---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

_______________

FORM 10-Q_______________

(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, 2008

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
registrant as specified in its charter)

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

7115 16thStreet East, Suite 105
Sarasota, Florida 34243(Address of principal executive
offices)

(941) 952-9255(Registrant's telephone number,
including area code)

_______________

Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
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 registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):

|Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [ ]  | Smaller reporting company [ x ]
|--------------------------- | --------------------- | -------------------------- | -------------------------------
|                            |                       | (Do not check if a smaller |                                
|                            |                       | reporting company)         |                                

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

As of June 13, 2008, 68,488,549 common shares of the Registrant
were issued and outstanding.

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

---

|CARBIZ INC.                                  
|---------------------------------------------
|                                             
|FORM 10-Q                                    
|                                             
|For the Quarterly Period Ended April 30, 2008
|                                             
|INDEX                                        

|PART I        | Financial
      Information                                                                 |   
|------------- | ------------------------------------------------------------------------------------------- | --
|Item
      1. | Financial
      Statements                                                                  | 1 
|Item
      2. | Managements
      Discussion and Analysis of Financial Condition and Results of Operations | 15
|Item
      4. | Controls
      and Procedures                                                               | 20
|              |                                                                                             |   
|PART II       | Other Information                                                                           |   
|Item
      1. | Legal
      Proceedings                                                                     | 21
|Item
      2. | Unregistered
      Sales of Equity Securities and Use of Proceeds                           | 21
|Item
      3. | Defaults
      Upon Senior Securities                                                       | 21
|Item
      4. | Submission
      of Matters to a Vote of Security Holders                                   | 21
|Item
      5. | Other
      Information                                                                     | 21
|Item
      6. | Exhibits                                                                                    | 21

---

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)   | potential infringement by us of third parties
      proprietary rights;                                                                                                                                                                                             
| |         |                                                                                                                                                                                                                                                                      
| | (xv)    | defects in our products;                                                                                                                                                                                                                                             
| |         |                                                                                                                                                                                                                                                                      
| | (xvi)   | our compliance with privacy laws;                                                                                                                                                                                                                                    
| |         |                                                                                                                                                                                                                                                                      
| | (xvii)  | our ability to obtain adequate remedies in the event that
      our intellectual property rights are violated;                                                                                                                                                       
| |         |                                                                                                                                                                                                                                                                      
| | (xviii) | our ability to develop and market on a timely and
      cost-effective basis new products that meet changing market conditions,
      and                                                                                                                            
| |         |                                                                                                                                                                                                                                                                      
| | (xix)   | the risk factors identified in our most recent Annual
      Report on Form 10-KSB, including factors identified under the headings
      Description of Business, Risk Factors and Managements Discussion and
      Analysis or Plan of Operation.            

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, 2008 |   |   | January 31, 2008 |  
|                                                                           |   | (unaudited)    |   |   |                  |  
|ASSETS                                                                     |   |                |   |   |                  |  
|CURRENT                                                                    |   |                |   |   |                  |  
|Cash and cash
      equivalents                                            | $ | 145,860        |   | $ | 1,141,271        |  
|Accounts receivable                                                        |   | 54,777         |   |   | 84,916           |  
|Current portion of
      notes receivable                                  |   | 14,796,778     |   |   | 16,389,259       |  
|Inventory                                                                  |   | 3,545,520      |   |   | 2,554,836        |  
|Prepaids and other
      assets                                            |   | 427,090        |   |   | 465,500          |  
|Deferred costs                                                             |   | 2,036          |   |   | 3,707            |  
|                                                                           |   | 18,972,061     |   |   | 20,639,489       |  
|NOTES RECEIVABLE, NET LESS CURRENT PORTION                                 |   | 9,726,017      |   |   | 8,649,284        |  
|DEFERRED FINANCING COSTS                                                   |   | 1,176,559      |   |   | 1,362,593        |  
|PROPERTY AND EQUIPMENT                                                     |   | 864,763        |   |   | 767,995          |  
|GOODWILL                                                                   |   | 438,283        |   |   | 438,283          |  
|                                                                           | $ | 31,177,683     |   | $ | 31,857,644       |  
|                                                                           |   |                |   |   |                  |  
|LIABILITIES                                                                |   |                |   |   |                  |  
|CURRENT                                                                    |   |                |   |   |                  |  
|Accounts payable and accrued
      liabilities                             | $ | 3,701,103      |   | $ | 3,078,560        |  
|Loans Payable                                                              |   |                |   |   |                  |  
|Related Party                                                              |   | 200,000        |   |   | 200,000          |  
|Line of credit                                                             |   | 15,119,137     |   |   | 17,580,169       |  
|Inventory floor
      plan                                                 |   | 2,478,167      |   |   | 1,421,151        |  
|Current portion of
      capital leases                                    |   | 7,369          |   |   | 8,104            |  
|Current portion of convertible
      debenture                             |   | 1,060,857      |   |   | 435,597          |  
|Derivative liability                                                       |   | 6,743,005      |   |   | 8,844,036        |  
|Deferred revenue                                                           |   | 48,609         |   |   | 59,753           |  
|                                                                           |   | 29,358,247     |   |   | 31,627,370       |  
|                                                                           |   |                |   |   |                  |  
|CAPITAL LEASES, NET OF CURRENT PORTION                                     |   | 1,326          |   |   | 2,621            |  
|CONVERTIBLE DEBENTURE, LESS CURRENT PORTION                                |   | 100,075        |   |   | 312,405          |  
|Includes $35,166 and $25,093 respectively to Related Parties               |   |                |   |   |                  |  
|LONG-TERM DEBT,
      LESS CURRENT PORTION                                 |   | 19,007,422     |   |   | 17,423,298       |  
|                                                                           |   | 48,467,070     |   |   | 49,365,694       |  
|COMMITMENTS AND CONTINGENCIES (Note 13)                                    |   | -              |   |   | -                |  
|STOCKHOLDERS' DEFICIENCY                                                   |   |                |   |   |                  |  
|COMMON SHARES                                                              |   | 16,274,119     |   |   | 16,274,119       |  
|Unlimited shares authorized, 68,488,549 and 67,590,681 common
      shares |   |                |   |  
|issued and
      outstanding as at April 30, 2008 and January 31, 2008     |   |                |   |   |                  |  
|ADDITIONAL PAID-IN CAPITAL                                                 |   | 7,872,558      |   |   | 7,679,205        |  
|ACCUMULATED OTHER COMPREHENSIVE LOSS                                       |   | (385,197       | ) |   | (385,197         | )
|ACCUMULATED DEFICIT                                                        |   | (41,050,867    | ) |   | (41,076,177      | )
|                                                                           |   | (17,289,387    | ) |   | (17,508,050      | )
|                                                                           | $ | 31,177,683     |   | $ | 31,857,644       |  

