Financial Results for the Three and Nine Month Period Ended September 30, 2016

Montreal, Quebec–(Newsfile Corp. – November 29, 2016) – IOU FINANCIAL INC. (TSXV: IOU) (“IOU” or “the Company”), a leading online lender to small businesses (IOUFinancial.com), announced today its results for the three and nine month period ended September 30, 2016.

“IOU remains committed to achieving profitable growth by emphasizing credit quality over loan volume and seeking to continuously improve operational efficiencies. To that end, we recently deployed our next generation proprietary IOU Risk Logic Score, part of our continued investment in innovation and technology and at the end of the quarter adopted a plan to reduce operating costs. The close of our $50 million credit facility with Midcap Financial in the second quarter, lowered our funding costs and enhanced our competitive position,” said Mr. Marleau.

“In addition, during the quarter we also announced our entrance into Canada. Since 2009, we have originated roughly US$ 400 million of loans in the USA. We are looking forward to fueling the growth of small businesses across Canada,” added Mr. Marleau.

FINANCIAL HIGHLIGHTS

  • Loan applications rose significantly year over year. As a result of a continuing disciplined strategy aimed at emphasizing the quality of IOU’s loans over gross loan origination, loan volumes decreased during the quarter. Loan originations in the third quarter ended September 30, 2016 were US$30.2 million versus originations of US$45.0 million for the same period last year. For the nine-month period ended September 30, 2016, IOU Financial originated US$87.5 million in loans compared to loan originations of US$110.1 million for the same period last year.
  • As of September 30, 2016, IOU’s total loans under management decreased to $78.6 million as compared to $89.6 million at the end of the third quarter 2015. On September 30, 2016, the principal balance of the loan portfolio grew to $40.9 million compared to $21.1 million at the end of the third quarter of 2015 consistent with the Company’s strategy to retain more loans on its balance sheet. The principal balance of IOU’s servicing portfolio (loans being serviced on behalf of a third-parties) was $37.7 million compared to $68.5 million in 2015.
  • Gross revenue for the quarter ended September 30, 2016 was $5.7 million versus $2.6 million for the quarter ended September 30, 2015, representing a 114% increase as a result of the increase in the loan portfolio. For the nine-month period ended September 30, 2015, gross revenues improved to $12.5 million, in comparison to $8.1 million for the same period in 2015.
  • IOU recorded net revenue for the quarter ended September 30, 2016 of $2.6 million versus $1.5 million for the quarter ended September 30, 2015. The increase in net revenue for the quarter was due to an increase in the loan portfolio. For the nine-month period ended September 30, 2016 IOU Financial recorded net revenue of $6.1 million versus $5.3 million for the same period in 2015, an increase of 14.9%.
  • Interest expense during the quarter ended September 30, 2016 increased to $0.9 million, up from $0.4 million over the previous year. The increase is attributable to an increase in borrowings under the credit facility. Interest expense for the nine-month period increased to $2.2 million, up from $1.2 million for the same period in 2015.
  • Provision for loan losses (net of recoveries) increased to $2.2 million, up from $0.7 million, for the quarter ended September 30, 2016. This increase is attributable to an increase in the size of the loan portfolio and a build in the allowance for loan losses for loans originated in prior periods. IOU Financial has since adjusted its originating levels and shifted its loan originations towards higher quality loans. This shift is expected to contribute to improved credit performance. In addition, the Company has implemented certain process changes to improve its servicing and collections. For the nine-month period, provision for loan losses (net of recoveries) increased to $4.2 million, up from $1.7 million, over the previous year.
  • Operating expenses (excluding non-recurring costs) were $2.8 million during the third quarter of 2016 versus $2.6 million for the quarter ended September 30, 2015. During the quarter, the Company adopted a plan to reduce operating expenses. These cost-reduction efforts, once fully implemented are expected to lower operating expenses to $2.0 million to $2.2 million during the fourth quarter on a normalized basis. For the nine-month period ended September 30, 2016 IOU Financial recorded operating expenses (excluding non-recurring costs) of $8.8 million versus $7.2 million for the same period in 2015.
  • IOU closed on the third quarter 2016 with a net loss of $350,033, or $0.01 per common share, compared to a net loss of $2,118,655 or $0.03 per common share during the same period of 2015. For the nine-month period ended September 30, 2016, IOU Financial had a net loss of $3,138,259 or $0.05 per common share (2015: $3,029,949 or $0.05 per common share).
  • IOU closed its third quarter 2016 with an adjusted net loss of $131,364, which excludes certain non-cash and non-recurring items, compared to an adjusted loss of $344,340 in the third quarter of 2015. For the nine-month period ended September 30, 2016, IOU Financial had an adjusted loss of $1,740,979 compared to an adjusted loss of $1,209,489 for the same period in 2015.

