IOU Financial announces that it has entered into an agreement to sell loans to the Palos/IOU High Yield Fund, a fund managed by Palos Management Inc.

MONTREAL, Jan. 8, 2014 /CNW Telbec/ - IOU Financial Inc. ("IOU Financial") (CNSX: IOU) is pleased to announce that it has entered into an agreement with Palos Management Inc. and the Palos/IOU High Yield Fund (the "Fund"), a fund managed by Palos Management Inc., whereby its wholly-owned US subsidiary, IOU Central Inc., will have the opportunity, but not the obligation, to sell to the Fund, and the Fund will have the opportunity, but not the obligation, to purchase, up to US$7.5 million aggregate principal amount of loans originated, over the course of the next twelve months.

This transaction may be considered a related party transaction within the meaning of Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions ("61-101") since Philippe Marleau, Chief Executive Officer and a director of IOU Financial, is a shareholder in a company that has control over more than 10% of IOU Financial's common shares and which controls, indirectly, Palos Management Inc. However, this transaction is exempt from the valuation and minority approval requirements provided under such regulation since IOU Financial, as a CNSX-listed issuer, is not listed on "specified markets", as defined under 61-101, and the fair market value of the transaction represents not more than 25% of IOU Financial's market capitalization.

The Board of Directors of IOU Financial has unanimously approved the transaction. Philippe Marleau declared his interest prior to the approval by the Board of Directors of IOU Financial and abstained from voting thereon.

Forward Looking Statements

Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of IOU Financial including, but not limited to, the impact of general economic conditions, industry conditions, dependence upon regulatory and shareholder approvals, the execution of definitive documentation and the uncertainty of obtaining additional financing. The transaction is still subject to due diligence by Palos Management and there can be no assurances that it will be completed. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. IOU Financial does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.

The CNSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

SOURCE IOU FINANCIAL INC.

For further information:

Philippe Marleau
Chief Executive Officer
(514) 789-0694 ext. 225

Mayco Quiroz
Chief Financial Officer
(514) 789-0694 ext. 298