Qwave Offer Provides Value, Liquidity and Opportunity; IOU Insiders Continue to Undermine Shareholder Value and Threaten Profitable Growth

MONTREAL, QUEBEC--(Marketwired - Aug. 31, 2015) - Qwave Capital LLC ("Qwave"), a venture capital firm focused on promising technologically advanced companies, announced today that it has distributed a letter to IOU Financial Inc. ("IOU") shareholders.

The letter details how Qwave's all-cash offer (the "Offer") to purchase 34,000,000 common shares ("Common Shares") of IOU at $0.50 per share is far superior to IOU's status quo, which includes the failure to grow shareholder value due to insider transactions, the company's deteriorating competitive position, ongoing losses, and management's risky development plans and inability to raise capital.

The full text of the letter is as follows:

"August 31, 2015"

Dear IOU Shareholder:

Today, the competitive position of IOU Financial Inc. ("IOU") is tenuous: the company is losing money, missing out on growth opportunities and falling further behind its much larger and better funded competitors. If IOU continues on its current path, its survival is at risk.

There is a better way forward for IOU.

As an IOU shareholder, you can directly impact the value of your investment and the company's future direction. By tendering to the all-cash offer (the "Offer") from Qwave Capital LLC ("Qwave") to purchase 34,000,000 common shares ("Common Shares") of IOU at $0.50 per share, you will secure a significant premium on a substantial portion of your IOU investment and partner with an experienced technology investor focused on IOU realizing its full potential.

Insider transactions sapping IOU's strength

When looking at the current state of IOU, investors must recognize that the key issue driving poor performance is that IOU leadership consistently puts the financial and business interests of insiders before the interests of the company and shareholders:

	•	IOU transactions have allowed Board members and insiders to maintain their dominant interest in IOU and purchase shares for below-market value. For instance, IOU recently completed a private placement financing at $0.40 per share, a 20% discount to Qwave's Offer and the private placement's original $0.50 per share price. IOU completed the $0.40 per share offering even though Qwave's offer was on the table and IOU had confirmed offers at $0.50 per share on its books. Parties related to IOU management subscribed to approximately 17% of the offering at the discounted offer price.
		Earlier this year, the IOU Board rejected a $15 million equity financing offer at $0.58 per share without explanation. The IOU Board's refusal to accept superior financing offers from outside investors in favor of inferior related-party transactions raises serious questions about the Board's commitment to transparency and IOU shareholders, and its ability to lead the company.
	•	TheIOU Board and management continue to conduct IOU business with related parties that benefit the privately owned entities (and the IOU insiders invested in them) while IOU continues to lose money. For instance, entities related to the IOU CEO have purchased more than $18.8 million of commercial loans receivable from IOU, received fees relating to loans sold to a third-party purchaser, and received commissions and warrants as a co-lead broker relating to an IOU private placement.

In addition to the damage that the Board and management insiders have done to IOU's business and its capital structure through related-party transactions, IOU shareholders continue to suffer due to:

	•	Funding failures: On June 19, 2015, IOU raised less than half the $7 million initially sought by IOU in February 2015. The final $0.40 share price represented a 19% discount to the closing price of IOU shares on June 19, 2015, and a 20% discount to the Qwave Offer and other outstanding offers on IOU's books.
	•	Ongoing losses: Based on IOU's second quarter disclosure on August 25, 2015, the company continues to operate unprofitably (recording a net loss attributable to IOU shareholders of $696,296 for the period).
		In all, IOU continues to demonstrate that it cannot grow profitably and compete effectively within its current model. This is made worse by the fact that, because IOU does not have sufficient capital, conservative lenders are reluctant to provide IOU access to capital at competitive rates. In comparison, OnDeck, IOU's major online lending competitor, had raised far more capital when at the same stage of development that IOU is at today. OnDeck can now attract the lower interest funds it requires to lend out to customers and support its profitable growth in the U.S. and Canada.
	•	Uncertain future: The more business IOU loses to competitors due to insufficient capital and high borrowing costs, the more uncertain its future. Meanwhile, the small business lending space is becoming more competitive, forcing small business lenders to lower the interest rates they charge their customers and compete harder for business.

No Competing Offers Emerging

The IOU Board has now had ample time to identify an alternative offer for IOU; it has failed to deliver one. The Qwave Offer remains the only premium offer available to IOU shareholders. If the Offer is not successful and no other offer is made for IOU, the Common Share price will likely decline back to pre-Offer levels and shareholders will remain invested in a company with limited ability to raise capital and limited access to the inexpensive capital that it requires to lend profitably, grow and maximize shareholder value. Similarly, IOU's recently announced plan for Canadian expansion contains significant risk, as IOU cannot borrow at competitive rates or execute profitably.

Qwave Offer Delivers Value, Liquidity and Opportunity

Qwave's Offer, announced in June 2015, provides investors with a 33.3% premium over the pre-offer share price and a premium of 28.7% over IOU's 20-day volume-weighted average price on the TSX-V. It provides IOU shareholders with certainty of value and immediate liquidity for all or a portion of their IOU Common Shares tendered and accepted under the Qwave Offer.

If Qwave is successful in completing the Offer, it will end related-party transactions at IOU, and ensure that the IOU board of directors possesses the skills, knowledge and expertise necessary to grow the company, increase market share and create value for shareholders.

The Qwave Offer closes at 5:00 p.m. (Eastern Standard Time) on September 22, 2015.

Visit our website (www.qwaveoffer.com) for the latest Offer information and to sign up for email updates. On Qwave's website, you will find the most up-to-date information on our Offer and links to our press releases and regulatory filings. Through the website, we encourage you to sign up to receive emailed updates and important information on the Offering over the next few weeks.