IOU’s financial statements and management discussion & analysis for the quarter ended September 30, 2016 have been filed on SEDAR and are available at www.sedar.com.

About IOU Financial
IOU Financial provides small businesses throughout the U.S. and Canada 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, the IOU Financial 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 U.S. applicants ($100,000 in Canada) within a few business days, with affordable charges favorable to cash-flow management. It’s speed and transparency make IOU Financial a trusted alternative to banks. To learn more visit: IOUFinancial.com.

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 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. 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 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 TSX-V has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

For more information, please contact:

Philippe Marleau
Chief Executive Officer
(514) 789-0694 ext. 225
David Kennedy
Chief Financial Officer
(514) 789-0694 ext. 278

Generating Additional Income for Salons with Product Expansions

Once a salon is able to compile a roster of returning clients, the business is off to a good start. However, many salon owners and hairstylists focus solely on providing services, such as cutting, blow-drying and styling hair, without considering other ways of generating additional income.

A salon is limited to the amount of clients you can service daily, depending on the the number of stylists available and their operating hours. Each stylist can accommodate a certain amount of people in a day, generating a profit based on those numbers. When you add a retail element to your existing services, you bring in additional profit that is not limited to the number of stylists or hours in the day.

There are numerous benefits to introducing a retail element to a salon; according to Cosmetologist Life, retail has a higher profit margin than services offered, and selling a product to an existing client base increases the client retention rate by up to 30 percent!

How can you introduce retail products into a salon?

Use the Products During the Service

The best way to introduce new products to your clients is to use them during their appointment. When your customers have had a chance to test the items for themselves, they will be much more likely to buy them. Make sure to market the product when you use it, getting the customer excited about it.

Explain that you just got a new product that will provide a benefit to them, such as shortening the time it takes to blow dry their hair, making their hair look fuller, helping their hair color last longer, etc.

Give Away Samples

Consider offering small samples that your customers can try at home, and follow up with them the next time they come in to see if the item proved to be effective.

“Sampling continues to rank among the most effective tactics in the history of direct marketing, in part because of its ability to do what no other medium can: put a physical product in customers’ hands,” according to An Post. In fact, this source reports that a United States Postal Service-sponsored study conducted by Opinion Research Corp. found that “61 percent of those polled said that sampling a product is the most effective way to get them to try a brand.”

Offer a Deal

Offering a deal on a product is another way to encourage your customers to buy it. When you lower the price of an item, you provide your clients with a sense of urgency to purchase it since they are aware that if they don’t purchase it now, it will likely go up in price. Deals also create a sense of excitement; a 2012 study conducted by Claremont Graduate University found that coupons actually raise individual’s oxytocin levels, creating happiness and lowering stress levels.

There are various deals you can offer, such as:

  • Buy one, get one free (BOGO)
  • A percentage off (20% off)
  • An amount off ($10 off)

Adding a retail element to your salon by selling products will generate more income for your business. However, you will need to have the funds to purchase the products and organize shelf space to display them in your salon, which may be a financial strain for many salon owners. IOU Financial can help you secure a small business loan in under 24 hours! Contact us today to learn more about investing in your business.

iouad-banner

Let’s Talk Money: 5 Ways Businesses Can Maintain Financial Transparency with Employees

Talking about money with friends, colleagues, family, or any other relationship that exists is usually topic that is avoided. When running a business, this trend also seems to remain true. Businesses are often reserved when it comes to sharing the company financials with its employees for a variety of fear-based reasons. While every business has the choice of who they share what numbers with, the businesses that choose to share with employees can navigate this hard-to-discuss topic with clear direction. In this post we will review the 5 correct ways your business can maintain financial transparency with your employees. Let’s take a look!

Share the Information on a Consistent Basis: Good and Bad

While good news is much easier to share, if you are committing to sharing the financial status of your company’s transactions with your employees, you should embrace sharing the information on a consistent basis, whether the numbers are good or bad. Sharing on a set schedule demonstrates that the company will remain transparent, regardless of the color the company is heading into. Good, bad, or indifferent, remaining on a set quarterly, monthly, or even weekly sharing basis will help with the commitment to being transparent with your employees.

Explain the Numbers: Help Employees Understand the Breakdown

Graphs, projections, charts, oh my. Sharing the financial status with employees is more than just arrows up or down. Sharing takes explaining what it all means. When reviewing financials, help employees understand the numbers they are seeing. Are the projections on track for making the growth expected? Does the company see their value in those numbers? Do you even know what the numbers mean? Sharing and explaining what each dollar in and dollar out means for the company can demonstrate the value of your employees in every transaction.

Review Tough Questions Ahead of Time

Make sure you’re ready to answer the tough questions that your employees may ask. Consider what the employee may see when the numbers come through and be prepared to explain what the company is doing, thinking, or considering when they see the same numbers. Reviewing some potential questions in advance of the numbers will help navigate a potential onslaught of “what does this mean?” question session.

