IOU Financial announces the closing of its private placement for total gross proceeds of approximately $2.1 million and provides corporate update

MONTRÉAL, Dec. 3, 2020 /CNW Telbec/ - IOU Financial Inc. ("IOU Financial" or the "Company") (TSXV: IOU) is pleased to announce that it closed on the date hereof its non-brokered private placement of 18,009,806 common shares of the Company (the "Common Shares") for total gross proceeds of approximately $2.1 million (the "Offering") previously announced on November 4, 2020. The Common Shares were offered to investors at a price of $0.1157 per Common Share.

As a part of the Offering, NB Specialty Finance Fund LP acquired 15,665,839 Common Shares for total gross proceeds of approximately $1,812,565, representing approximately 15% of the Company's issued and outstanding Common Shares.

Also as part of the Offering, an insider of IOU Financial, FinTech Ventures Fund, LLLP ("FinTech"), subscribed for 2,343,967 Common Shares for total gross proceeds of approximately $271,201 (the "Insider Subscription"). Further to the Offering, FinTech beneficially owns or control 13,592,671 Common Shares, representing approximately 13% of the Company's issued and outstanding Common Shares. The issuance of securities to FinTech may be considered a related party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.  However, the Offering is exempt from the valuation and minority approval requirements provided under such regulation since the fair market value of the Insider Subscription is less than 25 per cent of the market capitalization of IOU Financial.  The Company's board of directors has approved the Offering. Lucas Timberlake, a member of IOU Financial's board of directors and a Partner at FinTech, declared his interest prior to the approval by the board of directors of IOU Financial and abstained from voting.

The net proceeds of the Offering will strengthen the Company's financial position and be used for general corporate purposes.  The Offering remains subject to regulatory approval, including the definitive approval of the TSX-V.

A material change report in respect of this related party transaction could not be filed earlier than 21 days prior to the closing of the private placement due to the fact that the private placement was still subject to regulatory approval.

This news release shall not constitute an offer to sell nor the solicitation of an offer to buy nor shall there be any securities of IOU Financial offered in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Common Shares will be offered on a private placement basis in Canada and only to "accredited investors", as such term is defined under applicable Canadian securities laws.

THE SECURITIES BEING OFFERED HAVE NOT BEEN, NOR WILL THEY BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.

Corporate Update

Mr. Neil Wolfson, as previously announced, was also appointed to the board of directors of the Company as at the date hereof. The Company granted options to Mr. Wolfson to acquire up to an aggregate of 55,000 Common Shares at an exercise price of $0.10875. These options have a term of five years from the date of grant with one-third (1/3) vesting immediately and one-third (1/3) vesting on each of the first and second anniversaries of the date of grant. If exercised, their underlying shares would be subject to a four-month hold period from the date of issuance of the options.

About IOU Financial Inc.

IOU Financial Inc. provides small businesses throughout the U.S. and Canada access to the capital they need to seize growth opportunities quickly. In a unique approach to lending, IOU Financial's advanced, automated application and approval system accurately assesses applicants' financial realities, with an emphasis on day-to-day cash flow trends. IOU Financial allows these businesses to apply for six, nine, twelve, fifteen and eighteen-month term loans of up to US$500,000 to qualified U.S. applicants ($150,000 in Canada) within a few business days, with affordable charges favorable to cash-flow management. Its speed and transparency make IOU Financial a trusted alternative to banks. As of September 30, 2020, IOU Financial had originated US$854 million in loans to small businesses. To learn more visit: IOUFinancial.com.

Forward Looking Statements

Certain information set forth in this news release may contain forward-looking statements.  Forward looking statements are statements, other than statements of historical fact, that address or discuss activities, events or developments that IOU Financial expects or anticipates may occur in the future.  These forward looking statements can be identified by the use of words and phrases such as "anticipates", "believes", "estimates", "expects", "may", "plans", "projects", "should", "will", "intends", "seeks", "allows", or the negative thereof or other variations thereon.  In particular, this news release contains forward-looking statements including, without limitation, with respect to the Company's future financial position.  These forward-looking statements are subject to and involve substantial known and unknown 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 obtaining of the definitive regulatory approval relating to the Offering, the uncertainty of obtaining additional financing, risks related to the Company's incapacity to execute on its business plan, dependence on third-party service providers, competition, dependence on key personnel, security and confidentiality risk, technological development risk, IT disruptions, maintenance of client relationships, and litigation risk.  No assurance can be given that any of the events anticipated by such statements will occur or, if they do occur, what benefit IOU Financial will derive from them.  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.  Additional information concerning these and other factors can be found beginning on page 22 under the heading "Risks and Uncertainties" in IOU Financial's management's discussion and analysis dated November 20, 2020, which is available under IOU Financial's profile on SEDAR at www.sedar.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE IOU Financial Inc.

Phil Marleau, Chief Executive Officer, [phone], ext. 225; David Kennedy, Chief Financial Officer, [phone], ext. 278; Benjamin Yi, Capital Markets & Corporate Development, [phone]

Related Links

https://ioufinancial.com/en-ca/