Specialty Funding for Community Associations

Corporate Presentation

October 2016

Important Cautions Regarding ForwardLooking Statements

NASDAQ: LMFA

This presentation may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “expect,” “intend,” “plan,” and “project” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company’s filings with the SEC. The occurrence of any of these risks and uncertainties could have a material adverse effect on the company’s business, financial condition, and results of operations. For additional disclosure regarding risks faced by LM Funding America, Inc., please see our public filings with the Securities and Exchange Commission, available on the Investors section of our website at www.lmfunding.com and on the SEC's website at www.sec.gov.

© 2016 LM Funding America, Inc. All Right Reserved.

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NASDAQ: LMFA

LM Funding: How We Came To Be • After the real estate downturn in 2008, a unique opportunity presented itself in the homeowner association and condo-owner association market. • Bruce’s background in business law and real estate litigation coupled with his entrepreneurial sprit led to the founding of LM Funding in 2008 and its Initial Public Offering in 2015.

Bruce Rodgers, Founder & CEO • Bowling Green, Ky. • 1985 Vanderbilt University, B.S. Engineering • 1985 – 1989 U.S. Navy Surface Warfare Officer USS Lexington • 1991 University of Florida College of Law, J.D. with Highest Honors • 1991 – 1998 Macfarlane Ferguson – Shareholder • 1998 – 2003 Foley & Lardner P.A. – Equity Partner • 2003 – 2015 Business Law Group, P.A. • 2008 – Founded LM Funding

Building a $30 million public company at the dining room table, starting with $31,000 3

LM Funding: What We Do

NASDAQ: LMFA

• We provide funding solutions to condo and homeowner associations (COAs & HOAs) • Our solutions recover delinquent association dues and guaranty future association budgets • Enabled by our proprietary technology, we have collected delinquent dues and returned capital to associations over 12,000 times

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The Value of Association Receivables

NASDAQ: LMFA

• Associations have statutory and contractual rights to lien and foreclose on properties in order to collect assessments • Delinquent association receivables are subject to: • Statutory annualized interest of 18% • Late fees of $25/month • Legal fees associated with collection efforts

• We bring an orderly process of collecting unpaid assessments while unlocking significant value of these receivables 5

Association Receivables Carry Similar Power & Authority as Tax Liens • Unlike other types of receivables, COA & HOA receivables carry similar collection rights as Municipal Tax Liens

• While counties can sell tax lien certificates to cover delinquent taxes, associations lack methods to recover delinquent dues • This is where LM Funding comes in – providing a way for associations to easily and quickly monetize their receivables

NASDAQ: LMFA

Municipal Tax Liens

Associations Receivables

Lien & Foreclosure Rights





Investment Protected by Statute





Priority Over Mortgages



Cost of Collection Born by Debtor Efficient Auction Market



(Superlien States)

Some





No

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The Problem: Delinquent Association Dues • Unpaid association dues result in reduced property values • Associations are then unable to cover their budget, resulting in reduced amenities • Good neighbors are forced to pay for delinquent neighbors • There is no easy way for COAs or HOAs to collect delinquent dues

NASDAQ: LMFA

Homeowners are unable to get mortgages when association delinquencies are ≥ 15% Associations are unable to get bank loans when association delinquencies are ≥ 8% 7

The Solution: LM Funding

NASDAQ: LMFA

• We fund associations, enabling them to meet their budget obligations • Our investment is secured by lien and foreclosure rights against real property • Payoff events can include foreclosure, refinance, standard sale, short sale, fire, etc. • We leverage our proprietary software to manage the collection of these accounts

• Remove collection burden from associations

LM Funding helps HOAs meet budget obligations 8

Original Product Example – How it Works

NASDAQ: LMFA

LM Funding buys delinquent account from association for (1% of outstanding mortgage = safe harbor amount) At purchase, account was 41 months delinquent – accruing statutory interest and fees every month

$(1,533)

42 months after purchase: LM Funding collects proceeds when property is sold at a tax sale

$44,449

Purchase amount recovery to LM Funding (safe harbor amount) Interest to LM Funding (83 months @ 18% annual interest) Late fees to LM Funding (83 months X $25 per month) Total gross profit to LM Funding Legal fees paid to 3rd party law firm Repaid to association (includes initial funding $)

$1,533 $13,020 $2,110 $15,130 $2,406 $26,913 9

Original Product Example: $1,533 Investment

NASDAQ: LMFA

$26.9K to Association $44.4K Total Collected $2.4K to Legal

$15.1K to LM Funding

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New Neighbor Guaranty™ - How It Works

NASDAQ: LMFA

Total debt owed by unit at purchase (assigned to LM Funding)

$6,775

LM Funding guaranties dues during collection period (one month of dues in this example)

$(200)

LM Funding collects delinquent dues (one month later)

$6,775

Purchase amount recovery to LM Funding (one month of dues)

$200

Interest to LM Funding (18% annual interest)

$900

Late fees to LM Funding (25 months X $25 per month)

