Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 13, 2014 | Jun. 30, 2013 | |
Entity Information [Line Items] | ' | ' | ' |
Entity Registrant Name | 'PROSPER MARKETPLACE INC | ' | ' |
Entity Central Index Key | '0001416265 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $924,012 |
Entity Common Stock, Shares Outstanding | ' | 13,405,113 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Type | '10-K | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Prosper Funding LLC [Member] | ' | ' | ' |
Entity Information [Line Items] | ' | ' | ' |
Entity Registrant Name | 'Prosper Funding LLC | ' | ' |
Entity Central Index Key | '0001542574 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $0 |
Entity Common Stock, Shares Outstanding | ' | 0 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $18,339 | $2,300 |
Restricted cash | 15,473 | 5,949 |
Short term investments | 0 | 1,000 |
Accounts receivable | 218 | 92 |
Loans held for investment | 3,917 | 175 |
Borrower loans receivable at fair value | 226,238 | 166,900 |
Property and equipment, net | 3,396 | 1,530 |
Prepaid and other assets | 708 | 376 |
Total Assets | 268,289 | 178,322 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Accounts payable and accrued liabilities | 6,737 | 4,766 |
Class action settlement liability | 10,000 | 0 |
Notes at fair value | 226,794 | 167,478 |
Repurchase liability for unvested restricted stock awards | 609 | 0 |
Repurchase and indemnification obligation | 32 | 41 |
Total Liabilities | 244,172 | 172,285 |
Commitments and contingencies (see Note 12) | ' | ' |
Stockholders' Equity | ' | ' |
Convertible preferred stock | 0 | 72 |
Common stock --$0.01 par value; 41,487,465 shares authorized; 13,720,,214 shares issued and outstanding as of December 31, 2013; 8,263,000 shares authorized; 300,674 issued and outstanding as of December 31, 2012 | 75 | 5 |
Additional paid-in capital | 128,140 | 83,150 |
Less: treasury stock | -291 | -291 |
Accumulated deficit | -104,080 | -76,899 |
Total stockholders' equity | 24,117 | 6,037 |
Total Liabilities and Stockholders' Equity | 268,289 | 178,322 |
Series A '13 Preferred Stock [Member] | ' | ' |
Stockholders' Equity | ' | ' |
Convertible preferred stock | $273 | $0 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | 2 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Stockholders' Equity | ' | ' |
Convertible preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Convertible preferred stock, shares authorized (in shares) | 7,195,813 | 7,195,813 |
Convertible preferred stock, shares issued (in shares) | 7,195,813 | 7,195,813 |
Convertible preferred stock, shares outstanding (in shares) | 7,195,813 | 7,195,813 |
Convertible preferred stock, aggregate liquidation preference | $51,172 | $0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 41,487,465 | 8,263,000 |
Common stock, shares issued (in shares) | 13,720,214 | 300,674 |
Common stock, shares outstanding (in shares) | 13,720,214 | 300,674 |
Reverse stock split, shares issued (in shares) | 1 | ' |
Reverse stock split, shares converted (in shares) | 10 | ' |
Series A '13 Preferred Stock [Member] | ' | ' |
Stockholders' Equity | ' | ' |
Convertible preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Convertible preferred stock, shares authorized (in shares) | 27,274,068 | 0 |
Convertible preferred stock, shares issued (in shares) | 27,274,068 | 0 |
Convertible preferred stock, shares outstanding (in shares) | 27,274,068 | 0 |
Convertible preferred stock, aggregate liquidation preference | $96,172 | $0 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues | ' | ' |
Origination fees | $16,471 | $6,918 |
Interest income on borrower loans | 35,526 | 23,101 |
Interest expense on payment dependent notes | -33,072 | -21,889 |
Rebates and promotions | -1,534 | -1,322 |
Total Revenues | 17,391 | 6,808 |
Cost of revenues | ' | ' |
Cost of services | -2,056 | -1,421 |
Provision for repurchase indemnification obligation | -118 | -26 |
Net revenues | 15,217 | 5,361 |
Operating expenses | ' | ' |
Compensation and benefits | 13,079 | 10,334 |
Marketing and advertising | 14,851 | 5,683 |
Depreciation and amortization | 961 | 679 |
Professional services | 1,979 | 3,307 |
Facilities and maintenance | 1,764 | 1,228 |
Class action settlement | 10,000 | 0 |
Loss on impairment of fixed assets | 62 | 0 |
Other | 1,733 | 1,580 |
Total Expenses | 44,429 | 22,811 |
Loss Before Other Income and Expenses | -29,212 | -17,450 |
Other Income and Expenses | ' | ' |
Interest income | 3 | 14 |
Change in fair value on borrower loans, loans held for Investment and notes, net | 877 | 957 |
Other income | 1,151 | 369 |
Total Other Income and Expenses | 2,031 | 1,340 |
Loss Before Income Taxes | -27,181 | -16,110 |
Provision for income taxes | 0 | 0 |
Net Loss | ($27,181) | ($16,110) |
Net loss per share - basic and diluted (in dollars per share) | ($4.14) | ($5.51) |
Weighted - average shares - basic and diluted net loss per share (in shares) | 6,567,201 | 2,925,611 |
Consolidated_Statements_of_Ope1
Consolidated Statements of Operations (Parenthetical) | 2 Months Ended |
Dec. 31, 2013 | |
Reverse Stock Split [Abstract] | ' |
Reverse stock split, shares issued (in shares) | 1 |
Reverse stock split, shares converted (in shares) | 10 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
In Thousands, except Share data | ||||||
Balance at Dec. 31, 2010 | ' | ' | ' | ' | ' | ' |
Exercise of vested stock options | ' | ' | ' | $19 | $0 | $19 |
Balance at Dec. 31, 2011 | 72 | 5 | -291 | 82,733 | -60,789 | 21,730 |
Balance (in shares) at Dec. 31, 2011 | 7,195,813 | 469,550 | -182,264 | ' | ' | ' |
Exercise of vested stock options | 0 | 0 | 0 | 202 | 0 | 210 |
Exercise of vested stock options (in shares) | 0 | 13,388 | 0 | ' | ' | ' |
Exercise of nonvested stock options | 0 | 0 | 0 | 0 | 0 | 0 |
Exercise of nonvested stock options (in shares) | 0 | 0 | 0 | ' | ' | ' |
Repurchase of restricted stock | 0 | 0 | 0 | 0 | 0 | 0 |
Repurchase of restricted stock (in shares) | 0 | 0 | 0 | ' | ' | ' |
Issuance of common stock warrants | 0 | 0 | 0 | 58 | 0 | 58 |
Stock-based compensation expense | 0 | 0 | 0 | 340 | 0 | 340 |
Net loss | 0 | 0 | 0 | ' | -16,110 | -16,110 |
Balance at Dec. 31, 2012 | 72 | 5 | -291 | 83,150 | -76,899 | 6,037 |
Balance (in shares) at Dec. 31, 2012 | 7,195,813 | 482,938 | -182,264 | ' | ' | ' |
Issuance of convertible preferred stock, Series A'13, net of issuance costs | 139 | 0 | 0 | 19,702 | 0 | 19,841 |
Issuance of convertible preferred stock, Series A'13, net of issuance costs (in shares) | 13,868,152 | 0 | 0 | ' | ' | ' |
Issuance of convertible preferred stock, Series A-1'13 | 51 | 0 | 0 | 0 | 0 | 51 |
Issuance of convertible preferred stock, Series A-1'13 (in shares) | 5,117,182 | 0 | 0 | ' | ' | ' |
Issuance of convertible preferred stock, Series B'13, net of issuance costs | 83 | 0 | 0 | 24,847 | 0 | 24,930 |
Issuance of convertible preferred stock, Series B'13, net of issuance costs (in shares) | 8,288,734 | 0 | 0 | ' | ' | ' |
Conversion of Preferred Series A-F | -72 | 62 | 0 | 10 | ' | 0 |
Conversion of Preferred Series A-F (in shares) | -7,195,813 | 6,191,270 | 0 | ' | ' | ' |
Exercise of vested stock options | 0 | 8 | ' | ' | ' | ' |
Exercise of vested stock options (in shares) | 0 | 828,496 | ' | ' | ' | ' |
Exercise of nonvested stock options (in shares) | 0 | 6,499,463 | ' | ' | ' | ' |
Repurchase of restricted stock (in shares) | 0 | -100,509 | 0 | ' | ' | ' |
Cashless exercise of common stock warrants (in shares) | 0 | 820 | 0 | ' | ' | ' |
Stock-based compensation expense | 0 | 0 | 0 | 229 | 0 | 229 |
Net loss | 0 | 0 | 0 | 0 | -27,181 | -27,181 |
Balance at Dec. 31, 2013 | $273 | $75 | ($291) | $128,140 | ($104,080) | $24,117 |
Balance (in shares) at Dec. 31, 2013 | 27,274,068 | 13,902,478 | -182,264 | ' | ' | ' |
Consolidated_Statements_of_Sto1
Consolidated Statements of Stockholders' Equity (Parenthetical) | 2 Months Ended |
Dec. 31, 2013 | |
Reverse Stock Split [Abstract] | ' |
Reverse stock split, shares issued (in shares) | 1 |
Reverse stock split, shares converted (in shares) | 10 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from Operating Activities: | ' | ' |