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

1

---

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

|                                               |   | For the three months ended |  
|---------------------------------------------- | - | -------------------------- | -
|                                               |   | April 30                   |  
|                                               |   | 2008                       |  
|SALES                                          |   |                            |  
|Used Car Sales                                 | $ | 6,500,034                  |  
|Software and Consulting
      Services         |   | 575,317                    |  
|Interest Income                                |   | 1,847,921                  |  
|                                               |   | 8,923,272                  |  
|COST OF SALES                                  |   |                            |  
|Software and Consulting
      Services         |   | 380,332                    |  
|Used Car Sales                                 |   | 4,419,361                  |  
|                                               |   | 4,799,693                  |  
|GROSS PROFIT                                   |   | 4,123,579                  |  
|Gain on debt
      foregiveness                |   | -                          |  
|Personnel expenses                             |   | 639,325                    |  
|Selling expenses                               |   | 193,317                    |  
|Professional fees                              |   | 484,302                    |  
|Provision for credit
      losses              |   | 1,731,041                  |  
|Other operating expenses                       |   | 1,178,221                  |  
|                                               |   | 4,226,206                  |  
|OPERATING INCOME (LOSS)                        |   | (102,627                   | )
|                                               |   |                            |  
|INTEREST AND OTHER EXPENSES                    |   | (1,906,421                 | )
|GAIN ON DERIVATIVE INSTRUMENTS                 |   | 2,034,358                  |  
|MINORITY INTEREST                              |   | -                          |  
|NET INCOME FOR THE PERIOD                      |   | 25,310                     |  
|NET INCOME PER
      SHARE (basic and diluted) | $ | 0.00                       |  
|                                               |   |                            |  
|WEIGHTED AVERAGE NUMBER OF COMMON              |   |                            |  
|SHARES OUTSTANDING
      (Basic)               |   | 65,636,597                 |  
|WEIGHTED AVERAGE NUMBER OF COMMON              |   |                            |  
|SHARES OUTSTANDING
      (Diluted)             |   | 73,393,464                 |  

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

2

---

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

|                                                                         |   | For the Three Months Ended |  
|------------------------------------------------------------------------ | - | -------------------------- | -
|                                                                         |   | April 30, 2008             |  
|NET INFLOW (OUTFLOW) OF CASH RELATED                                     |   |                            |  
|TO THE FOLLOWING ACTIVITIES                                              |   |                            |  
|OPERATING                                                                |   |                            |  
|Net income                                                               | $ | 25,310                     |  
|Items not affecting
      cash                                           |   |                            |  
|Depreciation of property and equipment                                   |   | 46,912                     |  
|Minority interest                                                        |   | -                          |  
|Gain on
      derivative financial instruments                           |   | (2,034,358                 | )
|Gain on debt forgiveness                                                 |   | -                          |  
|Amortization of deferred financing costs                                 |   | 168,562                    |  
|Amortization of debt discount                                            |   | 428,216                    |  
|Stock
      compensation                                                 |   | 78,376                     |  
|Provision
      for bad debts                                            |   | 1,731,041                  |  
|                                                                         |   | 444,059                    |  
|Net changes in non-cash
      operating assets and liabilities           |   |                            |  
|Accounts
      receivable                                                |   | 33,266                     |  
|Notes Receivable                                                         |   | (1,218,419                 | )
|Prepaids
      and other assets                                          |   | 88,910                     |  
|Inventory                                                                |   | (990,684                   | )
|Deferred
      costs                                                     |   | 1,671                      |  
|Accounts payable and accrued liabilities                                 |   | 622,880                    |  
|Deferred revenue                                                         |   | (11,145                    | )
|NET CASH FLOWS FROM
      OPERATING ACTIVITIES                           |   | (1,029,462                 | )
|INVESTING                                                                |   |                            |  
|Acquisition of property and equipment                                    |   | (143,680                   | )
|NET CASH FLOW FROM INVESTING ACTIVITIES                                  |   | (143,680                   | )
|FINANCING                                                                |   |                            |  
|Repayment of capital leases                                              |   | (2,030                     | )
|Proceeds from line of
      credit                                       |   | 180,108                    |  
|Repayment long-term debt                                                 |   | -                          |  
|Proceeds from Trafalgar
      debenture, including derivative components |   | -                          |  
|Payment of deferred financing costs                                      |   | -                          |  
|NET CASH FLOWS FROM FINANCING
      ACTIVITIES                           |   | 178,078                    |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                  |   |                            |  
|AND CASH EQUIVALENTS                                                     |   | (347                       | )
|INCREASE (DECREASE) IN CASH AND                                          |   |                            |  
|CASH EQUIVALENTS                                                         |   | (995,411                   | )
|CASH AND CASH EQUIVALENTS,                                               |   |                            |  
|BEGINNING OF PERIOD                                                      |   | 1,141,271                  |  
|CASH AND CASH EQUIVALENTS,                                               |   |                            |  
|END OF PERIOD                                                            | $ | 145,860                    |  

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

3

---

|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|1. | DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING
      POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (a) Business and organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | 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, 2008 and
      2007 financial statements, which are necessary for a fair financial
      statement presentation. The results for the three months ended April 30,
      2008 and 2007 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,
      2008 which are included in the Companys Form 10-KSB filed with the U.S.
      Securities and Exchange Commission (the SEC) on April 30, 2008 (January
      31, 2008 Form 10-KSB). The year-end condensed consolidated balance sheet
      data was derived from audited financial statements, but does not include
      all disclosures required by accounting principles generally accepted in
      the United States of America.                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | References to the Company typically include the Companys
      consolidated subsidiaries and joint venture. The Companys operations are
      principally conducted through its five operating subsidiaries, Carbiz USA,
      Inc., a Delaware corporation, Carbiz Auto Credit, Inc. (CAC), Carbiz
      Auto Credit, AQ Inc. (AQ), Texas Auto Credit, Inc. (Texas Auto) (CAC,
      AQ and Texas Auto are all Florida corporations) and Carbiz Auto Credit
      JV1, LLC, a Florida limited liability company (JV1). Collectively,
      Carbiz Inc., Carbiz USA, Inc., CAC , AQ, Texas Auto, 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 selling and financing
      used automobiles, and developing, marketing, distributing and supporting
      software and Internet products for the automotive sales finance industry.
      During the three months ended April 30, 2008, the Company operated 26
      dealerships which sell and finance used automobiles. Included in the 26,
      are 23 locations acquired on October 1, 2007 throughout the Midwest.in
      Illinois, Indiana, Iowa, Kentucky, Nebraska, Ohio and Oklahoma.. in
      addition to the two dealerhips it operates in Florida and one in Texas.
      The Texas location originated on December 24, 2007 with the purchase of a
      portfolio of used automobile and light truck loans, and an inventory of
      used automobiles and light trucks located in Houston, Texas. Sales
      operations for the Texas location were not authorized by the State of
      Texas until March 28, 2008. On January 24, 2007 the Company purchased the
      remaining 50% share of Carbiz Auto Credit JV1, LLC that it did not
      previously own.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (b) Going concern assumption                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | While these condensed consolidated 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 period
      (exclusive of gains on derivative instruments) and in each of the past
      several years. The Company had a working capital deficiency of $10,386,186
      at April 30, 2008. The Companys continued existence is dependent upon its
      ability to achieve profitable operations and to obtain additional
      financing. The Company believes that the new 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.                                                                                                                                                                                                                                                                                                                                                                                            

