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SOFTCHOICE CORPORATION __________________________________________________________

ANNUAL INFORMATION FORM

For the fiscal period ended December 31, 2007

March 31, 2008

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SOFTCHOICE CORPORATION

ANNUAL INFORMATION FORM TABLE OF CONTENTS

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Corporate Structure........................................................................................................................................................1 Caution Regarding Forward-Looking Statements .........................................................................................................1 Development of the Business ........................................................................................................................................1

Nature of the Technology Industry ...........................................................................................................................3 The IT Distribution Channel ...........................................................................................................................3 Nature of the Software Market ........................................................................................................................4 Nature of the Hardware Market.......................................................................................................................5

Business of Softchoice...................................................................................................................................................5 Overview...................................................................................................................................................................5 Corporate Strategy ....................................................................................................................................................6 Our Growth Strategy.................................................................................................................................................8 Competition ............................................................................................................................................................10 Employees...............................................................................................................................................................10 Intellectual Property................................................................................................................................................10 Facilities..................................................................................................................................................................10

Risk Factors .................................................................................................................................................................11 Economic Conditions ....................................................................................................................................11 Exchange Rate Risk ......................................................................................................................................11 Credit Risk ....................................................................................................................................................11

Risks Related to the Technology Distribution Channel .....................................................................................12 Dependence on Microsoft .............................................................................................................................12 Reliance on Financial Incentives...................................................................................................................12 Dependence upon Distributors ......................................................................................................................12 Inability to Respond to Changes in the Manner of Information Technology Distribution............................12 Technical Innovation.....................................................................................................................................13 Competition...................................................................................................................................................13 Risk of Information Technology Product Defects.........................................................................................13

Risks Related to the Management of Softchoice’s Business .............................................................................13 Inability to Successfully Execute Strategies..................................................................................................13 Integration of Acquired Companies ..............................................................................................................13 Customer Attrition.........................................................................................................................................13 Productivity ...................................................................................................................................................14 Compliance with U.S. Government Procurement Processes.........................................................................14 Sales Model Risks .........................................................................................................................................14 Debt Service Risks ........................................................................................................................................14 Need for Additional Capital in the Future .....................................................................................................14 Dividend Policy.............................................................................................................................................14 Management of Growth.................................................................................................................................15 Future Acquisitions .......................................................................................................................................15 Hiring, Training and Retention of Personnel.................................................................................................15 Variability of Quarterly Operating Results ...................................................................................................15 Information Systems .....................................................................................................................................15 Damage to Softchoice's Computer Systems ..................................................................................................16 Dependence upon Management ....................................................................................................................16

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Selected Financial Information....................................................................................................................................16 Management’s Discussion and Analysis of Financial Condition and Results of Operations ......................................17 Dividends.....................................................................................................................................................................17 Capital structure...........................................................................................................................................................17 Market for Securities ...................................................................................................................................................17 Directors and Officers .................................................................................................................................................18 Audit Committee .........................................................................................................................................................20 Legal Proceedings........................................................................................................................................................20 Transfer Agent and Registrar.......................................................................................................................................20 Material contracts ........................................................................................................................................................20 Experts.........................................................................................................................................................................20 Additional Information ................................................................................................................................................21

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CORPORATE STRUCTURE

Softchoice Corporation (“Softchoice” or “the Company” or “we”) is the corporation resulting from the amalgamation (“the Amalgamation”) of Ukraine Enterprise Corporation (UEC) and Softchoice Corporation on May 15, 2002, under the Canada Business Corporations Act. The registered and head office of Softchoice is located at 173 Dufferin Street, Suite 200, Toronto, Ontario M6K 3H7. Softchoice’s main telephone number is (416) 588-9002; its main fax number is (416) 588-9005.

On December 10, 2007, Softchoice incorporated a wholly owned subsidiary, Softchoice Holding Corporation (“Holdco”). Holdco is incorporated under the laws of Delaware. Softchoice transferred its ownership in Softchoice U.S. into Holdco in exchange for the common shares of Holdco. Holdco is not an operating company.

Softchoice’s United States operations are carried on by Softchoice Corporation (“Softchoice U.S.”), a corporation incorporated under the laws of the state of New York. The registered and head office of Softchoice U.S. is located at 314 West Superior Street, Suite 301, Chicago, Illinois 60610-3538. Holdco owns all of the common shares of Softchoice U.S. Softchoice U.S. also has issued preferred shares which are entirely owned by Softchoice.

In this Annual Information Form, unless the context otherwise requires, the term Softchoice includes Softchoice and its subsidiary, Softchoice U.S.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Information and discussion in this document contains certain forward-looking statements based on current expectations. Management bases its expectations on current market conditions and forecasts published by experts, on knowledge of observed industry trends and on internal intentions based on developed business plans or budgets. The words “expect,” “intend,” “anticipate” and similar expressions generally identify forward-looking statements. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Certain of these risks are described under the heading “Risk Factors”.

DEVELOPMENT OF THE BUSINESS

Softchoice was founded in 1989 to sell software products to corporate customers. Our customer base includes small and medium-sized businesses (“SMB”) that we consider to be companies with fewer than 2,000 PCs; enterprise customers, with more than 2,000 PCs and government entities. We sell very little product to consumers. By 1995, Softchoice was the largest reseller of Microsoft products in Canada. By 1997, the decision was made to expand the business into the United States, and seven offices were opened in November of that year. Since that time, 24 additional branches have been opened across the United States. In 2002, the Company began selling hardware products.

On February 25, 2005, Softchoice acquired substantially all of the assets of the software division of Groupe 3-Soft Inc. (“3-Soft”). This division was in the business of selling software volume licenses to corporate customers. Its revenues in 2004 were approximately $60 million. The results of these operations began accruing to Softchoice after February 25, 2005.

In 2007 and early 2008 Softchoice consummated an additional three acquisitions to expand further our customer base and our scope of product and service offerings. These acquisitions are outlined below.

NexInnovations

On October 12, 2007 Softchoice purchased key assets of the Technology Solutions and Professional Services division of NexInnovations Inc. (“NexInnovations”). This division is engaged in the provision of consulting, technology solution architecture, infrastructure deployment, and support services to business and

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government organizations across Canada. In particular, this division has developed expertise in providing hardware product sales and related support services to some of the largest corporate customers and government groups in Canada. NexInnovations had filed for protection under the Companies’ Creditors Arrangement Act (“CCAA”) for the second time on September 27, 2007. The history of NexInnovations’ bankruptcy process is described in the Company’s Business Acquisition Report for NexInnovations which will be filed with the Canadian provincial securities regulators.

On October 12, 2007 Softchoice acquired the records, authorizations and certifications associated with this division for US$10.3 million and acquisition costs of US$0.6 million. On October 26, 2007, Softchoice paid an additional U.S. $1.6 million to acquire the division’s computer systems and the NexInnovations and Computerland names, including the domain names and all related tradenames, trademarks, copyrights, and other intangible assets. In neither transaction did Softchoice assume any liabilities or obtain any exposure to the debts of the parent company or the division, pre-acquisition. No other assets, including accounts receivable, were purchased in either of these transactions.

