IOU Financial Inc. Releases Financial Results for the Three and Six Month Period Ended June 30, 2016

Montreal, Quebec--(Newsfile Corp. - August 25, 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 six month period ended June 30, 2016.

"IOU believes loan quality is imperative to achieving its long term objective of loan origination growth of 25% to 30% annually. We are very pleased to have sustained healthy loan originations while continuing to emphasize loan quality in the quarter. IOU's disciplined growth path distinguishes it within the fintech marketplace," said Phil Marleau, CEO of IOU Financial.

"IOU is committed to profitable growth achieved by increasingly focussing on credit quality and continously improving operational efficiencies. To that end, we are working diligently to deploy our next generation proprietary IOU Risk Logic Score, part of our continued investment in innovation and technology. Finally, closing our $50 million credit facility with Midcap Financial in the second quarter, lowered our funding costs and enhanced our competitive position in the marketplace," continued Mr. Marleau.

FINANCIAL HIGHLIGHTS

• Loan applications rose significantly year over year. As a result of a continuing strategy aimed at maintaining the quality of IOU's loans, loan volumes decreased slightly during the quarter. Loan originations in the second quarter ended June 30, 2016 were US$31.8 million versus originations of US$33.8 million for the same period last year. For the six month period ended June 30, 2016, IOU Financial originated US$57.1 million in loans, representing a decrease of 12.2% over loan originations of US$65.1 million for the same period last year.

• As of June 30, 2016, IOU's total loans under management rose to $79.6 million as compared to $73.4 million at the end of the second quarter 2015, representing a year over year increase of 8.4%. On June 30, 2016, the principal balance of the loan portfolio grew to $35.5 million compared to $19.5 million at the end of the second quarter of 2015 while the principal balance of IOU's servicing portfolio (loans being serviced on behalf of a third-parties) was $44.1 million compared to $53.9 million in 2015.

• IOU improved gross revenue for the quarter ended June 30, 2016 of $3.5 million versus $2.9 million for the quarter ended June 30, 2015, representing a 22% increase as a result of the increase in the loan portfolio. For the six month period ended June 30, 2015, IOU Financial gross revenues improved to $6.8 million, in comparison to $5.5 million for the same period in 2015.

• IOU recorded net revenue for the quarter ended June 30, 2016 of $1.6 million versus $1.8 million for the quarter ended June 30, 2015. Two elements drove the decrease. First, an increase in interest paid as a result of the convertible unsecured subordinated debentures which closed in November 2015. Second, an increase in the provision for loan losses. For the six month period ended June 30, 2016 IOU Financial recorded net revenue of $3.5 million versus $3.8 million for the same period in 2015, a decrease of 8.2%.

• Operating expenses were $3.1 million during the second quarter of 2016 versus $2.5 million for the quarter ended June 30, 2015 as a result of an increase in staffing expenses, professional fees as well as legal fees relating to the closing of its credit facility. Legal fees relating to the closing of its credit facility amounted to approximately $0.3 million. For the six month period ended June 30, 2016 IOU Financial recorded operating expenses of $6.0 million versus $4.7 million for the same period in 2015.

• IOU closed on the second quarter 2016 with a net loss of $1,479,997, or $0.02 per common share, compared to a net loss of $696,296 or $0.01 per common share during the same period of 2015. For the six month period ended June 30, 2016, IOU Financial had a net loss of $2,788,226 or $0.05 per common share (2015: $911,294 or $0.02 per common share).

• IOU closed its second quarter 2016 with an adjusted Loss of $1,136,135, which excludes certain non-cash and non-recurring items, compared to an adjusted loss of $603,989 in the second quarter of 2015. For the six month period ended June 30, 2016, IOU Financial had an adjusted loss of $1,609,615 compared to an adjusted loss of $865,149 for the same period in 2015.

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

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 $150,000 to qualified applicants within a few business days, with affordable charges favourable to cash-flow management. IOU Financial's speed and transparency make it 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.

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