IOU Financial Advises Shareholders Not to Take Action with respect to Qwave’s Unsolicited Partial Offer; Hires Raymond James Ltd. as Financial Advisor and Announces Adoption of a Rights Plan

Montreal, Quebec, June 29, 2015 — IOU FINANCIAL INC. (“IOU Financial” or the “Company”; ticker symbol IOU/TSX-V), a leading online lender to small businesses, acknowledges the filing on June 25, 2015, of a take-over bid circular by Qwave Capital LLC (“Qwave”) for its unsolicited partial offer to purchase 34,000,000 outstanding common shares of IOU Financial (representing approximately 55.3% of IOU Financial’s issued and outstanding shares at the date hereof and 50.4% of IOU Financial’s issued and outstanding shares at the date hereof on a fully-diluted basis) at a price of $0.50 per common share. The current expiry date of the partial offer is July 31, 2015.

The board of directors of the Company (the “Board”) is evaluating Qwave’s partial offer and is also considering other alternatives. To that effect, the Board has hired Raymond James Ltd. as its financial advisor. Once a thorough review of Qwave’s partial offer and other alternatives has been completed, the Board will communicate its views to shareholders by issuing a news release and filing and mailing a circular to them within the statutory time period of 15 days from the date of the filing and mailing of the Qwave partial offer. In the interim, the Board advises shareholders not to take any action with respect to this unsolicited partial offer until the Board and its advisors have evaluated the partial offer and the Company’s other alternatives, and the Company has made a statement with respect thereto.

Given the unsolicited nature of Qwave’s partial offer and the time required to thoroughly consider alternatives to the partial offer, the Board has adopted a shareholder rights plan effective as of this date. The rights issued under the rights plan will become exercisable when a person, together with any parties related to it, acquires 20% or more of the Company’s outstanding common shares without complying with the “Permitted Bid” provisions of the rights plan or without approval of the Board. Should such an acquisition occur, rights holders (other than the acquiring person and related persons) will be able to purchase common shares of the Company at a significant discount to the market price of the common shares at that time.
Under the rights plan, a Permitted Bid is a bid (i) made to all holders of the Company’s common shares for all of the outstanding common shares they hold, (ii) which provides, among other things, that the acquiring person may take up and pay for the common shares only if at least 50% of the outstanding common shares of the Company, other than those held by the acquiring person and related persons, have been tendered, and (iii) which remains open for a minimum of 60 days.

The Board has determined to defer the “Separation Time” for rights under the rights plan in connection with Qwave’s partial offer to a later date to be determined by subsequent decision of the Board.

The issuance of common shares upon exercise of the rights is subject to receipt of certain regulatory approvals, including from the TSX Venture Exchange. The rights plan will take effect immediately and will be subject to confirmation by the Company’s shareholders at its next shareholder meeting. The rights plan will terminate at the earlier of the close of the meeting at which it is not confirmed by the Company’s shareholders and the date that is six months after the date hereof.

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