The Technology Solutions and Professional Services division of NexInnovations Inc. had revenues of US$258.3 million for their fiscal year ended May 31, 2007, down from $388.8 million from the year before. We estimate that the revenue stream of the entity once acquired by Softchoice was about $100 million per year as a result of the sales erosion caused by the CCAA process. We believe that the revenue levels achieved by this division for the year ended May 31, 2007 will not be regained under Softchoice for at least a two-year period.∗ Approximately 76 percent of the Technology Solutions and Professional Services division’s revenue for the year ended May 31, 2007 was from hardware products, 13 percent from the sale of software products and the remaining were service revenues. Approximately 52 percent of these revenues were derived from enterprise customers, 20 percent from SMB customers and 28 percent from governmental organizations. The Division had approximately 1,700 customers prior to the CCAA process; its largest customer accounted for 20 percent of total revenue. Of these customers, 338 purchased from Softchoice in the fourth quarter following the acquisition. We retained 78 of the Division’s employees following the acquisition.

The product sales and related services that NexInnovations sold to its customer base represent a significant expansion of the range of products and services previously offered by Softchoice alone. See “Corporate Strategy” and “Our Growth Strategy” for a discussion of how this incremental capability is relevant to our overall strategic positioning and growth expectations.

Software Plus

On December 11, 2007, Softchoice acquired all of the outstanding common shares of Software Plus Ltd., a company incorporated under the laws of Missouri, for cash consideration of US$47.1 million, including acquisition costs of $2.1 million. Immediately following the acquisition, Software Plus was merged with Softchoice. Software Plus was the largest corporate reseller of computer software in the U.S. Midwest and the industry’s ninth largest Microsoft Large Account Reseller (“LAR”). Software Plus had trailing twelve-month revenue of U.S. $198 million as at September 30, 2007 and total imputed revenue of U.S. $338 million for the same period. About 90 percent of the revenues for this period were from the sale of software and 10 percent from the sale of hardware. Software Plus did not have any material services revenue. Software Plus had about 6,600 customers in their most recent year end and about 1,000 bought from Softchoice between December 12, 2007 and the end of the year. We also retained approximately 60 of the Company’s employees following the acquisition.

This transaction expanded Softchoice’s geographical coverage in the Midwest with very little overlap of customer accounts. In particular, Software Plus concentrated on a number of enterprise customers and this expertise will be a leverage point for Softchoice to launch an enterprise focused sales team in the U.S. Because of the similarity between Software Plus’s Microsoft concentration and the Company’s core competencies as well as the diversified nature of the customer base, we expect that integration activities are likely to be completed by the end of the first quarter of 2008 and that cost synergies will begin to be realized thereafter.*

∗ This section includes forward-looking information. See “Caution Regarding Forward-Looking Information.” Total imputed revenue is a Non-GAAP term. See “Use of Non-GAAP Terms” in the annual MD&A.

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A Business Acquisition Report with respect to this acquisition will be filed with the Canadian provincial securities regulators.

Optimus Solutions

On January 3, 2008 Softchoice acquired all of the outstanding common shares of Optimus Solutions LLC, (“Optimus or Optimus Solutions”), a limited liability company formed under the laws of Georgia. Immediately following the acquisition, Optimus was merged with Softchoice. Optimus Solutions is a comprehensive IT products and solutions company focused on helping enterprise and mid-market clients plan, build and maintain their information technology infrastructure with headquarters in Norcross, Georgia, and nine offices elsewhere in the United States. Under the terms of the agreement, Softchoice paid US$38.1 million in cash with a deferred payment of up to US$9 million, payable during 2008 depending on the financial performance of Optimus Solutions. On a trailing 12-month basis, Optimus Solutions generated US$140 million in revenue. Approximately 40 percent of Optimus’ revenue during this period was derived from enterprise customers, 50 percent from SMB customers and 10 percent from the public sector. Approximately 87 percent of this revenue is from hardware sales, seven percent is attributable to the sale of software and the remainder from services. Optimus employs 100 people and services 1,500 customers with no single customer representing more than 12 percent of total revenues. The acquisition significantly enhances Softchoice’s ability to provide advanced infrastructure technology solutions and services, including storage, internetworking, server consolidation, and security solutions to U.S. mid-market, enterprise and public sector organizations.

A Business Acquisition Report with respect to this acquisition will be filed with the Canadian provincial securities regulators.

NATURE OF THE TECHNOLOGY INDUSTRY

Softchoice is a leading direct marketer or reseller of IT infrastructure solutions, including hardware, software and various infrastructure management services. As a reseller, Softchoice does not participate in all parts of the North American IT market. For example, the Company does not sell mainframe computer systems or Enterprise Resource Planning (ERP) systems like SAP that involve a high degree of complexity and long sales cycles. According to the International Data Corporation (IDC), the relevant indirect market available to Softchoice in North America is valued at $149 billion in 2007 (excluding services), of which Softchoice’s share is estimated to be below 1 percent. Indirect software and hardware revenues were estimated at $55.5 billion and $93.3 billion, respectively.

The IT Distribution Channel

The information technology distribution channel includes four main types of participants.

1. The software publisher or hardware manufacturer creates and builds the products. These companies elect to sell product directly to the customer, as is the case with Dell Computers, or they sell through the distribution channel or they may elect to do a combination of both, depending on the specific products. The more complex the product or the earlier that the product is in the adoption cycle, the more likely the manufacturer is to sell it directly. According to IDC, approximately 60 percent of all hardware products and 40 percent of all software products are sold through the distribution channel.

2. The distributor buys product from the manufacturer and sells it to the reseller or direct marketer. The

distributor does not sell to end users. Distributors generally maintain massive warehouses and specialize in providing logistical services. Ingram Micro, Synnex and Tech Data are the largest examples of technology distributors in the North American market.

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3. The reseller or direct marketer buys product from either distributors or the manufacturer and sells it to the end user. Resellers are usually prohibited from selling to other resellers. Resellers have agreements with the manufacturers that generally are not exclusive, but may describe a geographical territory, such as Canada or North America. Resellers may focus on specific customer segments, defined either by the size of the customer, the industry or their geography. In the past few years, there has been considerable consolidation in the reseller channel and the midsized or regional players are being acquired by national resellers. The industry is bifurcating into small local players and larger national or international participants.

4. VARs (value-added resellers) provide integration services to their customers and will sell product as well.

They generally source product from distributors and do not have agreements with the large manufacturers. While there are some larger VARs, the majority of the players in this segment are small local firms.

Softchoice, as a reseller, buys product from both distributors and manufacturers. Our designation as a Microsoft Large Account Reseller is an example of the type of contractual relationship that resellers have with manufacturers or publishers. This agreement gives us certain pricing advantages and access to Select and EA licenses (see “Microsoft and Softchoice”). Distributors and VARs are not able to purchase these products. Softchoice has an extensive referral program with local VARs and other service providers (the SPA or Softchoice Partner Agreement). Under these agreements we have referral and marketing relationships with local VARs in specific areas so that our customers can benefit from the local services provided by the VAR, in addition to the pricing and asset management advantages that Softchoice offers, when executing technology purchases. In some cases these agreements generate referral revenue for Softchoice or referral fees, and in some cases the partner program is a lead sharing agreement and no referral fees are provided by either party.