4

---

|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|1. | DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING
      POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | If the going concern assumption were not appropriate to
      these condensed consolidated financial statements, then adjustments would
      be necessary in the carrying values of assets and liabilities, the
      reported net income and the balance sheet classifications used.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In addition, the Amended Credit Agreement contains
      financial covenants which require, among other things, that the Company
      maintain specified interest coverage and loss to liquidation ratios, and
      meet certain specified minimum net income, loan loss and collection
      requirements. The Company and the lender have agreed to continue to
      negotiate regarding certain additional financial covenants relating to
      maintenance of specific leverage ratios and minimum tangible net worth
      requirements. It is anticipated the agreement on the covenants will be
      reached within a reasonable time. If an agreement on such additional
      covenants is not reached within a reasonable time, it may constitute a
      default under the Amended Credit Agreement, which could result in the
      lender demanding the repayment of approximately $36,605,000 currenty due
      under the Amended Credit Facility.                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | (c) Significant accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | These condensed consolidated financial statements have
      been prepared in accordance with accounting principles generally accepted
      in the United States of America (GAAP) and reflect the following
      significant accounting policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Accounts and notes receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Accounts and notes receivable shown are net of bad debt
      provisions. The amount includes short term notes received through the sale
      of used automobiles. The notes are for terms ranging from 80 weeks to 48
      months and some require weekly payments. Interest is calculated weekly
      based on the balance outstanding at the time. The allowance for doubtful
      accounts reflects the Companys best estimate of probable losses inherent
      in the accounts and notes receivable balances. The Company determines the
      allowance based on known troubled accounts, historical experience, and
      other currently available evidence.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company takes steps to repossess a vehicle when the
      customer becomes severely delinquent in his or her payments, and
      management determines that timely collection of future payments is not
      probable. Accounts are charged off after the expiration of a statutory
      notice period for repossessed accounts, or when management determines that
      the timely collection of future payments is not probable for accounts
      where the Company has been unable to repossess the automobile.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | For accounts where the automobile was repossessed, the
      fair value of the repossessed automobile is charged as a reduction of the
      gross finance receivable balance written-off. On average, accounts are
      approximately 90 days past due at the time of write-off. For previously
      written-off accounts that are subsequently recovered, the amount of such
      recovery is credited to the allowance for credit losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company maintains an allowance for credit losses on
      an aggregate basis at a level it considers sufficient to cover estimated
      losses in the collection of its finance receivables. The allowance for
      credit losses is based primarily upon historical credit loss experience,
      with consideration given to recent credit loss trends and changes in loan
      characteristics (i.e., average amount financed and term), delinquency
      levels, collateral values, economic conditions and underwriting and
      collection practices. The allowance for credit losses is periodically
      reviewed by management with any changes reflected in current operations.
      Although it is at least reasonably possible that events or circumstances
      could occur in the future that are not presently foreseen which could
      cause actual credit losses to be materially different from the recorded
      allowance for credit losses, the Company believes that it has given
      appropriate consideration to all relevant factors and has made reasonable
      assumptions in determining the allowance for credit
  losses.

5

---

|CARBIZ INC.                                             
|--------------------------------------------------------
|Notes to the Condensed Consolidated Financial Statements
|April 30, 2008 and 2007                                 
|(unaudited)                                             

|1. | DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING
      POLICIES (continued)                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                   
|   | A comparison of the following classifications of notes
      receivable related to auto sales at April 30, 2008 and 2007 is presented
      below:

| | Florida stores portfolio:          |   |         |  |  |        |  |   |         |  |  |        | 
| | ---------------------------------- | - | ------- |  |  | ------ |  | - | ------- |  |  | ------ | 
| |                                    |   | 2009    |  |  | 2008   | 
| |                                    |   | Amount  |  |  | Number |  |   | Amount  |  |  | Number | 
| | Active accounts                    | $ | 579,191 |  |  | 177    |  | $ | 457,264 |  |  | 163    | 
| | Accounts held in repossession      | $ | 27,416  |  |  | 7      |  | $ | 13,178  |  |  | 5      | 
| | Accounts written off during period | $ | 23,813  |  |  | 9      |  | $ | 31,528  |  |  | 12     | 

Midwest stores portfolio: February 1,
2008 through April 30, 2008

| |                                    |   | 2009       | 
| | ---------------------------------- | - | ---------- | 
| |                                    |   | Amount     | 
| | Active accounts                    | $ | 18,119,637 | 
| | Accounts held in repossession      | $ | 611,798    | 
| | Accounts written off during period | $ | 1,989,675  | 

Texas portfolio: February 1, 2008
through April 30, 2008

| |                                    |   | 2009       | 
| | ---------------------------------- | - | ---------- | 
| |                                    |   | Amount     | 
| | Active accounts                    | $ | 11,335,031 | 
| | Accounts held in repossession      | $ | 441,406    | 
| | Accounts written off during period | $ | 876,669    | 

Inventory

Inventory consists of used vehicles and
is related to the CAC, AQ, and Texas Auto 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 finance costs include fees
paid in conjunction with the issuance of convertible debentures and entering
into term loans, lines of credit, and inventory floor plans and are amortized
over the term of the related financial instruments. Approximate future
amortization of deferred finance costs is as follows as of April 30, 2008:

Periods ending April 302009
    $
    585,8742010
    
    272,4212011
    
    233,3332012
    
    84,931Thereafter
    
    -$
    1,176,559


6

---

|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|1. | DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING
      POLICIES (continued)                                                  
|-- | ------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                               
|   | Net income per share                                                                                                          
|   |                                                                                                                               
|   | The following table reconciles the numerators and
      denominators of the basic and diluted income per share
  computations.

| |                                                                 |   | Three Months Ended April 30 | 
| | --------------------------------------------------------------- | - | --------------------------- | 
| |                                                                 |   | 2008                        | 
| | Net income attributable to common
      stockholder-(numerator) | $ | 25,310                      | 
| | Basic:                                                          |   |                             | 
| | Weighted average shares outstanding (denominator)               |   | 65,636,597                  | 
| | Net
      income per common share - basic                       | $ | -                           | 
| | Diluted:                                                        |   |                             | 
| | Weighted average shares outstanding                             |   | 65,636,597                  | 
| | Effect of dilutive securities                                   |   | 7,756,867                   | 
| | Adjusted wieghted average share (denominator)                   |   | 73,393,464                  | 
| | Net income per common share (diluted)                           | $ | -                           | 

The effects of all stock options and
warrants outstanding have been excluded from Common Stock equivalents because
their effect would be anti-dilutive.

Share-based compensation

The Company uses the fair-value method
to determine compensation for all arrangements under which employees and others
receive shares of stock or equity instruments. The fair value of each option
award is estimated on the date of grant using the Black-Scholes valuation model
that uses assumptions for expected volatility, expected dividends, expected
term, and the risk-free interest rate. Expected volatilities are based on
weighted average of the historical volatility of the Companys stock measured on
a once monthly basis over the expected term of the options. The expected term of
options granted is derived using the simplified method which computes expected
terms as the average of the sum of the vesting term plus the contract term. The
risk-free rate is based on the U.S. Treasury yield curve in effect at the time
of grant for the period of the expected term.

No stock options were granted during
the three months ended April 30, 2008.

During the three months ended April 30,
2008, the Company recognized stock-based compensation expense of $20,076 as a
result of new options issued on January 19, 2007. See Note 14(e) to the January
31, 2008 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, 2008 the Company recognized stock-based compensation expense of
$32,300 as a result of this restricted stock transaction. See Note 13 to the
January 31, 2008 Form 10KSB.

Total options outstanding and vested at
April 30, 2008 were 3,958,041.

Weighted average exercise price and
weighted average life were as follows:

| |             |  | Number of |  |  | Weighted           |  |  | Weighted Average | 
| | ----------- |  | --------- |  |  | ------------------ |  |  | ---------------- | 
| |             |  | Options   |  |  | Average Life (Yrs) |  |  | Exercise Price   | 
| | 1998 Plan * |  | 2,838,041 |  |  | 1.0                |  |  | $0.26            | 
| | 2007 Plan   |  | 1,120,000 |  |  | 3.7                |  |  | $0.13            | 
| | Total       |  | 3,958,041 |  |  |                    |  |  |                  | 

7

---

|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|1. | DESCRIPTION OF BUSINESS AND SUMMARY OF
      ACCOUNTING POLICIES (continued)
|-- | ----------------------------------------------------------------------------

(*) This series of options were
denominated in Canadian dollars. For purpose of this schedule the exercise
prices have been converted into U.S. dollars based on the foreign exchange rate
as at April 30, 2008.

