---

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

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended **April 30,
2007**

OR

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT

For the transition period from ________________ to
_______________

Commission file Number: **000-52209**

CARBIZ INC.(Exact name of
small business issuer as specified in its charter)

|Ontario, Canada                 | Not Applicable                   
|------------------------------- | ---------------------------------
|(State or other jurisdiction of | (IRS Employer Identification No.)
|incorporation or organization)  |                                  

7405 North Tamiami Trail Sarasota, Florida 34243(Address of principal executive offices)

(941) 952-9255(Issuer's telephone number)

Check whether the issuer: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the issuer was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [   ]

Indicate by check mark whether the issuer is a shell company (as
defined in Rule 12b-2 of the Exchange Act): Yes [   ] No [X]

As of June 11, 2007, 64,224,404 common shares of the issuer were
issued and outstanding.

Transitional Small Business Disclosure Format (Check one): Yes
[   ] No [X]

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CARBIZ INC.

FORM 10-QSB

For the Quarterly Period Ended April 30, 2007

INDEX

|PART I  | Financial Information | 1                                                          
|------- | --------------------- | -----------------------------------------------------------
|        | Item 1.               | Financial Statements                                       
|        | Item 2.               | Managements Discussion and Analysis or Plan of Operation  
|        | Item 3.               | Controls and Procedures                                    
|        |                       |                                                            
|PART II | Other Information     | 18                                                         
|        | Item 1.               | Legal Proceedings                                          
|        | Item 2.               | Unregistered Sales of Equity Securities and Use of Proceeds
|        | Item 3.               | Defaults Upon Senior Securities                            
|        | Item 4.               | Submission of Matters to a Vote of Security Holders        
|        | Item 5.               | Other Information                                          
|        | Item 6.               | Exhibits                                                   

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

Except for statements of historical fact, certain information
contained herein constitutes forward-looking statements, within Section 21E of
the Securities Exchange Act of 1934, as amended (the Exchange Act). In some
cases, you can identify the forward-looking statements by our use of the words
such as may, will, should, could, expect, plan, estimate,
predict, potential, continue, believe, anticipate, intend, expect,
or the negative or other variations of these words, or other comparable words or
phrases.

Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause our actual results or
achievements to be materially different from any of our future results or
achievements expressed or implied by such forward-looking statements. Such
factors include, but are not limited to the following:

| | (i)     | whether we are successful in implementing our business
      strategy;                                                                                                                                                                                               
| | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                                      
| | (ii)    | our ability to increase revenues in the future and to
      continue as a going concern;                                                                                                                                                                             
| |         |                                                                                                                                                                                                                                                                      
| | (iii)   | our ability to obtain additional financing on terms
      favorable to us, if at all, if our operating revenues fail to
    increase;                                                                                                                                
| |         |                                                                                                                                                                                                                                                                      
| | (iv)    | our ability to attract and retain key
personnel;                                                                                                                                                                                                                     
| |         |                                                                                                                                                                                                                                                                      
| | (v)     | the impact on the market price of our common shares of
      the concentration of common share ownership by our directors, officers and
      greater than 5% shareholders, which may delay, deter or prevent actions
      that would result in a change of control;
| |         |                                                                                                                                                                                                                                                                      
| | (vi)    | the significant fluctuation of the market price of our
      common shares;                                                                                                                                                                                          
| |         |                                                                                                                                                                                                                                                                      
| | (vii)   | costly difficulties we may face in the assimilation of
      the operations, technologies and products of companies that we may acquire
      in the future;                                                                                                         
| |         |                                                                                                                                                                                                                                                                      
| | (viii)  | the adequacy of our insurance coverage to cover all
      losses or liabilities that may be incurred in our operations;                                                                                                                                              
| |         |                                                                                                                                                                                                                                                                      
| | (ix)    | our dividend policy;                                                                                                                                                                                                                                                 
| |         |                                                                                                                                                                                                                                                                      
| | (x)     | the impact on our financial position, liquidity and
      results of operations if we underestimate the default risk of sub-prime
      borrowers;                                                                                                                   
| |         |                                                                                                                                                                                                                                                                      
| | (xi)    | general economic conditions;                                                                                                                                                                                                                                         
| |         |                                                                                                                                                                                                                                                                      
| | (xii)   | general competition;                                                                                                                                                                                                                                                 
| |         |                                                                                                                                                                                                                                                                      
| | (xiii)  | our ability to comply with federal and state government
      regulations;                                                                                                                                                                                           
| |         |                                                                                                                                                                                                                                                                      
| | (xiv)   | our joint venture arrangements;                                                                                                                                                                                                                                      
| |         |                                                                                                                                                                                                                                                                      
| | (xv)    | potential infringement by us of third parties
      proprietary rights;                                                                                                                                                                                             
| |         |                                                                                                                                                                                                                                                                      
| | (xvi)   | defects in our products;                                                                                                                                                                                                                                             
| |         |                                                                                                                                                                                                                                                                      
| | (xvii)  | litigation exposure related to refund anticipation
      loans;                                                                                                                                                                                                      
| |         |                                                                                                                                                                                                                                                                      
| | (xviii) | our compliance with privacy laws;                                                                                                                                                                                                                                    
| |         |                                                                                                                                                                                                                                                                      
| | (xix)   | our ability to obtain adequate remedies in the event that
      our intellectual property rights are violated; and                                                                                                                                                   
| |         |                                                                                                                                                                                                                                                                      
| | (xx)    | our ability to develop and market on a timely and
      cost-effective basis new products that meet changing market
    conditions.                                                                                                                                  

Although we believe that expectations reflected in these
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance, achievements or other future events. Moreover,
neither we nor anyone else assumes responsibility for the accuracy and
completeness of these forward-looking statements. We are under no duty to update
any of these forward-looking statements after the date of this report. You
should not place undue reliance on these forward-looking statements.

---

PART 1  FINANCIAL INFORMATION

Item 1. Financial Statements

|CARBIZ INC.                          
|-------------------------------------
|Condensed Consolidated Balance Sheets
|(expressed in
      U.S. dollars)    

