IOU FINANCIAL ANNOUNCES PRIVATE PLACEMENT OF UP TO $10 MILLION OF CONVERTIBLE UNSECURED SUBORDINATED DEBENTURES

MONTREAL, Québec, September 25, 2015 /CNW/ – IOU Financial Inc. (TSX Venture Exchange: IOU) (“IOU Financial” or the “Company”), a leading online lender to small businesses in the United States, announced today that it has entered into an engagement letter with Palos Management Inc., a registered dealer, in connection with a brokered private placement on a “best efforts” agency basis of up to $10 million in principal amount of convertible unsecured subordinated debentures of the Company (the “Convertible Debentures”). The Convertible Debentures will be offered at a price of $1,000 per Convertible Debenture on a prospectus-exempt basis in the provinces of British Columbia, Alberta, Ontario and Québec (the “Private Placement”).

The Convertible Debentures will mature on December 31, 2020, will bear interest at a rate of 10% per annum, and will be convertible at their holders’ option into common shares of IOU Financial (“Common Shares”) at a price of $0.75 per Common Share, representing a conversion rate of 1,333.33 Common Shares per $1,000 principal amount of Convertible Debentures. The Company will have the right to force the conversion of the Convertible Debentures into Common Shares at any time after December 31, 2018 should the 20-day volume weighted average price of the Common Shares on the TSX Venture Exchange (the “TSX-V”) exceed 125% of the conversion price.

To date, the Company has received committed subscriptions under the Private Placement in excess of $7 million.

The net proceeds of the Private Placement will be used primarily by IOU Financial to finance small business loans in the Company’s target markets and for general corporate purposes. The Private Placement is subject to regulatory approval, including the approval of the TSX-V.

The Company expects to close the Private Placement on or about November 1, 2015.

This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.

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