Nature of the Software Market

Over the last 10 years the software market has evolved significantly with the proliferation of personal computers and the pervasive influence of the Internet. Software was originally sold as boxed product with perpetual licenses. This evolved into more complex licensing agreements that allowed corporate customers to increase the number of users with access to the programs already installed on their networks. In the last few years, there has been a common trend among software publishers to migrate their customers away from transactional purchases of perpetual licenses to annual purchases of licenses and add-on support. The license itself allows the user to access the product, whereas the annual support or maintenance contracts allow the user access to all upgrades and patches. This changes the nature of the purchase from an episodic or transactional one to an annual subscription arrangement. This trend also tends to smooth the customers’ expenditure levels so that software purchases become another predictable cost of doing business. This shift means that software publishers are less dependent on new products to lift their revenues and more dependent on the annual payments that give users access to those new products as they are released. Customers are responding to these changes with varying levels of reception. If the customer’s corporate environment needs to be on current technology platforms, there is a tendency to embrace these annual flows since they simplify the purchasing and managing process for the customer. If the customer prefers “good enough” computing and upgrades to current versions only after several years, the annual payment stream tends to be a more expensive alternative. The advent of increased threats from security issues, such as viruses and spam, increases the customers’ need for current technology and reinforces the publishers’ strategy of annual fees. In this new subscription environment, renewals of in-place agreements are of increasing focus and importance.

IDC estimates that the North American software market that was sold through the IT Distribution channel was valued at approximately US$55.5 billion in 2007. They estimate that the market will grow by 10 percent to 11 percent during 2008 and 2009 and that growth will decline to just under 10 percent by 2011. The Canadian market is expected to grow by about seven percent in 2008 and then by 6.5 percent to six percent in 2009 through 2011. The U.S. market is expected to grow by 3.5 percent in 2008, 4.8 percent in 2009 and then about four percent in the following two years. IDC estimates that about 40 percent of total software sales are sold through the distribution channel.

As customers plan and manage their IT infrastructure, it is generally software that has a more strategic relevance for customers and gets planned first. Hardware acquisitions generally follow the software decisions as a result of the

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requirements of the software applications. Since Softchoice began as a software-only reseller and since this remains a primary area of focus and expertise, we believe that this orientation provides us with a strategic advantage as we are aware of customer hardware acquisition planning prior to those competitors who are less involved in the software sales cycle.

Nature of the Hardware Market

According to IDC reports, the North American market for hardware products that was sold through the IT distribution channel was worth US$93.3 billion in 2007. They expect this market to grow by 3.7 percent in 2008, 4.9 percent in 2009 and about 4 percent in 2010 and 2011. IDC estimates that between 60 percent and 65 percent of total hardware sales are estimated to flow through the channel. Hardware sales in the U.S. are expected to grow by three percent to four percent over the next four years, whereas sales in the Canadian market are expected to grow at just under six percent each year.

Most corporate customers have established corporate standards and purchase their hardware in accordance with those standards. Speed and accuracy of delivery are the prime considerations for these customers, as well as competitive pricing. Purchases tend to be episodic as customers increase their employee base and replace damaged or outdated machines. In addition, customers cyclically upgrade their users’ infrastructure every three or four years. These rollouts are done on a consistent basis which indicates larger accounts are regularly acquiring servers, PCs, and the associated technology. Research on Softchoice customers indicates that most companies make some type of hardware purchase a couple of times each month. There are, however, some annual payment streams related to hardware support, warranty protection, etc.

Hardware sales frequently encompass a variety of fee-based services that are provided to the customer, some before the product sale and some concurrently or following the product sale itself. There tends to be a symbiotic relationship between these services and the related hardware purchases. The acquisitions recently completed by the Company will significantly increase our ability to participate in some of these service offerings, particularly the design and architecture of more complex hardware installations. NexInnovations also had a competency in large scale rollouts and the related staging, imaging and configuration services that we intend to expand across our sales offices in North America.∗

BUSINESS OF SOFTCHOICE

OVERVIEW

Softchoice sells IT products and services that enable our customers to manage their IT infrastructure throughout its life cycle from assessment, design and solution architecture through procurement, lifetime management and asset disposal. In most cases the purpose of our services offerings are designed to enhance the product procurement revenue stream and to deepen the customer relationship. Softchoice has been providing assessment and other services for some time, but the acquisitions completed at the end of 2007 and early 2008 significantly increase our service capability and the strategic relevance of these offerings. These capabilities are expected to enhance the growth of our product business in 2008 and beyond.∗

∗ This paragraph includes forward-looking information. See “Caution Regarding Forward-Looking Information.”

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In thousands of US dollars, unaudited 2005$ Y/Y % $ Y/Y % $

Microsoft revenue 288,044            ‐4.6% 301,934         ‐2.3% 309,151           Agency Fees (51,285)             44.2% (35,562)          42.9% (24,886)            

Microsoft Imputed Revenue 535,336              35.8% 394,304           33.9% 294,554           Other software 257,556            12.6% 228,559         7.3% 213,062           Hardware  231,482            34.0% 172,745         47.3% 117,269           

Total revenue 777,082            10.5% 703,238         10.0% 639,482           

Total revenue, including Imputed Revenue 1,261,133          18.8% 1,061,980        16.8% 909,150           

Hardware % of revenue 29.8% 24.6% 18.3%

Hardware % of Total revenue, including Imputed Revenue 18.4% 16.3% 12.9%†Imputed revenue  is a Non‐GAAP term. See "Use of Non‐GAAP Terms in the annual MD&A. 

2007 2006

Softchoice sells to corporate customers across North America. Our U.S. expansion was fuelled with a

concentration on the SMB customer. Our Canadian business has historically been more balanced between SMB, Enterprise and government customers. The recent acquisitions will also continue to extend our reach into the Enterprise market segment.

Our expanded focus on enterprise customers is expected to have increased benefit for SMB customers as well, partly because the expertise learned in serving enterprise customers is portable down market, and partly because of advances in hardware processing power and software application capability, there is an increasing trend for more sophisticated infrastructure solutions to become available to smaller customers as manufacturers and publishers continue to view this segment of the market as a growth opportunity and the technology becomes more cost effective. As a result of this trend, we expect the factors influencing the buying decisions of the SMB customer increasingly to emulate the enterprise customer on issues of trust, accessibility and quality of service. Through our established network of 43 sales offices, five call centers and 427 sales associates, we believe that Softchoice is well positioned to profit from these developments.

CORPORATE STRATEGY

Softchoice’s strategy is comprised of a number of elements that individually are less critical but when combined together form a coherent, consistent framework within which to manage our growth programs. The map outlined below identifies the six critical pillars of our strategy and the interrelations between each component.