|                                                                               |   | As at          |   |   | As at            |  
|------------------------------------------------------------------------------ | - | -------------- | - | - | ---------------- | -
|                                                                               |   | April 30, 2007 |   |   | January 31, 2007 |  
|                                                                               |   | (unaudited)    |   |   |                  |  
|ASSETS                                                                         |   |                |   |   |                  |  
|CURRENT                                                                        |   |                |   |   |                  |  
|Cash and cash
      equivalents                                                | $ | 343,509        |   | $ | 67,990           |  
|Accounts receivable                                                            |   | 51,519         |   |   | 48,482           |  
|Current portion of
      notes receivable                                      |   | 335,578        |   |   | 274,151          |  
|Inventory                                                                      |   | 128,206        |   |   | 67,785           |  
|Prepaids and other
      assets                                                |   | 127,482        |   |   | 171,350          |  
|Deferred costs                                                                 |   | 10,809         |   |   | 13,309           |  
|                                                                               |   | 997,103        |   |   | 643,067          |  
|NOTES RECEIVABLE                                                               |   | 87,202         |   |   | 44,887           |  
|DEFERRED FINANCING COSTS                                                       |   | 774,999        |   |   | -                |  
|DEFERRED COSTS                                                                 |   | 2,036          |   |   | 3,706            |  
|PROPERTY AND EQUIPMENT                                                         |   | 60,976         |   |   | 76,054           |  
|                                                                               | $ | 1,922,316      |   | $ | 767,714          |  
|                                                                               |   |                |   |   |                  |  
|LIABILITIES                                                                    |   |                |   |   |                  |  
|CURRENT                                                                        |   |                |   |   |                  |  
|Accounts payable and accrued
      liabilities                                 | $ | 548,793        |   | $ | 1,232,610        |  
|Loan payable                                                                   |   |                |   |   |                  |  
|Related party                                                                  |   | 230,000        |   |   | 230,000          |  
|Other                                                                          |   | 249,000        |   |   | -                |  
|Current portion of capital leases                                              |   | 7,841          |   |   | 7,662            |  
|Current portion of
      long-term debt                                        |   | -              |   |   | 180,139          |  
|Convertible debenture                                                          |   | 71,077         |   |   | -                |  
|Derivative liability                                                           |   | 4,348,791      |   |   | 3,415,679        |  
|Deferred revenue                                                               |   | 133,973        |   |   | 121,239          |  
|                                                                               |   | 5,589,475      |   |   | 5,187,329        |  
|DEFERRED REVENUE                                                               |   | 13,575         |   |   | 49,805           |  
|CAPITAL LEASES                                                                 |   | 8,695          |   |   | 10,724           |  
|LONG-TERM DEBT                                                                 |   | -              |   |   | 35,851           |  
|                                                                               |   | 5,611,745      |   |   | 5,283,709        |  
|MINORITY INTEREST                                                              |   | 212,264        |   |   | 206,170          |  
|STOCKHOLDERS' DEFICIENCY                                                       |   |                |   |   |                  |  
|COMMON SHARES                                                                  |   | 16,274,119     |   |   | 16,274,119       |  
|Unlimited shares
      authorized, 64,224,404 and 64,224,404 common shares     |   |                |   |   |                  |  
|issued and outstanding as at April 30
      and January 31, 2007, respectively |   |                |   |   |                  |  
|ADDITIONAL PAID-IN CAPITAL                                                     |   | 6,282,697      |   |   | 6,222,397        |  
|OTHER COMPREHENSIVE LOSS                                                       |   | (385,197       | ) |   | (385,197         | )
|ACCUMULATED DEFICIT                                                            |   | (26,073,312    | ) |   | (26,833,484      | )
|                                                                               |   | (3,901,693     | ) |   | (4,722,165       | )
|                                                                               | $ | 1,922,316      |   | $ | 767,714          |  

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

1

---

|CARBIZ INC.                                    
|-----------------------------------------------
|Condensed Consolidated Statements of Operations
|(Unaudited)                                    
|(expressed in
      U.S. dollars)              

|                                                      |   | For the three months ended |  
|----------------------------------------------------- | - | -------------------------- | -
|                                                      |   | April
      30             |  
|                                                      |   | 2007                       |  
|SALES                                                 |   |                            |  
|Software and Consulting
      Services                | $ | 609,980                    |  
|Used Car Sales and Financing                          |   | 270,606                    |  
|                                                      |   | 880,586                    |  
|COST OF SALES                                         |   |                            |  
|Software and Consulting
      Services                |   | 218,151                    |  
|Used Car Sales and Financing                          |   | 197,802                    |  
|                                                      |   | 415,954                    |  
|GROSS PROFIT                                          |   | 464,632                    |  
|GAIN ON DEBT FORGIVENESS                              |   | 391,337                    |  
|OPERATING EXPENSES                                    |   |                            |  
|Personnel Expenses                                    |   | 241,918                    |  
|Selling Expenses                                      |   | 72,360                     |  
|Other Operating Expenses                              |   | 364,537                    |  
|                                                      |   | 678,815                    |  
|OPERATING INCOME (LOSS)                               |   | 177,154                    |  
|                                                      |   |                            |  
|INTEREST AND OTHER EXPENSES                           |   | (89,508                    | )
|GAIN (LOSS) ON DERIVATIVE INSTRUMENTS                 |   | 678,621                    |  
|MINORITY INTEREST                                     |   | (6,094                     | )
|                                                      |   |                            |  
|NET INCOME (LOSS) FROM CONTINUING OPERATIONS          |   | 760,173                    |  
|NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS        |   |                            |  
|                                                      |   |                            |  
|NET INCOME (LOSS)                                     | $ | 760,173                    |  
|NET INCOME (LOSS) PER SHARE FROM                      |   |                            |  
|CONTINUING OPERATIONS (basic and diluted)             | $ | 0.01                       |  
|NET INCOME (LOSS) PER SHARE FROM                      |   |                            |  
|DISCONTINUED OPERATIONS                               | $ | -                          |  
|                                                      |   |                            |  
|NET INCOME (LOSS)
      PER SHARE (basic and diluted) | $ | 0.01                       |  
|                                                      |   |                            |  
|WEIGHTED AVERAGE NUMBER OF COMMON                     |   |                            |  
|SHARES OUTSTANDING                                    |   | 60,824,404                 |  

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

2

---

|CARBIZ INC.                                    
|-----------------------------------------------
|Condensed Consolidated Statements of Cash Flows
|(unaudited)                                    
|(expressed in
      U.S. dollars)              