Net loss | ($27,181) | ($16,110) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Change in fair value of borrower loans | 4,856 | -4,801 |
Change in fair value of notes | -5,734 | 3,833 |
Depreciation and amortization | 961 | 679 |
Provision for repurchase and indemnification obligation | -9 | 19 |
Stock-based compensation expense | 229 | 340 |
Loss on impairment of fixed assets | 62 | 0 |
Change in fair value of loans held for investment | 1 | 11 |
Issuance of common stock warrants | 0 | 58 |
Changes in operating assets and liabilities: | ' | ' |
Restricted cash | -9,524 | -1,585 |
Accounts receivable | -126 | -79 |
Prepaid and other assets | -332 | -142 |
Accounts payable and accrued liabilities | 1,971 | 1,615 |
Class action settlement liability | 10,000 | 0 |
Net cash used in operating activities | -24,826 | -16,162 |
Cash Flows from Investing Activities: | ' | ' |
Origination of borrower loans held at fair value | -341,176 | -153,175 |
Repayment of borrower loans held at fair value | 105,692 | 66,840 |
Proceeds from sale of borrower loans held at fair value | 171,290 | 0 |
Purchases of property and equipment | -2,889 | -872 |
Maturities of short term investments | 1,000 | 11,998 |
Repayment of loans held for investment at fair value | 143 | 133 |
Origination of loans held for investment at fair value | -14,296 | -182 |
Proceeds from sale of borrower loans held at fair value | 10,410 | 0 |
Purchases of short-term investments | 0 | -3,000 |
Net cash used in investing activities | -69,826 | -78,258 |
Cash Flows from Financing Activities: | ' | ' |
Proceeds from issuance of notes held at fair value | 169,742 | 153,175 |
Payment of notes held at fair value | -104,692 | -65,690 |
Proceeds from issuance of convertible preferred stock | 45,000 | 0 |
Proceeds from early exercise of stock options | 650 | 0 |
Purchase of restricted stock from stockholders | -41 | 0 |
Proceeds from exercise of vested stock options | 210 | 19 |
Issuance costs of convertible preferred stock | -178 | 0 |
Net cash provided by financing activities | 110,691 | 87,504 |
Net increase (decrease) in cash and cash equivalents | 16,039 | -6,916 |
Cash and cash equivalents at beginning of the year | 2,300 | 9,216 |
Cash and cash equivalents at end of the year | $18,339 | $2,300 |
Organization_and_Business
Organization and Business | 12 Months Ended |
Dec. 31, 2013 | |
Organization and Business [Abstract] | ' |
Organization and Business | ' |
1. Organization and Business | |
Prosper Marketplace, Inc. (“PMI” or the “Company”) was incorporated in the state of Delaware on March 22, 2005. PMI developed a platform (the “platform”) and prior to February 1, 2013, owned the proprietary technology that made operation of the platform possible, operated the platform, facilitated the origination of unsecured, consumer loans by WebBank, an FDIC-insured, Utah-chartered industrial bank, through the platform and issued and sold borrower payment dependent notes corresponding to those loans. On February 1, 2013, PMI transferred ownership of the platform, including all of the rights related to the operation of the platform, as well as all then-outstanding Borrower Loans, to its wholly-owned subsidiary, Prosper Funding (“Prosper Funding”). At that same time, Prosper Funding assumed all of PMI’s obligations with respect to all then-outstanding Notes. Since February 1, 2013, all Notes issued and sold through the platform are issued and sold by Prosper Funding. Pursuant to a Loan Account Program Agreement between PMI and WebBank, PMI manages the operation of the platform, as agent of WebBank, in connection with the submission of loan applications by potential borrowers, the making of related loans by WebBank and the funding of such loans by WebBank. On February 1, 2013, Prosper Funding entered into an Administration Agreement with PMI in its capacity as licensee, corporate administrator, loan platform administrator and loan and note servicer, pursuant to which PMI provides certain back office support, loan platform administration and loan and note servicing to Prosper Funding. In this Annual Report, any actions taken by PMI pursuant to the Loan Account Program Agreement or the Administration Agreement are described as actions taken by PMI, in spite of the fact that such actions are being taken by PMI on behalf of WebBank or Prosper Funding, respectively. In these notes to financial statements, the unsecured, consumer loans originated through the platform, which are referred to elsewhere in this Annual Report as “PMI Borrower Loans” and “Prosper Funding Borrower Loans”, are referred to collectively as “Borrower Loans”, and the borrower payment dependent notes issued through the platform, which are referred to elsewhere in this Annual Report as “PMI Notes” and “Prosper Funding Notes”, are referred to collectively as “Notes”. | |
The platform is designed to allow people to invest money in people in an open transparent marketplace, with the aim of allowing both lender members and borrower members to profit financially as well as socially. The Company believes peer-to-peer lending represents a new model of consumer lending, where individuals and institutions can earn the interest spread of a traditional consumer lender but must also assume the credit risk of a traditional lender. The platform was launched to the public in 2006 and had attracted over two million members and facilitated over $801,000 in Borrower Loans as of December 31, 2013. | |
As reflected in the accompanying consolidated financial statements, PMI has incurred net losses and negative cash flows from operations since inception, and has an accumulated deficit of $104,080 as of December 31, 2013. At December 31, 2013, PMI had $18,339 in cash and cash equivalents. Since its inception, PMI has financed its operations primarily through equity financing from various sources. PMI is dependent upon raising additional capital or debt financing to fund its current operating plan. Failure to obtain sufficient debt and equity financings and, ultimately, to achieve profitable operations and positive cash flows from operations could adversely affect PMI’s ability to achieve its business objectives and continue as a going concern. Further, there can be no assurances as to the availability or terms upon which the required financing and capital might be available. In January 2013, PMI issued and sold to investors 13,868,152 shares of new Series A preferred stock in a private placement at a purchase price of $1.44 per share for approximately $19,844, net of issuance costs. In connection with that sale, PMI issued 5,117,182 shares at par value $.01 per share, of Series A-1 convertible preferred stock to the holders of shares of PMI’s preferred stock that was outstanding immediately prior to the sale in consideration for such stockholders participating in the sale. In September 2013, PMI issued and sold to investors 8,288,784 shares of new Series B preferred stock in a private placement at a purchase price of $3.02 per share for approximately $24,880, net of issuance costs. See Note 9, Stockholders’ Equity, for additional information. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||||||||
2. Summary of Significant Accounting Policies | |||||||||||||||||
Basis of Presentation | |||||||||||||||||
The accompanying consolidated financial statements include the accounts of PMI and its wholly owned subsidiary Prosper Funding. All intercompany balances and transactions between Prosper Funding and PMI have been eliminated in consolidation. PMI and Prosper Funding's financial statements have been prepared in accordance with U.S generally accepted accounting principles (U.S. GAAP). | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates, judgments and assumptions include but are not limited to the following: valuation of borrower loans receivable and associated member payment dependent notes, valuation of servicing rights, valuation allowance on deferred tax assets, valuation and amortization periods of intangible assets, repurchase and idemnification obligation, stock-based compensation expense, and contingent liabilities. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. | |||||||||||||||||
