Carbiz Inc.
OTC Bulletin Board : CBZFF

Carbiz Inc.

May 01, 2008 09:30 ET

CarBiz CEO Issues Letter to Shareholders Providing Additional Perspective Following Annual Report Filing

SARASOTA, FLORIDA--(Marketwire - May 1, 2008) - CarBiz Inc. (OTCBB:CBZFF), the fourth largest Buy Here Pay Here car dealership chain in America filed its annual report earlier this week. As a result, CarBiz CEO Carl Ritter has issued the following letter to shareholders to provide this additional perspective:

Over the past six months, our company has experienced significant changes in every area of our operations. Many of our shareholders have asked me to provide some type of guidance so that they can better understand what CarBiz is today and where it is headed tomorrow. The best way for a shareholder to learn about all of the changes is to read our Annual Report on Form 10-KSB, filed with the SEC on April 30, 2008, which can be accessed over the internet at www.sec.gov/edgar/searchedgar/companysearch.html.

In this letter, I will provide you with a summary of some of the more important operational changes discussed in the Annual Report and give you an idea about our vision for the future of the company.

In October of last year, we began a process of significant change through the acquisition of a mid-western chain of 23 used car stores and a portfolio of associated consumer loans. Subsequently, in December, we purchased an additional portfolio of consumer loans associated with used car financings and we opened our first used car "Supercenter," in Houston Texas.

We currently operate a chain of twenty six (26) used car stores. At our stores, we offer financing for the used cars we sell, and we provide financing to consumers with poor credit. We hold these consumer notes as assets and pledge them as collateral under our newly expanded senior credit facility, which is fully described in our Annual Report on Form 10-KSB. We believe that this credit facility puts in place the financial foundation for the company to grow for many years without the need for additional funding.

In the first quarter of this year we have been ramping up our operations, and by the end of the quarter we will have all of our 26 stores fully operational. We expect that the ramp up in operations at the stores will continue throughout the balance of the year with increased revenue on a same store sales basis and that each quarter during 2008 will reflect an increase. In the first quarter of this year we expect that revenues will be close to $10,000,000, which is a very significant increase over the revenues for the first quarter of 2007. We have also focused our attention on earnings and expect to produce a net operating profit this fiscal year. Each quarter should improve in dollars and as a percentage of revenues in this fiscal year. Of course, there are numerous risk factors that could affect our anticipated results. Many of these are described in our Annual Report, and you should review them.

Our current business model embraces an average vehicle sale price of about $6,000. Over the past several weeks, we have prepared to launch a pilot project at four of our current stores that will broaden our product and financing options for consumers with vehicle sales prices up to $20,000. This will provide an opportunity for each of our stores that participate in this pilot project to reach a broader consumer market and potentially increase sales at each of these stores. We call this project a "tier 2" lending program and have created specific underwriting and collection processes for this project. By the end of the year, we hope that each store with a "tier 2" designation will have a ratio of 1:1 (tier 1 to tier 2) product sales. The successful result to each store that enjoys a tier 2 status would be a substantial increase in revenues even without an increase in unit sales. Our plan is to continue to increase the number of stores that enjoy "tier 2" status throughout the year.

In regard to the broader economy and its impact on our business, we see the U.S. as being in a practical recession, if not an official recession. We certainly seem to be in a period of diminished economic growth and experiencing a level of uncertainty that the U.S. has not seen in many years. A recession does not necessarily have a negative impact on our business. That said, inflation and specifically the cost of fuel and associated cost of living increases due to rising fuel costs does have an impact on consumers and their ability to stay current with their obligations, including car loans. Our proprietary collection systems provide flexibility at a regional management level to assist consumers and help to keep them on track with their car payments. We have also adopted into our underwriting profile an expectation of fuel prices reaching $4.50 a gallon, so that we take proactive steps to maintain our consumer loan portfolio.

In summary, CarBiz is a very different company than it was six months ago. Our expectation of first quarter revenues and earnings is that they will be substantially greater than any comparable period in our history, and we expect that each subsequent quarter this year will see continued growth. We have a strong and committed senior lender in place and our efforts will now be focused on improving our bottom line and efficiencies in both our operations and our financial structure. The recent announcement that introduced "Pointe Atlantic" as our investment banker is part of our plan to re-introduce CarBiz to the institutional investment community.

Moving forward we see immense opportunity for CarBiz to expand its revenues and earnings within its current distribution network. Our focus will move to expanding productivity at each of our current stores and making them as efficient as they can be. Some stores may be closed or moved to better locations; most of them will be expanded over time to maximize the profitability on a store by store basis. At the corporate level, there will be a focus on store branding, debt reduction and positioning the company to improve our cash flow so that we can invest those resources into the expansion project without increasing debt. I encourage you all to follow our company's results closely; the 1st quarter will set a new benchmark for CarBiz.

Thank you for your interest in the company and your continued support.

Yours truly

Carl Ritter, Chief Executive Officer

About CarBiz Inc.

Based in Sarasota, Florida, CarBiz owns and operates the nation's fourth-largest chain of "buy-here pay-here" dealerships through its CarBiz Auto Credit division. The company is also a leading provider of software, training and consulting solutions to the United States automotive industry. CarBiz's suite of business solutions includes dealer software products focused on the "buy-here pay-here," sub-prime finance and automotive accounting markets. Capitalizing on expertise developed over 10 years of providing software and consulting services to "buy-here pay-here" businesses across the United States, CarBiz entered the market in 2004 with a location in Palmetto, Florida. CarBiz has added two more credit centers since - in Tampa and St. Petersburg - and recently acquired a large regional chain in the Midwest and one in Houston, bringing the total number of dealerships to 26 in eight states. For more information about CarBiz and its services, visit CarBiz's web site: www.CarBiz.com.

Forward-Looking Statements

All statements, other than statements of historical fact, in this news release are forward-looking statements that involve various risks and uncertainties, including, without limitation, statements regarding the future growth plans and objectives of CarBiz. There can be no assurance that such statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements as a result of known and unknown risks, uncertainties and other factors. Such factors that could cause actual results and future events to differ from those anticipated in such statements include, but are not limited to, the market acceptance of CarBiz's Auto Credit Centers, the ability of CarBiz to effectively deploy the funds received from the convertible debenture financing, the ability of CarBiz to close on additional tranches of the convertible debenture financing, the possibility that the liquidated damage provisions or the default provisions could be triggered under the terms of the convertible debenture financing which could be adverse to CarBiz, CarBiz's ability to measure the default rate of its borrowers, competition, the impact of any changes in applicable government regulation and general economic conditions. These and all subsequent written and oral forward-looking statements are based on the estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. CarBiz assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change.


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