|                                                                           |   | For the Three Months Ended |  
|-------------------------------------------------------------------------- | - | -------------------------- | -
|                                                                           |   | April 30, 2007             |  
|NET INFLOW (OUTFLOW) OF CASH RELATED                                       |   |                            |  
|TO THE FOLLOWING ACTIVITIES                                                |   |                            |  
|OPERATING                                                                  |   |                            |  
|Net income (loss)                                                          | $ | 760,173                    |  
|Items not affecting cash                                                   |   |                            |  
|Depreciation
      of property and equipment                               |   | 26,550                     |  
|Minority interest                                                          |   | 6,094                      |  
|Loss
      on disposal of assets                                           |   | -                          |  
|Gain on derivative
      financial instruments                             |   | (678,621                   | )
|Gain
      on debt forgiveness                                             |   | (391,337                   | )
|Amortization
      of deferred finaning costs                              |   | 35,368                     |  
|Amortization
      of debt discount                                        |   | 41,748                     |  
|Stock compensation                                                         |   | 60,300                     |  
|Provision
      for bad debts                                              |   | (24,352                    | )
|                                                                           |   | (164,077                   | )
|Net changes in non-cash
      operating assets and liabilities             |   |                            |  
|Accounts receivable                                                        |   | (3,066                     | )
|Notes
      Receivable                                                     |   | (79,359                    | )
|Prepaids and
      other assets                                            |   | 22,398                     |  
|Inventory                                                                  |   | (60,421                    | )
|Deferred costs                                                             |   | 4,170                      |  
|Accounts
      payable and accrued liabilities                             |   | (396,013                   | )
|Deferred revenue                                                           |   | (23,497                    | )
|NET CASH FLOWS FROM OPERATING
      ACTIVITIES                             |   | (699,865                   | )
|INVESTING                                                                  |   |                            |  
|Acquisition of property and equipment                                      |   | (11,472                    | )
|NET CASH FLOW FROM INVESTING ACTIVITIES                                    |   | (11,472                    | )
|FINANCING                                                                  |   |                            |  
|Repayment of capital leases                                                |   | (1,849                     | )
|Proceeds from line of credit                                               |   | 249,000                    |  
|Repayment long-term debt                                                   |   | (215,990                   | )
|Proceeds from Trafalgar debenture, including
        derivative components |   | 1,480,719                  |  
|Payment of deferred financing costs                                        |   | (416,087                   | )
|Issuance of convertible debenture                                          |   | -                          |  
|Issuance of share capital                                                  |   | -                          |  
|Issuance
      of new warrant liability                                    |   | -                          |  
|NET
      CASH FLOWS FROM FINANCING ACTIVITIES                             |   | 1,095,793                  |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    |   |                            |  
|AND
      CASH EQUIVALENTS                                                 |   | (108,937                   | )
|INCREASE (DECREASE) IN CASH AND                                            |   |                            |  
|CASH EQUIVALENTS                                                           |   | 275,519                    |  
|CASH AND CASH EQUIVALENTS,                                                 |   |                            |  
|BEGINNING
      OF PERIOD                                                  |   | 67,990                     |  
|CASH AND CASH EQUIVALENTS,                                                 |   |                            |  
|END
      OF PERIOD                                                        | $ | 343,509                    |  

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

3

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|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2007 and 2006                                 
|(unaudited)                                             

|1. | ORGANIZATION AND BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Carbiz Inc. (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. As of October 3, 2006, the Companys common shares are quoted
      on the United States Over the Counter Bulletin Board. Prior to such date,
      the Companys common shares were traded on the TSX Venture Exchange
      (TXSV), formerly the Canadian Venture Exchange (CDNX).                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In the opinion of management, all adjustments, consisting
      of normal recurring adjustments, have been made in the April 30, 2007 and
      2006 financial statements, which are necessary for a fair financial
      statement presentation. The results for the three months ended April 30,
      2007 and 2006 are not necessarily indicative of financial operations for
      the full year. These financial statements are combined and condensed. For
      further information, refer to the financial statements and footnotes in
      the Companys audited financial statements for the year ended January 31,
      2007 which are included in the Companys Form 10KSB filed with the U.S.
      Securities and Exchange Commission (the SEC) on April 20, 2007 (January
      31, 2007 Form 10KSB).                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | References to the Company typically include the Companys
      consolidated subsidiaries and joint venture. 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 a
      joint venture, Carbiz Auto Credit JV1, LLC (JV1). Collectively, Carbiz
      Inc., Carbiz USA Inc., CAC , and JV1 are referred to herein as Carbiz or
      the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | All dollar figures presented in this report are
      denominated in U.S. dollars unless otherwise indicated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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 previously supplied a
      seasonal lead generation product that facilitates tax-refund loans which
      are primarily used for down payments on car loans. The assets associated
      with this business segment, however, were sold on May 16, 2006. During the
      three months ended April 30, 2007, the Company operated two CAC
      dealerships and a third location under its JV1 joint venture, all of which
      sell and finance used automobiles.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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 losses in the current year
      (exclusive of gains on derivative instruments and debt forgiveness) and in
      each of the past several years. In addition, the Company has a working
      capital deficiency (excluding derivative liability) of $(243,581) as at
      April 30, 2007. This deficiency grows to $(4,592,372) when you include the
      derivative liability of $4,438,791. The Companys continued existence is
      dependent upon its ability to achieve profitable operations and to obtain
      additional financing. The Company expects to expand operations in its
      existing CAC dealerships and open new dealerships with the proceeds which
      are available under its new line of credit (see Note 5). The Company
      believes that the new CAC dealerships, combined with its existing software
      and consulting businesses will improve its operating cash flows going
      forward. However, there can be no assurance that the Company will achieve
      profitable operations or 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

4

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|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2007 and 2006                                 
|(unaudited)                                             

|2. | SUMMARY OF ACCOUNTING POLICIES                                                                                                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                
|   | 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.                                                                           
|   |                                                                                                                                                                                                                                                                                
|   | Deferred finance costs                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                
|   | Deferred financing costs related to the convertible
      debentures and line of credit discussed in Notes 4 and 5 are amortized
      over the respective terms of the debt to which the costs related. Future
      amortization of these costs is expected to be as
follows:

Years ending April 302008
      
      $
      350,1912009
      
      
      302,4642010
      
      
      63,8282011
      
      
      58,5162012
      
      
      -$
      774,999


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 loss per share.

The weighted average number of common
  shares outstanding (basic) for the three months ended April 30, 2007 does not
  include 3,400,000 non-vested restricted shares issued for the 2007 Incentive
  Stock Plan, 30,000,000 shares pledged in support of the Trafalgar Debentures
  (as defined in Note 4 herein), 8,438,041 common share options outstanding, or
  the warrants outstanding which are summarized in Note 6 herein. Diluted net
  income per share for the period, including these securities, was no different
  than the basic net income per share.

Stock-based compensation

Effective, February 1, 2006, the
Company adopted Statement of Financial Accounting Standards (SFAS), No.
123(R), Share-Based Payment, (SFAS 123R). This statement is a revision of
SFAS 123 and supersedes Accounting Principle Board Opinion No. 25, Accounting
for Stock Issued to Employees, (APB Opinion 25). SFAS 123R requires all stock
options to be recognized in the financial statements based on their fair values.
The Company adopted SFAS 123R using the modified prospective method, which
requires application of the standard to all options granted, modified,
repurchased or cancelled on or after February 1, 2006, and to all options
granted that were unvested as of February 1, 2006.

No stock options were granted during
the three months ended April 30, 2007.

During the three months ended April 30,
2007, the Company recognized stock-based compensation expense of $28,000 as a
result of new options issued on January 19, 2007. See Note 12(e) to the January
31, 2007 Form 10-KSB.

In addition, on January 25, 2007, the
Company awarded 3,400,000 common shares as restricted stock to certain
directors, officers, and key employees of the Company. During the three months
ended April 30, 2007 the Company recognized stock-based compensation expense of
$32,300 as a result of this restricted stock transaction. See Note 11 to the
January 31, 2007 Form 10KSB.