Certain Risks and Concentrations | |||||||||||||||||
In the normal course of its business, PMI encounters two significant types of risk: credit and regulatory. Financial instruments that potentially subject PMI to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and short term investments. PMI places cash, cash equivalents, restricted cash and short term investments with high-quality financial institutions and is exposed to credit risk in the event of default by these institutions to the extent the amount recorded on the balance sheet exceeds federally insured amounts. PMI performs periodic evaluations of the relative credit standing of these financial institutions and has not sustained any credit losses from instruments held at these financial institutions. | |||||||||||||||||
To the extent that Borrower Loan payments are not made, servicing income will be reduced. A group of Notes corresponding to a particular Borrower Loan is wholly dependent on the repayment of such Borrower Loan. As a result, PMI does not bear the risk on such Borrower Loan. | |||||||||||||||||
PMI is subject to various regulatory requirements. The failure to appropriately identify and address these regulatory requirements could result in certain discretionary actions by regulators that could have a material effect on PMI's consolidated financial position and results of operations (See Note 12—Commitments and Contingencies—Securities Law Compliance). | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
PMI invests its excess cash primarily in highly liquid debt instruments of the U.S. government and its agencies. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents. Cash equivalents are recorded at cost, which approximates fair value. Cash and cash equivalents include various unrestricted deposits with highly rated financial institutions in checking, money market and short-term certificate of deposit accounts. | |||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash consists primarily of cash deposits held as collateral as required for loan funding and servicing activities. | |||||||||||||||||
Short Term Investments | |||||||||||||||||
PMI's short term investments consists of highly liquid debt instruments of the U.S. government and its agencies with original maturity periods greater than three months and less than 12 months. PMI had no short term investments as of the year ended December 31, 2013. | |||||||||||||||||
Borrower Loans and Notes | |||||||||||||||||
On July 13, 2009, PMI implemented the operating structure it employed through January 31, 2013 and began issuing Notes. That operating structure resulted in PMI purchasing loans from WebBank and holding the loans until maturity. PMI issued new securities, the Notes, to the winning lender members. PMI’s obligation to repay the Notes was conditioned upon the repayment of the associated Borrower Loan owned by PMI. As a result of those changes, PMI carried the Borrower Loans and the Notes on its balance sheet as assets and liabilities, respectively. In conjunction with that operating structure, PMI adopted the provisions of ASC Topic 825, Financial Instrument. ASC Topic 825 permits companies to choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. The fair value election, with respect to an item, may not be revoked once an election is made. | |||||||||||||||||
In applying the provisions of ASC Topic 825, PMI recorded assets and liabilities measured using the fair value option in a way that separates these reported fair values from the carrying values of similar assets and liabilities measured with a different measurement attribute. PMI does not record a specific allowance account related to the Borrower Loans and Notes in which PMI has elected the fair value option, but rather estimates the fair value of the Borrower Loans and Notes using discounted cash flow methodologies adjusted for PMI’s historical payment, loss and recovery rates. An account is considered to be a loss, or charged-off, when it reaches more than 120 days past due. PMI has reported the aggregate fair value of the Borrower Loans and Notes as separate line items in the assets and liabilities sections of the accompanying balance sheets using the methods described in ASC Topic 820, Fair Value Measurements and Disclosures—See Fair Value Measurement. | |||||||||||||||||
Member Loans Sold Directly to Third Party Purchasers | |||||||||||||||||
For loans sold to unrelated third party purchasers on a servicing retained basis, a gain or loss is recorded on the sale date. In order to calculate the gain or loss, PMI first determines whether the terms of the servicing arrangement with the purchaser results in a net servicing asset (i.e., when contractual/expected servicing revenues adequately compensate PMI) or a net servicing liability (i.e., when contractual/expected servicing revenues do not adequately compensate PMI). When contractual/expected servicing revenues do not adequately compensate PMI, a portion of the gross proceeds of the loans sold on a servicing retained basis are allocated to the recording of a net servicing liability. Conversely, when contractual/expected servicing revenues provide more than adequate compensation to PMI, the excess servicing compensation is allocated to the gross proceeds of the loans sold and results in the recording of a net servicing asset. | |||||||||||||||||
PMI estimates the fair value of the loan servicing asset or liability considering the contractual servicing fee revenue, adequate compensation for PMI's servicing obligation, the current principal balances of the loans and projected servicing revenues given projected defaults and prepayments (if significant) over the remaining lives of the loans. At December 31, 2013, PMI recorded $144 as a servicing asset related to these loans, which is included in Borrower Loans Receivable at fair value on the consolidated balance sheets. | |||||||||||||||||
Loans held for investment | |||||||||||||||||
Loans held for investment are primarily comprised of loans held for short durations and are recorded at cost which approximates fair value. | |||||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment consists of computer equipment, office furniture and equipment, and software purchased or developed for internal use. Property and equipment are stated at cost, less accumulated depreciation and amortization. PMI capitalizes expenditures for replacements and betterments and recognizes as expenses amounts for maintenance and repairs as incurred. Depreciation and amortization commences once the asset is placed in service. Depreciation and amortization are computed using the straight-line method based upon estimated useful lives of the assets as follows: | |||||||||||||||||
Furniture and fixtures | 7 years | ||||||||||||||||
Office equipment | 5 years | ||||||||||||||||
Computers and equipment | 3 years | ||||||||||||||||
Leasehold improvements | 3 years | ||||||||||||||||
Software | 3 years | ||||||||||||||||
Earned Vacations | |||||||||||||||||
The Company has a flexible vacation plan for its employees under which employees are entitled to take vacations for such periods of time that do not interfere with the orderly performance of their job responsibilities. Accordingly, no accrual for unpaid vacation pay has been included in the consolidated financial statements. | |||||||||||||||||
Internal Use Software and Website Development | |||||||||||||||||
PMI accounts for internal use software costs, including website development costs, in accordance with ASC Topic 350-40, Internal Use Software and ASC Topic 350-50, Website Development Costs. In accordance with ASC Topic 350-40 and 350-50, the costs to develop software for the website and other internal uses are capitalized when management has authorized and committed project funding, preliminary development efforts are successfully completed, and it is probable that the project will be completed and the software will be used as intended. Capitalized software development costs primarily include software licenses acquired, fees paid to outside consultants, and salaries and payroll related costs for employees directly involved in the development efforts. | |||||||||||||||||
Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed. Costs incurred for upgrades and enhancements that are considered to be probable to result in additional functionality are capitalized. Capitalized costs are included in property and equipment and amortized to expense using the straight-line method over their expected lives. PMI evaluates its software assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset. | |||||||||||||||||
Impairment of Long-Lived Assets Including Acquired Intangible Assets | |||||||||||||||||
In accordance with ASC Topic 360, Property Plant and Equipment, PMI reviews property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying values of those assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying value of the asset to future net undiscounted cash flows that the assets are expected to generate. If an asset is considered to be impaired, the impairment to be recognized equals the amount by which the asset’s carrying value exceeds its fair value. Fair value is estimated using discounted net cash flows. | |||||||||||||||||
During 2013 management made the decision to discontinue the development of certain of its planned software development projects and to dispose of obsolete computer software and hardware. The assets PMI's capitalized in prior years were deemed to be impaired in accordance with ASC Topic 360, Property, Plant, and Equipment. An impairment charge for obsolete equipment of $62 is included in operating expenses in PMI's consolidated statement of operations for the year ended December 31, 2013. During 2012, no asset disposals resulted in a loss on impairment of fixed assets. | |||||||||||||||||
Repurchase and Indemnification Obligation | |||||||||||||||||
PMI is obligated to indemnify lenders and repurchase certain Notes and member loans sold directly to third party purchasers in the event of violation of applicable federal, state, or local lending laws, or verifiable identify theft. The loan indemnification and repurchase obligation is estimated based on historical experience. PMI accrues a provision for the repurchase and indemnification obligation when the Notes or member loans are issued. Indemnified or repurchased Notes and member loans associated with federal, state, or local lending laws, or verifiable identity thefts are written off at the time of repurchase or at the time an indemnification payment is made. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenue is recognized in accordance with ASC Topic 605, Revenue Recognition. Under ASC Topic 605, PMI recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the price of the services is fixed and determinable, and collectability is reasonably assured. | |||||||||||||||||
Origination fees | |||||||||||||||||
The company earns an origination fee upon the successful closing of a loan. The borrower receives an amount equal to the loan amount net of the loan origination fee. The loan origination fee is determined by the term and credit grade of the loan, and ranges from 1.00% to 4.95% of the original principal amount. Since PMI accounts for borrower loans, loans held for investment and Notes at fair value, origination fees are not deferred but are recognized at origination of the loan, and direct costs to originate loans are recorded as expenses as incurred. | |||||||||||||||||
Loan servicing fees | |||||||||||||||||
Loan servicing revenue includes monthly loan servicing fees and non-sufficient funds (“NSF”) fees. Loan servicing fees are accrued daily based on the current outstanding loan principal balance of the Borrower Loans but are not recognized until payment is received due to the uncertainty of collection of borrower loan payments. NSF fees are charged to borrowers on the first failed payment of each billing period. NSF fees are charged to the customer and collected and recognized immediately. | |||||||||||||||||
Interest income on Borrower Loans Receivable and Interest Expense on Notes | |||||||||||||||||
PMI recognizes interest income on Borrower Loans and interest expense on the corresponding Notes using the accrual method based on the stated interest rate to the extent PMI believes it to be collectable. Below is a table which summarizes the gross interest income and expense for the twelve months ended December 31, 2013 and 2012. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Interest income on borrower loans | $ | 35,526 | $ | 23,101 | |||||||||||||
Interest expense on notes | (33,072 | ) | (21,889 | ) | |||||||||||||
Net interest income | $ | 2,454 | $ | 1,212 | |||||||||||||
Marketing and Advertising Expense | |||||||||||||||||
Under the provisions of ASC Topic 720, Other Expenses, the costs of advertising are expensed as incurred. Marketing and advertising costs were approximately $14,851 and $5,683 for the years ended December 31, 2013 and 2012, respectively. | |||||||||||||||||
Rebate and Promotional Expenses | |||||||||||||||||
PMI accounts for rebates and promotions in accordance with ASC Topic 605, Revenue Recognition. From time to time PMI offers rebates and promotions to borrower and lender members. PMI records these rebates and promotions as an offset to revenue if a particular rebate or promotion is earned upon origination of the loan. PMI's rebate and promotions have in the past been in the form of cash back and other incentives paid to lender and borrower members. | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
PMI accounts for its stock-based compensation for employees using fair-value-based accounting in accordance with ASC Topic 718, Stock Compensation. ASC Topic 718 requires companies to estimate the fair value of stock-based awards on the date of grant using an option-pricing model. The stock-based compensation related to awards that are expected to vest is amortized using the straight line method over the vesting term of the stock-based award, which is generally four years. Expected forfeitures of unvested options are estimated at the time of grant and reduce the recognized stock-based compensation expense. PMI estimated its annual forfeiture rate to be 17.2% and 18.2% for the years ended December 31, 2013 and 2012, respectively. | |||||||||||||||||
PMI has granted options to purchase shares of common stock to nonemployees in exchange for services performed. PMI accounts for stock options and restricted stock issued to nonemployees in accordance with the provisions of ASC Topic 505-50, Equity-Based Payments to Non-Employees, which requires that equity awards be recorded at their fair value. Under ASC Topic 718 and 505-50, PMI uses the Black-Scholes model to estimate the fair value of options granted to nonemployees at each vesting date until performance is complete to determine the appropriate charge for the services provided. The volatility of PMI's common stock was based on comparative company volatility. | |||||||||||||||||
Total stock-based compensation expense for employees reflected in PMI's statements of operations for the years ended December 31, 2013 and 2012 is approximately $229 and $340, respectively. As of December 31, 2013, the unamortized stock-based compensation expense related to unvested stock-based awards was approximately $991, which will be recognized over the remaining weighted average vesting period of approximately 4.2 years. | |||||||||||||||||
Net Loss Per Share | |||||||||||||||||
PMI computes net loss per share in accordance with ASC Topic 260 Earnings Per Share. Under ASC Topic 260, basic net loss per share is computed by dividing net loss per share available to common shareholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. At December 31, 2013, there were outstanding convertible preferred stock, warrants and options convertible into 27,274,068, 218,810 and 938,585 common shares, respectively, which may dilute future earnings per share. At December 31, 2012 there were outstanding convertible preferred stock, warrants and options convertible into 6,195,813, 260,987 and 1,173,816. Because PMI is reporting a net loss for the years ended December 31, 2013 and 2012, potentially dilutive securities are excluded from the computation of net loss per share, as their effect would be antidilutive. | |||||||||||||||||