The market value of our shares at April
30, 2008 was $0.16; therefore the intrinsic value of all options outstanding and
vested at April 30, 2008 was $33,600. In addition, non-vested options to
purchase 4,480,000 shares were outstanding at April 30, 2008 with a weighted
average exercise price of $0.13 per share and a weighted average life of 3.7
years. The Company expects to record a total of an additional $301,136 of
compensation expense during periods subsequent to April 30, 2008 for non-vested
options as of that date.

Total share based compensation of
$78,376 consists of $32,300 and $20,076 above plus $6,250 from Note 6(b) and
$9,750 from Note 6(c).

Warrant derivative liability

The Company accounts for warrants
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 warrants
classified 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. See Note 7 herein.

Goodwill

On April 30, 2008, the Company had
$438,283 of goodwill, related to its acquisition on January 24, 2008 of the 50%
of JV1 that it did not already own.

Fair value disclosure

In September 2006, the FASB issued
Statement of Financial Accounting Standards No. 157, Fair Value Measurements
(Statement No. 157) which defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
Statement No. 157 applies to other accounting pronouncements that require or
permit fair value measurements and does not require any new fair value
measurements.

In February 2008, the FASB issued FASB
Staff Position 157-2, which provides for a one-year deferral of the provisions
of Statement No. 157 for non-financial assets and liabilities that are
recognized or disclosed at fair value in the consolidated financial statements
on a non-recurring basis. The Company is currently evaluating the impact of
adopting the provisions of Statement No. 157 for non-financial assets and
liabilities that are recognized or disclosed on a non-recurring basis.

Effective February 1, 2008, the Company
adopted the provisions of Statement No. 157 for financial assets and
liabilities, as well as for any other assets and liabilities that are carried at
fair value on a recurring basis. The adoption of the provisions of Statement No.
157 related to financial assets and liabilities and other assets and liabilities
that are carried at fair value on a recurring basis did not materially impact
the Companys consolidated financial position and results of operations.

Statement No. 157 defines fair value as
the exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date. Statement No. 157 also establishes a fair value hierarchy,
which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. Statement No. 157
describes three levels of inputs that may be used to measure fair value:

8

---

|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|1. | DESCRIPTION OF BUSINESS AND SUMMARY OF
      ACCOUNTING POLICIES (continued)
|-- | ----------------------------------------------------------------------------

Level 1 - quoted prices in active
markets for identical assets or liabilities; Level 2 - quoted prices for
similar assets and liabilities in active markets or inputs that are observable;
Level 3 - inputs that are unobservable (for example cash flow modeling
inputs based on assumptions).

The following table summarizes
liabilities measured at fair value on a recurring basis at April 30, 2008, as
required by Statement No. 157:

| |                        |   | Fair Value Measurements Using | 
| | ---------------------- | - | ----------------------------- | 
| |                        |   | Level 1                       | 
| | Liabilities            |   |                               | 
| | Derivative liabilities | $ | --                            | 

|2. | ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE
|-- | ----------------------------------------

| |                                                     |  |            |            |   | April 30, 2008 | 
| | --------------------------------------------------- |  | ---------- | ---------- | - | -------------- | 
| | Trade receivables from software &
      consulting  |  |            |            | $ | 60,193         | 
| | Less: Allowance
      for doubtful accounts         |  |            |            |   | 5,417          | 
| |                                                     |  |            |            | $ | 54,776         | 
| | Notes receivable from vehicle sales  Florida       |  |            |            | $ | 606,607        | 
| | Less: Allowance for doubtful accounts               |  |            |            |   | 119,855        | 
| |                                                     |  |            |            | $ | 486,752        | 
| | Notes receivable from vehicle sales 
      Midwest |  |            |            | $ | 18,731,435     | 
| | Less: Allowance
      for doubtful accounts         |  |            |            |   | 3,705,043      | 
| |                                                     |  |            |            | $ | 15,026,392     | 
| | Notes receivable from vehicle sales  Texas Auto    |  | $          | 11,776,437 |  
| | Less: Allowance for doubtful accounts               |  |            |            |   | 2,766,786      | 
| |                                                     |  |            |            | $ | 9,009,651      | 
| | Long-term portion of notes receivable               |  | Florida    |            | $ | 125,406        | 
| |                                                     |  | Midwest    |            |   | 4,623,328      | 
| |                                                     |  | Texas Auto |            |   | 4,977,283      | 
| |                                                     |  | Total      |            | $ | 9,726,017      | 
| | Current portion of notes receivable                 |  | Florida    |            | $ | 361,345        | 
| |                                                     |  | Midwest    |            |   | 10,403,064     | 
| |                                                     |  | Texas Auto |            |   | 4,032,369      | 
| |                                                     |  | Total      |            | $ | 14,796,778     | 

The future maturities of the long term
portion of the notes receivable total of $9,726,017 are $7,156,850 in fiscal
year 2010, $1,880,514 in fiscal year 2011, and $688,653 in fiscal year 2012.

During the three month periods ended
April 30, 2008, and 2007, the Company earned $1,847,921 and $15,584,
respectively, of financing income on the notes receivable. This amount has been
included as interest income within Revenues in these financial statements.

9

---

|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|2. | ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE
      (continued)          
|-- | --------------------------------------------------------------------
|   |                                                                     
|   | Activity in the allowance for doubtful accounts is as
      follows:

| |                              |   | Software |   |   | Florida |   |   | Midwest    |   |   | Texas     |   |   | Total
      2008 |   |   | 2007    |  
| | ---------------------------- | - | -------- | - | - | ------- | - | - | ---------- | - | - | --------- | - | - | ---------------- | - | - | ------- | -
| | Balance at Beginning of Year | $ | 8,543    |   | $ | 117,161 |   | $ | 4,103,125  |   | $ | 3,526,902 |   | $ | 7,755,731        |   | $ | 83,775  |  
| | Charged to Expenses          |   | (3,612   | ) |   | 26,507  |   |   | 1,591,593  |   |   | 116,553   |   |   | 1,731,041        |   |   | 4,153   |  
| | Write-offs and Other         |   | 486      |   |   | (23,813 | ) |   | (1,989,675 | ) |   | (876,669  | ) |   | (2,889,671       | ) |   | (28,505 | )
| | Balance at End of Period     | $ | 5,417    |   | $ | 119,855 |   | $ | 3,705,043  |   | $ | 2,766,786 |   | $ | 6,597,101        |   | $ | 59,423  |  

|3. | LONG-TERM DEBT                                                   
|-- | -----------------------------------------------------------------
|   |                                                                  
|   | Long-term debt consists of the following at April 30,
      2008:

| | Inventory floor plan                             | $ | 2,478,167  |  
| | ------------------------------------------------ | - | ---------- | -
| | Revolving line of credit                         |   | 3,301,284  |  
| | Term loan                                        |   | 30,825,274 |  
| | Convertible debenture                            |   |            |  
| | exclusive
      of unamortized discount (Note 4) |   | 5,674,030  |  
| | Note payable, related party                      |   | 200,000    |  
| |                                                  |   | 42,478,755 |  
| | Less unamortized discount on                     |   |            |  
| | convertible debenture                            |   | (4,513,097 | )
| |                                                  | $ | 37,965,658 |  

The future maturities of debt are
estimated as follows:

| | Years ending April 30 |   |            | 
| | --------------------- | - | ---------- | 
| | 2009                  | $ | 21,891,545 | 
| | 2010                  |   | 7,129,587  | 
| | 2011                  |   | 6,554,333  | 
| | 2012                  |   | 3,774,498  | 
| | 2013                  |   | 3,128,792  | 
| | Total long term debt  | $ | 42,478,755 | 

These estimated maturities are based
upon the Companys projected repayment schedules which are affected by the
expected collection periods of existing notes receivable rather than the
contracted latest repayment date stipulated in the agreement.