5

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|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2007 and 2006                                 
|(unaudited)                                             

|2. | SUMMARY OF ACCOUNTING POLICIES
  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Total options outstanding and vested at April 30, 2007
      were 2,838,041 with a weighted average exercise price of $0.23 per share
      and a weighted average life of 2 years. In addition, non-vested options of
      5,600,000 were outstanding at April 30, 2007 with an exercise price of
      $0.13 per share and life of 4.7 years. The Company expects to record a
      total of $436,800 of compensation expense during periods subsequent to
      April 30, 2007 for non-vested options as of that date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Derivative Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | We review the terms of our convertible debt and equity
      instruments to determine whether there are embedded derivative
      instruments, including the embedded conversion option, that are required
      to be bifurcated and accounted for separately as a derivative financial
      instrument. In circumstances where the convertible instrument contains
      more than one embedded derivative instrument, including the conversion
      option, that is required to be bifurcated, the bifurcated derivative
      instruments are accounted for as a single, compound derivative instrument.
      Also, in connection with the sale of convertible debt and equity
      instruments, we may issue freestanding options or warrants that may,
      depending on their terms, be accounted for as derivative instrument
      liabilities, rather than as equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | For derivative financial instruments that are accounted
      for as liabilities, the derivative instrument is initially recorded at its
      fair value and is then re-valued at each reporting date, with changes in
      the fair value reported as charges or credits to operations. We estimate
      fair values of derivative financial instruments using various techniques
      (and combinations thereof) that are considered to be consistent with the
      objective of measuring fair value. In selecting the appropriate technique,
      we consider, among other factors, the nature of the instrument, the market
      risks that it embodies and the expected means of settlement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | For less complex derivative instruments, such as
      freestanding warrants, we generally use the Black-Scholes- Merton option
      valuation model because it embodies all of the requisite assumptions
      (including trading volatility, estimated terms and risk free rates)
      necessary to fair value these instruments. For complex derivative
      instruments, such as embedded conversion options, we generally use the
      Flexible Monte Carlo valuation technique because it embodies all of the
      requisite assumptions (including credit risk, interest-rate risk and
      exercise/conversion behaviors) that are necessary to fair value these more
      complex instruments. Estimating fair values of derivative financial
      instruments requires the development of significant and subjective
      estimates that may, and are likely to, change over the duration of the
      instrument with related changes in internal factors and external market
      indicators. In addition, option based techniques are highly volatile and
      sensitive to changes in our trading market price which has a
      high-historical volatility. Since derivative financial instruments are
      initially and subsequently carried at fair values, our income reflects the
      volatility in these estimate and assumption
changes.

|3. | CONVERTIBLE DEBENTURES  2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On September 1, 2006 the Companys SB-2 registration
      statement was declared effective by the U.S. Securities and Exchange
      Commission (SEC). Effective October 3, 2006, the approximately
      US$1,406,529 of debenture financing which closed on April 6, 2006
      (described in Note 9(a) of the January 31, 2007 Form 10KSB) and
      accumulated interest of $76,805 were converted into 13,842,027 common
      shares, 14,472,753 Class A Common Share Purchase Warrants and 7,236,355
      Class B Common Share Purchase Warrants (the Conversion).                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The 14,472,753 Class A Common Share Purchase Warrants
      related to 13,124,494 debenture principal, 717,533 debenture interest, and
      630,723 penalty interest warrants. The 7,236,372 Class B Common Share
      Purchase Warrants related to 6,562,247 debenture principal, 358,766
      debenture interest, and 315,342 penalty interest warrants. Each class A
      common share purchase warrant and each class B common share purchase
      warrant is exercisable for one common share expiring from October 6, 2009
      through April 6, 2011, quantities summarized in Note 6(e) herein, and an
      exercise price of CDN$0.12.

6

---

|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2007 and 2006                                 
|(unaudited)                                             

|4. | CONVERTIBLE DEBENTURES - TRAFALGAR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | On February 28, 2007 the Company sold $2,500,000 Secured
      Convertible Debentures to Trafalgar Capital Specialized Investment Fund,
      Luxembourg (Trafalgar) and (Trafalgar Debentures). Of this amount,
      $1,000,000 was released upon execution (March 2, 2007), $750,000 was
      released after the Company filed a Registration Statement on Form SB-2
      (April 17, 2007) and the $750,000 balance will be released no later than
      June 30, 2007. The Trafalgar Debentures bear an interest rate of 12%
      compounded monthly from the date of issuance until the Company filed the
      Registration Statement (April 17, 2007), 10% compounded monthly from the
      date the registration was filed until it becomes effective, and 8% per
      annum thereafter until the Trafalgar Debentures are paid in
full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Trafalgar Debentures are convertible at Trafalgars
      option into common shares of the Company at a price per share equal to the
      lesser of (i) US$0.22 or (ii) 85% of the lowest daily closing bid price of
      the Companys common shares, as quoted by Bloomberg, L.P. for the five
      trading days immediately preceding the date of conversion. The Trafalgar
      Debentures are secured by a pledge of 30,000,000 common shares of the
      Company. These shares are held in escrow, not considered issued and
      outstanding and, therefore, they are not considered in earnings per share
      calculation. See Note 2 herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | As mentioned above, the filing of the Companys
      Registration Statement resulted in the release of the second tranche of
      funding ($750,000 on April 17, 2007), provided, further, that failure by
      the Company to have it declared effective could result in the Company
      having to pay liquidated damages to Trafalgar.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In addition, the Company issued to Trafalgar warrants to
      purchase up to an aggregate of 2,500,000 common shares of the Company at a
      strike price of US$0.15 per share, exercisable over the next 5
    years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | When we evaluated the Trafalgar Debentures and warrants,
      we concluded that equity classification was not appropriate under EITF
      00-19. Accordingly we allocated proceeds from the debentures to the
      detachable warrants, the compound derivative embedded in the convertible
      debenture, and the convertible debenture itself in the amounts of
      $562,500, $1,259,228, and $29,329 respectively, based upon the fair values
      of these financial instruments. The compound derivatives arising from
      bifurcation comprises (i) the embedded conversion option, (ii) mandatory
      redemption feature, (iii) equity-interest payments, and (iv) cash payable
      puts. Because the aggregate fair values of these derivative instrument
      liabilities exceeded the gross proceeds, we recognized a day-one
      derivative loss amounting to $101,058. At April 30, 2007 the Company had
      incurred: (a) $290,114 of deferred financing costs and amortized $13,187
      to interest expense on a straight line basis; (b) $49,166 of prepaid
      interest was deducted by Trafalgar and $22,181 amortized to interest
      expense; (c) $41,639 of debt discount was amortized to interest expense
      leaving a debenture balance of $71,077; (d) the warrants were revalued at
      fair value of $264,750 (see Note 6 herein) with a resulting gain on
      derivative instrument of $297,750; and (e) the compound derivative
      revalued at fair value of $1,440,638 (see Note 6 herein) with a resulting
      loss on derivative instrument of $181,410.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The convertible debentures are payable interest only
      through January 2008 and thereafter in monthly installments through
      February 2009, at which time the then remaining $700,000 balance is due.
      Annual principal maturities are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Year ending April 302008
      