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Deeper Customer Relationships: ours is a high touch model of customer interaction. We focus on multiple relationships within a customer from the IT management group, through purchasing and other relevant touch points. We measure and manage the number of customer interactions and our overall goal is to increase the percentage of the customers’ IT budget that is spent with Softchoice. This approach can be differentiated from a number of competitive approaches that could focus on certain product lines or high margin items only. Our approach crosses all product and service lines as we measure the number of different product solutions that are sold to a particular customer and the overall increase in gross margin realized per customer. We make it easy for customers to interact with Softchoice in person, over the phone and through our ever-expanding web capability. Most corporate customers have their own portal or landing page on our web site and we can incorporate standards and a variety of purchase control mechanisms, depending on customer preference.

Local Branches: we have 43 local branches across North America, with 208 outbound sales people focused on meeting customers face to face. Our primary customer interaction is with the local outbound sales rep which we believe fosters a greater relationship with the customer and a better understanding of our customers’ strategic objectives and our capabilities. Local branches also foster local relationships with the vendor community and various partner relationships as well. This local network of IT professionals means that if a customer has specific requirements, we can source the expertise within the community to solve the problem. This interaction could mean that we bring local vendors in to meet the customer as they decide about implementing a new technology or it could mean introducing a local service expert to the customer for a specific services engagement. These local relationships generally produce a virtuous cycle as we bring vendors and partners into our customer accounts, and they in turn introduce us to additional customers in the community. To the extent that our local branch personnel focus on SMB customers, and this is to a significant extent in the U.S., this is a unique expertise that is not generally matched by our competition. Some of our competitors have local branches with staff to focus on larger enterprise or government customers, but few national competitors are able to use local branches to service the SMB market on a cost-effective basis.

Call Centers: At the end of December, 2007, we have five call centers to support the outbound sales force located in Montreal, Toronto, Chicago, St. Louis and Seattle. While the outbound sales rep identifies the underlying strategic procurement requirements of the customer, it is the inside sales staff in the call centers that manages the daily transaction flow. Customers have their choice of dealing with a dedicated inside account manager, or they can telephone the call centre directly and get a live knowledgeable response every time. Our proprietary call center technology and infrastructure mean that our sales staffs answer the telephone every time; we do not employ phone trees or call waiting services in our call centers. We believe that this practice is largely responsible for the high levels of customer satisfaction registered by our customers when surveyed about their call center usage.

Flexible Proprietary Systems: our internal IT systems were designed for Softchoice and have been improved and updated continually to ensure that they continue to meet our changing needs. These systems include our web capability and search engine, integrated customer and product databases, and extensive reporting capabilities for the customer and for internal purposes. We use XML and EDI links to ensure that our systems are closely linked to our distribution partners and various customers. Through these links we can see the pricing and availability of all products sold by the company through distribution and therefore can often offer customers the choice between choosing speed or availability and pricing, if there is a decision to be made between these attributes. Softchoice processes about 300,000 transactions each year and it is the efficiency of our proprietary systems that contributes towards the cost-effective management of our business.

Services Offerings: our services are designed to help our customers manage their infrastructure throughout the life cycle of the assets under management. We provide services to customers through our own employee capabilities and competencies and through a web of partner networks that blanket the continent. These services include:

• Assessment services that help a customer identify the correlation between their existing environment and those outlined by their IT policies and objectives. These services can focus on providing an inventory of all hardware and software and components, can identify software license

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compliance or harvesting opportunities, asset aging reports, policy compliance management, etc. These services include, but are not limited to the Softchoice branded Tech Check services.

• Design and Architecture services help customers identify and build the optimum infrastructure configuration.

• Procurement services make up the bulk of our revenue as we help customers streamline their procurement processes and save time and money as a result. We can also identify optimal license vehicles for software license purchases and facilitate various financing arrangements such as product leasing. Procurement services also include imaging, configuration services and staging for large infrastructure deployments.

• Management services include software license management, warranty registration and management, life cycle inventory management through the assessment services and identification of growth constraints due to the age, size or capability of the assets under management. Monitoring services can also be arranged through various partner relationships.

• Disposal services to ensure that IT hardware is disposed of safely and with appropriate regard for environmental disposal processes.

Virtual Supply Chain: as a result of our supply chain, Softchoice holds minimal inventory levels and customer requirements can be satisfied through access to warehouses across North America. We use the services of distributors to drop ship product as well as to collect returns when necessary. We also use distributor services to augment our internal services for imaging, configuration and staging. We maintain extensive electronic links with our distributors across North America enabling real time decision making by our sales staff and the customer to expedite purchases and delivery.

The combination of these six elements of our strategy together provides a cohesive framework within which to make decisions and to grow our business. We used this strategy map to evaluate the various acquisition opportunities we reviewed in 2007 to ensure that the companies that we bought would be consistent with these elements of strategy and expand the depth of our customer relationships with the provision of enhanced services and capabilities.

OUR GROWTH STRATEGY∗

At the beginning of 2007, we identified our growth strategy as two-pronged: organic growth and growth through acquisition. We have executed on both strategies in 2007 and expect to continue to do so in 2008 and beyond.

Our organic growth is measured by the growth in our customer base and by the increase in sales to our customers, as measured by gross profit per customer. During 2007 our customer base shrank slightly by 3 percent as smaller customers (those spending less than $500 per year) did not purchase from Softchoice. Gross profit per customer rose in the year by 28 percent indicating to us the success of our strategy to increase the depth of customer relationships.

The implementation of our acquisition strategy resulted in the successful acquisition of three entities: NexInnovations, Software Plus and Optimus Solutions. We believe that each of these acquisitions will either increase the breadth of our product and services offerings or will provide us with an increased customer base. In 2008 we expect that revenue growth will be nominal or negative when compared to the pro-forma revenue of the existing business combined with the three acquisitions. We believe that some revenue will be at risk as a result of opportunistic competitive efforts to solicit customers who may be vulnerable during the period when the acquired company is being integrated. We expect to minimize this disruption by completing the integrations as rapidly as possible. The NexInnovations business was largely integrated into the Softchoice systems by the end of ∗ This section includes forward-looking information. See “Caution Regarding Forward-Looking Information.”

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January, 2008, with the exception of a couple of specific customer requirements. Software Plus is expected to be fully integrated into our system infrastructure prior to the end of the first quarter. Optimus Solutions is being managed by its old parent company through a services agreement with Softchoice, and this agreement will remain in place until the Optimus integration effort is also completed. This integration is expected to be completed prior to the end of the third quarter. We believe that it is critical to move through the integration as rapidly as possible to minimize the risk of customer erosion and to accelerate the time line when cost synergies can be realized.

While we do not expect to grow the revenue from the pro-forma basis at the end of 2007, we do expect to adjust the cost infrastructure so that excess costs are removed from these organizations and Softchoice’s cost infrastructure is applied to the acquired entity. This focus means that we expect that by the end of 2008, the consolidated entity will be running at cost efficiencies that are similar to Softchoice’s experience prior to the acquisitions. We will be measuring this outcome with such metrics as compensation as a percent of gross profit, expenses as a percent of gross profit and sales productivity per person. We believe that in 2008 it is much more important to ensure that the combined company’s cost infrastructure is aligned so that future revenue growth delivers maximum profitability.

We do not expect that we will complete additional acquisitions during the first half of 2008; however, if the integration of these acquisitions goes well and is completed in the second and third quarters, we will again resume our strategy of growth through selective acquisitions.