The unamortized discount of $4,513,097
will be amortized utilizing the effective interest method through the respective
maturity dates.

10

---

|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|4. | CONVERTIBLE DEBENTURE                                                                    
|-- | -----------------------------------------------------------------------------------------
|   |                                                                                          
|   | As of April 30, 2008 the Company had outstanding
      Convertible Debentures as follows:

| |                                                                             |   | Carrying Value |  
| | --------------------------------------------------------------------------- | - | -------------- | -
| | a) $2,500,000 face value convertible
      debenture due February 28, 2009  | $ | 919,111        |  
| | b) $1,000,000 face value convertible debenture due August
      31, 2008    |   | 81,861         |  
| | c) $1,500,000 face value convertible
      debenture due September 26, 2009 |   | 124,794        |  
| | d) $800,000 face value convertible debenture due December
      1, 2011     |   | 35,166         |  
| |                                                                             |   | 1,160,932      |  
| | Less current portion                                                        |   | (1,060,857     | )
| | Long-term portion                                                           | $ | 100,075        |  

|5. | LIQUIDATED DAMAGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Trafalgar financings include registration rights
      agreements which, under certain circumstances, include provisions that
      require the Company to pay liquidated damages, in the event effective
      registrations are not in place on a timely basis for the underlying shares
      in the Trafalgar transactions. The Company originally filed a Registration
      Statement on Form SB-2 on April 17, 2007. Such registration was updated
      and amended several times until it was finally approved and declared
      effective on March 24, 2008 as an amended SB-2 on Form F-3. On November
      21, 2007 the Company was invoiced by Trafalgar for a total of $165,184 of
      liquidated damages. The Company was further invoiced an additional $54,192
      on February 13, 2008. Both amounts ($219,376) were recorded as interest
      expense during the year ended January 31, 2008. Since the registration
      rights agreements call for liquidated damages up to 15%, a remaining
      contingent liability of $155,624 remains under the $2,500,000 Trafalgar
      financing. In addition, the $1,000,000 September 10, 2007 and $1,500,000
      September 26, 2007 Trafalgar financings have similar registration rights
      provisions (limited to 15%) with contingent amounts of $150,000 and
      $225,000. The Form F-3 filing declared effective on March 24, 2008,
      included the maximum number for shares underlying both the convertible
      debentures and warrants held by Trafalgar as allowed under SEC Rule 415.
      No additional invoices for liquidated damages have been received and the
      Company believes that no additional expense will be incurred as the
      registration statement requirements for filing have been fulfilled.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|6. | COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (a) Conversion of convertible debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | During the three months ended April 30, 2008, the Company
      issued 497,686 shares of common stock at conversion prices ranging from
      $0.1275 to $0.1488 in a series of Trafalgar Convertible Debenture
      conversions. As a result of these transactions, Additional Paid in Capital
      was credited for $64,476 and Deferred Financing costs was credited for
      $17,472. The offset was allocated to Derivative Liability and Convertible
      Debenture on on the dates of conversion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (b) Unregisteredshares for investment banking
      services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | On April 7, 2008 the Company entered into a non-exclusive
      investment banking arrangement for a six month period. The Company paid an
      initial non-refundable $5,000 retainer and will pay an additional monthly
      retainer of $2,500 for 6 months beginning on May 15, 2008. In addition,
      the Company issued 250,000 unregistered common shares on May 15, 2008
      which were valued at $0.15 per share and will be expensed over the six
      months of the contract. The value of the shares was based on market value
      at that date ($37,500) and $6,250 was expensed during the three months
      ended April 30, 2008. and the remaining balance of $31,250 is included in
      Prepaids and other assets at April 30, 2008. The Company expects to record
      this $31,250 as additional investment banking services expense during the
      priod from May 1, 2008 through September 30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

11

---

|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|6. | COMMON STOCK (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | (c) Unregistered shares for executive officer
      compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On February 1, 2008 the Company issued 150,000
      unregistered common shares for discretionary management compensation. The
      shares were valued at $0.26, the market value on the date of the board
      action ($39,000) and will be expensed ratably during the year ended
      January 31, 2009. Accordingly, $9,750 was expensed during the three months
      ended April 30, 2008 and the remaining balance of $29,250 is included in
      Prepaids and other assets at April 30, 2008. The Company expects to record
      this $29,250 as additional compensation expense during the period May 1,
      2008 through January 31, 2009.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|7. | DERIVATIVE LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Derivative fair values at April 30, 2008 were as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |                                             |   | Compound   |  |   |             |  |   |             | 
| | ------------------------------------------- | - | ---------- |  | - | ----------- |  | - | ----------- | 
| |                                             |   | Embedded   |  |   | Warrant     |  |   | Total       | 
| |                                             |   | Derivaties |  |   | Derivatives |  |   | Derivatives | 
| | $2,500,000 face value convertible debenture |   |            |  |   |             |  |   |             | 
| | due February
      28,2009                  | $ | 1,622,179  |  | $ | 339,000     |  | $ | 1,961,179   | 
| | $1,000,000 face value convertible debenture |   |            |  |   |             |  |   |             | 
| | due August 31,
      2008                   |   | 456,598    |  |   | 240,700     |  |   | 697,298     | 
| | $1,500,000 face value convertible debenture |   |            |  |   |             |  |   |             | 
| | due September 26,
      2009                |   | 886,844    |  |   | 262,850     |  |   | 1,149,694   | 
| | $800,000 face value convertible debenture   |   |            |  |   |             |  |   |             | 
| | due December 1,
      2010                  |   | 655,619    |  |   | -           |  |   | 655,619     | 
| | 2004 warrants expiring October 6, 2009      |   |            |  |   | 821,571     |  |   | 821,571     | 
| | 2004 warrants expiring October 10, 2010     |   |            |  |   | 1,205,012   |  |   | 1,205,012   | 
| | 2004 warrants expiring April 6, 2011        |   |            |  |   | 37,372      |  |   | 37,372      | 
| | 2006 warrants expiring September 5, 2008    |   |            |  |   | 118,964     |  |   | 118,964     | 
| | 2004 warrants expiring October 6, 2011      |   |            |  |   | 96,296      |  |   | 96,296      | 
| |                                             | $ | 3,621,240  |  | $ | 3,121,765   |  | $ | 6,743,005   | 

This derivative liability is adjusted
quarterly based on a value model discussed in Note 1 herein and any changes in
fair value are recorded as gain or loss on derivative financial instruments in
the consolidated statements of operations.

