IOU Financial Chairman Releases Letter to Shareholders

• IOU urges shareholders to REJECT Qwave Partial Offer
• Qwave lacks credible plan and its offer is substantially inadequate
• IOU's business continues to accelerate and has originated US$260 million in loans since inception

MONTREAL, Sept. 8, 2015 /CNW/ - IOU Financial Inc. (TSX Venture Exchange: IOU) ("IOU" or the "Company"), a leading online lender to small businesses, today released a letter from the Chairman of the Board of Directors (the "Board") to IOU shareholders ("Shareholders"), further responding to the unsolicited partial takeover offer from Qwave Capital LLC ("Qwave") for the purchase of 34,000,000 outstanding common shares (the "Common Shares") of IOU (representing approximately 55.3% of the issued and outstanding Common Shares at the date hereof (50.4% of Common Shares on a fully-diluted basis) at a price of $0.50 per Common Share (the "Qwave Partial Offer").

Shareholders are encouraged to review IOU's Directors' Circular which sets forth in greater detail the Board's recommendation and the reasons for rejecting the Qwave Partial Offer, is available under the Company's profile on SEDAR at www.sedar.com and was mailed to all Shareholders. The Directors' Circular is also available on the Company's Website www.ioufinancial.com.

The full text of the Chairman's letter follows:

Dear Fellow Shareholders:

You have an important decision to make, one that will affect the future of your investment in IOU.

As you know, an entity called "Qwave" made a partial bid for IOU several weeks ago. If successful, Qwave would gain control of just over 50% of IOU fully diluted outstanding shares, allowing it to effectively control IOU without having to purchase the entire company and without having to pay all Shareholders an appropriate control premium. Due to the effect of pro-ration if all Shareholders were to accept the Qwave Partial Offer, Shareholders will be able to tender at most 55.3% of their outstanding shares to the Qwave Partial Offer.

After the successful completion of the Qwave Partial Offer, the remaining minority shareholders of IOU will have little say in how their company is run, since Qwave's holdings will allow it to install a board of its choosing. Important decisions about future M&A activity, operations, and leadership, will be in the hands of Qwave's hand-picked directors. In addition, with 50% fewer Common Shares outstanding, the stock may suffer from significantly lower trading liquidity, resulting in less attention from the marketplace. Most importantly, the Board believes that in the hands of Qwave, IOU will have significantly diminished prospects for growth and profitability given the risk of the potential loss of key management personnel and Qwave's lack of operating experience.

On July 10^th, the Board unanimously recommended that IOU shareholders REJECT the Qwave Partial Offer and NOT TENDER their Common Shares. Each member of the Board and management team has also rejected the Qwave Partial Offer and will not tender their personal shareholdings.   

The timing of the Qwave Partial Offer is highly opportunistic, as it comes at a critical inflection point in IOU's business and amid increased investor interest in the alternative non-bank lending space. The years of work invested by our management team, and you, our shareholders, to develop IOU's lending platform, sales channels and partnerships is beginning to bear fruit, and we are seeing a significant acceleration in our business which was apparent in the second quarter of 2015, and has continued in the third quarter. In the second quarter of 2015, IOU originated US$33.8 Million in new loans, representing a year over year increase of 40%. In the current third quarter, for the months of July and August alone, loan originations totaled US$31.3 Million, representing a year over year increase of 150% vs. the same period in 2014.

To-date we have originated over US$260 million of loans since inception.

In addition, IOU announced plans to build on its success in the United States by expanding its offering to Canada – transforming small business lending in its home market.

We believe that further market expansion, backed up by consecutive quarters of strong and consistent loan growth will ultimately be recognized and rewarded by the stock market. We should not be surprised that firms like Qwave would want to get in front of the stock market's recognition of value with an inadequate and potentially coercive takeover bid. It is up to us as shareholders, to recognize the tremendous opportunity in front of us and reject a bid that your board believes deeply undervalues IOU's market position, assets, brand presence, and long-term business prospects.

To-date, Qwave has failed to articulate a credible plan for IOU and has said little about its track record and principals other than noting their activities have been focused on "physics and the material sciences". In contrast, IOU has a well-thought out strategic plan, a track-record of growth and execution and a motivated and highly-qualified management team led by CEO Philippe Marleau. The Board believes that the loss of IOU's management team could adversely affect the value of the remaining shares of IOU following the completion of the Qwave Partial Offer. The Board also reminds Shareholders that it is pursuing alternative transactions to the Qwave Partial Offer, and it anticipates making an announcement on the conclusion of its deliberations in the short term.

Fellow Shareholders, I urge you to reject the Qwave Partial Offer and allow your Board and management team to remain focused on delivering sustainable profitability and long term shareholder value. IOU has the right plan, the right people and is delivering results for Shareholders.

To REJECT the Qwave Partial Offer, you don't need to take any action. Simply discard any materials sent to you by Qwave or their representatives. If you have tendered your Common Shares to the Qwave Partial Offer, withdraw them as indicated in the Directors' Circular.

If you have questions or require assistance, please contact IOU Financial at 1-877-419-0934 (toll-free in North America) or [email protected]

Sincerely,

Evan Price, Chairman of the Board

About IOU Financial Inc.

IOU Financial provides small businesses throughout the U.S. access to the capital they need to seize growth opportunities quickly. Typical customers include medical and dental practices, grocery and retail stores, restaurant and hotel franchisees and e-commerce companies. 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. It makes loans of up to US$150,000 to qualified applicants within a few business days, with affordable charges favorable to cash-flow management. IOU Financial's speed and transparency make it a trusted alternative to banks. To learn more visit: www.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 expects or anticipates may occur in the future. These forward looking statements can be identified by the use of words such as "anticipates", "believes", "estimates", "expects", "may", "plans", "projects", "should", "will", or the negative thereof or other variations thereon. These forward-looking statements reflect management's current views and are based on certain assumptions including assumptions as to future economic conditions and courses of action, as well as other factors management believes are appropriate in the circumstances. Such forward-looking statements are subject to risks and uncertainties and no assurance can be given that any of the events anticipated by such statements will occur or, if they do occur, what benefit IOU will derive from them. A number of factors could cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, risks related to the actions taken by Qwave in connection with the Qwave Partial Offer, risks related to the actions taken by Shareholders in response to the Qwave Partial Offer, risks related to the possible effects of the Qwave Partial Offer on the business and prospects of IOU, risks inherent in growing a new business, dependence on third-party service providers, competition, regulatory risk, dependence on key personnel, risks related to rapid growth of IOU, security and confidentiality risk, risk related to inability to attract borrowers and lenders, technological development risk, IT disruptions, maintenance of client relationships, litigation risk, volatility of stock price, and other factors that are beyond its control. Additional information concerning these and other factors can be found beginning on page 15 under the heading "Risks and Uncertainties" in IOU's management's discussion and analysis dated August 25, 2015, which is available under IOU'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.

For more information, shareholders please contact IOU at: 1-877-419-0934 (toll-free in North America) or [email protected].

or

Philippe Marleau
Chief Executive Officer
[phone] ext. 225

SOURCE IOU Financial Inc.

Media: Bayfield Strategy, Inc. - Riyaz Lalani, 416-907-9365