$625

Recoveries in excess to LM Funding

Total gross profit to LM Funding Legal fees paid to 3rd party law firm

$4,800

$6,325 $(250) 11

New Neighbor Guaranty: $200 Investment

NASDAQ: LMFA

$0.2K

to Association

$0.3K to Legal

$6.8K Total Collected

$6.3K to LM Funding

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NASDAQ: LMFA

REO Example: Mark at Brickell June 6, 2012 – LM Funding buys delinquent account (1% of outstanding mortgage)

$(5,700)

July 7, 2012 – Mortgage foreclosure dismissed for lack of prosecution January 17, 2013 – Took title via association lien foreclosure (subject to statute of limitations barred unenforceable $570,000 first mortgage)

Upgrades to property: toilets and A/C handler

$(16,000)

LM Funding rents out property for $3,700 per month Five year statue of limitations has expired Zillow Estimated Value Balance sheet carrying value

$1,200,000 $21,700

We are currently renting out a condo on this property for $3,700 per month that we paid $5,700 for. 13

Additional Opportunity: Monetizing Unsecured Debt • Throughout LM Funding’s history, the company has collected over $112M of delinquent dues • But that is only part of the total debt LM Funding has rights to • There is an $160M of unsecured debt that is still owed to LM Funding and its association clients*

*Company Estimates at 9/30/16

NASDAQ: LMFA

Uncollected

• Currently evaluating partnerships in order to monetize this opportunity

$112M

• Likely to generate between $1.5M and $3.0M of cash for LM Funding over the next 12 months*

$160M

Collected

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NASDAQ: LMFA

LM Funding “Lien Machine” • We have collected delinquent dues and returned capital to associations over 12,000 times Historical Average: $1 of purchased association debt = $5 payout and $3.25 in free cash flow

High Margin.

Scalable. Repeatable.

Average capital investment per unit is $1,000 Average collection takes 25 months Average collection to LM Funding is ~$5,500 Currently 2,000 units outstanding 15

NASDAQ: LMFA

LM Funding “Lean Machine” • Low overhead: 20 employees including 10 commission-based sales people

$57M to Associations

• Proprietary software is our leading competitive advantage • Unique funding solutions attract clients and differentiate us from competitors

• Outsource work to law firms • Highly scalable: purchased $285M with only $12M in cash • Recently implemented cost cutting initiative removed $2M of annualized expenses

$112M Total Collected

$11M to Legal

$44M to LM Funding

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NASDAQ: LMFA

Value Within Our Balance Sheet • Receivables calculated using cash recovery accounting – these receivable only represent what we paid to acquire delinquent debt • $2.1M of Other Assets include only what we paid to acquire 71 properties that currently have a fair market value of $7.9M (according to Zillow)

June 31, 2016

Assets

Dec 31, 2015

Cash

$5.8M

$9.0M

Receivables: Original Product

$1.2M

$1.5M

$0.6M

$0.7M

Other Assets

$2.1M

$1.2M

Deferred Tax Asset

$2.7M

$2.1M

$12.4M

$14.6M

Net Notes Payable

$6.5M

$7.7M

Other Liabilities & Obligations

$0.7M

$0.6M

Total Liabilities

$7.0M

$8.3M

Total Stockholder’s Equity

$5.4M

$6.3M

$12.4M

$14.6M

New Neighbor Guaranty

Total Assets

Liabilities

Total Liabilities & Members’ Deficit

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NASDAQ: LMFA

The Value of Our Receivables • Receivables calculated using cash recovery accounting • These receivables only represent what LM Funding paid to acquire delinquent debt • *Fair value estimate determined by third party completed as part of 2015 year-end audit

Source: Form 10-K filed 3/30/16, as of December 31, 2015

June 31, 2016

Carrying Amount

Fair Value*

Finance Receivables:

Original Product

$1.2M

$9.0M

New Neighbor Guaranty

$0.6M

$1.5M

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Annual Market Opportunity

NASDAQ: LMFA

• 65M Americans live in 333,000 associations and pay $65B in annual assessments • LM Funding has purchased a total of $285M in association debt – an average of $35M/year, since inception in 2008

+$9 Billion Annual Assessments in Florida

In a poor economy, 25% delinquency yields a $2.3B annual opportunity in Florida In a strong economy, 5% delinquency yields a $450M annual opportunity in Florida

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Building an Entrepreneurial Sales Team

NASDAQ: LMFA

• Currently our sales and marketing team is made up of 10 full-time professionals • At the IPO, there were only two • At December 31, 2015, there were only three

• Deployed geographically, with one sales person serving each major market in Florida • Goal of acquiring an additional 2,000 delinquent accounts in the 12 months ended Sept 30, 2017

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Growing Our Business

NASDAQ: LMFA

• Historically, we have built relationships with association boards – one at a time • Currently, our focus is building relationships with trusted advisors (B2B): • Management companies

• Law firms • Banks lending to associations

• Evaluate opportunities to acquire competitors and their legacy accounts

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October 2015 Initial Public Offering

NASDAQ: LMFA

• First ever sale of equity by LM Funding • Management aligned with shareholders (100% shareholder did not sell in) • IPO Proceeds: $9.7M • Use of capital: purchase accounts, acquire competitors, develop sales team, & expand business to other states.