12

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|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

|7. | DERIVATIVE LIABILITIES (continued)                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                             
|   | The following table summarizes the number of common
      shares indexed to the derivative financial instruments as of April 30,
      2008:

| |                                             |  | Warrant     |  |  | Conversion | 
| | ------------------------------------------- |  | ----------- |  |  | ---------- | 
| |                                             |  | Derivatives |  |  | Features   | 
| | $2,500,000 face value convertible debenture |  |             |  |  |            | 
| | due February28, 2009                        |  | 2,500,000   |  |  | 11,004,282 | 
| | $1,000,000 face value convertible debenture |  |             |  |  |            | 
| | due August 31, 2008                         |  | 2,000,000   |  |  | 4,334,036  | 
| | $1,500,000 face value convertible debenture |  |             |  |  |            | 
| | due September 26, 2009                      |  | 2,000,000   |  |  | 6,818,182  | 
| | $800,000 face value convertible debenture   |  |             |  |  |            | 
| | due December 1, 2010                        |  | 0           |  |  | 3,636,364  | 
| | 2004 warrants expiring October 6, 2009      |  | 9,212,400   |  |  |            | 
| | 2004 warrants expiring October 10, 2010     |  | 11,055,264  |  |  |            | 
| | 2004 warrants expiring April 6, 2011        |  | 314,276     |  |  |            | 
| | 2006 warrants expiring September 5, 2008    |  | 3,965,464   |  |  |            | 
| | 2004 warrants expiring October 6, 2011      |  | 876,200     |  |  |            | 
| |                                             |  | 31,923,604  |  |  | 25,792,864 | 

In addition to the warrants included as
Warrant Derivatives, the Company has two additional warrants which were
previously accounted for as equity: $800,000 convertible debenture due December
1, 2010  warrants to purchase up to 1,033,332 shares; and Knightsbridge
Warrants: 1,000,000 See Note 8(a) to the January 31, 2008 Form 10-KSB.

For information and significant
assumptions embodied in our valuations (including range for certain assumptions)
See Note 12 to the January 31, 2008 Form 10 KSB.

|8. | CASH FLOW INFORMATION
|-- | ---------------------

(a) Supplemental Information

| |                                          |   | Three months ended | 
| | ---------------------------------------- | - | ------------------ | 
| |                                          |   | April 30, 2008     | 
| | Cash paid during the period for Interest | $ | 1,085,562          | 

(b) Supplemental non-cash
information

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 and capitalized as deferred financing costs. See Note
7(a) to January 31, 2008 Form 10-KSB. During the three months ended April 30,
2008, the Company issued 497,868 shares in connection with convertible debt
conversions. See Note 6 herein.

|9. | SEGMENT INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company operates and manages its business in two
      segments, which are its used car sales and financing segment (Carbiz Auto
      Credit or CAC), including its new acquisitions Carbiz Auto Credit AQ
      or AQ and Texas Auto Credit or Texas Auto, and its previous joint
      venture (JV1), and various software and consulting services offered to
      independent car dealerships (Software and Other Products). In prior
      periods, JV1 has been displayed as a separate segment of operations. The
      Company purchased the 50% percent portion of JV1 it did not own on January
      24, 2008, and as a result, the Company now combines the JV1 results with
      the other CAC results. Approximately 99.7% 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.

13

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|CARBIZ INC.                                                   
|--------------------------------------------------------------
|Notes to the Condensed Consolidated Financial
      Statements
|April 30, 2008 and 2007                                       
|(unaudited)                                                   

CAC purchases automobiles through
auctions and sells them to end users at car lots located in the United States.
When required, the Company will also finance these sales with loans that are
generally 80 weeks to 48 months in length

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  |   |                    |  |   | 2008               |   |   |            |  
| | ---------------------------- | - | ------------------ |  | - | ------------------ | - | - | ---------- | -
| |                              |   |                    |  |   | Software and Other |   |   |            |  
| |                              |   | Carbiz Auto Credit |  |   | Products           |   |   | Total      |  
| | Sales                        | $ | 8,347,955          |  | $ | 575,317            |   | $ | 8,923,272  |  
| | Cost of Sales                |   | 4,419,361          |  |   | 380,332            |   |   | 4,799,693  |  
| | Gross Profit                 |   | 3,928,594          |  |   | 194,985            |   |   | 4,123,579  |  
| | Operating Expenses
      (1) |   | 3,219,640          |  |   | 959,654            |   |   | 4,179,294  |  
| | Income (Loss) From Segments  |   | 708,954            |  |   | (764,669           | ) |   | (55,715    | )
| | Depreciation & Amortization  |   |                    |  |   |                    |   |   | (46,912    | )
| | Total Operating Loss         |   |                    |  |   |                    |   |   | (102,627   | )
| |                              |   |                    |  |   |                    |   |   |            |  
| | Total Assets                 | $ | 30,317,006         |  | $ | 860,677            |   | $ | 31,177,683 |  

| | Three months ended April 30   |   |                    |   |   | 2007               |   |   |           |  
| | ----------------------------- | - | ------------------ | - | - | ------------------ | - | - | --------- | -
| |                               |   |                    |   |   | Software and Other |   |   |           |  
| |                               |   | Carbiz Auto Credit |   |   | Products           |   |   | Total     |  
| | Sales                         |   | 270,606            |   |   | 609,980            |   | $ | 880,586   |  
| | Cost of Sales                 |   | 197,802            |   |   | 218,152            |   |   | 415,954   |  
| | Gross Profit                  |   | 72,804             |   |   | 391,828            |   |   | 464,632   |  
| | Operating Expenses
      (1)  |   | 68,172             |   |   | 584,093            |   |   | 652,265   |  
| | Income (Loss) From Segments   |   | 4,632              |   |   | (192,265           | ) |   | (187,633  | )
| | Depreciation & Amortization   |   |                    |   |   |                    |   |   | (26,550   | )
| | Gain on Debt Foregiveness     |   |                    |   |   |                    |   |   | 391,337   |  
| | Total Operating Income (Loss) |   |                    |   |   |                    |   |   | 177,154   |  
| |                               |   |                    |   |   |                    |   |   |           |  
| | Total Assets                  | $ | (102,752           | ) | $ | 2,025,068          |   | $ | 1,922,316 |  

(1) Excluding depreciation and
amortization

|10. | COMMITMENTS AND CONTINGENCIES.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | See Note 5 for Registration Rights liquidated
    damages.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | As outlined in Note 6 (b), the Company entered into a
      non-exclusive investment banking arrangement for a six month period. In
      addition to the specific fees outlined in Note 6(b). the agreement also
      provides for contingent fees typical in the investment banking industry
      for any equity raised as a direct result of the services of the service
      provider. The contingent fees include warrants to purchase common shares
      of the Company and cash compensation equal to a percentage of the gross
      proceeds.

14

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Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations

The following Managements
Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements concerning our revenues, operating results,
and financial condition. Such forward-looking statements include our intent to
open additional credit centers in the future; our expectations regarding the
future revenues for, and the market acceptance of, our software and related
consulting service, and our expectations regarding future expense levels related
to our credit center business and interest expenses. The following discussion
should also be read in conjunction with the Companys interim condensed
consolidated financial statements as of April 30, 2008 and the audited
consolidated January 31, 2008 statements reported in our January 31, 2008 Form
10-KSB.

Overview

Our revenue has been derived from two
sources, which include:

- Direct auto sales and related financing (Carbiz Auto Credit centers)through our self provided on-site specialty finance business at 26 company
  owned locations; and
- Software product and support sales and business model consulting
  servicesthrough 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.

Historically, we have been a
software company that has also offered 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.

Over the past six months we have
experienced significant changes in every area of our operations. In October 2007
we began a process of significant change through the acquisition of a large
Midwestern chain of automobile dealerships and a portfolio of associated
consumer loans. Subsequently, in December, we purchased an additional portfolio
of consumer loans and opened our first Supercenter in Houston, Texas.

We currently operate a chain of
26 used car stores that sell and originate loans for consumers with poor credit.
We hold the consumer notes generated by the loans as assets and pledge them as
collateral to secure our obligations under our senior debt facility.

In terms of our existing software
and consulting businesses, our substantial customer base of software users
continues to grow organically and provides both a stable revenue base of monthly
support and continuing opportunities for providing additional consulting
services to those dealers. During the fiscal year ended January 31, 2008, we
introduced several new products including transaction based online services for
the entry and processing loan documents on plain paper rather than preprinted
forms. This product is utilized by several centralized loan processing locations
to provide immediate access to transaction entry and forms delivery to their
dealers. Our consulting group has also introduced new seminar and training
products that are approved by and marketed in conjunction with state dealer
associations and other dealer groups.