History of Growth

The chart below shows Softchoice’s five-year growth story at the revenue, gross profit and net income levels. This growth has been organic with the exception of the 3-Soft acquisition of approximately Cdn. $60 million in revenue in 2005, the NexInnovation revenue of $25.6 million and the Software Plus revenue of $14.7 million both at the end of 2007.

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5 

10 

15 

20 

25 

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100 

200 

300 

400 

500 

600 

700 

800 

900 

2003* 2004* 2005 2006 2007

Revenue

Gross Profit

Net income

In our 2005 Annual Report, we indicated specific growth targets for a three-to five-year time frame. With the completed acquisitions, on a pro-forma basis, these targets have largely been met at the end of the first two years into the cycle and we are confident that the remaining growth areas in these targets will be realized in 2008.

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COMPETITION

Softchoice competes on the basis of service levels, product availability and price. Softchoice faces competition from a variety of sources, including: (i) catalogue direct marketers, such as Insight Enterprises, and CDW Computer Centers and; (ii) local service providers; and (iii) hardware and software direct marketers, such as Dell, Software House International, PC Connection and Compucom. Competition in the SMB market primarily comprises catalogue direct marketers and local service providers.

Softchoice believes it has a competitive advantage over the national direct marketers because its cost-efficient infrastructure allows it to maintain local branches, enabling it to meet, consult and develop relationships with customers face to face. Most competitors in this sector who focus on the SMB market service their customers through a call center environment only. We expect this competitive advantage to favour Softchoice as the IT buying decisions of the mid-market become more complex. Softchoice also believes it has a competitive advantage over local service providers because its North American presence gives it access to better pricing from distributors and the authorizations necessary to sell volume licenses and products from manufacturers. The Company’s proprietary information technology systems and the integration between its inside and outbound sales representatives and effective marketing campaigns enable Softchoice to provide this local service to the SMB and Enterprise market on a profitable basis.

EMPLOYEES

As of December 31, 2007, Softchoice had 795 full-time employees, 539 of whom were employed in Canada and 256 in the U.S. These employees include 208 outbound sales representatives and 219 call center sales representatives.

None of Softchoice’s employees are covered by a collective bargaining agreement, and Softchoice has never experienced a work slowdown or stoppage due to a labour dispute. Softchoice maintains a casual environment for its employees in the belief that a relaxed and motivated staff provides better customer service.

INTELLECTUAL PROPERTY

Softchoice relies on a combination of copyright, trade secret and trademark laws, confidentiality procedures and contractual provisions to protect its proprietary information and technology. Softchoice holds a registered trademark on the Softchoice name in Canada and the U.S. Softchoice does not currently hold any patents. Softchoice will assess appropriate occasions for seeking additional intellectual property protections for the aspects of its technology that it believes constitute innovations that provide Softchoice with competitive advantages. Such applications may or may not result in the registration of copyrights or trademarks.

FACILITIES

Softchoice currently operates 43 branches across North America. All of the premises are leased. Softchoice maintains approximately a 77,500-square-foot head office in Toronto, the corporate head office. The Company has sales offices and call centers in Toronto, Montreal, Chicago, St. Louis and Seattle. Sales branches are located in the following other cities in Canada: Victoria, Vancouver, Calgary, Edmonton, Regina, Winnipeg, London, Ottawa, Quebec City and Halifax. In the United States we have sales offices in the following cities: Atlanta, Austin, Boston, Charlotte, Columbus, Dallas, Denver, Houston, Indianapolis, Irvine, Kansas City, Los Angeles, Las Vegas, Memphis, Miami, Minneapolis, Nashville, New York, Norwalk, Philadelphia, Phoenix, Portland, Ore., , Salt Lake City, San Diego, San Francisco, Tampa, Virginia Beach and Washington, D.C.

RISK FACTORS

Softchoice does not follow a specific risk model, but rather includes risk management analysis in all levels of strategic and operational planning. Management has identified the risks below as specific risks to Softchoice in the upcoming year.∗

Risks Related to the Economy and Financial Conditions Economic Conditions

Softchoice’s business is sensitive to the spending patterns of its customers, which, in turn, are subject to prevailing economic and business conditions. All of Softchoice’s revenue is derived from customers in Canada and the United States. To the extent that capital investment, particularly in the area of information technology, diminishes in both of these countries, Softchoice believes that demand for its products and services could be suppressed. In particular, if the U.S. economy heads into a recession, it is highly likely that there will be a spill-over effect on the Canadian economy and capital spending by corporations in both countries could be reduced and the company’s revenue could be similarly reduced. Reduced capital spending would likely have the greatest effect in larger enterprise customers and, based on economic conditions in early 2008, in the financial services sector. The impact of a general recession is likely to be felt by the SMB sector somewhat later in the economic cycle and, because of the diversification of the SMB sector, to a somewhat lesser extent. In addition, expenses related to bad debts from customers could be increased in the event of a recession in either country.

Exchange Rate Risk

The change in the relative exchange rates between the U.S. and Canadian dollar creates three different risk scenarios for the Company:

• When we buy product in one currency and sell it in another, there is a risk related to the transaction to the extent that the relative strength of the dollar changes between the date of the quote to the customer and the date that the customer pays us. The dollar value of this type of transaction risk is relatively low. If this transaction stream became larger, the Company would be able to hedge this foreign exchange risk.

• The Canadian company has an inter-company debt owed to the U.S. subsidiary that is denominated in U.S. dollars, and changes in the exchange rate affect the carrying value of this debt. It is the Company’s policy to hedge all or part of the balance of the inter-company debt where it is cost-effective to do so, but there is a risk that hedges may not be implemented effectively or that the cost of these hedges could be material to the Company’s financial results.

• Approximately 60 percent of the Company’s revenue is derived from sales in Canada. If the Canadian dollar weakens, the value of this revenue is reduced when the results are consolidated into U.S. dollars. There is a natural hedge in place as almost all costs of sale in Canada are in Canadian dollars so the net exposure is limited to net income in the Canadian company. However, significant fluctuations in the currency could affect the reported value of these earnings.

Credit Risk

When Softchoice sells products to its customers it generally requires payment within 30 days. Accordingly, it is incurring the credit risk associated with its customers. Alternatively, Softchoice may charge the customer’s

∗ This section includes forward-looking information. See “Caution Regarding Forward-Looking Information.”

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credit card for smaller purchases, especially if the purchases are made over the Internet. Accordingly, it may be susceptible to the fraudulent use of credit card numbers. As a consequence, Softchoice may suffer losses in connection with the insolvency of its customers or the fraudulent use of credit card numbers, which could have an effect on Softchoice’s business, results of operations and financial condition.

Risks Related to the Technology Distribution Channel

Dependence on Microsoft

For the year ended December 31, 2007, 37 percent of the Company’s revenue (and 61 percent of Total revenue, including imputed revenue ), was from Microsoft products. A loss of or significant change to the relationship with Microsoft could have a materially adverse effect upon the Company. Rebates earned by the Company are predominantly from Microsoft.

