MONTREAL, Feb. 21, 2012 /CNW Telbec/ - IOU Financial Inc. ("IOU" or the "Company") (CNSX: IOU) announced today that it plans to restate its financial statements for the first three quarters of 2011. Following discussions with its auditors, the Company has discovered an incorrect application of the newly adopted IFRS accounting standards as it applies to the reverse takeover transaction of IOU Central (completed on February 28, 2011). For the nine month period ended September 30, 2011, the Company had previously reported a $2.6 million non-cash, non-operating, and non-recurring "cost of listing" expense pertaining to the RTO. The Company plans to recalculate and reclassify this item from the consolidated statement of comprehensive loss and book approximately $1.3 million as equity. The Company also plans to upwardly revise the stock volatility percentages that were used to calculate its 2011 warrant expense from 40% - 59% to approximately 70% - 75%. A stock volatility adjustment would result in a non-cash adjustment to the consolidated financial statements. None of these adjustments will have a material impact on the Company's financial position or cash flow. As a result of these adjustments, the Company will be filing restated financial statements for each of the first three quarters of 2011.
About IOU Financial
IOU Financial Inc., via its U.S. subsidiary, IOU Central Inc., operates an online lending platform which services store-front businesses (traditional and internet-based) throughout the United States, that it believes are under served by banks today. IOU allows these businesses to obtain loans of up to $100,000, without having to resort to more expensive factoring type products. Loan applications are done online and businesses can receive funding in as little as two business days. The Company's approach to lending is unique. Its underwriting model looks holistically at a business' financial realities, with an emphasis on its day-to-day cash flow trends, while its micro-payment system allows it to service the loans on a daily basis for easy cash flow management. To learn more visit: www.ioucentral.com
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this news release are forward-looking and are subject to numerous risks and uncertainties, known and unknown. For information identifying known risks and uncertainties, relating to liquidity risks, risks inherent in growing a new business, dependence on third-party service providers, credit risks, competition, regulatory risk, and assumptions that could cause the company's actual results to differ from current expectations, please refer to the section "Risks and Uncertainties" of IOU's most recent Management's Discussion and Analysis ("MD&A"), which may be consulted at www.sedar.com. IOU cautions that the foregoing list of factors is not exhaustive. The forward-looking statements presented in the MD&A reflect IOU's expectations as at the date of the MD&A. IOU Financial does not undertake any obligation to update publicly or to revise any such forward-looking statements, unless required by applicable legislation or regulation.
The Canadian National Stock Exchange (CNSX Markets Inc.) has neither approved nor disapproved of the contents of this press release.
For further information:
Chief Executive Officer
(514) 789-0694 ext. 225
Chief Financial Officer
(514) 789-0694 ext. 298