Income Taxes | |||||||||||||||||
PMI uses the liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are based on the differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |||||||||||||||||
Under ASC Topic 740, Income Taxes, PMI's policy to include interest and penalties related to gross unrecognized tax benefits within PMI's provision for income taxes did not change. | |||||||||||||||||
Fair Value Measurement | |||||||||||||||||
PMI adopted ASC Topic 820, Fair Value Measurements and Disclosures, on January 1, 2008. ASC Topic 820 provides a framework for measuring the fair value of assets and liabilities. ASC Topic 820 also provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level within the hierarchy of information used in the valuation. ASC Topic 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. | |||||||||||||||||
ASC Topic 820 defines fair value in terms of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. | |||||||||||||||||
The price used to measure the fair value is not adjusted for transaction costs while the cost basis of certain financial instruments may include initial transaction costs. Under ASC Topic 820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset. The principal market is the market in which the reporting entity would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability under ASC Topic 820, it is assumed that the reporting entity has access to the market as of the measurement date. If no market for the asset exists or if the reporting entity does not have access to the principal market, the reporting entity should use a hypothetical market. | |||||||||||||||||
Under ASC Topic 820, assets and liabilities carried at fair value on the balance sheets are classified among three levels based on the observability of the inputs used to determine fair value: | |||||||||||||||||
Level 1 — The valuation is based on quoted prices in active markets for identical instruments. | |||||||||||||||||
Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |||||||||||||||||
Level 3 — The valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques, which incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation. | |||||||||||||||||
Fair value of financial instruments are determined based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of quoted prices and observable inputs and to minimize the use of unobservable inputs when measuring fair value. Various valuation techniques are utilized, depending on the nature of the financial instrument, including the use of market prices for identical or similar instruments, or discounted cash flow models. When possible, active and observable market data for identical or similar financial instruments are utilized. Alternatively, fair value is determined using assumptions that management believes a market participant would use in pricing the asset or liability. | |||||||||||||||||
Financial instruments consist principally of cash and cash equivalents, restricted cash, short term investments, Borrower Loans receivable, accounts payable and accrued liabilities, Notes and long-term debt. The estimated fair values of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their carrying values because of their short term nature. | |||||||||||||||||
The following tables present the assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012: | |||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Borrower loans receivable | $ | - | $ | - | $ | 226,238 | $ | 226,238 | |||||||||
Certificates of deposit & restricted cash | 14,032 | 1,441 | - | 15,473 | |||||||||||||
Loans held for investment | - | - | 3,917 | 3,917 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 226,794 | $ | 226,794 | |||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Short term investments | $ | 1,000 | $ | - | $ | - | $ | 1,000 | |||||||||
Certificates of deposit & restricted cash | 4,331 | 1,618 | - | 5,949 | |||||||||||||
Borrower loans receivable | - | - | 166,900 | 166,900 | |||||||||||||
Loans held for investment | - | - | 175 | 175 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 167,478 | $ | 167,478 | |||||||||
Short term investments consist of United States Treasuries with maturity periods greater than three months and less than 12 months. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PMI has the ability to access. PMI classifies United States Treasuries as Level 1 assets. PMI intends to hold these investments until maturity. | |||||||||||||||||
As observable market prices are not available for the Borrower Loans and Notes, or for similar assets and liabilities, PMI believes the Borrower Loans and Notes should be considered Level 3 financial instruments under ASC Topic 820. In a hypothetical transaction as of the measurement date, PMI believes that differences in the principal marketplace in which the Borrower Loans are originated and the principal marketplace in which PMI might offer those loans may result in differences between the originated amount of the loans and their fair value as of the transaction date. For Borrower Loans, the fair value is estimated using discounted cash flow methodologies based upon valuation assumptions including prepayment speeds, roll rates, recovery rates and discount rates based on the perceived credit risk within each credit grade. | |||||||||||||||||
The obligation to pay principal and interest on any group of Notes is equal to the loan payments, if any, that are received on the corresponding Borrower Loan, net of its 1.0% servicing fee. The fair value election for Notes and Borrower Loans allows both the assets and the related liabilities to receive similar accounting treatment for expected losses which is consistent with the subsequent cash flows to lenders that are dependent upon borrower payments. As such, the fair value of a group of Notes is approximately equal to the fair value of the corresponding Borrower Loan, adjusted for the 1.0% servicing fee and the timing of borrower payments subsequently disbursed to such Note holders. Any unrealized gains or losses on the Borrower Loans and Notes for which the fair value option has been elected is recorded as a separate line item in the statement of operations. The effective interest rate associated with a group of Notes is less than the interest rate earned on the corresponding Borrower Loan due to the 1.0% servicing fee. See Note 6 for a roll-forward and further discussion of the significant assumptions used to value Borrower Loans and Notes. | |||||||||||||||||
Servicing rights related to Borrower Loans originated prior to October 16, 2008 do not trade in an active open market with readily observable prices. Although sales of servicing assets do occur, the nature and character of the assets underlying those transactions are not similar to those held by PMI and, therefore, the precise terms and conditions typically seen in the marketplace would likely not be available to PMI. Accordingly, management determined the fair value of its servicing rights using a discounted cash flow model to project future expected cash flows based upon a set of valuation assumptions PMI believes market participants would use for similar rights. The primary assumptions PMI uses for valuing its servicing asset include default rates, estimated servicing income, cost to service, profit margin, and discount rate. | |||||||||||||||||
PMI reviewed these assumptions to ensure they were consistent with market conditions. Inaccurate assumptions in valuing the servicing rights could affect PMI's results of operations. Due to the nature of the valuation inputs, servicing assets are classified as Level 3. The change in the fair-value of servicing rights is included in cost of services in the statement of operations. Servicing rights decreased to zero as loans originated prior to October 16, 2008 had fully matured or charged off as of December 31, 2013. | |||||||||||||||||
The changes in Level 3 assets measured at fair value on a recurring basis are as follows: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Borrower | Notes | Loans | Total | ||||||||||||||
