned’s investment decision to acquire the Debenture and the Underlying Securities;
(x)	the undersigned has either spoken or met with, or been given reasonable opportunity to speak with or meet with, representatives of the Corporation for the purpose of asking questions of, and receiving answers and information from, such representatives concerning the undersigned’s investment in the Debenture and the Underlying Securities;
(xi)	the undersigned understands that in making an investment decision, the undersigned must rely on its own examination of the Corporation including the merits and risks involved;
(xii)	the undersigned is acquiring the Debenture for its own account and not with a view to any resale, distribution or other disposition of the Debenture or any Underlying Securities received upon conversion of the Indebtedness in violation of the 1933 Act or any applicable state securities laws;
(xiii)	the Subscriber understands and acknowledges that the Corporation has the right not to record a transfer without first being notified by the Corporation that it is satisfied that such transfer is exempt from or not subject to registration under the 1933 Act and any applicable state securities laws;
(xiv)	the undersigned consents to the Corporation making a notation on its records or giving instructions to any transfer agent (if any) of the Debentures and any Underlying Securities received upon conversion of the Indebtedness in order to implement the restrictions on transfer set forth and described herein;
(xv)	the undersigned acknowledges that the Debenture and any Underlying Securities received upon conversion of the Indebtedness are not currently eligible for resale under Rule 144

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		in the United States due to the fact, among others, that the Corporation is not a reporting company under the 1934 Act; and
	(xvi)	the Subscriber understands that the Debentures and the Underlying Securities are being offered for sale only on a "private placement" basis and that the sale and delivery of the Debentures and the Underlying Securities is conditional upon such sale being exempt from the requirements as to the filing of a prospectus or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus and that as a consequence of acquiring the Debenture and the Underlying Securities pursuant to such exemptions, certain protections, rights and remedies provided by applicable securities legislation, including statutory rights of recission or damages, may not be available to the Subscriber in connection with the purchase and sale of the Debenture and the Underlying Securities and the Subscriber further acknowledges that:
		(A)	the Subscriber is restricted from using most of the civil remedies available under applicable securities laws;
		(B)	the Subscriber may not receive information that would otherwise be required to be provided to it under applicable securities laws;
		(C)	the Corporation is relieved from certain obligations that would otherwise apply under applicable securities laws; and
		(D)	the Debenture is not being purchased by it as a result of any information concerning the Corporation that has not been publicly disclosed and its decision to purchase Debenture has not been made as a result of any verbal or written representation as to fact or otherwise (including that any person will resell or repurchase or refund the purchase price of its Debenture), or as to the future price or value of any Underlying Securities received upon conversion of the Indebtedness made by or on behalf of the Corporation; and
	(xvii)	the Subscriber confirms that neither the Corporation nor any of its representative directors, employees, officers or affiliates, have made any representations (written or oral) to the Subscriber:
		(A)	regarding the future value of the Underlying Securities;
		(B)	that any person will resell or repurchase the Debenture or the Underlying Securities; or
		(C)	that any person will refund the purchase price of the Debenture other than as provided in this Subscription Agreement.
5.	TIMELINESS OF REPRESENTATIONS, ETC.

The Subscriber agrees that the representations, warranties and covenants of the Subscriber herein will be true and correct both as of the execution of this Subscription Agreement and as of the Closing Date and will survive the completion of the issuance of the Debenture and any subsequent disposition by the Subscriber of the Underlying Securities.

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6. RELIANCE ON SUBSCRIBER’S REPRESENTATIONS

The foregoing representations, warranties and covenants are made by the Subscriber with the intent that they be relied upon in determining its suitability as a purchaser of a Debenture and the Subscriber hereby agrees to indemnify the Corporation and its officers, directors, employees and agents against all losses, claims, costs, expenses and damages or liabilities that any of them may suffer or incur caused or arising from reliance thereon. The Subscriber undertakes to notify the Corporation immediately at the following addresses:

Carbiz Inc.
7560 Commerce Court
Sarasota, Florida 34243

Attention:        Carl Ritter, Chief Executive Officer
Facsimile:         (941) 952-9255

of any change in any representation, warranty or other information relating to the Subscriber set forth herein which takes place prior to Closing.

7. PARTIAL ACCEPTANCE AND REJECTION OF SUBSCRIPTION

The Corporation may, in its absolute discretion, accept or reject the Subscriber's subscription for a Debenture as set forth in this Subscription Agreement, in whole or in part, and the Corporation reserves the right to sell to the Subscriber less than the full amount of the Debenture subscribed for under this Subscription Agreement. If this Subscription Agreement is rejected in whole, any certified cheque(s) or bank draft(s) delivered by the Subscriber to the Corporation on account of the subscription price for the Debenture subscribed for will be promptly returned to the Subscriber without interest. If this Subscription Agreement is accepted only in part, a cheque representing the amount by which the payment delivered by the Subscriber to the Corporation exceeds the subscription price of the Debenture sold to the Subscriber pursuant to a partial acceptance of this Subscription Agreement, will be promptly delivered to the Subscriber without interest.

8. CLOSING

The Subscriber agrees to deliver to the Corporation, not later than 4:00 p.m. (Florida time) on the date that is two (2) business days prior to the Closing Date: (a) this duly completed and executed Subscription Agreement (including the Representation Letter and the Form 4C, if applicable); and (b) a certified cheque or bank draft payable to the Corporation for the aggregate amount proposed to be invested in a Debenture by the Subscriber or payment of the same amount in such other manner as is acceptable to the Corporation.

The sale of the Debentures will be completed at the offices of the Corporation, in Sarasota Florida, at 2:00 p.m. (Florida time), or such other time as the Corporation may determine on the Closing Date.

9. FACSIMILE SUBSCRIPTIONS

The Corporation shall be entitled to rely on delivery by facsimile of an executed copy of this Subscription, and acceptance by the Corporation of such facsimile copy shall be equally effective to create a valid and binding agreement between the Subscriber and the Corporation in accordance with the terms hereof.

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10. ASSIGNMENT

This Subscription is not assignable or transferable by either of the parties hereto without the expressed written consent of the other party hereto.

11. GOVERNING LAW

The contract arising out of acceptance of this Subscription by the Corporation shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein.

12. MISCELLANEOUS

Time shall be of the essence of this Subscription Agreement. This Subscription Agreement represents the entire agreement of the parties hereto relating to the subject matter hereof and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein. The invalidity, illegality or unenforceability of any provision of this Subscription Agreement shall not affect the validity, legality or enforceability of any other provision hereof. The covenants, representations and warranties contained in this Subscription Agreement shall survive the closing of the transactions contemplated hereby and shall be binding upon and enure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns. The headings used in this Subscription Agreement have been inserted for convenience of reference only and shall not affect the meaning or interpretation of this Subscription Agreement or any provision hereof. Except as otherwise provided herein, this Subscription Agreement may only be amended by the parties hereto in writing.

13. RISK

THE SUBSCRIBER FURTHER ACKNOWLEDGES THAT AN INVESTMENT IN THE DEBENTURE AND THE UNDERLYING SECURITIES IS SUBJECT TO A NUMBER OF RISK FACTORS. RESALE OF SUCH SECURITIES MAY REQUIRE THE AVAILABILITY OF EXEMPTIONS FROM THE PROSPECTUS REQUIREMENTS OF APPLICABLE SECURITIES LEGISLATION OR SIMILAR REGULATORY AUTHORITY PERMITTING THE TRADE. THE SUBSCRIBER COVENANTS AND AGREES TO COMPLY WITH THE SECURITIES ACT (ONTARIO) AND ANY OTHER RELEVANT SECURITIES LEGISLATION, ORDERS OR POLICIES CONCERNING THE PURCHASE, HOLDING OF, AND RESALE OF SUCH DEBENTURE AND THE UNDERLYING SECURITIES.

A-1

SCHEDULE"A"

REPRESENTATION LETTER

TO:                CARBIZ INC. (the "Corporation")

AND TO:      INNOVATION CAPITAL, LLC (the “Agent”)

In connection with the purchase of a Debenture of the Corporation by the undersigned subscriber, the undersigned hereby represents, warrants, covenants and certifies to the Corporation and acknowledges that the Corporation, the Agent and their counsel are relying thereon that:

 (a)          it is purchasing the Debenture for its own account, for investment purposes only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Underlying Securities in the United States; provided, however, that the Subscriber may sell or otherwise dispose of any of such securities pursuant to registration thereof pursuant to the 1933 Act and any applicable state securities laws or under an exemption from such registration requirements;

(b)          it satisfies one or more of the categories of "accredited investor" (as such term is defined in Rule 501(a) of Regulation D under the 1933 Act) indicated below (PLEASE INITIAL ALL APPROPRIATE LINES) (an "Accredited Investor"):

________	Category 1.	A bank, as defined in Section 3(a)(2) of the 1933 Act, whether acting in its individual or fiduciary capacity; or
________	Category 2.	A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; or
________	Category 3.	A broker or dealer registered pursuant to Section 15 of the United States Securities Exchange Act of 1934; or
________	Category 4.	An insurance company as defined in Section 2(13) of the 1933 Act; or
________	Category 5.	An investment company registered under the United States Investment Company Act of 1940; or
________	Category 6.	A business development company as defined in Section 2(a)(48) of the United States Investment Company Act of 1940; or
________	Category 7.	A small business investment company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the United States Small Business Investment Act of 1958; or
________	Category 8.	A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of US$5,000,000; or
________	Category 9.	An employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or an employee benefit plan with total assets in excess of US$5,000,000 or, if a self- directed plan, with investment decisions made solely by persons who are accredited investors; or
________	Category 10.	A private business development company as defined in Section 202(a)(22) of the United States Investment Advisers Act of 1940; or
________	Category 11.	An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US$5,000,000; or

A-2

________	Category 12.	Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; or
________	Category 13.	A natural person whose individual net worth, or joint net worth with that person's spouse, at the date hereof exceeds US$1,000,000; or
________	Category 14.	A natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with that person's spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or
________	Category 15.	A trust, with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act; or
________	Category 16.	Any entity in which all of the equity owners meet the requirements of at least one of the above categories;

(c)          it agrees that if it decides to offer, sell, pledge or otherwise transfer the Debenture or any of the Underlying Securities, it will not offer, sell, pledge or otherwise transfer any of such securities, directly or indirectly, except;

