XS Cargo Income Fund Announces Fourth Quarter and Year End Guidance and Appointment of New Vice-President Distribution & Logistics

EDMONTON, ALBERTA--(Marketwire - Feb. 15, 2008) - XS Cargo Income Fund (TSX:XSC.UN) (the "Fund") today announced that based on the preliminary unaudited financial information currently available, EBITDA and earnings for the Fourth Quarter of 2007 and the year ending December 31, 2007 will be lower than anticipated. The Company experienced a significant supply chain disruption related to the implementation of its new Merchandise Management System. This negatively impacted sales and significantly increased freight, storage and labor costs. The audited 2007 and Fourth Quarter Financial Statements will be released in March 2008 in accordance with the Company's normal reporting schedule.

The lower than anticipated sales and higher than expected costs will result in the Company (as at its fiscal year end of December 31, 2007) breaching some of the financial covenants given by the Company under the Company's Credit Agreement with the CIBC as well as under the Loan Agreements granted in favor of its subordinated debt lenders, Famous Brands Inc. and the CIBC. Representatives from the Company's management have met with its lenders to discuss those issues.

"In spite of the problems associated with our Merchandise Management System which have had a substantial negative affect on our 2007 financial results, I remain confident in our business model as all 40 XS Cargo stores were profitable on a four wall EBITDA basis during 2007." says Michael McKenna, Chief Executive Officer and President of the Company. "As a result there is neither the need nor any plans to close any of our current stores. We are currently working on correcting our supply chain problems and our new Vice-President of Distribution & Logistics, Bob Dickson has already made significant progress to date on these issues."

Mr. Bob Dickson was hired and appointed Vice-President of Distribution & Logistics by the Fund on January 2, 2008. Mr. Dickson has over 20 years experience in logistics and distribution management.

ABOUT THE FUND

The Fund is an open-ended trust that holds, indirectly, a 51% interest in XS Cargo Limited Partnership ("XS Cargo LP"). XS Cargo LP is one of the largest broadline closeout retailers in Canada with 35 stores in the provinces of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario, Newfoundland and Nova Scotia. The Fund's trust units are listed on the Toronto Stock Exchange under the symbol "XSC.UN".

Additional information about XS Cargo Income Fund is available at www.sedar.com and the Fund's website at www.xscargo.com.