Reliance on Financial Incentives

As part of its agreements with certain publishers, including Microsoft, Softchoice receives substantial incentives in the form of rebates and marketing development funds. Rebates are designed by vendors to encourage certain selling behaviour by the resellers. The terms of the rebate change every quarter or six months. Resellers such as Softchoice have little or no input into either the form of the rebate or the revenue targets required to achieve rebates. A reduction or discontinuance of these incentives could have a materially adverse effect on Softchoice’s business, results of operations and financial condition. Further, these rebates can be difficult to estimate in advance. Should the terms of these rebates change so that the ease of estimating and therefore certainty of rebate achievement is increased, we believe that our competitors will flow certain rebates through to the customers. Should this occur, the impact would be increased competition and lower selling prices, both of which could adversely affect the Company’s business. Rebates are approximately one percent of revenue and are recorded as a reduction of Cost of sales on the income statement.

Dependence upon Distributors

Softchoice cannot be sure that key distributors will continue to provide Softchoice with trade credit and other significant incentives in the form of discounts and credits. In addition, Softchoice cannot be sure that any financial or other difficulties of its distributors will not have a materially adverse effect on Softchoice’s provision of services.

Inability to Respond to Changes in the Manner of Information Technology Distribution

The manner in which PC-related products are distributed and sold is continually changing, and new methods of distribution may emerge or expand. Some manufacturers distribute products directly to large corporate customers. Technology manufacturers may intensify their efforts to sell their products directly to end users, including current and potential customers of Softchoice. There is no assurance that this trend will not migrate to the SMB market. Dell Computers successfully targets this customer base, and other manufacturers may try to emulate this strategy. Manufacturers, present competitors or other third parties may introduce other methodologies for distributing software to users. For example, the search engine and advertising company, Google, has begun offering free access to a number of online business applications. These offerings suggest the future potential of the web as a personal computing platform, a development that could diminish the role of technology direct marketers. If the technology direct marketers’ role is reduced or eliminated or if other methods of distribution, that exclude the PC software and hardware resale channel, become common, Softchoice’s business, results from operations and financial condition could be materially adversely affected.

Total imputed revenue is a Non-GAAP term. See “Use of Non-GAAP Terms” in the annual MD&A

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Technical Innovation

Continued growth by Softchoice and the industry in general is dependent on the ability of equipment manufacturers and software developers to continue to develop new products that become accepted and demanded by corporate customers. Should the rate of innovation decline, the Company’s rate of revenue growth would also decline.

Competition

The information technology market is intensely competitive. Softchoice faces competition from a wide variety of sources, including: (i) software catalogue direct marketers; (ii) local service providers; and (iii) hardware and software direct marketers. Many of Softchoice’s competitors have substantially greater financial resources than Softchoice. Because of the intense competition within the technology sales channel, companies that compete in this market, including Softchoice, are also characterized by low gross and operating margins. Consequently, Softchoice’s profitability is highly dependent upon effective cost and management controls. Softchoice’s main direct competitors in the U.S. market are larger than Softchoice and more established.

Risk of Information Technology Product Defects

Defects or errors in the software and hardware of third-party manufacturers that Softchoice sells to its customers may potentially result in claims against Softchoice and may result in negative publicity, harm to Softchoice’s reputation or the loss of or delay in achieving market acceptance of these information technology products. The consequences of such defects, errors and claims could have a materially adverse effect on Softchoice’s business, results of operations and financial condition.

Risks Related to the Management of Softchoice’s Business

Inability to Successfully Execute Strategies

If Softchoice fails to execute any element of its strategy in a timely or effective manner, new competitors that enter the market may be able to seize the marketing opportunities Softchoice has identified. Softchoice’s business strategy requires that it successfully and simultaneously complete many tasks. In order to be successful, Softchoice must: (i) continue to build and operate a highly reliable, complex infrastructure; (ii) attract and retain customers; (iii) hire, train and retain employees; and (iv) evolve Softchoice’s business to gain advantages in a competitive environment.

Integration of Acquired Companies

Softchoice acquired three companies in the last quarter of 2007 and early 2008 and there can be no assurance that these companies will be integrated effectively into Softchoice. Particular risks include the following: (i) the potential disruption of Softchoice’s business and the diversion of management’s attention from other business concerns; (ii) the loss of sales personnel due to differing cultures and values of the acquired companies and Softchoice; (iii) loss of acquired customers, particularly if sales personnel leave the Company; (iv) inability to realize on expected cost synergies; (v) inability to manage effectively the services business that has been acquired in which the Company has limited experience or expertise; (vi) the potential inability to capture and incorporate into our system customer purchase history data; and (vii) inability to expand the acquired capabilities across the broader Softchoice customer and employee base.

Customer Attrition

There is a risk that existing customers will not continue to buy from the Company and that management will not be able to increase the customer base effectively. If the Company is not able to retain an increasing number of its customers, then sales growth cannot be maintained at historical levels.

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Productivity

As sales of hardware products increase as a proportion of total revenue, there is a risk that productivity

levels will decline as a result of the smaller size of most hardware orders. There can be no assurance that the Company will be able to increase its overall productivity to compensate for the increase in smaller orders.

Compliance with U.S. Government Procurement Processes

Sales to the U.S. federal government comprised about nine percent of total sales in 2007. The success of this business unit is contingent upon the Company’s ability to identify and manage the government procurement processes. If government procurement requirements are not met, the government can revoke all authorizations to sell to this customer base and the segment would be lost until such time as the authorizations were reinstated. There can be no assurances that Softchoice has identified all the required processes or that we will be able to meet all such requirements.

Sales Model Risks

The Softchoice sales model includes outbound sales staff that visit customers face-to-face and are supported by a variety of inside sales personnel. The face-to-face model requires that Softchoice maintain facilities across North America, with the resulting increased cost base for such items as travel, training, data communication and systems. Management believes that this model will be more cost-effective in the long run as the face-to-face model allows for greater penetration of the customer account and greater revenue per customer. As the hardware business grows so that the Softchoice results are more comparable to those of our competitors, the validity of this assumption will become evident. There is no assurance that the increased costs of the diversified model will lead to greater customer penetration and a better return for investors.

Debt Service Risks

As a result of the acquisitions completed at the end of 2007 and in early 2008, the Company has increased its debt levels significantly and is subject to new debt covenants and interest charges and other fees. There can be no assurances that the earnings from these acquisitions will offset the interest charges. Further, there is a risk that the Company will not be able to meet its debt covenants and this could lead to significant financial constraints being placed upon the Company by its lenders.

Need for Additional Capital in the Future

Softchoice may require additional capital in the future that may not be available to the Company. Softchoice may need to raise additional funds through public or private debt or equity financing. Adequate funds may not be available when needed or may not be available on favourable terms. If Softchoice raises additional funds by issuing equity securities, dilution to existing shares may result. If funding is insufficient at any time in the future, Softchoice may be unable to develop or enhance services, take advantage of business opportunities or respond to competitive pressures, any of which could harm its business. Softchoice’s future capital requirements depend upon many factors, including, but not limited to, the rate of expansion of its operations and the management of its working capital.

Dividend Policy

The Company has a history of paying a dividend of Cdn $0.40 per common share per annum. There is a risk that the Company will not generate cash in accordance with historical trends and therefore will not be able to continue to pay this dividend. In addition, there can be no assurance that the Company’s intention will not change, particularly as a result of its debt structure and if there is a worsening in the underlying economic conditions.