Loans | Held for | ||||||||||||||||
Investment | |||||||||||||||||
Balance at January 1, 2012 | $ | 75,764 | $ | (76,160 | ) | $ | 137 | $ | (259 | ) | |||||||
Originations | 153,175 | (153,175 | ) | 182 | 182 | ||||||||||||
Principal repayments | (66,840 | ) | 65,690 | (133 | ) | (1,283 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | 4,801 | (3,833 | ) | - | 968 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (11 | ) | (11 | ) | |||||||||||
Balance at December 31, 2012 | $ | 166,900 | $ | (167,478 | ) | $ | 175 | $ | (403 | ) | |||||||
Originations | 341,176 | (169,742 | ) | 14,296 | 185,730 | ||||||||||||
Principal repayments and credit losses | (105,692 | ) | 104,692 | (143 | ) | (1,143 | ) | ||||||||||
Borrower Loans sold to third parties | (171,290 | ) | - | (10,410 | ) | (181,700 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | (4,856 | ) | 5,734 | - | 878 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (1 | ) | (1 | ) | |||||||||||
Balance at December 31, 2013 | $ | 226,238 | $ | (226,794 | ) | $ | 3,917 | $ | 3,361 | ||||||||
The changes in fair value would directly impact the change in fair value on Borrower Loans, loans held for investment and Notes in the consolidated statements of operations. | |||||||||||||||||
Quantitative information about PMI's Level 3 fair value measurements of its Borrower Loans and Notes as of December 31, 2013 is provided below. The table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to PMI's fair value measurements. | |||||||||||||||||
Assets and Liabilities | Fair | Valuation | Unobservable Inputs | ||||||||||||||
Value as of | Technique | ||||||||||||||||
31-Dec | |||||||||||||||||
Borrower loans receivable at fair value | $ | 226,238 | Discounted Cashflow | Default rates and discount rates | |||||||||||||
Notes at fair value | $ | (226,794 | ) | Discounted Cashflow | Default rates and discount rates |
Cash_and_Cash_Equivalents_and_
Cash and Cash Equivalents and Short Term Investments | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Cash and Cash Equivalents and Short Term Investments [Abstract] | ' | ||||||||
Cash and Cash Equivalents and Short Term Investments | ' | ||||||||
3. Cash and Cash Equivalents and Short Term Investments | |||||||||
Cash and cash equivalents and short term investments consist of the following: | |||||||||
December 31, | |||||||||
Cash and cash equivalents and short term investments | 2013 | 2012 | |||||||
Cash | $ | 18,339 | $ | 2,300 | |||||
Restricted cash | 15,473 | 5,949 | |||||||
Short term investments | - | 1,000 | |||||||
Total cash and cash equivalents and short term investments | $ | 33,812 | $ | 9,249 |
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
4. Property and Equipment | |||||||||
Property and equipment consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Property and equipment: | |||||||||
Computer equipment | $ | 2,115 | $ | 1,630 | |||||
Internal-use software | 3,454 | 1,656 | |||||||
Purchased software | 375 | 369 | |||||||
Office equipment and furniture | 39 | 125 | |||||||
Leasehold improvements | - | 41 | |||||||
Assets not yet placed in service | 651 | 134 | |||||||
Property and equipment | 6,634 | 3,955 | |||||||
Less accumulated depreciation and amortization | (3,238 | ) | (2,425 | ) | |||||
Total property and equipment, net | $ | 3,396 | $ | 1,530 | |||||
Depreciation expense for 2013 and 2012 was $961 and $679, respectively. PMI capitalized internal-use software costs in the amount of $1,798 and $530 for the years ended December 31, 2013 and 2012, respectively. |
Loans_Held_for_Investment
Loans Held for Investment | 12 Months Ended |
Dec. 31, 2013 | |
Loans Held for Investment [Abstract] | ' |
Loans Held for Investment | ' |
5. Loans Held for Investment | |
During the year ended December 31, 2013, a total of $14,296 of Borrower Loans originated through the platform as Loans held for investment. During the year ended December 31, 2013, $10,410 of these loans were sold to an unrelated third party. The Company services the Borrower Loans that are sold to a third party. Loans held for investment on the consolidated balance sheets as of December 31, 2013 and 2012 was $3,917 and $175, respectively. When a Borrower Loan has been funded by PMI in whole, or in part, the portion of the borrower’s monthly loan payment that corresponds to the percentage of the Borrower Loan that is funded is retained. In these cases, interest income is recorded on these Borrower Loans. | |
The fair value of the Borrower Loans held for investment is estimated using discounted cash flow methodologies based upon a set of valuation assumptions similar to those of Borrower Loans, which are set forth in Note 2, as they have similar characteristics and PMI expects these loans to behave in a comparable manner. The valuation assumptions used to value these loans include prepayment rates, default rates and recovery rates derived from historical loan performance data and discount rates based on the credit grade applied to each loan. | |
The fair value adjustment on these loans held for investment was $(1) and ($11), which is included in earnings for the year ended December 31, 2013 and 2012, respectively. During the year ended December 31, 2013 and 2012, PMI has received $143 and $127 in payments on these loans. During the year ended December 31, 2013 and 2012, there was $14 and $29 in loans held for investment that were charged-off. |
Borrower_Loans_and_Notes_Held_
Borrower Loans and Notes Held at Fair Value | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Borrower Loans and Notes Held at Fair Value [Abstract] | ' | ||||||||
Borrower Loans and Notes Held at Fair Value | ' | ||||||||
6. Borrower Loans and Notes Held at Fair Value | |||||||||
The Company estimates the fair value of the Borrower Loans and Notes using discounted cash flow methodologies based upon a set of valuation assumptions. The primary assumptions used to value the Borrower Loans and Notes include default rates derived from historical performance and discount rates applied to each Prosper Rating tranche based on the perceived credit risk of each such Prosper Rating. If PMI does not receive payments on a Borrower Loan, PMI is not obligated to and does not make payments on the corresponding Notes. The aggregate fair value of a group of Notes corresponding to a particular Borrower Loan is approximately equal to the fair value of that Borrower Loan, adjusted for the 1.0% servicing fee and the timing of borrower payments subsequently disbursed to Note holders. The effective interest rate associated with the Notes is less than the interest rate earned on the corresponding Borrower Loan due to the 1.0% servicing fee. | |||||||||
Key economic assumptions and the sensitivity of the current fair value to immediate adverse changes in those assumptions at December 31, 2013 for Borrower Loans and Notes are presented in the following table: | |||||||||
Borrower Loans | Notes | ||||||||
Discount rate assumption: | 9.77 | %* | 9.77 | %* | |||||
Resulting fair value from: | |||||||||
100 basis point increase | $ | 222,989 | $ | 220,362 | |||||
200 basis point increase | 220,363 | 217,756 | |||||||
Resulting fair value from: | |||||||||
100 basis point decrease | $ | 228,465 | $ | 225,784 | |||||
200 basis point decrease | 231,282 | 228,560 | |||||||
Default rate assumption: | 7.2 | %* | 7.2 | %* | |||||
Resulting fair value from: | |||||||||
10% higher default rates | $ | 223,233 | $ | 220,620 | |||||
20% higher default rates | 220,039 | 217,439 | |||||||
Increase in fair value and income (loss) to earnings from: | |||||||||
10% lower default rates | $ | 228,151 | $ | 225,477 | |||||
20% lower default rates | 230,554 | 227,866 | |||||||
* Represents weighted average assumptions considering all Prosper Ratings. | |||||||||
The changes in fair value would directly impact the change in fair value on loans, loans held for investment and Notes in the consolidated statements of operations. | |||||||||
Due to the recent origination of the Borrower Loans and Notes, the change in fair value attributable to instrument-specific credit risk is immaterial. Of the Borrower Loans originated from July 13, 2009 to December 31, 2013, 332 loans were 90 days or more delinquent for an aggregate principal amount of $1,941 and a fair value of $175 as of December 31, 2013. |