(i)	to the Corporation; or
(ii)	outside the United States in compliance with the requirements of Regulation S under the 1933 Act and in compliance with applicable local laws and regulations; or
(iii)	in compliance with an exemption from registration under the 1933 Act provided by Rule 144 or Rule 144A thereunder, if available, and in accordance with any applicable state securities or "Blue Sky" laws; or
(iv)	in a transaction that does not require registration under the 1933 Act or any applicable state securities laws;

and, in the case of subparagraph (iii) or (iv), it has furnished to the Corporation an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to such effect;

(d)          it understands and acknowledges that the Debenture and the Underlying Securities are "restricted securities" as defined in Rule 144 under the 1933 Act, and upon the original issuance of the Debenture and the Underlying Securities, and until such time as it is no longer required under applicable requirements of the 1933 Act or applicable state securities laws, all certificates representing the Debenture and the Underlying Securities and all certificates issued in exchange therefore or in substitution thereof, shall bear the following legend:

"THE SECURITIES REPRESENTED HEREBY [AND THE SECURITIES ISSUED UPON EXERCISE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE

A-3

SECURITIES OR "BLUE SKY" LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF SUBPARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

provided, that if the Debenture or the Underlying Securities are being sold pursuant to Rule 144 of the 1933 Act, the legend may be removed by delivery to the Corporation’s registrar and transfer agent of an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation, to the effect that the legend is no longer required under applicable requirements of the 1933 Act and applicable state securities laws;

(e)          it consents to the Corporation making a notation on its records or giving instructions to any transfer agent of the Debentures and the Underlying Securities in order to implement the restrictions on transfer set forth and described herein;

(f)          it has been afforded the opportunity to ask such questions and to receive answers from, representatives of the Corporation concerning the terms and conditions of the offering of the Debentures;

(g)          it is an Accredited Investor that satisfies the criteria set forth in subparagraph (b) above and, by reason of its business and financial experience and the business and financial experience of those persons retained to advise the Subscriber with respect to the investment in the Debenture and the Underlying Securities, the Subscriber, together with such advisors, has such knowledge, sophistication and experience in business and financial matters that the Subscriber is capable of evaluating the merits and risks of the prospective investment;

(h)          it understands and acknowledges that the Warrants may not be exercised unless an exemption is available from the registration requirements of the 1933 Act and the securities laws of all applicable states and the holder has furnished an opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to such effect; provided that an Accredited Investor, that purchased a Debenture in the United States will not be required to deliver an opinion of counsel in connection with the exercise of Warrants that are issued upon conversion of such Debenture;

(i)          it acknowledges that any person who exercises a Warrant will be required to provide to the Corporation either:

(a)

a written certification that the holder (i) acquired the Warrant directly from the Corporation pursuant to a written subscription agreement for the purchase of a Debenture; (ii) is exercising the Warrant, as applicable, solely for its own account and not on behalf of any other person; and (iii) was an Accredited Investor, both on the date the Debenture was acquired from the Corporation and on the date of exercise of the Warrant; or

(b)

a written opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available for the issuance of the Warrant Shares.

A-4

The Subscriber understands that the certificates representing the Warrant Shares will bear a legend restricting transfer without registration under the 1933 Act and applicable state securities laws unless an exemption from registration is available;

(j)          the office or other address of the Subscriber at which the Subscriber received and accepted the offer to purchase the Debenture is the address listed as the "Subscriber’s Address" on the signature page of the Subscription Agreement;

(k)          it acknowledges that it has not purchased the Debenture as a result of any form of “general solicitation” or “general advertising” (as such terms are defined in Regulation D of the 1933 Act);

(l)          it understands and agrees that there may be material tax consequences to the Subscriber of an acquisition, disposition or exercise of the Debenture; the Corporation gives no opinion and makes no representation with respect to the tax consequences to the Subscriber under United States, state, local or foreign tax law of the undersigned’s acquisition or disposition of such Debenture; in particular, no determination has been made whether the Corporation will be a "passive foreign investment company" ("PFIC") within the meaning of Section 1291 of the United States Internal Revenue Code;

(m)          it understands and agrees that the financial statements of the Corporation have been prepared in accordance with Canadian generally accepted accounting principles, which differ in some respects from United States generally accepted accounting principles, and thus may not be comparable to financial statements of United States companies; and

(n)          it is acquiring the Debenture for its own account and not on behalf of any other person for investment purposes only and not with a view to any resale, distribution or other disposition of the Debenture or the Underlying Securities in violation of the United States federal and state securities laws.

The foregoing representations, warranties and covenants are made by the undersigned with the intent that they be relied upon in determining its suitability as a purchaser of a Debenture. The undersigned undertake to notify the Corporation immediately of any change in any statement set forth herein which takes place prior to the Closing Date. Terms used and not defined in this Schedule are as defined in the Subscription Agreement to which this Schedule is attached.

Dated at_________________________________on _____________________________________.

(Name of Purchaser - please print)

(Authorized Signature)

(Official Capacity - please print)

(please print name of individual whose signature

appears above)

B-1

SCHEDULE “B” FORM 4C

CORPORATE PLACEE REGISTRATION FORM

Where subscribers to a Private Placement are not individuals, the following information about the placee must be provided. This Form will remain on file with the Exchange. The corporation, trust, portfolio manager or other entity (the “Placee”) need only file it on one time basis, and it will be referenced for all subsequent Private Placements in which it participates. If any of the information provided in this Form changes, the Placee must notify the Exchange prior to participating in further placements with Exchange listed companies. If as a result of the Private Placement, the Placee becomes an Insider of the Issuer, Insiders of the Placee are reminded that they must file a Personal Information Form (2A) or, if applicable, Declarations, with the Exchange.

1.	Placee Information:
	1.1	Name: ____________________________________________________________________________________
	1.2	Complete Address: __________________________________________________________________________
		_________________________________________________________________________________________
	1.3	Jurisdiction of Incorporation or Creation: __________________________________________________________
2.	(a)	Is the Placee purchasing securities as a portfolio manager (Yes/No)? _____________________________________
	(b)	Is the Placee carrying on business as a portfolio manager outside of Canada (Yes/No)? _______________________
3.	If the answer to 2(b) above was “Yes”, the undersigned certifies that:
	3.1	It is purchasing securities of an Issuer on behalf of managed accounts for which it is making the investment decision to purchase the securities and has full discretion to purchase or sell securities for such accounts without requiring the client’s express consent to a transaction;
	3.2	it carries on the business of managing the investment portfolios of clients through discretionary authority granted by those clients (a “portfolio manager” business) in _______________________________ [jurisdiction], and it is permitted by law to carry on a portfolio manager business in that jurisdiction;
	3.3	it was not created solely or primarily for the purpose of purchasing securities of the Issuer;
	3.4	the total asset value of the investment portfolios it manages on behalf of clients is not less than $20,000,000; and
	3.5	it has no reasonable grounds to believe, that any of the directors, senior officers and other insiders of the Issuer, and the persons that carry on investor relations activities for the

B-2

	Issuer has a beneficial interest in any of the managed accounts for which it is purchasing
4.	If the answer to 2(a). above was “No”, please provide the names and addresses of control persons of the Placee:

Name City Province or
State Country

The undersigned acknowledges that it is bound by the provisions of applicable Securities Law, including provisions concerning the filing of insider reports and reports of acquisitions (See for example, sections 87 and 111 of the Securities Act (British Columbia) and sections 176 and 182 of the Securities Act (Alberta).

Acknowledgement - Personal Information

“Personal Information” means any information about an identifiable individual, and includes information contained in sections 1, 2 and 4, as applicable, of this Form. The undersigned hereby acknowledges and agrees that it has obtained the express written consent of each individual to:

(a)	the disclosure of Personal Information by the undersigned to the Exchange (as defined in Appendix 6B) pursuant to this Form; and
(b)	the collection, use and disclosure of Personal Information by the Exchange for the purposes described in Appendix 6B or as otherwise identified by the Exchange, from time to time.

Dated at_________________________________on _____________________________________.

(Name of Purchaser - please print)

(Authorized Signature)

(Official Capacity - please print)

(please print name of individual whose signature appears above)

THIS IS NOT A PUBLIC DOCUMENT

EX-10.8

 

  Innovation Capital, LLC
7491 Estrella Circle
Boca Raton, FL 33433-1651
Telephone (561) 859-3673
fax (561) 483-6129

____________________________________________

PLACEMENT AGENT AGREEMENT

This agreement (the “Agreement”), made as of this 29^th day of September, 2004, by and between CARBIZ, INC., an Ontario corporation, (the “Company”), with its principal place of business at 7405 N. Tamiami Trail, Sarasota, Florida 34243 and INNOVATION CAPITAL, LLC, (the “Placement Agent”), a Florida limited liability company, with its principal place of business at 7491 Estrella Circle, Boca Raton, Florida 33433, confirms the understanding and agreement between the Company and the Placement Agent as follows:

SECTION I

The Company hereby engages the Placement Agent as the Company’s placement agent in connection with a proposed private placement in the United States (the “Offering”) of up to two million dollars (US$2,000,000) of the Company’s convertible debentures (the “Debentures”). The Offering will be made to solely “accredited investors” (the “Accredited Investors”), as such term is defined in Rule 501(a) of Regulation D (“Regulation D”) promulgated under the United States Securities Act of 1933, as amended (the “Securities Act”), pursuant to an exemption from registration under applicable federal and state securities laws available under Rule 506 of Regulation D and in accordance with the terms of this Agreement. The Debentures shall be convertible into units (the “Units”), which shall consist of one common share (a “Share”), one Class A Warrant (a “Class A Warrant”) and one half of one Class B Warrant (a “Class B Warrant”, together a Class A Warrant, the “Warrants”). The Debentures shall automatically convert on the date that the Company obtains a listing on the United States Over-The-Counter Bulletin Board and delists from the TSX Venture Exchange (the “Conversion Date”). The Placement Agent hereby accepts such engagement upon the terms and conditions set forth in this Agreement. This Agreement shall not give rise to any commitment or obligation by the Placement Agent to purchase any of the Debentures or, except as set forth herein, to find purchasers for the Debentures.