Share in Person

Timing is everything. Companies usually have the time they share news to the team down to a day and time of the week. That usually is paired with a nicely worded email, newsletter, or some form of typed-out document. When it comes to sharing the fiscal information, companies should consider doing this in person when possible. Sharing in person can help reduce office chatter about what the numbers “really mean”, or reduce the misunderstanding of one “0” in the fancy pie chart. Sharing in person allows allows real questions in real time. If a company can find a way to share and provide a follow-up meeting or offer in person reviews, it will ensure staff morale stays high around the company’s financial transparency and communication with its employees.

Demonstrate the Employee Connection in Financial Goals and Reviews

People work harder when they see their value in the end product. Highlight the employee’s contribution to the numbers they see. By demonstrating the connection each employee has to every dollar, they will be encouraged to take ownership of that dollar. By highlighting where an employee fits in the grand scheme, it will help define purpose, passion, and projections to shoot for. The employee paycheck should not be the only financial connection they see to a company.

By sharing and remaining transparent with your company’s financial statements, employees can find increased value and connection to the company that they work hard for. By following these five ways to maintain your business’s financial transparency, employers can reduce the fear that goes into sharing their finances with others. While these methods may not make dinner party discussion about how much or how little one makes easier, it can help the employee, company, and its operating managers feel better prepared to use the company numbers to their advantage.

IOU Financial announces the completion of the second and final tranche of its private placement for total gross proceeds of approximately $1.1 million

MONTRÉAL, Nov. 8, 2016 /CNW Telbec/ – IOU Financial Inc. (“IOU Financial” or the “Company“) (TSX-V: IOU) is pleased to announce that it closed on November 7, 2016 the second tranche of its previously announced private placement of common shares (the “Common Shares“) for total gross proceeds of approximately $1.1 million. The Common Shares were offered to investors at a price of $0.27 per Common Share. The second tranche, when combined with the previously announced first tranche of the private placement, raised total gross proceeds of approximately $2.3 million. Insiders of IOU Financial (or entities related to, or controlled by, them), being Philippe Marleau, CEO and director, Serguei Kouzmine, director, and Jason Cawley, director, each participated in the second tranche of the private placement and subscribed a total of 2,033,333 Common Shares for total gross proceeds of approximately $549,000. In connection with the private placement, the Company paid to Palos Management Inc. (“Palos“), a related party to the Company, a cash commission equal to 6% of the proceeds raised from subscribers introduced to the Company by Palos, for a total aggregate cash commission payment of $40,812.

The issuance of securities to such persons and the payment of a cash commission to Palos may be considered related party transactions within the meaning of Regulation 61-101 respecting protection of minority security holders in special transactions. However, the private placement is exempt from the valuation and minority approval requirements provided under such regulation since the fair market value of the private placement to related parties is less than 25 per cent of the market capitalization of IOU Financial. The board of directors of IOU Financial has approved the private placement. Messrs. Marleau, Kouzmine and Cawley declared their interest prior to the approval by the board of directors of IOU Financial and abstained from voting thereon.

A material change report in respect of this related party transaction has been filed by the Company but 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 and the terms of the participation of certain of the non-related parties and the related parties in the private placement were not confirmed.

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 WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (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.

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 approval, the execution of definitive documentation and the uncertainty of obtaining additional financing. 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 TSX-V has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Should You Allow Pets at the Workplace?

As a business owner, there are a lot of decisions you need to make about the best policies for your office. You may offer your employees unlimited vacation, the option to telecommute to work, or free lunch. Another benefit to consider offering your staff members is a pet-friendly office environment. Although this may seem counterproductive to running a successful operation, it’s becoming more common for business owners to allow staff members to bring their pets to work. Is a pet-friendly office right for your business? Consider the benefits that pets can offer to your team members, such as:

dog_blogLower Stress Levels

The workplace is a fast-paced, demanding environment, which creates stress for working professionals. Forty percent of workers stated that they were very or extremely stressed out on the job, and 25 percent said that their work was the number one cause of stress in their lives. The effects of stress on the body are well-known: high blood pressure, sleep problems, weight issues, diabetes and heart attacks.

One effective way to fight stress is to create a pet-friendly office where employees are allowed to bring in their cats and dogs. A 2012 study found that employees who brought their pets to work reported being less stressed out throughout the day.

Dogs have been proven to reduce levels of cortisol, which is a hormone that is responsible for stress, while raising the levels of oxytocin, the “love hormone,” which causes happiness. A 2001 study found that pets can lower blood pressure levels that are caused by mental stress.

Improved Communication

Employees must be able to effectively communicate with each other, ask each other for help, and create a support system in the office. However, most professionals are too busy with their responsibilities to get to know their colleagues.