Repurchase_and_Indemnification
Repurchase and Indemnification Obligation | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Repurchase and Indemnification Obligation [Abstract] | ' | ||||||||
Repurchase and Indemnification Obligation | ' | ||||||||
7. Repurchase and Indemnification Obligation | |||||||||
Changes in repurchase and indemnification obligations are summarized below: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Beginning of year balance: | $ | 41 | $ | 22 | |||||
Provision for repurchases and indemnifications | 67 | 19 | |||||||
Amounts repurchased and immediately charged off or charged off and indemnified (net of recoveries) | (76 | ) | - | ||||||
End of year balance: | $ | 32 | $ | 41 | |||||
For the years ended December 31, 2013 and 2012, the provision for repurchase and indemnification obligation was $118 and $26, respectively. | |||||||||
Net_Loss_Per_Share
Net Loss Per Share | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Net Loss Per Share [Abstract] | ' | ||||||||
Net Loss Per Share | ' | ||||||||
8. Net Loss Per Share | |||||||||
PMI computes net loss per share in accordance with ASC Topic 260. Under ASC Topic 260, basic net loss per share is computed by dividing net loss per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The weighted average number of shares and the loss per share reflect a 10-for-1 reverse stock split effected by the Company on October 29, 2013. | |||||||||
The Company uses the two-class method to compute net loss per share because the Company has issued securities, other than common stock, that contractually entitle the holders to participate in dividends and earnings of the Company. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Prior to their conversion to common shares, each series of the Company’s convertible preferred stock was entitled to participate on an as-if-converted basis in distributions, when and if declared by the board of directors, that were made to common stockholders and as a result these shares were considered participating securities. During the year ended December 31, 2013, certain shares issued as a result of the early exercise of stock options, which are subject to a repurchase right by the Company, were entitled to receive non-forfeitable dividends during the vesting period and as a result were considered participating securities. | |||||||||
Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current year earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the year’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net loss per common share is computed under the two-class method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options and warrants. In addition, the Company analyzes the potential dilutive effect of the outstanding participating securities under the “if-converted” method when calculating diluted earnings per share, in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period. The Company reports the more dilutive of the approaches (two class or “if-converted”) as its diluted net income per share during the period. Due to net losses for the years ended December 31, 2013 and 2012, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive. | |||||||||
Basic and diluted net loss per share was calculated as follows: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Numerator: | |||||||||
Net loss | $ | (27,181 | ) | $ | (16,110 | ) | |||
Denominator: | |||||||||
Weighted average shares used in computing basic and diluted net loss per share | 6,567,201 | 2,925,611 | |||||||
Basic and diluted net loss per share | $ | (4.14 | ) | $ | (5.51 | ) | |||
Due to losses attributable to PMI's common shareholders for each of the periods below, the following potentially dilutive shares are excluded from the diluted net loss per share calculation because they were anti-dilutive under the treasury stock method, in accordance with ASC Topic 260: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Excluded securities: | (shares) | (shares) | |||||||
Convertible preferred stock issued and outstanding | 27,274,068 | 6,195,813 | |||||||
Stock options issued and outstanding | 938,585 | 1,173,817 | |||||||
Unvested stock options exercised | 6,499,463 | - | |||||||
Warrants issued and outstanding | 218,810 | 260,987 | |||||||
Total common stock equivalents excluded from diluted net loss per common share computation | 34,930,926 | 7,630,617 |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Stockholders' Equity [Abstract] | ' | ||||||||||||||||
Stockholders' Equity | ' | ||||||||||||||||
9. Stockholders’ Equity | |||||||||||||||||
Preferred Stock | |||||||||||||||||
Under PMI's amended and restated certificate of incorporation, preferred stock is issuable in series, and the board of directors is authorized to determine the rights, preferences, and terms of each series. | |||||||||||||||||
In January 2013, PMI issued and sold to investors 13,868,152 shares of new Series A (“new Series A”) preferred stock in a private placement at a purchase price of $1.44 per share for approximately $19,844, net of issuance costs. In connection with that sale, PMI issued 5,117,182 shares at par value $.01 per share, of Series A-1 (“Series A-1”) convertible preferred stock to the holders of shares of PMI’s preferred stock that was outstanding immediately prior to the sale (“Old Preferred Shares”) in consideration for such stockholders participating in the sale. In connection with the new Series A sale, Old Preferred Shares were converted into shares of PMI common stock at a ratio of 1:1 if the holder of the Old Preferred Shares participated in the new Series A sale or at a 10:1 ratio if the holder of the Old Preferred Shares did not so participate. In addition, each such participating holder received a share of PMI’s new Series A-1 preferred stock for every dollar of liquidation preference associated with an Old Preferred Share held by such holder. Each share of Series A-1 preferred stock has a liquidation preference of $1.00 and converts into common stock at a ratio of 1,000,000:1. | |||||||||||||||||
In September 2013, PMI issued and sold 8,288,734 shares of new Series B (“new Series B”) preferred stock in a private placement at a purchase price of $3.02 per share for approximately $24,880, net of issuance costs. | |||||||||||||||||
Convertible Preferred Stock | Par Value | Authorized, | Balance | Liquidation | |||||||||||||
Issued and | December | Preference | |||||||||||||||
Outstanding | 31, 2013 | ||||||||||||||||
shares as of | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | |||||||||||||||||
New Series A | 0.01 | 13,868,152 | 139 | $ | 20,000 | ||||||||||||
Series A-1 | 0.01 | 5,117,182 | 51 | 51,172 | |||||||||||||
New Series B | 0.01 | 8,288,734 | 83 | 25,000 | |||||||||||||
27,274,068 | $ | 273 | $ | 96,172 | |||||||||||||
The number of shares issued and outstanding reflect a 10-for-1 reverse stock split effected by the Company on October 29, 2013. | |||||||||||||||||
Dividends | |||||||||||||||||
Dividends on shares of the new Series A and new Series B preferred stock are payable only when, as, and if declared by the board of directors. No dividends will be paid with respect to the common stock until any declared dividends on the new Series A preferred stock and new Series B preferred stock have been paid or set aside for payment to the new Series A preferred stockholders and the new Series B preferred stockholders. After payment of any such dividends, any additional dividends or distributions will be distributed among all holders of common stock and preferred stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of preferred stock were converted to common stock at the then effective conversion rate. To date, no dividends have been declared on any of PMI’s preferred stock or common stock, and there are no dividends in arrears at December 31, 2013. | |||||||||||||||||