The Placement Agent shall provide the following services (the “Services”):

(a)          Advise the Company with regard to the size of the Offering and the structure and terms of the Debentures in light of the current market environment;

(b)          Assist the Company in identifying and evaluating prospective qualified Accredited Investors;

(c)          Approach such investors on a “best efforts basis” regarding an investment in the Company; and

(d)          Work with the Company to develop a negotiating strategy and assist with the negotiations with such potential investors.

In connection with the Placement Agent providing the Services, the Company agrees to keep the Placement Agent up to date and apprised of all material business, market and legal developments related to the Company and its operations and management. The Placement Agent shall devote such time and effort as it deems commercially reasonable under the circumstances in rendering the Services. The Placement Agent shall not provide any work that is in the ordinary purview of a certified public accountant. The Placement Agent cannot guarantee results on behalf of the Company, but shall pursue all avenues that it deems reasonable through its network of contacts.

SECTION II

The Placement Agent, its affiliates and any person acting on its or their behalf hereby represent, warrant and agree as follows (the “Placement Agent Parties”):

(a)          The Debentures offered and sold by the Placement Agent have been and will be offered and sold in compliance with all federal and state securities laws and regulations governing the registration and conduct of broker-dealers, and each Placement Agent Party making an offer or sale of Debentures was or will be, at the time of any such offer or sale, registered as a broker-dealer pursuant to Section 15(b) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and under the laws of each applicable state of the United States (unless exempted from the respective state’s broker-dealer registration requirements), and in good standing with the National Association of Securities Dealers, Inc.

(b)          The Debentures offered and sold by the Placement Agent have been and will be offered and sold only to Accredited Investors in accordance with Rule 506 of Regulation D and applicable state securities laws; provided, however, the Company shall make all necessary filings under Rule 503 of Regulation D and such similar notice filings under applicable state securities laws. The Placement Agent Parties represent and warrant that they have reasonable grounds to believe and do believe that each person to whom a sale, offer or solicitation of an offer to purchase Debentures was or will be made was and is an Accredited Investor. Prior to the sale and delivery of a Debenture to any such investor, the Placement Agent Parties will obtain an executed subscription agreement and an executed investors’ rights agreement in the form agreed upon by the Company and the Placement Agent (the “Subscription Documents”).

(c)          In connection with the offers and sales of the Debentures, the Placement Agent Parties have not and will not

              (1)          Offer or sell, or solicit any offer to buy, any Debentures by any form of “general solicitation” or “general advertising”, as such terms are used in Regulation D, or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act;

              (2)          Use any written material other than the term sheet approved by the Company and the Placement Agent, a copy of which is attached hereto as Appendix A, and the Subscription Documents, and shall only rely upon and communicate information that is publicly available regarding the Company to any potential investors (without limiting the foregoing, none of the Placement Agent Parties is authorized to make any representation or warranty to any offeree concerning the Company or an investment in the Debentures); or

               (3)          Take any action that would constitute a violation of Regulation M under the Exchange Act.

(d)          The Placement Agent shall cause each affiliate or each party acting on its or their behalf with whom they enter into contractual arrangements relating to the offer and sale of any Debentures to agree, for the benefit of the Company, to the same provisions contained in this Agreement.

SECTION III

During the Term (as defined below), the Placement Agent is hereby retained by the Company to make limited introductions on a best efforts basis to provide financing for the Company in an amount and form to be mutually determined by the Company and the Placement Agent.

SECTION IV

The Company hereby represents, warrants and agrees as follows:

(a)          This Agreement has been authorized, executed and delivered by the Company and, when executed by the Placement Agent will constitute the valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles.

(b)          The offer and sale of the Debentures, the Shares, and the Warrants shall be exempt from registration under the Securities Act, and will comply, in all material respects with the requirements of Rule 506 of Regulation D promulgated under the Securities Act and any applicable state securities laws. No documents prepared by the Company in connection with the Offering, or any amendment or supplement thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(c)          The financial statements, audited and unaudited (including the notes thereto), included in the Company’s latest annual information form and subsequent quarterly reports filed with the Canadian regulatory authorities (the “Financial Statements”), present fairly the financial position of the Company as of the dates indicated and the results of operations and cash flows of the Company for the periods specified. Such Financial Statements have been prepared in conformity with Canadian generally accepted accounting principles applied on a consistent basis throughout the periods involved except as otherwise stated therein.

(d)          No federal, state or foreign governmental agency has issued any order preventing or suspending the Offering.

(e)          The Company is an Ontario corporation organized, existing and with active status under the laws of Ontario, Canada, with corporate power and authority under such laws to own, lease and operate its properties and conduct its business as now conducted. The Company has all power, authority, authorization and approvals as may be required to enter into this Agreement and each of the Subscription Documents, and to carry out the provisions and conditions hereof and thereof, and to issue and sell the Debentures, the Shares, and Warrants.

(f)          The Debentures, the Shares, the Warrants, and common shares issuable upon exercise of the Warrants (the “Warrant Shares”), have all been authorized for issuance and sale pursuant to the Subscription Documents, and when issued and delivered by the Company against payment therefore in accordance with the terms of the Subscription Documents, will be validly issued and fully paid and non-assessable.

(g)          With the exception of any approvals required by the TSX Venture Exchange related to the Offering, no further approval or authorization of any shareholder of the Company, its Board of Directors or other person or group is required for the issuance and sale of the Debentures, the Shares, the Warrants or the Warrant Shares.

(h)          Since the latest unaudited financial statements filed with the Canadian regulatory authorities for the quarter ended July 30, 2004, there has not been any (A) material adverse change in the business, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company, (B) transaction that is material to the Company, except transactions in the ordinary course of business, (C) obligation that is material to the Company, direct or contingent, incurred by the Company, except obligations incurred in the ordinary course of business, (D) change that is material to the Company or in the common shares or outstanding indebtedness of the Company, or (E) dividend or distribution of any kind declared, paid, or made in respect of the common shares.

SECTION V

The parties agree that the close of the Offering (the “Closing”) shall be subject to the satisfaction of the following conditions, unless expressly waived in writing by the parties:

(a)          The Offering shall not be subject to any regulatory or judicial proceeding questioning or reviewing its effectiveness for the purpose of offering the Debentures for sale and issuance.

(b)          The Company shall deliver a certificate of an officer of the Company dated as of the Closing that affirms the accuracy of the representations and warranties contained in Section IV hereof.

(c)          The Agent shall have received an opinion of Willcox & Savage P.C., counsel to the Company, dated as of the Closing, that the Debentures offered and sold in compliance with this Agreement are not required to be registered under the Securities Act.

(d)          The Company shall have paid, or made arrangements satisfactory to the Agent for the payment of, all such expenses as required by Section VIII below.

(e)          The Placement Agent and the Company shall have finalized and agreed to the form of the warrant agreement and registration rights agreement referred to in Section VIII below.

SECTION VI

(a)          The term of this Agreement shall commence on the date first written above and shall expire the earlier of three (3) months thereafter or the closing of the Offering, unless terminated in accordance with the provisions set forth below, or extended by the mutual written consent of the parties hereto (the “Term”). This Agreement may be terminated only:

              (1)          By the Company for any reason at any time upon thirty (30) days’ prior written notice; or

              (2)          By the Placement Agent upon default in the payment of any amounts due to the Placement Agent pursuant to this Agreement, if such default continues for more than thirty (30) days following receipt by the Company from the Placement Agent of written notice of such default and demand for payment.

(b)          In the event of termination, the Placement Agent shall be immediately paid in full on all items of compensation and expenses (including any amounts deferred) payable to the Placement Agent pursuant hereto, as of the date of termination.

SECTION VII

If at any time during the twelve (12) months following the termination of this Agreement the Company conducts a Qualified Offering, the Placement Agent shall (1) be entitled to act as a placement agent in such Qualified Offering and receive commissions and fees for subscriptions received or solicited by the Placement Agent for the Company’s securities pursuant to the terms and conditions of an agreement that shall be substantially similar to the terms and conditions of this Agreement, and (2) be entitled to the compensation and fees as set forth in Section VIII of this Agreement for any Qualified Financing received by the Company. Any compensation or fees paid pursuant to Section VIII below shall relate only to the securities initially issued by the Company and not the underlying securities, unless otherwise agreed to by the Company.

“Qualified Offering” shall mean any securities issued by the Company, other than: (1) the Units, the Warrants, the Shares or the common shares underlying the Warrants issued pursuant to the terms and conditions of the Offering; (2) common shares, options or other rights to purchase common shares issued or granted to employees, officers, directors and consultants of the Company pursuant to one or more employee stock plans or agreements approved by the Company’s board of directors; (3) securities of the Company issued or issuable to financial institutions or lessors in connection with real estate leases, commercial credit arrangements, equipment financings or similar transactions approved by the Company’s board of directors, including, but not limited to, equipment leases or bank lines of credit; (4) securities issued as a dividend or distribution on, or in connection with a split of or recapitalization of, any of the capital stock of the Company; (4) securities issued by the Company pursuant to strategic partnership, joint venture or other similar arrangements approved by the Company’s board of directors where the primary purpose of the arrangement is not to raise capital; (5) securities of the Company issued pursuant to a registration statement filed by the Company under the Securities Act; (6) securities issued by the Company pursuant to an acquisition of another corporation or other entity by the Corporation by merger, purchase of all or substantially all of the capital stock or assets, or other reorganization; or (7) securities of the Company issued pursuant to currently outstanding options, warrants or other rights to acquire securities of the Company.

“Qualified Financing” shall mean an investment from a person after the termination of this Agreement that directly results from the Placement Agent’s performance of the Services hereunder during the Term of this Agreement (for the avoidance of doubt this shall mean any solicitation of a potential investor or an introduction of a potential investor to the Company by the Placement Agent related to the Offering during the Term of this Agreement). The Placement Agent agrees to provide to the Company within ten (10) days after the termination of this Agreement (the “Delivery Deadline”) a list of all persons solicited on behalf of the Company or introduced to the Company by the Placement Agent related to the Offering (the “Solicitation

List”) to assist the parties in making a later determination as to whether a Qualified Financing has occurred. If the Solicitation List is not provided to the Company prior to the expiration of the Delivery Deadline, the Company’s obligation to pay any commissions or fees related to a Qualified Financing pursuant to this Section VII shall immediately terminate. For purposes of this Agreement, receipt of Qualified Financing shall be deemed to be received by the Company on the date that a definitive agreement regarding the Qualified Financing is executed by the Company and the party providing such financing. The compensation or fees shall become payable to the Placement Agent upon the date that the Company receives the proceeds of the Qualified Financing.