Bringing pets to work has been shown to increase interaction between employees. “When I first took the job, I often learned the names of the pets before employees, and it helped me build a bond with everyone,” stated Lisa Conklin, public relations manager for Replacements, a dinnerware retailer.

When a team is able to communicate effectively, they are more efficient, productive and happier. This benefits business owners with a better corporate culture, higher employee retention rates and additional profits due to increase productivity.

Work/ Life Balance

Employees are increasingly demanding a better work/ life balance amidst the longer work  hours common in the US. A pet-friendly office helps to improve that balance by allowing staff members to bring their beloved pets to work. A long day at the office does not seem so bad when your employee’s canine best friend is next to them. Additionally, it takes away the burden of hiring dog walkers or worrying about pets being alone for extended periods of time.

Set Policies When Allowing Pets at Work

If you believe that allowing pets at work could benefit your business, it is advantageous to create rules that all employees must abide by. First, the office should be pet-proofed, which means all loose wires must be hidden, small objects must be removed from lower surfaces and all doors must be closed at all times.

Second, a pet policy should be adopted that allows only well-behaved and friendly pets to be brought to work. For example, a dog that is prone to barking will only distract your workers instead of increasing productivity.

Third, find out if any of your staff members have allergies to pets. If this is the case, they may agree to take allergy medications; however, that must be discussed before pets are allowed on the premises.

If you could benefit from more advice on managing a business, click here to find seven tips to small business success.

IOU Financial announces the completion of the first tranche of its private placement for total gross proceeds of approximately $1.2 million

MONTRÉAL, Oct. 13, 2016 – IOU Financial Inc. (“IOU Financial” or the “Company”) (TSXV: IOU) is pleased to announce that it closed on the date hereof the first tranche of its previously announced private placement of common shares (the “Common Shares”) for total gross proceeds of approximately $1.2 million. The Common Shares were offered to investors at a price of $0.27 per Common Share.

Insiders of IOU Financial (or entities related to, or controlled by, them), being Philippe Marleau, CEO and director, Serguei Kouzmine, director, David John Kennedy, CFO, Yves Roy, director, and Charles Marleau, each participated in the private placement and subscribed a total of 2,944,444 Common Shares for total gross proceeds of approximately $795,000.

The issuance of securities to such persons may be considered a related party transaction within the meaning of Regulation 61-101 respecting protection of minority securityholders in special transactions. However, the private placement is exempt from the valuation and minority approval requirements provided under such regulation since the fair market value of the private placement to related parties is less than 25 per cent of the market capitalization of IOU Financial. The board of directors of IOU Financial has approved the private placement. Messrs. Marleau, Kouzmine and Roy declared their interest prior to the approval by the board of directors of IOU Financial and abstained from voting thereon.

A material change report in respect of this related party transaction will be filed by the Company but 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 and the terms of the participation of certain of the non-related parties and the related parties in the private placement were not confirmed.

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 WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (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.

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 approval, the execution of definitive documentation and the uncertainty of obtaining additional financing. 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 TSX-V has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Integrating New Technology for Greater Business Success

Medical Plaza Pharmacy in Houston, Texas has become a staple business in the community. With lots of hard work and a few career shifts, small business owner Art has built his company from the ground-up. After following in his brother’s footsteps and finishing Pharmacy school, Art spent a few years working for a large chain. He and his brother always dreamt of opening their own business together. In 1973, that dream became reality and lasted for 10 years before they both went to work for independents. In 1987, an opportunity arose for Art to open his own business again, and he jumped at the chance. In its 29 years, Art’s business has flourished and provided a much-needed service to his community. “I get enjoyment out of helping  people with health issues and assisting them anyway I can. That has always been a calling card for myself and my growth,” said Art.

Art has borrowed working capital from IOU Financial a art-blog-imagefew times to encourage his business growth. Throughout the years, his business model has changed and technology has quickly evolved the industry. “If you don’t keep up with technology, you fall behind. However, technology can cost a lot,” said the business owner. “At this time, my business is looking to introduce technology in new ways in order to advance in other areas of practice, such as becoming involved in assisted living communities.”

An IOU small business loan provides a cushion that allows Art’s business to grow at a quicker pace. In the past he has used his working capital to make upgrades to the physical space, providing a fresh environment for his customers and employees. This time around he is focused on moving forward in the industry through technological advances and the integration of new software.

“IOU has been very cooperative with my loan applications. The people there really look at what we are trying to do, and they’ve invested in our business as though we’re a best friend. The IOU employees I have spoken with have been so enthusiastic about our growth,” said Art. “That is so helpful in getting us the funds we need to continue to grow in the direction we’d like. We’ve had nothing but wonderful experiences with the company!”

iouad-banner