How to Tender Your Shares to the Qwave Offer

The takeover bid circular contains a detailed explanation of the terms of the offer and a more fulsome explanation of the proposed benefits to IOU shareholders. We encourage you to take the time to read the circular carefully and make an informed decision. This is an important juncture for your company.

If you have any questions regarding our Offer and how to tender shares, please call our Depositary and Information Agent, Laurel Hill Advisory Group ("Laurel Hill"), at 1-877-452-7184 or 416-304-0211, or email assistance@laurelhill.com. The offer and take-over bid circular and other documents may also be obtained for free by contacting Laurel Hill at the numbers and email above.

TENDER YOUR SHARES TO THE QWAVE OFFER TODAY!

I thank you in advance for taking the time to carefully consider the details of the Offer contained in the circular and the information provided in this letter.

ON BEHALF OF QWAVE CAPITAL LLC

Serguei Kouzmine, Manager

This press release does not constitute an offer to buy or an invitation to sell, or the solicitation of an offer to buy or invitation to sell, any of the securities of IOU. Such an offer may only be made pursuant to an offer and take-over bid circular filed with the securities regulatory authorities in Canada.

Additional Information - How to Tender Your Shares to the Qwave Offer

IOU shareholders wishing to accept the Offer are encouraged to tender their shares by completing the yellow letter of transmittal accompanying the documents mailed to them and returning it together with certificates representing their IOU shares and all other documents to the offices of Laurel Hill Advisory Group in accordance with the instructions provided in the yellow letter of transmittal. If IOU shares are held by a broker or other financial intermediary, IOU shareholders should contact such intermediary and instruct them to promptly tender their IOU shares.

Shareholder Questions

Shareholders may obtain a free copy of the offer and take-over bid circular and other documents filed by Qwave with the Canadian securities regulators at www.sedar.com. The offer and take-over bid circular and other documents may also be obtained for free by contacting the Depositary and Information Agent, Laurel Hill Advisory Group, toll free in North America at 1-877-452-7184, collect outside North America at 416-304-0211, or by email at assistance@laurelhill.com.

About Qwave

Qwave is a venture capital firm focused on promising, technologically advanced companies. Qwave draws upon a management group with more than 20 years of experience and a strong track record of finding and investing in companies with breakthrough technologies and excellent potential for growth and value creation.

ON BEHALF OF QWAVE CAPITAL LLC

Serguei Kouzmine, Manager

Forward-Looking Information

Information and statements contained in this news release that are not historical facts are "forward-looking information" within the meaning of Canadian securities legislation that involves risks and uncertainties. Forward-looking information included herein is made as of the date of this news release and Qwave does not intend, and does not assume any obligation, to update forward-looking information unless required by applicable securities laws. Forward-looking information relates to future events or future performance and reflects management of Qwave's expectations or beliefs regarding future events. In certain cases, forward-looking information can be identified by the use of words such as "plans", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. Examples of forward-looking information in this news release include, but are not limited to, statements with respect to the completion of the Offer; IOU's prospects in the event that the Offer is completed; IOU's prospects in the event that the Offer is not completed; Qwave's anticipated actions with respect to IOU if the Offer is completed; the Expiry Time of the Offer; IOU's continued inability to secure financing if the Offer is not completed; Qwave's assessment of the effect of the Offer on IOU and the shareholders of IOU, the timing and prospects for shareholder acceptance of the Offer and the implementation there of; IOU's ability to identify an alternative superior offer; and the continued listing of Common Shares on the TSX-V. This forward-looking information is based, in part, on assumptions and factors that may change or prove to be incorrect, thus causing actual results, performance or achievements to be materially different from those expressed or implied by forward-looking information. Such factors and assumptions include, but are not limited to: the number of Common Shares validly deposited under, and not withdrawn from, the Offer at the expiry time of the Offer, our ability to obtain and maintain timely receipt of regulatory approvals including approval of the TSX-V of the Offer and approval of the Autorité des Marchés Financiers of the Offer; dilution; competition; loss of key employees; and additional funding requirements.

By its very nature, forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking information. Such factors include, but are not limited to: the need to satisfy regulatory and legal requirements with respect to the Offer; dilution to shareholders from any equity financings; and influence of significant shareholders. Although Qwave has attempted to identify important factors that could cause actual actions, events or results to differ materially from forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated by such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information.

The TSX-V has neither approved nor disapproved the form or content of this release. Information concerning IOU contained in this news release and has been taken from, or is based upon, publicly available information and records on file with Canadian securities regulatory authorities and other public sources. IOU has not reviewed this news release and has not confirmed the accuracy and completeness of the information in respect of IOU contained herein. Although Qwave has no knowledge that would indicate that any statements contained herein concerning IOU taken from or based on such documents and records are untrue or incomplete, neither Qwave nor its manager Dr. Kouzmine assumes any responsibility for the accuracy or completeness of such information or for any failure of IOU or its directors or officers to disclose events or facts which may have occurred or which may affect the significance or accuracy of any such information but which are unknown to it. The information presented regarding the percentage of Common Shares subject to the Offer is based upon publicly available information and records on file with Canadian securities regulatory authorities.

You may call our Depositary and Information Agent, Laurel Hill Advisory Group, if you have questions or requests for additional copies of the take-over bid circular and other documents filed by Qwave with the Canadian securities regulators. Questions and requests should be directed to the following telephone numbers:

For further information:

Qwave Capital LLC

3445 Stratford Road NE, 3902

Atlanta, GA 30326

You may call our Depositary and Information Agent, Laurel Hill Advisory Group, if you have questions or requests for additional copies of the take-over bid circular and other documents filed by Qwave with the Canadian securities regulators.