Notwithstanding anything to the contrary, if the Company conducts a Qualified Offering during the twelve (12) months following the termination of this Agreement, it shall not be obligated to accept any subscriptions received by the Placement Agent or any Qualified Financing by virtue of this Section VII and the Company reserves the right to accept or reject any such subscriptions or Qualified Financing in whole or in part.

SECTION VIII

In consideration for the performance of the Services hereunder, the Company hereby agrees to pay to the Placement Agent such fees as outlined below:

(a)          If the Placement Agent receives subscriptions for Debentures as a part of the Offering (the “Placement Agent Investors”), the Company shall:

               (1)          Pay to the Placement Agent an amount equal to ten percent (10%) of the principal amount of the Debentures purchased by the Placement Agent Investors (the “Financing Fee”), and

               (2)          Grant to the Placement Agent certain units in the Company (the “Agent’s Units”) equal to ten percent (10%) of the number of Units issued on the Conversion Date upon the conversion of the Debentures held by the Placement Agent Investors.

The Financing Fee shall be paid and the Agent’s Units shall be issued upon the Conversion Date. The Agent’s Units shall be comprised of one common share purchase warrant exercisable at Cdn.$0.23 for one common share of the Company for a period of five (5) years following the Conversion Date, and one common share purchase warrant exercisable at Cdn.$0.22 for one common share of the Company for a period of five (5) years following the Conversion Date, each of which shall contain certain cashless exercise provisions and customary adjustments for issuances of securities related to stock splits, stock dividends, recombinations and reorganizations (for the avoidance of doubt, the Agent’s Units shall not have anti-dilution provisions related to price).

(b)          In the event any Placement Agent Investor exercises its Warrant(s) within the twelve (12) months following the Conversion Date, the Company shall pay the Placement Agent a cash fee of two percent (2%) of the exercise price of such exercised Warrant(s) within thirty (30) days of such exercise.

(c)          The Company and Placement Agent agree to enter into a registration rights agreement that shall contain standard piggyback registration rights relating to the common shares underlying the warrants that comprise the Agent’s Units.

(d)          It is acknowledged and agreed that the Company shall bear all costs and expenses incident to the issuance, offer, sale and delivery of the Debentures. These costs and expenses will include but are not limited to state “Blue Sky” fees, legal fees, printing costs, travel costs, mailing, couriers, personal background checks, and other expenses incidental to the advancement and completion of the Offering. Full payment of Placement Agent’s expenses shall be made in same day funds at the Closing or, if the Offering is terminated for any reason, within ten (10) days of receipt by the Company of a written request from the Placement Agent for reimbursement of expenses. If the Placement Agent is to incur any costs and expenses in excess of US$5,000, the Placement Agent shall contact the Company to obtain its approval prior to incurring such cost or expense.

(e)          Subject to the other requirements set forth in this Agreement, the Placement Agent may introduce investors to the Offering directly or through other NASD member broker-dealers. If the Placement Agent utilizes any intermediaries, the Placement Agent shall be the Company’s point of contact, not the intermediary, and the Placement Agent, not the Company, shall be responsible for any compensation arrangement with the intermediary. The Company’s sole compensation arrangement, responsibility and obligation is with the Placement Agent. The Placement Agent will disclose the identity and compensation arrangements with all of its intermediaries in order to allow the Company to adequately disclose such arrangements, where necessary.

SECTION IX

The Company agrees to indemnify the Placement Agent and hold it harmless against any losses, claims, damages or liabilities incurred by the Placement Agent, in connection with, or relating in any manner, directly or indirectly, to the Placement Agent rendering the Services in accordance with the Agreement, unless it is determined by a court of competent jurisdiction that such losses, claims, damages or liabilities arose out of the Placement Agent’s breach of this Agreement, sole negligence, gross negligence, willful misconduct, dishonesty, fraud or violation of any applicable law. Additionally, the Company agrees to reimburse the Placement Agent immediately for any and all expenses, including, without limitation, attorney fees, incurred by the Placement Agent in connection with investigating, preparing to defend or defending, or otherwise being involved in, any lawsuits, claims or other proceedings arising out of or in connection with or relating in any manner, directly or indirectly, to the rendering of any Services by the Placement Agent in accordance with the Agreement (as defendant, nonparty, or in any other capacity other than as a plaintiff, including, without limitation, as a party in an interpleader action); provided, however, that in the event a determination is made by a court of competent jurisdiction that the losses, claims, damages or liability arose primarily out of the Placement Agent’s breach of this Agreement, sole negligence, gross negligence, willful misconduct, dishonesty, fraud or any violation of any applicable law, the Placement Agent will remit to the Company any amounts for which it had been reimbursed under this paragraph. The Company further agrees that the indemnification and reimbursement commitments set forth in this paragraph shall extend to any controlling person, strategic alliance, partner, member, shareholder, director, officer, employee, agent or subcontractor of the Placement Agent and their heirs, legal representatives, successors and assigns. The provisions set forth in this Section IX shall survive any termination of this Agreement.

SECTION X

All notices, demands or other communications given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or transmitted by facsimile transmission or the fifth calendar day after being mailed by registered or certified mail, return

receipt requested, postage prepaid, to the addresses herein above first mentioned or to such other address as any party hereto shall designate to the other for such purpose manner herein set forth.

SECTION XI

Governing Law. The subject matter of this Agreement shall be governed by and construed in accordance with the laws of the State of Florida (without reference to its choice of law principles), and to the exclusion of the law of any other forum, without regard to the jurisdiction in which any action or special proceeding may be instituted. EACH PARTY HERETO AGREES TO SUBMIT TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN PALM BEACH COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF, IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM. AS A MATERIAL INDUCEMENT FOR THIS AGREEMENT, EACH PARTY SPECIFICALLY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY ISSUES SO TRIABLE. If it becomes necessary for any party to institute legal action to enforce the terms and conditions of this Agreement, the prevailing party may be awarded reasonable attorneys fees, expenses and costs.

Confidentiality. The Placement Agent may acquire certain non-public information respecting the business of the Company in connection with the performance of services hereunder, including information, which is reasonably understood to be proprietary or confidential in nature (collectively, “Confidential Information”). The Placement Agent hereby agrees that all Confidential Information shall be kept strictly confidential by the Placement Agent and its affiliates, members, partners, shareholders, managers, directors, officers, employees, advisors, agents, and controlling persons (collectively, “Representatives”), except that Confidential Information or portions thereof may be disclosed to Representatives who need to know such information for the purpose of enabling the Placement Agent to perform services hereunder (it being understood that prior to such disclosure, such Representative will be informed by the Placement Agent of the confidential nature of such Confidential Information and shall agree to be bound by this Agreement). The Placement Agent shall be responsible for any breach of this provision by any of its Representatives. For purposes hereof, Confidential Information shall not include any information which (i) at the time of disclosure or thereafter is or becomes generally known by the public (other than as a result of its disclosure by the Placement Agent or its Representatives), (ii) was or becomes available to the Placement Agent on a non-confidential basis from a person who is not subject to a confidentiality agreement concerning that information, or (iii) is required by law to be disclosed by the Placement Agent (provided that if such disclosure is required by order of a court or administrative agency, the Placement Agent shall notify the Company as soon as possible so that the Company may seek a protective order).

Assignments and Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The rights and obligations of the parties under this Agreement may not be assigned or delegated without the prior written consent of both parties, and any purported assignment without such written consent shall be null and void.

Modification and Waiver. This Agreement may be amended only by an instrument in writing executed by the parties hereto. The failure of any party to insist upon strict performance of any of the provisions of this Agreement shall not be construed as a waiver of any subsequent default of the same or similar nature, or any other nature.

Construction. The captions used in this Agreement are provided for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement.

Facsimile Signatures. Facsimile transmission of any signed original document, and retransmission of any signed facsimile transmission, shall be the same as delivery of an original. At the request of either party, the parties shall confirm facsimile transmitted signatures by signing an original document. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same agreement.

Severability. If any provision of this Agreement shall be invalid or unenforceable in any respect for any reason, the validity and enforceability of any such provision in any other respect, and of the remaining provisions of this Agreement, shall not be in any way impaired.

Non-Exclusive. The Placement Agent acknowledges and agrees that it is being granted non-exclusive rights with respect to the Services to be provided to the Company and the Company is free to engage other parties to provide services similar to those being provided by the Placement Agent hereunder. The parties may, in their discretion and without any obligation to do so, agree to enter into an exclusive relationship, but any such exclusive relationship shall be set forth in a separate writing between the parties.

Non-Circumvention. The Company hereby irrevocably agrees not to circumvent, avoid, bypass, or obviate, directly or indirectly, the intent of this Agreement.

Survivability. Neither the termination of this Agreement nor the completion of any services to be provided by the Placement Agent hereunder, shall affect the provisions of this Agreement that shall remain operative and in full force and effect.

Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties hereto with respect to the subject matter of this Agreement and supersedes all prior understandings and agreements, whether written or oral, among the parties with respect to such subject matter.

If the foregoing correctly sets forth the understanding between the Placement Agent and the Company, please so indicate in the space provided below for that purpose. The undersigned parties hereto have caused this Agreement to be duly executed by their authorized representatives, pursuant to corporate board approval and intend to be legally bound.

CARBIZ, INC.	INNOVATION CAPITAL, LLC.
By: /s/ Carl Ritter	By: /s/ Bruce Jordan
Carl Ritter, Chief Executive Officer	Bruce Jordan, President

EX-10.9

FIRST AMENDMENT TO
PLACEMENT AGENT AGREEMENT

               This First Amendment (the “First Amendment”) to the Placement Agent Agreement (the “Agreement”) dated September 29, 2004 by and between CARBIZ, INC., an Ontario corporation (the “Company”), and INNOVATION CAPITAL, LLC, a Florida limited liability company (the “Placement Agent”), is made as of this 12^th day of October, 2004 by and between the Company and the Placement Agent.

RECITALS

               WHEREAS, the Company and the Placement Agent are parties to the Agreement, and such parties desire to amend the Agreement as stated herein.

               NOW, THEREFORE, the Company and the Placement Agent hereby agree as follows:

AGREEMENT

1.                Amendments to Section VIII.

(a)

The second sentence of Section VIII(a) of the Agreement shall be amended and restated in its entirety to read as follows: “The Financing Fee shall be paid upon the close of the Offering, and the Agent’s Units shall be issued upon the conversion of the Debentures held by the Placement Agent Investors.”