Critical Accounting Policies

Revenue Recognition

Our revenue is derived from the
sale of software licenses and consulting services 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.

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 consulting
services revenue is recognized when a signed contract has been executed, the

15

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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 range from 80 weeks to 48 months, 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 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, derivative financial
instruments and other share based payments.

Stock-Based Compensation

All share based payments
(options, warrants and stock grants) are recognized based upon their fair value
at the date of grant in accordance with Financial Accounting Standard 123R
Share Based Payments.

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 and embedded features 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.

Allowance for credit losses

The Company maintains an
allowance for credit losses on an aggregate basis at a level it considers
sufficient to cover estimated losses in the collection of its finance
receivables. The allowance for credit losses is based primarily upon historical
credit loss experience, with consideration given to recent credit loss trends
and changes in loan characteristics (i.e., average amount financed and term),
delinquency levels, collateral values, economic conditions and underwriting and
collection practices. The allowance for credit losses is periodically reviewed
by management with any changes reflected in current operations. Although it is
at least reasonably possible that events or circumstances could occur in the
future that are not presently foreseen which could cause actual credit losses to
be materially different from the recorded allowance for credit losses, the
Company believes that it has given appropriate consideration to all relevant
factors and has made reasonable assumptions in determining the allowance for
credit losses.

16

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Three Month Financial Information

The following summary of selected
financial information for the three months ended April 30, 2008 and 2007 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, 2008 and 2007.

Three months ended April 30, 2008 compared to the three
months ended April 30, 2007

|                                      |   |            |   |  | % of    |   |  |            |   |  | % of    |  
|------------------------------------- | - | ---------- | - |  | ------- | - |  | ---------- | - |  | ------- | -
|                                      |   | April 2008 |   |  | Revenue |   |  | April 2007 |   |  | Revenue |  
|Revenue                               | $ | 8,923,272  |   |  | 100.0   |   |  | 880,586    |   |  | 100.0   |  
|Cost of sales                         | $ | 4,799,693  |   |  | 53.8    |   |  | 415,954    |   |  | 47.2    |  
|Gross profit                          | $ | 4,123,579  |   |  | 46.2    |   |  | 464,632    |   |  | 52.8    |  
|Gain on debt forgiveness              | $ | -          |   |  | -       |   |  | 391,337    |   |  | 44.4    |  
|Operating expenses                    | $ | 4,226,206  |   |  | 47.3    |   |  | 678,815    |   |  | 77.1    |  
|Operating income (loss)               | $ | (102,627   | ) |  | (1.2    | ) |  | 177,154    |   |  | 20.1    |  
|Interest expense                      | $ | (1,906,421 | ) |  | 21.4    |   |  | (89,508    | ) |  | 10.2    |  
|Gain (loss) on derivative instruments | $ | 2,034,358  |   |  | 22.8    |   |  | 678,621    |   |  | 77.1    |  
|Minority interest income (loss)       | $ | -          |   |  | -       |   |  | (6,094     | ) |  | (0.7    | )
|NET INCOME                            | $ | 25,310     |   |  | 0.3     |   |  | 760,173    |   |  | 86.3    |  
|Income per common share               | $ | 0.00       |   |  |         |   |  | 0.01       |   |  |         |  
|Total assets                          | $ | 31,177,683 |   |  |         |   |  | 1,922,316  |   |  |         |  
|Long-term liabilities                 | $ | 19,108,823 |   |  |         |   |  | 22,270     |   |  |         |  

Revenue

In the three months ended April
30, 2008, our revenues increased by $8,042,686 compared to the same period ended
April 30, 2007. This was primarily due to our acquisition of a number of
buy-here-pay-here credit centers. Our Carbiz Auto Credit locations that were in
operation during the first quarter of 2007 had total sales during the three
months-ended April 30, 2008 of $236,118 compared to the previous periods sales
of $252,188. Our new Midwest locations acquired October 1, 2007 provided
$6,981,926 of sales and our Houston location provided $1,129,910 of sales, of
which approximately 71% was interest income because the Texas dealer sales
license was not issued until March 28, 2008.

Interest income for the three
months ended April 30, 2008 increased by $1,829,503 compared to the previous
years three month period, primarily due to the acquisitions of
buy-here-pay-here credit centers and the related portfolios. Interest income
from our three original Carbiz Auto Credit locations during the three months
ended April 30, 2008 was $31,267 compared to the previous years three month
period of $18,418. Our Midwest locations acquired October 1, 2007 provided
$1,018,219 of interest income and our Houston location provided $798,435 of
interest income.

Cost of Sales

Our cost of sales expense
increased by $4,383,739 for the three months ended April 30, 2008, compared to
the previous years three month period. Carbiz Auto Credit operations cost of
sales increased by $4,221,559, due to our Midwest and Houston locations. We
anticipate that our cost of sales expense will continue to increase as we
experience full fiscal year operations from the newly acquired credit
centers.

Gain on debt forgiveness

During the three months ended
April 30, 2007, the Company negotiated the settlement of a $466,337 trade
payable which resulted in a gain from debt forgiveness of $391,337. There was no
similar item during the three months ended April 30, 2008.

Expenses

For the three months ended April
30, 2008, our personnel expenses increased by $397,407 compared to the previous
years three month period. This was due to the additional corporate staff to
support newly acquired Midwest and Texas locations. Selling expenses increased
for the three months ended April 30, 2008 by $120,957 due to additional
advertising to support the Midwest and Texas locations. Professional fees
increased by $225,063 due to increased audit costs related to the increase in
company size, and maintenance of lines of credit and floor

17

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plans. Other operating expenses increased by $1,048,571 during
the three month period ended April 30, 2008, due to the general office, rent
expense and other expenses incurred by the acquired Midwest and Texas
locations.

The additional Midwest and Texas
locations have required a moderate investment in fixed assets and as a result,
depreciation expense increased for the period from $26,550 to $46,912 or
$20,362.

Interest Expense

Our interest expense and other
expenses increased by $1,816,913 for the three months ended April 30, 2008,
compared to the previous years three month period, as a result of the issuance
of the four convertible debentures during the prior fiscal year and the various
credit facilities to support our Midwest and Texas operations. The convertible
debenture financings incurred interest expense. The current line of credit
balance reflects the total borrowed against the acquired loan portfolios and
newly generated sales at the Midwest and Texas locations. We anticipate our
interest expense will increase over this and subsequent years while the
convertible debentures remain outstanding and as we draw down on our lending
facilities to finance additional inventory and customer loans.

Gain/Loss on Derivative Instruments

For the three months ended April
30, 2008, we incurred a non-cash gain of $2,034,358 as a result of the fair
value adjustment of outstanding derivative instruments. During the three months
ended April 30, 2007 we incurred a non-cash gain of $678,621 including day one
derivative losses on new financings. We expect gains and losses on derivative
instruments in the future while the convertible debentures and related warrants
remain outstanding.

Software Sales, Support and Consulting

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

Total software and consulting
sales during the three months ended April 30, 2008 decreased from the prior
years three month period by $33,453. New sales of software decreased by $39,003
while monthly recurring software support revenue decreased by $70,643. New sales
of consulting services for the three months ended April 30, 2008 increased from
the prior years three month period by $39,977. Recurring monthly consulting
revenue increased by $36,216 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.

Bad Debt Provision

As of April 30, 2008, the total
Carbiz Auto Credit loan portfolio was $31,114,479. The allowance for doubtful
accounts at the same date was $6,591,684.