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Management of Growth

Rapid growth in Softchoice’s business due to an increase in the number of customers could strain Softchoice’s operational and financial resources, causing Softchoice to lose customers and increase operating expenses. Any future growth may require Softchoice to, among other things: (i) expand and upgrade hardware and software systems; (ii) expand and improve operational and financial procedures, systems and controls; (iii) improve financial and IT systems; and (iv) expand, train and manage a larger workforce. There can be no assurance that Softchoice’s personnel, systems and controls will be adequate to support future growth. The inability to manage growth effectively or to maintain the quality of Softchoice’s services could cause Softchoice to lose customers and could materially increase operating expenses.

Future Acquisitions

Softchoice intends to participate in the consolidation trend taking place within the IT industry insofar as the criteria for making an acquisition support one or more of the Company’s growth strategies (see “Growth Strategies”). Entering into an acquisition entails many risks, any of which could materially harm Softchoice’s business, including: (i) the potential disruption of Softchoice’s business and the diversion of Management’s attention from other business concerns; (ii) the failure to effectively assimilate the acquired technology or company into Softchoice’s business; (iii) the loss of key employees from either Softchoice’s current business or the acquired business; (iv) the assumption of significant liabilities of the acquired company, the additional expense associated with completing an acquisition and amortizing any acquired assets; (v) the potential impairment of relationships with Softchoice’s customers and suppliers; and (vi) the risk of entering markets in which Softchoice has limited or no experience. There can be no assurance that acquired businesses, products or technologies, if any, will achieve anticipated revenues and income. In addition, the value of Softchoice shares may be diluted if Softchoice issues shares or other equity securities in connection with any acquisition.

Hiring, Training and Retention of Personnel

Softchoice believes that its continued success and sustained growth depend on its ability to hire, train and retain a large number of qualified personnel. There can be no assurance that Softchoice will be successful in attracting and retaining the personnel it requires. Softchoice currently experiences an annual turnover rate of approximately 30 percent; Softchoice cannot be certain that such rate will not increase in the future.

Variability of Quarterly Operating Results

Softchoice’s quarterly results of operations may fluctuate, resulting in a lower price for Softchoice shares. Softchoice’s quarterly results may be affected by factors that are beyond its control, such as the buying patterns of customers, delay in a major software release by a manufacturer or changes in a manufacturer’s prices or rebates, each of which could affect Softchoice’s business, financial condition and results of operations. Softchoice’s sales have tended to be highest in the quarters ending June 30 and December 31. A high percentage of Softchoice’s operating expenses, particularly personnel and rent, are relatively fixed in advance of any particular quarter. This makes the prediction of results of operations on a quarterly basis unreliable. Also, due to these and other factors, it is possible that Softchoice’s quarterly results of operations may be below the expectations of public market analysts and investors. This could adversely affect the price of the Softchoice shares.

Information Systems

The Company’s information systems are internally developed. They contain external applications that are linked to the proprietary core. These external applications include the Oracle ERP system modules for finance and human resources that were implemented in 2003 and the Customer Relationship Management (“CRM”) system that was deployed in 2006. There are continued risks when various departments in the Company operate on different systems and the Company must rely on developed interfaces between these systems. There can be no assurance that these systems will continue to expand to meet the needs of the growth of the Company or that the interfaces will be robust enough as the Company grows.

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Damage to Softchoice's Computer Systems

Softchoice’s operations are dependent on the continued and uninterrupted performance of Softchoice’s computer systems and, accordingly, on its ability to protect its computer systems against damage from computer viruses, fire, power loss, telecommunications failures, vandalism and other malicious acts, and similar unexpected adverse events. Any system failure, security breach or other damage or unanticipated problem with Softchoice’s computer systems could interrupt or delay Softchoice’s operations, damage its reputation and, if sustained or repeated, reduce the attractiveness of Softchoice’s services and result in the loss of customers.

Dependence upon Management

Softchoice depends heavily on its executive management team. Softchoice’s success depends, to a significant extent, upon the efforts and abilities of its current executive management team. Loss of their services could materially and adversely affect Softchoice’s business, results of operations and financial condition.

SELECTED FINANCIAL INFORMATION

The following table presents consolidated financial information for the periods indicated. This table should be read in conjunction with the audited financial statements for the Company and the Management’s Discussion and Analysis for each of the periods indicated.

Year ended December 31, 2007

Year ended December 31, 2006

Year ended December 31, 2005

in U.S. $000s, except per share amounts

Revenue 777,082$ 703,237$ 639,482$ Total Revenue, including Imputed Revenue 1 1,261,133 1,061,979 909,150

Gross profit 125,117 98,554 81,172 Gross profit as a percentage of revenue 16.1% 14.0% 12.7%Gross profit as a percentage of Total Revenue, including Imputed Revenue 1

9.9% 9.3% 8.9%

EBITDA 1 41,515 29,590 25,699

Earnings before income taxes 36,950 26,085 21,569

Net Earnings 21,997 15,930 13,108

Earnings per shareBasic 1.27$ 0.93$ 0.76$ Fully diluted 1.25$ 0.92$ 0.76$

Total Assets 319,826 190,747 173,485

Shareholders' Equity 74,700 56,127 45,563

Dividends 2 6,546 6,044 -

Notes:1

2 The company began paying dividends in 2006. See 'Dividends".

Imputed Revenue and EBITDA are non-GAAP terms and are unaudited. See "Use of Non-GAAP Terms". All imputed revenue and Total Revenue, including Imputed Revenue figures are unaudited.

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

The Company’s Management’s Discussion and Analysis for the year ended December 31, 2007, is incorporated by reference herein.

DIVIDENDS

The Company paid a quarterly dividend of $0.10 per share for each quarter in 2006 and 2007. The Company’s current practice is to pay an annual dividend of C$0.40 per common share, per annum, payable quarterly. Certain banking agreements limit the level of dividends that can be paid beyond the current levels.

CAPITAL STRUCTURE

The authorized capital of the Company is an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, of which 17,407,631 common shares and no preferred shares were outstanding at December 31, 2007. The preferred shares may be issued from time to time in one or more series, the number of shares, designation, rights, privileges, restrictions and conditions of which will be determined by resolution of the Board of Directors of Softchoice. The preferred shares will be entitled to priority over common shares with respect to payment of dividends and distributions in the event of the dissolution, liquidation or winding-up of the Company except as required by law or the provisions of any series. The holders of preferred shares will not be entitled to receive notice of, attend or vote at any meeting of the shareholders of Softchoice.

MARKET FOR SECURITIES

Softchoice’s common shares are listed for trading on the Toronto Stock Exchange (TSX) under the symbol “SO.” During 2007, 6,379,243 shares were traded at prices that ranged from C$11.00 to C$24.18.