(b)

The following paragraph shall be inserted at the end of Section VIII(a) of the Agreement: “In the event that the Corporation does not obtain an Over-The-Counter Bulletin Board listing within 180 days after October 12, 2004 and it is thereafter obligated to issue additional Warrants to the Placement Agent Investors, the Placement Agent shall be entitled to receive, on the date of any such issuance, Agent’s Units equal to ten percent (10%) of the aggregate number of Warrants issued to the Placement Agent Investors.”

2.                Remainder of Agreement Unaffected. Except to the extent expressly stated herein, the Agreement shall remain in full force and affect as written.

3.                Governing Law. The First Amendment shall be governed by and construed in accordance with the laws of the State of Florida (without reference to its choice of law principles), and to the exclusion of the law of any other forum, without regard to the jurisdiction in which any action or special proceeding may be instituted.

4.                Facsimile and Counterpart Signature Pages. This First Amendment may be executed by facsimile and in one or more counterparts, each of which will be deemed to be an original and all of which taken together will be deemed to constitute one in the same agreement.

               IN WITNESS WHEREOF, the Company and the Investors have executed and delivered this First Amendment as of the first date written above.

	CARBIZ, INC.		INNOVATION CAPITAL, LLC.
By:	/s/ Carl Ritter	By:	/s/ Bruce Jordan
	Carl Ritter, Chief Executive Officer		Bruce Jordan, President

2

EX-10.10

EX-10.11

SOFTWARE LICENSE AGREEMENT

     This Software License Agreement is between CarBiz Auto Credit - JV1, LLC with its principal offices located at 4102 N. Florida Ave., Tampa, FL 33603 ("Purchaser or "You") and CarBiz USA Inc, with its principal offices at 7405 N. Tamiami Tr., Sarasota, FL 34243 ("CarBiz"). The effective date of this Agreement is March 4, 2005 regardless of when the Agreement is finally executed (the "Effective Date").

SOFTWARE LICENSE: CarBiz hereby grants a non-exclusive, non-transferable license to Licensee to use the software product or products, including applicable documentation, listed on Schedule 1 attached to this Agreement beginning on the Effective Date, only to You and only pursuant to the terms and conditions of this Agreement. This is a License, not a sales agreement of the software products and related documentation. The software products and related documentation are owned by CarBiz or its licensers and protected by copyright and trademark laws. Therefore, You must treat the software products and related documentation like any other copyrighted material.

A.	Payment Terms and Amounts: You agree to pay CarBiz the amount or amounts stated in Schedule 1 according to the terms as stated in the Schedule. You also agree to pay a monthly support charge of $100 (One Hundred dollars) during the term of the license for main installation and any renewals as defined in the scope of license.
B.	Multi User: Additional user's (excluding Main Installation) Number of Multi Users 0 at $10 each totaling $0 per month. (Multi User is defined as additional user on the main installation on the same Local Area Network. Failure to make payments as stated will be a breach of this Agreement and will terminate this License.

Scope of License:

     1. You may install the software products in only One Computer. You may make one (1) copy of the software products in machine-readable form solely for backup purposes, provided that you reproduce all proprietary notices on the copy. You may install the software products on only one storage device, such as a network server, used only to run the software products over an internal network; however, you must declare the total number of computers and the location of each separate computer or work station to be served by such a network and obtain CarBiz's express written consent to use the software products. In addition Multi User setup fees and support charges may be added (see Schedule 1).

     2. You may not use the software on more than one computer, workstation or file server at a time in a network or multi-user system, unless specifically authorized by this Agreement. You may not modify, translate, reverse engineer, decompile, disassemble, create derivative works based on, or copy (except for the backup copy) the software products or the accompanying documentation. You may not rent or lease any rights in the software or accompanying documentation in any form. You may not remove any proprietary notices, labels or marks on the software, documentation or containers.

     3. All rights, title, interest and all copyrights to the software, documentation and any copy made by You remain with CarBiz. Unauthorized copying of the software or documentation, or failure to comply with the restrictions of this Agreement, will result in automatic termination of this license and will make available to CarBiz other legal remedies against You.

Term and Termination: This License begins on the Effective date and continues for an initial minimum period of Three (3) years unless terminated in accordance with this Agreement. License will automatically renew unless 30 days written notice is given to CarBiz

CarBiz may terminate this License if You fail to comply with this Agreement or related agreements between You and CarBiz. Such termination shall not void the payment obligations. For example, and without limitation, any unauthorized use, transfer, lease, rental or assignment of the software products and related documentation shall be void and will constitute grounds for termination. Failure to pay the monthly maintenance charge will constitute grounds for termination. Upon such termination, You agree to return all copies of the software products and related documentation to CarBiz within seven (7) days of such termination. You also expressly authorize CarBiz or its agent to examine any computer hardware or storage media in Your possession to confirm that You have not retained any aspect of the software products or documentation within a reasonable time after such termination.

CARBIZ USA INC. SOFTWARE LICENSE AGREEMENT
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You may terminate this agreement after the initial three (3) year agreement by 30 days written notice. Upon such termination, You agree to return all copies of the software products and related documentation to CarBiz within seven (7) days of such termination. You also expressly authorize CarBiz or its agent to examine any computer hardware or storage media in Your possession to confirm that You have not retained any aspect of the software products or documentation within a reasonable time after such termination.

Technical Support Agreement: You agree to purchase and CarBiz agrees to provide limited technical support services for the licensed software products. The payment terms for such services are $ 100.00 , per month including additional users for license and renewal term, as outlined in Software License, Paragraph A and B, Page 1 of this agreement. CarBiz will provide such services through telephone and on-line support to assist in the proper operation of the licensed software product. CarBiz will also provide to You under this Agreement all modifications or enhancements to the licensed software product as a part of technical support. Any items not covered under this agreement will be billable at $100 per hour. CarBiz reserves the right to change Technical Support pricing from time to time as deemed necessary.

Initial complete training of your staff in the proper usage is covered under this agreement, as is ongoing help with the system. Where there is a need for a new employee to be completely trained on the product, additional retraining may be done free of charge at our office location on a scheduled basis, or by phone at $50.00 per hour, 1 hour minimum.

Sub Licenses: You agree to acquire through CarBiz or its agents, or a CarBiz approved source, any such sublicenses that are necessary for the operation of the software program, any and all interfaces, and any or all network configurations. You agree to hold harmless CarBiz from any damages relating to any defects in such data obtained from these sources, including but not limited to, improper valuation or media failure. Your failure to make payment for these sublicenses according to Schedule 1 may result in a breech of this agreement and termination of this License.

Limited Warranty and Limitation of Remedies: Your sole remedy under this Agreement is the repair or replacement as provided in the limited warranty described below. CarBiz's sole and exclusive maximum liability for any claim by You or anyone claiming through or on behalf of You arising out of Your use of the software products and related documentation will not, in any event, exceed the actual amount of money paid by You under this Agreement. Your actual use of the .software products will be conclusive proof that the limited warranty is fulfilled to Your complete satisfaction. IN NO EVENT WILL CarBiz BE LIABLE FOR ANY INDIRECT, INCIDENTAL, COLLATERAL, EXEMPLARY, CONSEQUENTIAL OR SPECIAL DAMAGES OR LOSSES ARISING FROM YOUR USE OF THE SOFTWARE PRODUCTS, INCLUDING WITHOUT LIMITATION LOSS OF USE, PROFITS, GOODWILL OR SAVINGS, OR LOSS OF DATA, DATA FILES, OR PROGRAMS THAT MAY HAVE BEEN STORED OR IMPLEMENTED ALONG WITH THE SOFTWARE PRODUCTS.

THE SOFTWARE PRODUCTS AND RELATED DOCUMENTATION ARE PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE SOFTWARE PRODUCTS IS WITH YOU, AND YOU ASSUME THE COSTS OF ALL NECESSARY SERVICING, REPAIR OR CORRECTION, EXCEPT AS PROVIDED IN CONJUNCTION WITH ROUTINE TECHNICAL SUPPORT.

Legal Remedies and Injunctive Relief: You expressly acknowledge that CarBiz has invested its confidential and proprietary business information, as well as trade secret, information, in providing the software products and related documentation to You. You expressly warrant that the software products and related documentation contain confidential and proprietary information protected by copyright and trade secret laws. Further, You further expressly acknowledge that CarBiz will suffer irreparable injury from the disclosure or misappropriation of such information, and will take all. reasonable steps to protect the software products and related information from unauthorized disclosure, which obligations will survive the termination of this Agreement. In light of the likelihood of such irreparable injury, You consent to CarBiz's right to injunctive relief, which injunction may require the return of all software products, related documentation and

CARBIZ USA INC. SOFTWARE LICENSE AGREEMENT
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associated materials and permit CarBiz an unrestricted opportunity to investigate and audit Your records to determine all such materials have been returned.

CARBIZ shall have the right to collect from Company any and all reasonable expenses incurred in enforcing this Agreement, including, but not limited to, attorneys' fees, court costs and collection expenses.

Arbitration: Any and all disputes, difference, or controversies arising out of, under, in connection with, or by virtue of this agreement, or any breach thereof, shall be submitted to arbitration to be held in Manatee County, Florida, under the rules and regulations of the American Arbitration Association. Arbitration fees and costs paid, or to be paid through the American Arbitration Association, but not attorney's fees, will be awarded to the Party deemed by the arbitrator(s) to be the successful Party. The Parties agree to be bound by such arbitration as final and non-appealable.

General Provisions:

     1. Taxes: You are responsible for the payment of all taxes that result from this Agreement, including for the sale of Hardware, licensing of the software products and related documentation, and the provision of technical support.

     2. Independent Contractor: You agree that You are only an independent contractor of CarBiz and that You will not represent or hold yourself out as a partner, agent or having any other legal relationship with CarBiz.

     3. Entire Agreement: This is the entire Agreement between CarBiz and You. This Agreement supersedes any other communication, whether written or oral, advertisements or understandings with respect to the software products and/or consulting products and their related documentation, and technical support. This Agreement may only be modified or altered in writing, which must be signed by both You and CarBiz.