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NASDAQ: LMFA

Key Takeaways • A new market for COA & HOA delinquent debt

Revenue Pre-tax Income

• Proprietary technology allows for high volume of unit processing • Track record of +12,000 payoff experiences demonstrate: $1 in produces $5 revenue and $3.25 to free cash flow (25 month average collection time) • Highly scalable, highly profitable: purchased $285M of debt, with just $12M in cash, collecting $112M

$7.6M $7.0M

$6.9M $5.4M

$2.5M $1.7M

$1.7M $1.0M

2012

2013

2014

2015 23

NASDAQ: LMFA

Key Stats: LMFA (NASDAQ) Share Price (10/11/16)

52 Week Low/High

$7.95

$6.33 / $9.89

Market Cap

$26.2M

Enterprise Value

$26.7M

Common Shares Out. (6/30/16)

3.3M

Revenues (ttm)

Free Float

1.0M

Income (ttm)

Avg. Daily Volume (3 mo.) Warrant Price (LMFAW)

$6.4M

Cash

$5.8M

$0.90

Debt

$6.3M

Insider Holdings

Warrant Expiration

Initial Public Offering IPO Unit Price

October 23, 2020

$7.0M

$6.9M

$(0.4)M

~3,000

Warrant Strike/Call Price $12.50 / $15.00

Revenue Pre-tax Income $7.6M

$5.4M

70% October 2015

(1 share + 1 warrant)

$10.00

IPO Proceeds

$9.7M

Fiscal Year End

12/31

Sources: Capital IQ, Yahoo! Finance, Company Data. ttm = trailing twelve months at June 30, 2016.

$2.5M $1.7M

$1.7M

$1.0M

2012

2013

2014

2015 24

LM Funding Contact: Bruce M. Rodgers, Esq. 866.235.5001 [email protected] www.lmfunding.com

Investor Relations Contact: Liolios Michael Koehler 949.574.3860 [email protected] 25

Appendix

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NASDAQ: LMFA

Historical Annual Income Statement Twelve Months Ended Dec 31, 2015

Revenue (Cash Basis Accounting) As a % of Total Revenue

Operating Expenses As a % of Total Revenue

Operating Income As a % of Total Revenue

Net Income As a % of Total Revenue

Operating Cash Flow As a % of Total Revenue

Dec 31, 2014

$6,960,761

$7,649,389

100%

100%

$4,518,369

$4,118,033

53.8%

53.8%

$2,442,392

$3,531,356

46.2%

46.2%

$1,871,642

$2,546,333

31.2%

31.2%

$2,250,239

$2,422,570

31.7%

31.7% 27

NASDAQ: LMFA

Improving Profitability Growth Revenue Pre-tax Income

$7.6M $7.0M

$6.9M $5.4M

$2.5M $1.7M

$1.7M

$1.0M

2012

2013

2014

2015 28

NASDAQ: LMFA

Year-Over-Year Comparison in Collections Average Per Unit Financial Highlights 2014 vs. 2015 $5,706 $5,680

Total Collection $4,459 $4,526

Revenue Operating Cash Flow

$1,495 $1,433

Pre-tax Income

$1,243 $1,507

# of Units Collected

1,522 1,690

2015

2014 29

Our Customers

NASDAQ: LMFA

• Condominium and homeowner associations (COAs & HOAs) are run by elected volunteer boards • Associations behave and are treated similar to municipalities • Budgets are funded by association dues (i.e. taxes on owners) • Budget items include: • Insurance • Management company • Lawn, pool and common area maintenance • Deferred maintenance 30

Our Value Proposition to Associations

NASDAQ: LMFA

• Often, lawyers collect less money than they are paid – which ends up costing the association money • With LM Funding, associations do not have to pay legal fees, nor do they have to write off bad debt Original Product New Neighbor Guaranty

Increased Property Values

Instant Cash Budget Certainty

Increased Collections

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Our Products: Original Product

NASDAQ: LMFA

• Purchase community association receivables at deep discounts with limited risk • Pay safe harbor amount upfront (lesser of 12 months assessments or 1% of mortgage) • Safe harbor is minimum recovery from a mortgage foreclosure

• All other outcomes produce full payoffs

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Our Products: New Neighbor Guaranty

NASDAQ: LMFA

• Association assigns all delinquent Accounts Receivable to LM Funding • In exchange, LM Funding funds delinquent monthly assessments going forward • LM Funding protects their capital investment through the purchase of insurance • Association budget is guarantied • Property values increase and debt collection gets easier

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Our Products: Loan Guaranty

NASDAQ: LMFA

• Banks will not lend to associations with delinquency problems (≥8%) • LM Funding eliminates delinquency risk with New Neighbor Guaranty product • Bank loans for capital improvements increase property values • Increased property values = easier debt collection • Banks’ sales force becomes LM Funding sales force – when LM Funding gets involved, banks can issue loans 34