      $
      212,6502009
      
      
      1,537,3501,750,000Less unamortized discount
      
      
      (1,678,923
      )$
      71,077


7

---

|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2007 and 2006                                 
|(unaudited)                                             

|5. | LINE OF CREDIT FINANCING                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | On March 23, 2007, Carbiz USA, Inc., Carbiz Auto Credit,
      Inc. and Carbiz Auto Credit JV1, LLC, as borrowers and Carbiz, Inc., as
      guarantor, entered into a Loan and Security Agreement (the Loan
      Agreement) with Colossus Capital Fund, L.P (the Credit Facility). The
      Credit Facility has a maximum commitment of $10 million, and expires on
      March 23, 2011. The initial amount of the Credit Facility is $5 million.
      The amount may be increased to $10 million at the option of the Company.
      The Credit Facility is secured by a first priority interest in all the
      existing and after acquired tangible and intangible assets of the Company.
      The Credit Facility may be used to finance the Companys working capital
      needs.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Advances under the Credit Facility are limited to the
      lesser of (A) the total amount of the Credit Facility or (B) the lesser of
      (i) 58% of the outstanding balance of all Eligible Receivables (as defined
      in the Loan Agreement), or (ii) 100% of the Companys cost basis in the
      Eligible Receivables. All borrowings accrue interest at 15% per annum and
      upon the occurrence and during the continuance of an event of default, the
      interest rate will be increased by 6% per annum.                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Under the Loan Agreement, the Company was
  required:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | (i)   | to pay a facility commitment fee of $75,000;                                                                                                                                                                                    
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                 
| | (ii)  | to pay a second facility commitment fee of $75,000 if the
      Company elects to increase the amount of the credit facility to
      $10,000,000;                                                                              
| |       |                                                                                                                                                                                                                                 
| | (iii) | to pay an asset management fee of $5,000 per quarter,
      which will increase to $10,000 per quarter upon increase of the amount of
      the Credit Facility to $10 million;                                                 
| |       |                                                                                                                                                                                                                                 
| | (iv)  | to pay an unused facility fee of 0.50%, payable month in
      arrears, on the difference between (A) the total amount of the Credit
      Facility and (B) the actual average daily amount outstanding for the
      month; and
| |       |                                                                                                                                                                                                                                 
| | (v)   | to pay a termination fee if the Credit Facility is fully
      repaid and terminated prior to the maturity date. Such termination fee may
      range from 4.0% to 1.0% of the total amount of the Credit
  Facility.           

|   | In addition, the Credit Facility contains customary
      financial covenants and provides for customary events of default. At April
      30, 2007 the Company had total outstanding borrowings under the Credit
      Facility of $249,000.                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | At April 30, 2007 interest expense was $3,538 and the
      Company had incurred approximately $380,000 of deferred financing costs
      which will be amortized on a straight line basis over the sixty month life
      of the line of credit.                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6. | DERIVATIVE LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Evaluation of criteria under EITF Issue No. 00-19,
      Accounting for Derivative Financial Instruments Indexed to, and
      Potentially Settled in, a Companys Own Stock, resulted in the
      determination that the Companys outstanding warrants issued upon
      conversion of the 2004 Debentures (See Note 3 herein) should be classified
      as a derivative liability. In accordance with EITF 00-19, warrants which
      are determined to be classified as derivative liabilities are marked to
      market each reporting period, with a corresponding non-cash gain or loss
      reflected in the current period.    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As described in Note 9(a) and (e) of the January 31, 2007
      Form 10KSB, the Company had engaged an agent for the 2004 Convertible
      Debenture financing. Accordingly, the Company also issued as of October 3,
      2006 438,100 common share purchase warrants, with each warrant exercisable
      for one common share until October 3, 2011 at an exercise price of
      CDN$0.23, and 438,100 common share purchase warrants, with each warrant
      exercisable for one common share until October 3, 2011 at an exercise
      price of CDN$0.22. These 438,100 warrants were determined to be derivative
      liabilities.

8

---

|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2007 and 2006                                 
|(unaudited)                                             

|6. | DERIVATIVE LIABILITIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | (c)        Private
      Placement Warrants - 2006                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | As a result of an unregisted sale of equity securities in
      September, 2006 the Company issued 2,400,000 of share purchase warrants
      for two years at an exercise price of $0.15. Concurrently, related party
      debt held by two directors of the Company was converted to common shares
      and the Company issued 1,565,464 share purchase warrants under the same
      terms. These 3,965,464 warrants were determined to be derivative
      liabilities.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | (d)       
      Trafalgar Debenture Warrants and Embedded Compound Derivative  2007                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | As described in Note 4 herein, the Company issued
      2,500,000 share purchase warrants for five years and an embedded compound
      derivative in conjunction with the Trafalgar Debenture financing and these
      instruments were determined to be derivative liabilities.                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | (e)        Total
      Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | As of April 30, 2007 the Company had derivative liability
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                                            |  | Warrants   |  |   | Amount    | 
| | ---------------------------------------------------------- |  | ---------- |  | - | --------- | 
| | 2004 Conversion Warrants expiring October
      6, 2009    |  | 10,339,567 |  | $ | 1,018,317 | 
| | 2004 Conversion Warrants expiring October 10, 2010         |  | 11,055,264 |  |   | 1,187,786 | 
| | 2004 Conversion Warrants expiring April 6,
      2011      |  | 314,276    |  |   | 33,768    | 
| | 2006 Private Placement Warrants expiring September 5, 2008 |  | 3,965,464  |  |   | 317,237   | 
| | 2004 Agent Warrants expiring October 6,
      2011         |  | 876,200    |  |   | 86,295    | 
| | 2007 Trafalgar Warrants expiring February 28, 2012         |  | 2,500,000  |  |   | 264,750   | 
| | 2007 Trafalgar Embedded Derivative                         |  | -          |  |   | 1,440,638 | 
| |                                                            |  |            |  |   |           | 
| |                                                            |  | 29,050,771 |  | $ | 4,348,791 | 

|   | This derivative liability is adjusted quarterly based on
      a value model discussed in Note 2 herein and any changes in fair value are
      recorded as gain or loss on derivative financial instruments in the
      consolidated statements of operations.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                 
|7. | CASH FLOW INFORMATION                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                 
|   | (a)       
      Supplemental Information                                                                                                                                                                                                                       

| |                                          |   | Three months ended | 
| | ---------------------------------------- | - | ------------------ | 
| |                                          |   | April 30, 2007     | 
| | Cash paid during the period for Interest | $ | 30,687             | 

(b)        Supplemental
non-cash information

During the three months ended April 30,
2006, the Company extended certain convertible debentures which were treated as
an extinguishment and re-issuance of debt in the amount of $1,396,305 and as
such have not been included in the statements of cash flows. See Note 9(a) to
the January 31, 2007 Form 10KSB. During the three months ended April 30, 2007,
the Company issued $1,750,000 of Convertible Debentures in which $269,281 of
proceeds were allocated to and capitalized as deferred financing costs.