     4. Choice of Law and Venue: This Agreement will be interpreted and enforced according to the laws of the State of Florida, without reference to its conflict-of-laws provisions. You expressly consent to the jurisdiction and venue in Manatee County, Florida where all initial legal proceedings related to this Agreement, the software products and related documentation and technical support must be brought.

     5. Severable Terms: If any provisions of this Agreement are held invalid, the remainder shall continue in full force and effect.

	CarBiz USA Inc.
Licensee	/s/ Stan Heintz
/s/ Carl Ritter	Signature
Signature	Stan Heintz
Carl Ritter	Print Name
Print Name	COO
CEO	Title
Title	5/20/05
	Date
Date

CARBIZ USA INC. SOFTWARE LICENSE AGREEMENT
Page 3 of 3
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DEALER CONTROLLED FINANCING AGREEMENT

This Agreement is made and entered into by and between CarBiz Auto Credit - JV1, LLC, 4102 N. Florida Ave., Tampa, FL 33603 (hereinafter referred to as "Company") and CarBiz.com (USA) Inc., a Delaware corporation, having offices at 7560 Commerce Ct, Sarasota, Florida 34243 (hereinafter referred to as "CARBIZ"). For purposes of this Agreement, the term CARBIZ means CarBiz.com, Inc., and all corporations or other entities directly or indirectly controlled by or under common control of CARBIZ.

WHEREAS Company wishes to retain the services of CARBIZ's Dealer Controlled Financing Service regarding the operation of a business selling used motor vehicles and arranging credit services for used motor vehicle sales.

NOW THEREFORE, for and in consideration of the mutual covenants and undertakings of the parties to this Agreement, it is agreed as follows:

I. TERM OF AGREEMENT

A.	The term of this Agreement shall commence March 4, 2005.
B.	This Agreement, unless sooner terminated as herein provided, remains in force for a period of one (1) year from the date first shown above under Section IA. This agreement shall automatically renew for additional one-year periods unless terminated by either party as provided herein.

II. SERVICES

CARBIZ will provide to Company the products and services ("Services") set forth in Exhibit A attached hereto and hereby incorporated into and made a part of this Agreement. CARBIZ shall provide Services in a reasonable and timely manner.

Ill. FEES

A. Company will pay to CARBIZ, as an independent contractor, fees for Services as follows:

Start Up Fee	$0.00	one time fee
On-Going Support Fees	$300.00	per month fee

C. On Going Support Fees will commence upon execution of this Agreement, and are due each month on or before the tenth (10^th) of each month, in the amount of $300.00.

Rev. 3/4/05

IV. CONFIDENTIAL INFORMATION

A. Company agrees that it will not divulge, disclose, or communicate to any person, firm, corporation or business entity, in any manner whatsoever, any Confidential Information of .any nature, kind or description concerning any matter affecting or relating to CARBIZ's business, either directly or indirectly, except as is necessary in the ordinary course of conducting business for Company.

B. "Confidential Information" includes all information not generally known to the public at large pertaining to CARBIZ and its business including, but not limited to, customer names and addresses, records of customer transactions, CARBIZ computer systems, the names and functions of CARBIZ personnel and all other such personnel records, however they are designated, business and financial records, trade secrets and confidential planning or policy matters, any operational, management, financial, accounting, control system, marketing or other such matters relating to the business of CARBIZ, all policy and procedure manuals, all operations manuals, all software and any documentation for same, all class materials, all seminar materials, all reports produced by CARBIZ, all promotional supplies and guidelines and all other records and methods of operations howsoever designated, as they may exist from time-to-time. Company acknowledges that these are valuable and unique assets of CARBIZ's business, access to and knowledge of portions of which are essential to the performance of Company's duties and obligations pursuant to the terms of this Agreement.

C. Forms produced by CARBIZ are all copyright protected by CARBIZ with all rights reserved. Company acknowledges that the forms are copyright protected, and hereby agrees to order same from CARBIZ and to refrain from any and all copying of said forms.

V. NO WARRANTIES; NO REPRESENTATIONS

All software and computer equipment listed in Exhibit A is provided "as is" without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranties of merchantability and fitness for a particular purpose. CARBIZ does not represent or warrant that the functions contained in said software or computer equipment will meet Company's requirements. CARBIZ does not represent or warrant that the operations of the computer equipment or software will be uninterrupted or error free. In no event will CARBIZ be liable for any damages, including any lost profits, or other incidental or consequential damages arising out of the use or performance of said software or computer equipment, even if CARBIZ has been advised about the possibility of such damages.

VI. TERMINATION

A. After the initial twelve-month period, Company may terminate this Agreement by giving CARBIZ written notice at least thirty (30) days prior to the annual renewal date. All Fees and/or Earnest Money Deposit due and/or paid to CARBIZ as of the date termination becomes effective are nonrefundable.

B. After the initial 12-month agreement, CARBIZ's monthly support may be cancelled by giving CARBIZ written notice at least thirty (30) days prior to the annual renewal date. Upon cancellation, the dealership may not continue to use the licensed DCF forms and materials in

Rev. 3/4/05

use at the time of cancellation. The following items would also no longer be available or provided by CARBIZ:

• Upgrades to the DCF system and forms
• Attendance to training classes or training programs
• Attendance to DCF meetings
• DCF National composites
• CarBiz consulting services

C. The Management Systems Plus (MSP) software requires periodic upgrades. Monthly MSP software support must be paid in order for the MSP software to continue to function.

D. CARBIZ may terminate this License if COMPANY fails to comply with this Agreement or related agreements between COMPANY and CARBIZ. Such termination shall not void the payment obligations. For example, and without limitation, any unauthorized use, transfer, lease, rental or assignment of the software products and related documentation shall be void and will constitute grounds for termination. Failure to pay the monthly maintenance charge will constitute grounds for termination.

VII. MISCELLANEOUS

A. The preamble of this Agreement is hereby incorporated into this Agreement and all matters therein set forth are and shall be considered a part of this Agreement.

B. The covenants, representations and restrictions in this Agreement shall survive the termination of this Agreement, but shall not be deemed to have been made with respect to any period of time subsequent to the termination of this Agreement.

C. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall be invalid in that jurisdiction to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions of this Agreement or affecting the validity, enforceability or legality of the provision in any other jurisdiction.

D. No amendment, modification, termination or waiver of any provision of this Agreement by either party shall be effective unless it is in writing and signed by the party to be bound, and then the waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Inaction or failure to demand strict performance shall not be deemed a waiver.

E. This Agreement may not be assigned by Company.

F. Company hereby represents to CARBIZ that its authorized representative had the opportunity to review the terms and conditions of this Agreement with Company's attorney prior to the execution of this Agreement and fully understands the terms and conditions contained in this Agreement.

Rev. 3/4/05

G. This Agreement constitutes the entire understanding between the parties with respect to the subject matter. All prior agreements, representations, statements, negotiations and undertakings are superseded hereby.

H. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida without regard to any conflict of law provisions.

I. Arbitration: Any and all disputes, difference, or controversies arising out of, under, in connection with, or by virtue of this agreement, or any breach thereof, shall be submitted to arbitration to be held in Manatee County, Florida, under the rules and regulations of the American Arbitration Association. Arbitration fees and costs paid, or to be paid through the American Arbitration Association, but not attorney's fees, will be awarded to the Party deemed by the arbitrator(s) to be the successful Party. The Parties agree to be bound by such arbitration as final and non-appealable.

J. All matters contained in this Agreement are deemed confidential by CARBIZ and Company, and shall not be divulged by either party except as authorized by law.

K. Any notice or other communication with respect to this Agreement shall be in writing and shall be deemed to have been duly given when delivered, within two (2) business days after deposit in the United States Mail, certified or registered, return receipt requested, and with the proper postage prepaid, or on the next business day after sent by recognized overnight courier, addressed as follows:

If to COMPANY
CarBiz Auto Credit - JV1, LLC
4102 N. Florida Ave.
Tampa, FL 33603

If to CARBIZ
CarBiz.Com, Inc.
7560 Commerce Ct
Sarasota, Florida 34243

K. CARBIZ shall have the right to collect from Company any and all reasonable expenses incurred in enforcing this Agreement, including, but not limited to, attorneys' fees, court costs and collection expenses.

Signed

COMPANY:
By: /s/ Carl Ritter
Title: CEO	Date: _______
CARBIZ:
By: /s/ Stan Heintz
Title: COO	Date: 5/20/05

Rev. 3/4/05

EXHIBIT A

Single site license to use the DCF program for following location only:

CarBiz Auto Credit - JVI LLC
4102 N. Florida Ave.
Tampa, FL 33603

Management Systems Plus (MSP) software
Single site license of the MSP software
MSP software support & periodic upgrades
License to use all DCF forms and materials
Upgrades to DCF systems and forms
One-time 3 year Cash Flow and Profit Projection
(2) Licensed DCF Policy & Procedures Manuals
(2) On-Lot Training Manuals
30 days supply of DCF forms
Attendance to the annual CARBIZ National Convention and Workshops
Attendance to Manager's Training Class
Monthly DCF National Composites
Toll free consulting support
(1) One day on-site training/consulting visit
Popcorn Machine
Coke cooler
(1) Customized Banner with COMPANY phone number

CARBIZ reserves the right to substitute comparable equipment and software.

Rev. 3/4/05

ADDITIONAL CONSULTING AGREEMENT

This Agreement is made March 4, 2005 between CarBiz USA, Inc., hereinafter referred to as "CARBIZ" and CarBiz Auto Credit - JV1, LLC hereinafter referred to as the "COMPANY".

The COMPANY wishes to retain the services of CARBIZ to advise and consult the COMPANY in the operation of a "Dealer Controlled Financing" business selling used motor vehicles and arranging credit services for used motor vehicle sales, hereinafter referred to as a DCF Dealership. Services will be provided to the DCF Dealership located at 4102 N. Florida Ave., Tampa, FL 33603. The services to be provided under this Agreement include the following:

1.	SERVICES. CARBIZ will provide to the Company the services, which consist of the following: 2 lot inspections, a weekly operations review, weekly telephone meetings, software support, general problem solving, and on-going employee education.
2.	DUTIES AND OBLIGATIONS OF THE COMPANY. CARBIZ will make recommendations to improve the profitability of the COMPANY'S DCF Dealership. It shall be the duty and obligation of the COMPANY and its employees to make a reasonable and diligent effort to implement the recommendations in a timely manner.
3.	REPORTS. During the term of this Agreement both COMPANY and CARBIZ agree to furnish to the other party certain periodic reports including, but not limited to, those specified in Exhibit A of the Agreement.
4.	FEES. In payment for services, the COMPANY will pay to CARBIZ, as an independent contractor, a recurring monthly fee in an amount specified in Exhibit B of this Agreement for services commencing on February 1, 2005, The COMPANY shall not be obligated for MSP or DCF support in addition to ACP service.
5.	NON-COMPETE. CARBIZ agrees that during the term of this Agreement CARBIZ shall not perform the services outlined in Section One of this Agreement on behalf of any other business within the COMPANY'S DCF Dealership's Primary Sales Area as described in Exhibit C of this Agreement and incorporated herein.