After the acquisition of the
Midwest and Houston portfolios, we determined that since our historical
portfolio of approximate $600,000 in our Florida stores is now a very small
percentage of the total portfolio, it is appropriate to apply a percentage to
the entire portfolio rather than use a different method on that portion of the
portfolio.

It is not reasonable to expect
that the acquired portfolio will perform as well as if we had originated every
loan. Therefore, we have determined that a percentage above our own historical
level, but better than the industry average, is appropriate for the reserve
calculation going forward. In addition, because of the large number of accounts
and physical locations, we also determined that identifying all pending
repossessions at the reporting date was unrealistic. Those factors led to the
application of a 20% reserve calculation on the total balance of the Florida and
Midwest originated and the Midwest acquired portfolio. A factor of 24% was
applied to calculate the reserve for the Houston portfolio. These percentages
are in line with industry averages, but will be re-evaluated with more
experience in collection results.

18

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All acquired loans were made at a
maximum interest rate of 29.9% APR. Newly originated loans are made at a maximum
interest rate of 19.95% 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 obtained for each
customer. While the range of scores varies widely, the average credit score of
our customers is approximately 500. Typically, loans are made for approximately
100% of the sale price of the car, with down payment amounts sufficient to
offset the costs incurred for license and title fees and sales taxes paid.

Liquidity and Capital Resources

As of January 31, 2008 and April
30, 2008, we had $1,141,271 and $145,860, respectively, in cash and cash
equivalents. During the three month period ended April 30, 2008, we increased
our accounts payable and accrued liabilities by $622,543, which totaled
$3,701,103 at April 30, 2008. During the three months ended April 30, 2008, we
made capital lease payments totaling $2,030.

During the three months ended
April 30, 2008, we issued approximately 497,868 shares at conversion prices
ranging from $0.1275 to $0.1488 in a series of convertible debenture
conversions. We continue to discuss various options available to the convertible
debt holder and the Company for debt service and conversions.

The Amended Credit Agreement is
divided into two parts, one to finance the Companys Texas business (the Texas
facilities), and one to finance the Companys remaining business (the
Non-Texas facilities).

The Non-Texas facilities have a
maximum commitment of $30 million, including a $23 million revolving receivable
loan facility, a $2 million revolving floor plan loan facility, and a term loan
in the amount of $21.925 million. The revolving receivable loan facility and
revolving floor plan loan facility will expire on October 1, 2011, and the term
loan has a maturity date of April 1, 2011.

The Texas facilities have a
maximum commitment of $34.975 million initially, including a $15 million
revolving receivable loan facility, a $2 million revolving floor plan loan
facility, and a term loan in the amount of $17.975 million

At April 30, 2008, we had total
outstanding borrowings under the Amended Credit Agreement of $36,604,726. The
amount of borrowings under the Amended Credit Agreement may fluctuate
materially, depending on various factors, including the size of our Eligible
Receivables, the time of year, our need to acquire inventory, changes to our
plans and initiatives, changes to our capital expenditure plans and the
occurrence of other events or transactions that may require funding through the
Amended Credit Agreement.

As of April 30, 2008, payments
due by us over the next five fiscal years for operating and capital leases, and
long-term debt are as follows:

|                       |   | Less Than  |  |   | One to Three |  |   | Three to   |  |   | Greater than |  |   |            | 
|---------------------- | - | ---------- |  | - | ------------ |  | - | ---------- |  | - | ------------ |  | - | ---------- | 
|                       |   | One Year   |  |   | Years        |  |   | Five Years |  |   | Five Years   |  |   | Total      | 
|Operating Leases       | $ | 1,439,221  |  | $ | 1,291,094    |  | $ | 258,588    |  | $ | 560,000      |  | $ | 3,548,903  | 
|Capital Leases         |   | 7,369      |  |   | 1,326        |  |   | -          |  |   | -            |  |   | 8,695      | 
|Long-Term Debt         |   | 11,817,852 |  |   | 12,104,132   |  |   | 6,903,290  |  |   | -            |  |   | 30,825,274 | 
|Convertible Debentures |   | 4,094,242  |  |   | 957,566      |  |   | 622,222    |  |   | -            |  |   | 5,674,030  | 
|Interest (1)           |   | 353,563    |  |   | 181,256      |  |   | 41,086     |  |   | -            |  |   | 575,905    | 
|                       | $ | 17,712,247 |  | $ | 14,535,374   |  | $ | 7,825,186  |  | $ | 560,000      |  | $ | 40,632,807 | 

|(1) | Does not include our credit facility with SWC that has a
      maximum commitment of $111 million and expires on October 1,
  2011.
|--- | -----------------------------------------------------------------------------------------------------------------------------------

Based on twelve 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 until January 2009. 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.

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In addition, the Amended Credit
Agreement contains financial covenants which require, among other things, that
we maintain specified interest coverage and loss to liquidation ratios, and
meetcertainspecified minimum net income, loan loss and collection
requirements. We and the lender have agreed to continue to negotiate regarding
certain additional financial covenants relating to maintenance of specific
leverage ratios and minimum tangible net worth requirements. It is anticipated
the agreement on the covenants will be reached within a reasonable time. If an
agreement on such additional covenants is not reached within a reasonable time,
it may constitute a default under the Amended Credit Agreement, which could
result in the lender demanding the repayment of approximately $36,605,000
currenty due under the Amended Credit Facility.

Off-Balance Sheet Arrangements

As of April 30 2008, we do not have
any off-balance sheet arrangements.

Item 4. 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 in our existing operations 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.

20

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PART II  OTHER INFORMATION

Item 1. Legal Proceedings

None.

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

Trafalgar conversions

During the three months ended April 30, 2008, the Company
issued approximately 497,686 shares at conversion prices ranging from $0.1275 to
$0.1488 in a series of Trafalgar Convertible Debenture conversions.

Unregistered shares for investment banking
services

On April 7, 2008, we entered into a Financial Advisory and
Investment Banking Agreement with Pointe Atlantic, Inc., of Tampa, Florida.
Pursuant to the agreement, Pointe Atlantic will provide us with various
investment banking services. We have agreed to pay an initial retainer of $5,000
in cash, which was paid upon execution of the agreement, and 250,000 common
shares, which are to be issued to Pointe Atlantic on May 15, 2008. We have also
agreed to pay a monthly fee of $2,500 for six months, and to reimburse Pointe
Atlantic for their expenses incurred in providing services under the agreement.

The agreement also provides for the issuance to Pointe Atlantic
or its designee of warrants to purchase 2 million common shares of Carbiz stock
for $0.15 each upon the consummation of a $5 million equity offering by us. The
warrants will expire one year after issuance.

The agreement also provides for the payment to Pointe Atlantic
of a fee for any private equity securities offerings after any successful $5
million equity offering by us prior to June 16, 2008, equal to 8% of the gross
proceeds, plus a non-accountable expense allowance equal to 2% of the gross
proceeds, plus warrants to purchase 10% of the number of securities issued in
the offering. Such warrants will expire two years after issuance.

Unregistered shares for executive officer compensation

On February 1, 2008 the Company issued 150,000 unregistered
common shares for discretionary management compensation. The shares were valued at
$0.26, the market value on the date of the board action ($39,000).

All of the foregoing shares were issued in private placements,
exempt from registration under the Securities Act pursuant to Section 4(2).

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-Q:

|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

21

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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: June 16, 2008 | /s/
      Carl Ritter        
|                    | Carl Ritter                  
|                    | Chief Executive Officer      
|                    | (principal executive officer)

22

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