9

---

|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2007 and 2006                                 
|(unaudited)                                             

|8. | 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 JV1 Agreement). The purpose of this joint venture is to add five
      additional CAC centers in the state of Florida over five years. Under the
      JV1 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 director/joint venture partner contributed $500,000
      for the remaining 50% share. In April 2005, JV1 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
      Interpretation No. 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. Because the
      joint venture is operated as a CAC location and is fully integrated under
      the daily control and management of the Company, the Company is, under
      this guidance, the primary beneficiary. Accordingly operational revenue
      and expenses, and all assets and liabilities are fully consolidated. The
      50% share of the joint venture not owned by the Company is presented on
      the Minority Interest line item on the Consolidated Balance Sheets. A
      Summary of 100% of the joint venture revenues and expenses and assets are
      listed below:

April 30, 2007
    
    
    April 30, 2006Sales
    $
    134,507
    
    $
    62,947Cost of sales
    
    95,468
    
    
    48,465Gross Profit
    
    39,039
    
    
    14,482Operating Expenses (1)
    
    26,572
    
    
    34,598Operating Income (Loss)
    $
    12,467
    
    $
    (20,116
    )Depreciation
    
    (278
    )
    
    (278
    )Net Income (Loss)
    $
    12,189
    
    $
    (20,394
    )Total Assets
    $
    443,934
    
    $
    481,234


(1) Excluding depreciation and
amortization.

|   | During the fourth quarter of the fiscal year ended
      January 31, 2007 the Company borrowed $230,000 on a short term, informal,
      non-interest bearing basis from a company owned by a significant
      stockholder. The balance at April 30, 2007 was $230,000 and is included in
      current liabilities. This advance is expected to be repaid during 2007
      from the proceeds of subsequent financings.                                                                                                                                                                                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|9. | SEGMENT INFORMATION FOR CONTINUING
    OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company operates and manages its business in three
      segments, which are its used car sales and financing segment (Carbiz Auto
      Credit or CAC), its used car sales and financing joint venture (JV1),
      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. In addition almost
      all of the Companys assets are located in the U.S. A fourth business
      segment, TaxMax, a tax preparation service, was sold on May 16, 2006. The
      Company has eliminated TaxMax from the segment information. See Note 10
      herein.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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 80 weeks in length. CAC operates a third car lot located in the
      State of Florida under a joint venture, Carbiz Auto Credit JV1,
  LLC.                                                                                                                                                                                                                                                                                                                                           

10

---

|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2007 and 2006                                 
|(unaudited)                                             

|9. | SEGMENT INFORMATION FOR CONTINUING OPERATIONS
      (continued)                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                        
|   | 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.

| | Three months ended
      April 30 |   | 2007        |  
| | --------------------------------- | - | ----------- | -
| |                                   |   | Carbiz Auto |  
| |                                   |   | Credit      |  
| | Sales                             | $ | 136,099     |  
| | Cost of Sales                     |   | 102,334     |  
| | Gross Profit                      |   | 33,765      |  
| | Operating Expenses
      (1)      |   | 41,878      |  
| | Income (Loss) From Segments       | $ | (8,113      | )
| | Depreciation & Amortization       |   |             |  
| | Gain on Debt Forgiveness          |   |             |  
| | Total Operating Income (Loss)     |   |             |  
| | Total Assets                      | $ | (546,686    | )

| | Three months ended
      April 30 |   | 2006        |  
| | --------------------------------- | - | ----------- | -
| |                                   |   | Carbiz Auto |  
| |                                   |   | Credit      |  
| | Sales                             | $ | 137,219     |  
| | Cost of Sales                     |   | 163,552     |  
| | Gross Profit                      |   | (26,333     | )
| | Operating Expenses
      (1)      |   | 32,738      |  
| | Income (Loss) From Segments       | $ | (59,071     | )
| | Depreciation & Amortization       |   |             |  
| | Total Operating Income (Loss)     |   |             |  
| | Total Assets                      | $ | (309,751    | )

(1) Excluding depreciation and
amortization

|10. | DISCONTINUED OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On May 16, 2006 the Company completed the sale of its
      TaxMax business to Tax Refund Services, Inc. located in Tampa, Florida.
      The proceeds of $442,000 received from the sale will be primarily used to
      expand CAC operations. The book value of the assets sold was $20,575,
      therefore, the Company realized a gain of $421,425 on the disposition. No
      reserves for disposition were deemed appropriate prior to the
  sale.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In accordance with SFAS No. 144, Accounting for the
      Impairment or Disposal of Long-Lived Assets (SFAS 144), the financial
      results of the TaxMax business have been presented as discontinued
      operations on the financial statements for all periods presented. The
      former segment had revenue of $248,082 and operating income of $145,192
      for the three months ended April 30, 2006.                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|11. | GAIN ON DEBT FORGIVENESS                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | During the three months ending April 30, 2007, the Company
        negotiated the settlement of a $466,337 trade payable which resulted in
        a gain on debt forgiveness of $391,337.                                                                                                                                                                                                                                                                 

11

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Item 2. Managements Discussion and Analysis or Plan of
Operation

Overview

This Managements Discussion and
Analysis (MD&A) should be read in conjunction with the Companys interim
condensed consolidated financial statements as of April 30, 2007 and the audited
consolidated January 31, 2007 statements and notes reported in US dollars and in
accordance with United States generally accepted accounting principles (GAAP).

Our revenue has been derived from two 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.
- Direct auto sales and related financing (Carbiz Auto Credit centers) through our self provided on-site 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 on-site to customers with poor credit.. We
opened our second credit center in St. Petersburg, Florida in November 2004, and
we opened our third credit center, a joint venture location, in Tampa, Florida
in May 2006. Further, on May 16, 2006, we sold our TaxMax business to Tax Refund
Services Inc. of Tampa, Florida. As a part of such asset sale, we agreed to
enter into a non-competition agreement and, therefore, we do not intend to
provide tax return processing services in the future.

Rather
than continuing to focus our resources only on our software and consulting
businesses, it is our intent to expand and further diversify our business
operations by opening additional credit centers in the future. Some of these
credit centers will be wholly-owned by us and others will be joint venture
arrangements, such as with Carbiz Auto Credit JV1, LLC.

In
terms of our existing software and consulting businesses, we believe that our
Independent Dealer Accounting (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 over 30 dealerships, with continuing interest on
the part of independent dealers. We believe that there is an industry-wide
movement towards the adoption of standardized accounting procedures and
financial reporting within the independent dealer population, which consists of
non-franchise automotive dealers, as a result of efforts 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 from NIADA, a designation that
indicates to the dealer community that IDA operates properly in producing
appropriate audit trails, transaction processing, and financial reporting as
defined by NIADA. Although NIADA approval is not required for a company to
market its products to independent automobile dealers, we believe that the NIADA
Approved Vendor designation will provide additional market acceptance of IDA
as a specific accounting solution for independent dealers throughout North
America.

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.

12

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We
derive our revenue through the licensing of software products and providing
related services, including installation, training and support and our Carbiz
Auto Credit Buy Here-Pay Here 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. 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

In
preparing our financial statements in accordance with generally accepted
accounting principles, our 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.