6.	CONFIDENTIALITY. The COMPANY will agree and acknowledge that all documents generated by CARBIZ shall remain confidential. Unless otherwise provided, the COMPANY will not copy any of the documents or information generated by CARBIZ and agrees not to disclose any such documents or information to any third party. CARBIZ agrees not to disclose COMPANY'S information to any third party.
7.	WARRANTIES. CARBIZ does not guarantee any results from the use of the services provided.
8.	INVALID PROVISIONS. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions herein.
9.	MUTUAL COOPERATION. CARBIZ and the COMPANY acknowledge that they will cooperate fully with each other by executing all necessary documents and performing any acts that may be reasonably necessary to implement the terms of this Agreement.
10.	TERMINATION. This year agreement will expire on November 31, 2005. Neither party may terminate the agreement prior to the expiration date. After the initial period, either COMPANY or CARBIZ may terminate this Agreement without cause after providing the other party with a thirty (30) day written notice. In the event of cancellation, the services shall continue and payment shall be due through the end of the calendar month following the month of cancellation. In the absence of such written notice the agreement shall renew automatically.
11.	ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings of the parties. No modification of this Agreement shall be valid unless the modification is in writing and signed by both parties.

CARBIZ USA, INC
7560 Commerce Court
Sarasota, FL. 34243

CarBiz Auto Credit - JV1, LLC
4102 N. Florida Ave.
Tampa, FL 33603

By: /s/ Signature	By: /s/ Stan Heintz
Dealer Representative	CarBiz Representative
Title:______ Date: ______	Title: COO Date: 5/20/05

EXHIBIT A TO THE ADDITIONAL CONSULTING AGREEMENT

REPORTS

Each Monday night, at the close of business, Company shall transmit the following reports, via the Internet, to CARBIZ at: dmiller@carbiz.com and amosher@carbiz.com or ftp://support@carbiz.com.

Lot Memo
Long Version Delinquency List
Inventory Price Sheet (sorted by days in Inventory)
Inventory Cost Report (do not show expenses; sorted by days in inventory)
Profit & Loss Report (totals only / week in review)
Business Summary Report (full information/ week in review)
Bank Deposit Report (full Information/ week in review)
Accounts Receivable Report (full information; active accounts only)
Projection Report (totals only)
Paid Off Customer Reports (week in review)
Payment Status Report (upcoming week Tuesday through Monday)
Rewrite Reports (week in review)

Until Company is successfully connected to the Internet, all reports must be forwarded via fax or overnight delivery service at Company's expense.

EXHIBIT B TO THE ADDITIONAL CONSULTING AGREEMENT

RECURRING FEES

COMPANY SHALL PAY TO CARBIZ A RECURRING MONTHLY FEE OF $1000.00. THE MONTHLY PAYMENT SHALL BE TENDERED ON OR BEFORE THE TENTH DAY OF THE MONTH FOLLOWING THE FIRST FULL MONTH OF OPERATION UNDER THIS AGREEMENT.

ONLY ACTIVE DCF DEALERS ARE ELIGIBLE TO CONTRACT WITH CARBIZ FOR THE SERVICES OF THE ADDITIONAL CONSULTING PROGRAM. THE RECURRING MONTHLY FEE FOR THE ADDITIONAL CONSULTING PROGRAM SHALL INCLUDE SOFTWARE SUPPORT AND DCF SERVICE. DEALERS ON THE ADDITIONAL CONSULTING PROGRAM ARE NOT OBLIGATED TO PAY FOR DCF OR MSP SERVICE SEPARATELY.

EXHIBIT C TO THE ADDITIONAL CONSULTING AGREEMENT

AREA OF NON-COMPETITION

The area of non-competition shall be the area of the COMPANY'S DCF Dealerships Primary Sales Area, defined as follows:

Within 15 miles of the Dealership location.

EX-10.12

PROMISSORY NOTE

TO: Medipac (US) International Inc. and Theodore Popel, "as their interests may apply". (Referred to in this document as "Lender").

1. PROMISE TO PAY

     FOR VALUE RECEIVED Carbiz Inc. (the "Borrower" or "Debtor") promises to pay, ON OR BEFORE SEPTEMBER 1, 2006 (the "Maturity Date"), to or to the order of [Lender] (the "Lender"), at the above address, the sum of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000.00) US (the "Principal Amount"), which sum shall be drawn down by the Borrower in accordance with the following schedule:

On or *** about*** July 25, 2005	$50,000
August 1, 2005	$50,000
September 1, 2005	$50,000

in lawful money of the U.S.A., together with interest and other fees and monies which may from time to time be owing hereunder or pursuant hereto, which amount represents a loan made to the undersigned by Lender on the dates described above.

2. INTEREST RATE AND PAYMENTS

     The Borrower shall pay interest on the Principal Amount computed from the date of advance of monies by the Lender to the Borrower hereunder at a rate of 17.7% per annum (the "Interest Rate"). Interest shall be payable in lawful money of the United States of America on the balance from time to time outstanding of the Principal Amount of this Promissory Note and on any other monies due and payable hereunder (including the interest) at the Interest Rate calculated and payable monthly in arrears on the last business day of each month during the term of this Note.

     Payments equal to FIFTEEN THOUSAND DOLLARS ($15,000) US, which amount shall include principal and interest, shall be made on the first day of each month beginning on October 1, 2005 and ending *** August 1, 2006***.

3. DEFAULT AND PENALTIES

The occurrence of any of the following shall constitute an Event of Default hereunder:

(a)	default in the payment of principal or interest in accordance with the terms hereof ; or
(b)	any misrepresentation by the Borrower as to any material matter hereunder.

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     Upon the occurrence of the earlier of an Event of Default or the Maturity Date, the Principal Sum, plus interest at the Interest Rate, calculated and payable from the date of advance up to and including the Repayment Date, shall be immediately due and payable in full. Upon the occurrence of any such Event of Default and the acceleration of the maturity of the indebtedness evidenced by this Note:

(a)	the Lender shall immediately be entitled to exercise any and all rights and remedies possessed by the Lender pursuant to the terms of the Note; and
(b)	the Lender shall have any and all other rights and remedies that Lender may now or hereafter possess at law, in equity or by statute.

4. SECURITY

     For value received, the undersigned hereby grants to the Lender a subordinate security interest, mortgage and charge (hereinafter collectively referred to as the "Security Interest") as hereinafter provided: (Subordinate to Automotive Finance Corporation)

(a)	a security interest in the undertaking of Debtor and all of Debtor's present and after acquired personal property including, without limitation, all Goods (including all parts, accessories, attachments, special tools, additions and accessions thereto), Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles, Money and Securities now owned or hereafter owned or acquired by or on behalf of Debtor (including such as may be returned to or repossessed by Debtor) and including, without limitation, all of the following now owned or hereafter owned or acquired by or on behalf of Debtor:
	A.	all Inventory of whatever kind and wherever situate;
	B.	all equipment (other than Inventory) of whatever kind and wherever situate, including, without limitation, all machinery, tools, apparatus, plant, furniture, fixtures and vehicles of whatsoever nature or kind;
	C.	all Accounts and book debts and generally all debts, dues, claims, chooses in action and demands of every nature and kind howsoever arising or secured and whether arising in connection with an interest in real or personal property or otherwise, including letters of credit and advices of credit, which are now due, owing or accruing or growing due to or owned by or which may hereafter become due, owing or accruing or growing due to or owned by Debtor (collectively referred to as the "Debts");
	D.	all deeds, documents, writings, papers, books of account and other books relating to or being records of Debts, Chattel Paper or Documents of Title or by which such are or may hereafter be secured, evidenced, acknowledged or made payable by the Debtor;
	E.	all contractual rights and insurance claims; and

-3-

	F.	all patents, industrial designs, trade-marks, trade secrets and know-how, including without limitation, environmental technology and biotechnology, confidential information, trade-names, goodwill, copyrights, personality rights, plant breeders' rights, integrated circuit topographies, software and all other forms of intellectual and industrial property, and any registrations and applications for registration of any of the foregoing (collectively referred to as "Intellectual Property"); and
(b)	a mortgage and charge as and by way of a floating charge, in all of Debtor's present and after acquired interest in property, assets and undertaking not secured in (i) above, including all real, immoveable and leasehold property and all easements, rights-of-way, privileges, benefits, licences, improvements and rights whether connected therewith or appurtenant thereto or separately owned or held, including without limitation, all structures, plants and other fixtures now owned or hereafter owned or acquired by or on behalf of Debtor (collectively referred to as "Real Property"); and
(c)	a Security Interest in all proceeds and renewals thereof, accretions thereto and substitutions therefor, all of the foregoing being hereinafter collectively referred to as the "Collateral".

     The Security Interest granted hereby shall not extend or apply to, and Collateral shall not include, the last day of the term of any lease or agreement therefor, but upon the enforcement of the Security Interest Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term. The Security Interest granted hereby shall also be subject to any valid prior security interest of the Debtor in force as at the date hereof.

     The terms "Goods", "Chattel Paper", "Document of Title", "Instrument", "Intangible", "Security", "proceeds", "Inventory", "equipment", "accessions", "Money", "Account", "financing statement" and "financing change statement" whenever used herein shall be interpreted pursuant to their respective meanings or comparable meanings under the Uniform Commercial Code ("UCC") of the state of the United States of America in which any such Collateral is located or where the Debtor conducts business or is organized . Provided always that the term "Goods" when used herein shall not include "consumer goods" of Debtor as that term is defined in the UCC and the term "Inventory" when used herein shall include livestock and the young thereof after conception and crops that become such during the term of this Security Agreement. Any reference herein to "Collateral" shall, unless the context otherwise requires, be deemed a reference to "Collateral or any part thereof'.