Summary of Monthly Trading

Month Close High Low VolumeJanuary 11.25$      11.44$      11.00$     133,988                February 12.19$      12.95$      11.06$     895,768                March 12.70$      12.81$      11.62$     324,536                April 14.30$      14.51$      12.45$     507,878                May 15.75$      16.40$      14.30$     741,730                June 17.80$      18.85$      15.70$     406,505                July 16.37$      18.06$      15.81$     200,603                August 17.55$      17.60$      16.21$     570,884                September 16.58$      17.50$      16.25$     367,239                October 19.60$      19.80$      16.26$     855,675                November 19.85$      22.76$      19.14$     537,204                December 23.32$      24.18$      20.00$     837,233                

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DIRECTORS AND OFFICERS

The following sets out details respecting the Directors and executive Officers of Softchoice, as of December 31, 2007. The names, the municipalities of residence, the positions held by each in Softchoice and the principal occupation for the past five years of the Directors and executive Officers of Softchoice are as follows:

Name and Municipality of Residence

Offices Held

Director Since Principal Occupation Lawrence Tapp(1) Langley, British Columbia

Chairman of the Board; Director

2002 Director; prior to February, 2005, President and CEO of Tapp Technologies Inc. (specialty printing company); prior to 2003, Dean, Richard Ivey School of Business, University of Western Ontario.

David MacDonald Unionville, Ontario

President and Chief Executive Officer, Director

2002 President and Chief Executive Officer Softchoice

Anne Brace Toronto, Ontario

Sr. Vice President, Finance, Chief Financial Officer, Secretary and Treasurer

Sr. Vice President, Finance, Chief Financial Officer, Secretary and Treasurer, Softchoice.

Steve Leslie Unionville, Ontario

Sr.Vice President, Sales

Sr. Vice President, Sales, Softchoice; prior to December 31, 2006, Sr. Vice President Sales and Marketing; prior to December 31, 2005, Vice President Sales, Softchoice;

Nick Foster Toronto, Ontario

Sr. Vice President, Mergers and Acquisitions

Sr. Vice President Mergers and Acquisitions; prior to December 13, 2007, Sr. Vice President, People and Growth, Softchoice; prior to December 31, 2005, Vice President, Marketing, Softchoice;

Kevin Wright Toronto, Ontario

Sr. Vice President, Chief Information Officer

Sr. Vice-President, Chief Information Officer, Softchoice, prior to 2004, Vice President of IT Services, GE IT Solutions

A. Kevin Francis (2) California, USA

Director 2007 President and CEO, Centerbeam Inc. (information technology outsourcing company)

William W. Linton Toronto, Ontario

Director 2007 Chief Financial Officer, Rogers Communications Inc (communications company).; prior to July 2005, President and Chief Executive Office of Call-Net Enterprises Inc. (telecommunications company)

Robert W. Luba (1) Toronto,

Director

2007

President, Luba Financial Inc. (investment company)

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Name and Municipality of Residence

Offices Held

Director Since Principal Occupation Ontario Frank Potter (2) Toronto, Ontario

Director

2002

Chairman, Emerging Markets Advisors Inc. (c0nsulting firm).

Allan J. Reesor (2)

Director 2007 Corporate director; prior to April 2004, Executive Vice-President, Member Services and Chief Information Officer of Ontario Teachers’ Pension Plan

William P. Robinson(1) Calgary, Alberta

Director 2002 President and a Director of Manvest Inc. ( private equity investment company).

_____________ Notes: (1) Member of Audit Committee (2) Member of Human Resources and Corporate Governance Committee.

To the knowledge of Softchoice, none of the nominees for director is or, in the past 10 years has been, a director, chief executive officer or chief financial officer of any issuer that, (a) while the person was acting in that capacity was the subject of a cease trade order or similar order or an order that denied the issuer access to any exemption under securities legislation, for a period of more than 30 consecutive days, (b) was subject to an order described in (a) that was issued after that person ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while the person was acting in that capacity.

To the knowledge of Softchoice, none of the nominees for director (a) is, or has been within the past 10 years, a director or executive officer of any issuer that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver/manager or trustee appointed to hold its assets; or (b) has made a proposal under any legislation relating to bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver/manager or trustee appointed to hold the assets of the person, except as follows:

Mr. Luba served as a director of Safety-Kleen Corp. ("Safety-Kleen"), a New York Stock Exchange listed company, which, on June 9, 2000, filed voluntary petitions for Chapter 11 relief in the Untied States Bankruptcy Court for the District of Delaware. Safety-Kleen emerged from bankruptcy in December 2003. As well, Mr. Luba was the director of a private merchant banking investment, Raymond Steel Inc., which has undergone bankruptcy proceedings.

Within one year after Mr. Robinson ceased to be a director of Concert Industries Ltd. on June 25, 2003, that issuer filed for protection under the Companies' Creditors Arrangement Act.

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The term of each Director will expire at the next annual meeting of the Company. The Directors and executive Officers of Softchoice and their respective associates and affiliates, as a group, beneficially own, directly or indirectly, or exercise control or direction over an aggregate of 351,655 Softchoice shares, representing 2 percent of the issued and outstanding Softchoice shares as of the date of this annual information form. There are no material conflicts of interest among any of the Directors or Officers and the Corporation.

AUDIT COMMITTEE

The composition of the Audit Committee, its mandate, its policy for the pre-approval of audit services, the relevant education and experience of the Audit Committee members and the fees charged by the auditors in 2006 and 2007 have been described in the Management Proxy Circular, which document is incorporated herein by reference.

LEGAL PROCEEDINGS

During the normal course of business, claims by or against the Company arise from time to time. Management is not aware of any claims sufficient to cause a materially adverse effect against the Company or the results of its operations. No amount has been provided for in the financial statements in respect of such claims.

TRANSFER AGENT AND REGISTRAR

The Company’s transfer agent is Computershare Investor Services Canada at 100 University Avenue, Toronto, Ontario M5J 2Y1.

MATERIAL CONTRACTS

The Company enters into a variety of contracts in the normal course of business. Material contracts entered into since January 1, 2002, include:

Asset Purchase Agreement dated October 5, 2007 between the Corporation and NexInnovations Inc., described under “Development of the Business – NexInnovations”.

Share Purchase Agreement dated December 11, 2007 between the Corporation and the shareholders of Software Plus, described in “Development of the Business – Software Plus”.

Share Purchase Agreement dated January 2, 2007 between the Corporation and OHC LLC described under “Development of the Business –Optimus Solutions”.

EXPERTS

The Corporation’s auditors are PricewaterhouseCoopers LLP, Chartered Accountants, who have prepared an independent auditors’ report dated February 12, 2008 in respect of the Corporation’s consolidated financial statements with accompanying notes as at and for the years ended December 31, 2007 and 2006.

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PricewaterhouseCoopers LLP has advised that they are independent with respect to the Corporation within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.

Ernst and Young are the auditors of NexInnovations and their audit report will be included in the Business Acquisition Report related to that acquisition.

ADDITIONAL INFORMATION

Additional information with respect to Softchoice may be found on the SEDAR website at www.sedar.com. Additional financial information is provided in our financial statements and Management’s Discussion and Analysis for the year ended December 31, 2007.

Additional information, including Directors’ and Officers’ remuneration and indebtedness, principal holders of Softchoice’s securities and options to purchase securities if applicable, is contained in Softchoice’s latest Management Information Circular.