Stock-Based Compensation

Effective
February 1, 2006, we adopted Statement of Financial Accounting Standards
(SFAS), No. 123(R), Share-Based Payment, (SFAS 123R). This statement is a
revision of SFAS 123 and supersedes Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, (APB Opinion 25). SFAS 123R
requires all stock options to be recognized in the financial statements based on
their fair values. We adopted SFAS 123R using the modified prospective method,
which requires application of the standard to all options granted, modified,
repurchased or cancelled on or after February 1, 2006, and to all options
granted that were unvested as of February 1, 2006.

Derivative Liability

We
account for warrants and other embedded features issued in connection with
financing arrangements in accordance with Emerging Issues Task Force (EITF)
Issue No. 00-19, Accounting for Derivative Financial Instruments, Indexed to,
and Potentially Settled in, a Companys Own Stock (EITF 00-19). Pursuant to
EITF 00-19, an evaluation of specifically identified conditions is made to
determine whether the fair value of warrants issued is required to be classified
as a derivative liability. The fair value of such instruments classified as
derivative liabilities is adjusted for changes in fair value at each reporting
period, and the corresponding non-cash gain or loss is recorded in current
period earnings.

13

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Three Month Financial Information

The
following summary of selected financial information for the three months ended
April 30, 2007 and 2006 is derived from, and should be read in conjunction with,
and is qualified in its entirety by reference to, our interim financial
statements, including the notes thereto, for periods ended April 30, 2007 and
2006.

Three months ended April 30, 2007 compared to the three
months ended April 30, 2006

|                                                     |   |            |   |  | % of    |   |   |            |   |  | % of    |  
|---------------------------------------------------- | - | ---------- | - |  | ------- | - | - | ---------- | - |  | ------- | -
|                                                     |   | April 2007 |   |  | Revenue |   |   | April 2006 |   |  | Revenue |  
|Revenue                                              | $ | 880,586    |   |  | 100.0   |   | $ | 757,758    |   |  | 100.0   |  
|Cost of sales                                        | $ | 415,954    |   |  | 47.2    |   | $ | 437,225    |   |  | 57.7    |  
|Gross profit                                         | $ | 464,632    |   |  | 52.8    |   | $ | 320,533    |   |  | 42.3    |  
|Gain on debt forgiveness                             | $ | 391,337    |   |  | 44.4    |   | $ | -          |   |  |         |  
|Operating expenses                                   | $ | 678,815    |   |  | 77.1    |   | $ | 675,313    |   |  | 89.1    |  
|Operating income (loss)                              | $ | 177,154    |   |  | 20.1    |   | $ | (354,780   | ) |  | (46.8   | )
|Interest expense                                     | $ | (89,508    | ) |  | 10.2    |   | $ | (35,438    | ) |  | (4.7    | )
|Gain (loss) on derivative instruments                | $ | 678,621    |   |  | 77.1    |   | $ | -          |   |  |         |  
|Minority interest income (loss)                      | $ | (6,094     | ) |  | (0.7    | ) | $ | 10,197     |   |  | 1.3     |  
|Net income (loss) from continuing operations         | $ | 760,173    |   |  | 86.3    |   | $ | (380,021   | ) |  | (50.2   | )
|Net income (loss) from discontinued
      operations | $ |            |   |  | 0.0     |   | $ | 145,192    |   |  | 19.2    |  
|NET INCOME (LOSS)                                    | $ | 760,173    |   |  | 86.3    |   | $ | (234,829   | ) |  | (31.0   | )
|Income (loss) per common share (1)                   | $ | 0.01       |   |  |         |   | $ | (0.01      | ) |  |         |  
|Total assets                                         | $ | 1,922,316  |   |  |         |   | $ | 1,127,676  |   |  |         |  
|Long-term liabilities                                | $ | 22,270     |   |  |         |   | $ | 250,994    |   |  |         |  

(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 three months ended April 30, 2007, our revenues from continuing operations
increased by $122,828 compared to our three-month revenue during the previous
period ended April 30, 2006. This increase was due to an increase of $70,440 in
sales by our Carbiz Auto Credit operating unit and an increase of $52,388 in
sales by our software and consulting division during the three months ended
April 30, 2007 when compared to the same period ended April 30, 2006. Carbiz
Auto Credit generated sales of $270,606, including $136,099 from our
Company-owned locations and $134,507 from our joint venture location during the
three months ended April 30, 2007.

We
continued throughout the period to eliminate non-performing products, such as
several older pre-Windows software products including our GoldKey Buy Here-Pay
Here program and our TurboCAT F&I program. As of January 31, 2007, a
majority of users of those products have replaced the discontinued product with
our higher priced, higher margin products, which will result in a positive
impact on future revenues. The decision to stop support for a specific product
is made on the basis of the size of the remaining user population, the recurring
revenue generated by that product, and the cost and difficulty of maintaining a
technical support staff for the product.

Cost of Sales

Our
cost of sales expense decreased by $21,271 for the three months ended April 30,
2007, compared to the same period ended April 30, 2006. Carbiz Auto Credit
operations cost of sales decreased by $14,215, including a decrease in costs of
$61,218 from our Company-owned locations and an increase of $46,994 from our
joint venture location during the three months ended April 30, 2007, and all
other parts of the operation decreased cost of sales by $7,056 during the three
months ended April 30, 2007. The decrease in cost of sales in our Company-owned
locations even though sales increased was the result of a decrease in bad debt
expense compared to the same period ended April 30, 2006, while the increase in
cost of sales in our joint venture location was the direct result of additional
sales compared to the same period ended April 30, 2006. We anticipate that our
cost of sales expense will increase in direct proportion to increased auto sales
as we open additional Carbiz Auto Credit centers in the future.

Gain on debt forgiveness

During
  the three months ending April 30, 2007, the Company negotiated the settlement
  of a $466,337 trade payable which resulted in a gain on debt forgiveness of
  $391,337.

14

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Expenses

For
the three months ended April 30, 2007, our operating expenses increased by $622
compared to the same period ended April 30, 2006. The Carbiz Auto Credit
operating expenses increased by $836, including an increase of $9,140 from our
Company-owned locations and a decrease of $8,304 from our joint venture location
during the three months ended April 30, 2007, while operating expenses for other
segments decreased by $214 during the three months ended April 30, 2007. While
overall operating expenses increased due to SB-2 expense, personnel expense and
selling expense decreased by a total of $27,764 as a result of lower advertising
and sales commissions expense.

We
have not been investing significant amounts in fixed assets over the past two
years. This fact is reflected in the increase in depreciation and amortization
expenses by only $2,880 for the three months ended April 30, 2007 as compared to
the same period ended April 30, 2006.

Interest Expense

Our
interest expense increased by $54,071 for the three months ended April 30, 2007,
compared to the same period ended April 30, 2006, as a result of the closing of
the convertible debenture and the line of credit. We anticipate our interest
expense will increase over this and subsequent years related to the Trafalgar
Debentures and as we draw down on our credit facility with Colossus Capital
Fund, L.P.