5. GOVERNING LAW AND JURISDICTION

     This Promissory Note shall be governed by and construed in accordance with, the laws of the State of Florida and the federal laws of the United States of America applicable therein (other than the conflict of laws rules).

     The parties hereby submit to the jurisdiction of the Courts of the State of Florida in respect of any dispute arising under this Promissory Note or any security related thereto.

-4-

6. NO DEDUCTION

     All payments of principal, interest, fees and other amounts to be made pursuant to this Promissory Note shall be made free and clear of and without deduction for, any and all present and future taxes, withholdings, levies, duties, any governmental charges and all liabilities with respect thereto, and without setoff, withholding, deduction or counterclaim of any kind whatsoever. If, with regard to any payment to be made the Borrower to the Lender pursuant to this Promissory Note, any deduction for any and all present and future taxes, withholdings, levies, duties, governmental charges or any liability with respect thereto as required by law, the Borrower shall pay such additional amounts as may be necessary in order that the net amount received by the Lender after such deduction shall equal each payment which would have been received by the Lender in the absence of such deduction.

7. NOTICE

     Any notice or written communication given pursuant to or in connection with this Promissory Note shall be in writing and shall be given by delivering the same personally or by prepaid courier, prepaid registered mail, or telecopier, addressed to the party to be notified at the address of such party set out herein or at such other address of which such party has given notice to the other party hereto. Any such notice shall be conclusively deemed to have been given and received on the day of actual receipt by the addressee or, if given by prepaid registered or certified mail, on the fifth day following the mailing date (absent a general disruption in postal service).

8. SUCCESSORS AND ASSIGNS

     This Promissory Note shall be binding upon the Borrower and his heirs, executors, administrators and other legal representatives and shall enure to the benefit of the Lender and its successors and assigns. Any references herein to the Lender or the Borrower shall include their respective successors and assigns as if specifically named. This Promissory Note may be assigned by the Lender and, if to assigned, the Lender shall provide the Borrower with written notice of such assignment. Present for payment, demand, protest, notice of protest, notice of dishonour and statutory days of grace respecting this Promissory Note or hereby waived.

     IN WITNESS WHEREOF the Borrower has executed this Promissory Note effective as of the date first written above.

CARBIZ INC.

Per: /s/ Signature (c/s)

EX-10.13

DEBENTURE INSTRUCTIONS

               I am advised by Carbiz Inc. (the "Corporation") that I have the following alternatives with respect to my Debenture number • dated October 6, 2004 issued by the Corporation (the "Debenture").

        (Please check one)

¨ I can agree to an amendment of the Debenture such that it will have a new maturity date of • and a new conversion rate such that the "Conversion Rate" (as that term is defined in the Debenture) will change from $0.22 to $0.15, and the exercise price of each Class A Warrant and Class B Warrant will change from $0.23 to $0.30 respectively to $0.15 for each class of Warrant; OR

¨ I can have my Debenture repaid in accordance with its terms. This will result in the repayment of my original investment plus interest as set out therein (5% per annum for the period of May 1, 2005 to October 5, 2005) totaling in aggregate $• US. By doing so, I understand the Debenture will terminate before conversion and so I will not receive • Class A and • of Class B warrants.

               In either event, by executing this document, the undersigned debenture holder also releases the Corporation from any and all obligations, claims or liabilities, due to or held by the undersigned debenture holder, his/her successors or assigns.

               Signed this _____ day of ____________, 2005 in the city of __________, state of __________.

Debenture Holder's Printed Name	Witness Printed Name
Debenture Holder's Signature	Witness Signature

EX-21.1

Exhibit 21.1

List of Subsidiaries

Name of Subsidiary	Jurisdiction of Incorporation
Carbiz.com (USA) Inc.	Delaware
Carbiz Auto Credit, Inc.	Florida
Carbiz Auto Credit JV1, LLC	Florida

EX-23.1

Deloitte & Touche LLP
5140 Yonge Street
Suite 1700
Toronto ON M2N 6L7
Canada Tel: 416-601-6150
Fax: 416-601-6151
www.deloitte.ca

Consent of Independent Registered Public Accounting Firm

We consent to the use in this Registration Statement on Form SB-2 of our reports dated March 25, 2005 (except for Note 21, which is as at April 10, 2005) relating to the financial statements of Carbiz Inc. (which audit report expresses an unqualified opinion on the financial statements and includes a separate report titled Comments by Independent Registered Chartered Accountants on Canada-United States of America Reporting Differences describing conditions that raise substantial doubt about Carbiz Inc.’s ability to continue as a going concern as described in Note 1 to the financial statements, and relating to a change in accounting principal that had an effect on the comparability of the financial statements) appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading “Experts” in such Prospectus.

/s/ Deloitte & Touche LLP

Independent Registered Chartered Accountants

Toronto, Ontario
October 31, 2005

Member of
Deloitte Touche Tohmatsu

EX-99.1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-X

APPOINTMENT OF AGENT FOR SERVICE OF PROCESS
AND UNDERTAKING

A.	Name of issuer or person filing ("Filer"): Carbiz Inc.
B.	(1)	This is
	x	an original filing for the Filer.
	¨	an amended filing for the Filer.
	(2)	Check the following box if you are filing the Form F-X in paper in accordance with Regulation S-T Rule 101(b)(9). ¨
	(3)	A filer may also file the Form F-X in paper under a hardship exemption provided by Regulation S- T Rule 201 or 202. When submitting a Form F-X in paper under a hardship exemption, a filer must provide the legend required by Regulation S-T Rule 201(a)(2) or 202(c) on the cover page of the Form F-X.
C.	Identify the filing in conjunction with which this Form is being filed:
	Name of registrant:                             Carbiz Inc.
	Form type:                                            Form SB-2
	File number:                                         Unknown
	Filed by:                                                Carbiz Inc.
	Date filed:                                             November 2, 2005
D.	The Filer is incorporated or organized under the laws of the province of Ontario, Canada and has its principal place of business 7405 North Tamiami Trail, Sarasota, Florida 34243, telephone number (941) 952-9255.
E.	The Filer designates and appoints William Guerrant, Esq. located at Hill, Ward & Henderson P.A., 101 East Kennedy Blvd., Suite 3700, Tampa, Florida 33602, telephone number (813) 221-3900, as the agent of the Filer upon whom may be served any process, pleadings, subpoenas, or other papers in
	(a)        any investigation or administrative proceeding conducted by the Commission; and
	(b)        any civil suit or action brought against the Filer or to which the Filer has been joined as defendant or respondent, in any appropriate court in any place subject to the jurisdiction of any state or of the United States or of any of its territories or possessions or of the District of Columbia, where the investigation, proceeding or cause of action arises out of or relates to or concerns (i) any offering made or purported to be made in connection with the securities registered or qualified by the Filer on Form SB-2 filed on November 2, 2005 or any purchases or sales of any security in connection therewith; (ii) the securities in relation to which the obligation to file an annual report on Form 40-F arises, or any purchases or sales of such securities; (iii) any tender offer for the securities of a Canadian issuer with respect to which filings are made

	by the Filer with the Commission on Schedule 13E-4F, 14D-1F or 14D-9F; or (iv) the securities in relation to which the Filer acts as trustee pursuant to an exemption under Rule 1Oa-5 under the Trust Indenture Act of 1939. The Filer stipulates and agrees that any such civil suit or action or administrative proceeding may be commenced by the service of process upon, and that service of an administrative subpoena shall be effected by service upon such agent for service of process, and that service as aforesaid shall be taken and held in all courts and administrative tribunals to be valid and binding as if personal service thereof had been made.
F.	Each person filing this Form in connection with:
	(a)        the use of Form F-9, F-10, 40-F, or SB-2 or Schedule 13E-4F, 14D-lF or 14D-9F stipulates and agrees to appoint a successor agent for service of process and file an amended Form F-X if the Filer discharges the Agent or the Agent is unwilling or unable to accept service on behalf of the Filer at any time until six years have elapsed from the date the issuer of the securities to which such Forms and Schedules relate has ceased reporting under the Exchange Act;
	(b)        the use of Form F-8, Form F-80 or Form CB stipulates and agrees to appoint a successor agent for service of process and file an amended Form F-X if the Filer discharges the Agent or the Agent is unwilling or unable to accept service on behalf of the Filer at any time until six years have elapsed following the effective date of the latest amendment to such Form F-8, Form F-80 or Form CB;
	(c)        its status as trustee with respect to securities registered on Form F-7, F-8, F-9, F-10, F-80, or SB-2 stipulates and agrees to appoint a successor agent for service of process and file an amended Form F-X if the Filer discharges the Agent or the Agent is unwilling or unable to accept service on behalf of the Filer at any time during which any of the securities subject to the indenture remain outstanding; and
	(d)        the use of Form 1-A or other Commission form for an offering pursuant to Regulation A stipulates and agrees to appoint a successor agent for service of process and file an amended Form F-X if the Filer discharges the Agent or the Agent is unwilling or unable to accept service on behalf of the Filer at any time until six years have elapsed from the date of the last sale of securities in reliance upon the Regulation A exemption.
	Each filer further undertakes to advise the Commission promptly of any change to the Agent's name and address during the applicable period by amendment of this Form, referencing the file number of the relevant form in conjunction with which the amendment is being filed.
G.	Each person filing this Form, other than a trustee filing in accordance with General Instruction L(a) of this Form, undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the Forms, Schedules and offering statements described in General Instructions L(a), L(b), L(c), L(d) and I.(f) of this Form, as applicable; the securities to which such Forms, Schedules and offering statements relate; and the transactions in such securities.

2

     The Filer certifies that it has duly caused this power of attorney, consent, stipulation and agreement to be signed on its behalf by the undersigned, thereunto duly authorized, in Sarasota, Florida on November 1, 2005.

CARBIZ INC.
By:	/s/ Carl Ritter
Name:	Carl Ritter
Title:	Chief Executive Officer

3

                 This statement has been signed by the following persons in the capacities and on the dates indicated.

By:	/s/ William Guerrant
Name:	William Guerrant, Esq.
Date:	November 1, 2005

4

COVER

Filed by Automated Filing Services Inc. (604) 609-0244 - Carbiz Inc. - Cover Letter