Gain/Loss on Derivative Instruments

For
the three months ended April 30, 2007, we incurred a non-cash gain of $678,621
as a result of the fair value adjustment of outstanding derivative instruments.
See Note 2 herein. For the same period ended April 30, 2006, we did not incur
any similar non-cash expenses.

Software Sales, Support and Consulting

This
segment of our business consists of new sales and recurring monthly revenue for
software products and 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 three months ended April 30,
2007 increased by $52,388 over the prior period ended April 30, 2006.

Total
software sales during the three months ended April 30, 2007 increased from the
prior year by $31,957, with recurring monthly support revenue showing
improvement over the prior year by an increase of $4,383. Sales of new software
installations increased from the prior year by $27,573. 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 existing DOS users
continued to show an upward trend during the three months ended April 30, 2007.
This is due to the announcement that effective at the end of the 2006 calendar
year, we would no longer support one of our DOS-based programs. All users of
that program have now committed to the change to our current product, and some
of those installations were completed during the period. We believe 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.

Our
new sales of consulting services for the three months ended April 30, 2007
showed an increase from the prior period of $13,532, however, due to accounting
rules regarding revenue recognition, $6,844 of the new consulting revenue was
deferred from the prior year. Recurring monthly consulting revenue increased by
$7,100 from the prior period.

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 dealer who provides
  self-funded, on-site auto financing (Buy Here-Pay Here). The standard package
  includes unlimited manager training, unlimited 800 number

15

---

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 two or 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.

Carbiz Auto Credit

The
fastest growing segment of our business continues to be our Carbiz Auto Credit
specialty consumer finance business. We operate three 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.

We
believe that the results from our Palmetto and St. Petersburg corporate
locations and Tampa joint venture location for the year ended January 31, 2007
have indicated a strong consumer demand for the finance product in that market,
as well as reinforce the effectiveness of our system for operations, marketing,
underwriting and collections.

The
increase in sales activity during the three months ended April 30, 2007 was the
result of an increase in inventory levels at all three locations due to a
increase in cash available for the purchase of inventory after the closing and
funding of the Trafalgar Debenture and the Credit Facility.

As
of the year-ended January 31, 2007, the total Carbiz Auto Credit loan portfolio
was $472,780. The allowance for doubtful accounts at the same date was $49,794.
The allowance for doubtful accounts is established through the allocation of
100% of any repossessions in process plus 8% of the remaining portfolio balance.
All loans are made at an interest rate of 14.95% APR, with no loans made without
complete documentation and verification of employment and references. While our
underwriting procedures do not take credit score into account, a credit bureau
report is done on each customer. While the range of scores varies widely, the
average credit score of our customers is approximately 500.

Liquidity and Capital Resources

As
of January 31, 2007 and April 30, 2007, we had $67,990 and $343,509,
respectively, in cash and cash equivalents. During thethree months ended
April 30, 2007, we decreased our accounts payable and accrued liabilities by
$683,816, which totaled $548,793 at April 30, 2007. During the three months
ended April 30, 2007, we made debt repayments and capital lease payments
totaling $217,839, which includes $205,990 paid to retire long term debt. 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
February 28, 2007, we sold an aggregate of $2,500,000 secured convertible
debentures to an investor, of which we have received $1,750,000 of gross
proceeds as of the date of this report.

On
  March 23, 2007, we closed a credit facility with Colossus Capital Fund, L.P.
  that has a maximum commitment of $10 million and expires on March 23, 2011.
  The initial amount of the credit facility is $5 million, of which $249,000 was
  borrowed at April 30, 2007. The amount may be increased to $10 million at the
  option of Carbiz.

We used
proceeds from the borrowings primarily to finance our operating loss and expand
our Carbiz Auto Credit operations.

As
of April 30, 2007, payments due by us over the next five fiscal years for
operating and capital leases, and long-term debt are as follows:

16

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Less Than One
    
    
    One to Three
    
    
    Three to
    
    
    GreaterYear
    
    
    Years
    
    
    Five Years
    
    
    than Five
    
    
    TotalOperating Leases
    $
      194,492
    
    $
    263,058
    
    $
    -
    
    $
    -
    
    $
    457,550Capital Leases
    
      7,842
    
    
    8,695
    
    
    -
    
    
    -
    
    
    16,537Long-Term Debt
    
      212,650
    
    
    1,537,350
    
    
    -
    
    
    -
    
    
    1,750,000Interest (1)
    
      158,736
    
    
    131,753
    
    
    -
    
    
    -
    
    
    290,489$
      573,720
    
    $
    1,940,856
    
    $
    -
    
    $
    -
    
    $
    2,514,576


|(1) | Does not include our credit facility with Colossus
      Capital Fund, L.P. that has a maximum commitment of $10 million and
      expires on March 23, 2011. The initial amount of the credit facility is $5
      million. The amount may be increased to $10 million at the option of
      Carbiz. At April 30, 2007, we had total outstanding borrowings under the
      credit facility of $249,000.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Should
our operating revenues fail to increase to provide sufficient cash flow to fund
operations, we may require additional financing. Based on three month results
and an assumption of meeting business projections for the remainder of the
fiscal year, our current cash flow from operations and our cash on hand are
expected to be sufficient to fund our operations untilJanuary
2008. 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 April 30, 2007, we do not have any off-balance sheet arrangements.

Item 3. Controls and Procedures

Disclosure Controls

Under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934,
as amended (the Exchange Act)) as of the end of the period covered by this
report (the Evaluation Date). Based upon that evaluation, the Chief Executive
Officer and Chief Financial officer concluded that, as of the Evaluation Date,
our disclosure controls and procedures were operating effectively to ensure that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act, is recorded, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission, and accumulated and communicated to management, including the Chief
Executive Officer and Chief Financial officer, to allow timely decisions
regarding required disclosures.

Internal Control Over Financial Reporting

Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. No changes in our internal control over financial reporting occurred
during our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

Notwithstanding
the foregoing, because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that our disclosure
controls and procedures will detect or uncover every situation involving the
failure of persons within our company and our subsidiaries to disclose material
information otherwise required to be set forth in our periodic reports. Our
disclosure controls and procedures are designed to provide reasonable assurance
of achieving their objective of ensuring that information required to be
disclosed in the reports that we file or submit under the Exchange Act is
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

17

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PART II  OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds

None

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed (or incorporated by reference
herein) as part of this Form 10-QSB:

| | Exhibit |                                                                                  
| | ------- | ---------------------------------------------------------------------------------
| | Number  | Description                                                                      
| | 31.1    | Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a)        
| | 31.2    | Certification of Chief
      Financial Officer pursuant to Rule 13a-14(a)        
| | 32.1    | Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
| | 32.2    | Certification of Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350

18

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SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                   | CARBIZ INC.                  
|------------------ | -----------------------------
|                   |                              
|                   |                              
|                   |                              
|Date: June14, 2007 | /s/ Carl Ritter              
|                   | Carl Ritter                  
|                   | Chief Executive Officer      
|                   | (principal executive officer)

19

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