The holders of Series D, Series E and Series F preferred stock were entitled to receive an annual dividend per share in an amount equal to 8% times the liquidation preference for such share, payable in preference and priority to any declaration or payment of any distribution on common stock in such calendar year. The right to receive dividends on shares of Series D, Series E and Series F preferred stock was cumulative from and after the date of issuance of such shares and were payable only when, as, and if declared by the board of directors. Holders of Series E-1 preferred stock were not entitled to receive dividends in preference and priority to, or on a pari passu basis with, the other preferred stock or the common stock. Dividends on shares of Series E-1 preferred stock were payable only when, as, and if declared by the board of directors. All shares of PMI’s Series D, E, E-1 and F preferred stock were converted to common stock in connection with the January 2013 sale of PMI’s new Series A preferred stock and A-1 preferred stock. | |||||||||||||||||
Conversion | |||||||||||||||||
Under the terms of PMI’s amended and restated certificate of incorporation, the holders of preferred stock have the right to convert such preferred stock into common stock at any time. In addition, all preferred stock automatically converts into common stock (i) immediately prior to the closing of an IPO that values PMI at least at $200,000 and that results in aggregate proceeds to PMI of at least $40,000 or (ii) upon a written request from the holders of at least 60% of the voting power of the outstanding preferred stock (on an as-converted basis) including at least 14% of the voting power of the outstanding Series A-1 preferred stock. In addition, if a holder of the new Series A preferred stock has converted any of the new Series A preferred stock, then all of such holder’s shares of Series A-1 preferred stock also will be converted upon a liquidation event. In lieu of any fractional shares of common stock to which a holder would otherwise be entitled, PMI shall pay such holder cash in an amount equal to the fair market value of such fractional shares, as determined by PMI’s board of directors. At present, the new Series A preferred stock and new Series B preferred stock converts into PMI common stock at a 1:1 ratio while the Series A-1 preferred stock converts into PMI common stock at a 1,000,000:1 ratio. | |||||||||||||||||
Liquidation Rights | |||||||||||||||||
Each holder of new Series A preferred stock and new Series B preferred stock is entitled to receive, on a pari passu basis, prior and in preference to any distribution of proceeds from a liquidation event to the holders of Series A-1 preferred stock or common stock an amount per share for each share of new Series A preferred stock and new Series B preferred stock equal to the sum of the liquidation preference specified for such share and all declared but unpaid dividends, if any, on such share. After the payment or setting aside for payment to the holders of new Series A preferred stock and new Series B preferred stock, the holders of Series A-1 preferred stock are entitled to receive, prior and in preference to any distribution of proceeds to the holders of common stock an amount per share for each such share of Series A-1 preferred stock equal to the sum of the liquidation preference specified for such share and all declared but unpaid dividends, if any, on such share. After the payment or setting aside for payment to the holders of new Series A preferred stock, new Series B preferred stock and Series A-1 preferred stock, the entire remaining proceeds legally available for distribution will be distributed pro rata to the holders of new Series A preferred stock and common stock in proportion to the number of shares of common stock held by them assuming the new Series A preferred stock has been converted into shares of common stock at the then effective conversion rate, provided that the maximum aggregate amount per share of new Series A preferred stock which the holders of new Series A preferred stock shall be entitled to receive is three times the original issue price for the new Series A preferred stock. At present, the liquidation preferences are equal to $1.44215155 per share for the new Series A preferred stock, $10.00 per share for the Series A-1 preferred stock and $3.01613647 per share for the new Series B preferred stock. | |||||||||||||||||
Voting | |||||||||||||||||
Each holder of shares of preferred stock shall be entitled to the number of votes equal to the number of shares of common stock into which such shares of preferred stock could be converted and shall have voting rights and powers equal to the voting rights and powers of the common stock. The holders of preferred stock and the holders of common stock shall vote together as a single class (except with respect to certain matters that require separate votes or as required by law), and shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of PMI. | |||||||||||||||||
Common Stock | |||||||||||||||||
PMI, through its amended and restated certificate of incorporation, is the sole issuer of common stock and related options and warrants. On October 29, 2013, PMI amended and restated its certificate of incorporation to effect a 10-for-1 reverse stock split. The total number of shares of stock which PMI has the authority to issue is 68,761,533, consisting of 41,487,465 shares of common stock, $0.01 par value per share, and 27,274,068 shares of preferred stock, $0.01 par value per share, 13,868,152 of which are designated as new Series A preferred stock 5,117,182 of which are designated as Series A-1 preferred stock and 8,288,734 of which are designated new Series B preferred stock. | |||||||||||||||||
Common Stock Issued for Services | |||||||||||||||||
Nonemployees | |||||||||||||||||
In August 2013, PMI granted an immediately vested option to purchase 47,601 common shares to a nonemployee for services. | |||||||||||||||||
PMI did not grant any immediately vested common shares to nonemployees for services during the year ended December 31, 2012. | |||||||||||||||||
Common Stock Issued upon Exercise of Stock Options | |||||||||||||||||
For the years ended December 31, 2013 and 2012, PMI issued 7,327,959 and 13,388 shares of common stock, respectively, upon the exercise of options for cash proceeds of $864 and $19, respectively, of which 6,499,463 and zero were unvested, respectively | |||||||||||||||||
For the years ended December 31, 2013 and 2012, PMI repurchased 100,509 and zero shares of restricted stock for approximately $41 and zero, respectively, upon termination of employment of various employees. | |||||||||||||||||
The number of shares reflects a 10-for-1 reverse stock split effected by PMI on October 29, 2013. | |||||||||||||||||
Common Stock Issued upon Exercise of Warrants | |||||||||||||||||
For the years ended December 31, 2013 and 2012 PMI issued 820 and zero shares of common stock upon the exercise of warrants, respectively for $0.01 per share. | |||||||||||||||||
The number of shares reflects a 10-for-1 reverse stock split effected by the Company on October 29, 2013. |
Stock_Option_Plan_and_Compensa
Stock Option Plan and Compensation | 12 Months Ended | ||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||
Stock Option Plan and Compensation [Abstract] | ' | ||||||||||||||||||||||||||||||
Stock Option Plan and Compensation | ' | ||||||||||||||||||||||||||||||
10. Stock Option Plan and Compensation | |||||||||||||||||||||||||||||||
Incentive stock options are granted to employees at an exercise price not less than 100% of the fair value of PMI’s common stock on the date of grant. Non-statutory stock options are granted to consultants and directors at an exercise price not less than 85% of the fair value of PMI’s common stock on the date of grant. If options are granted to stockholders who hold 10% or more of PMI’s common stock on the option grant date, then the exercise price shall not be less than 110% of the fair value of PMI’s common stock on the date of grant. The fair value is based on a good faith estimate by the board of directors at the time of each grant. As there is no active trading market for these options, such estimate may ultimately differ from valuations completed by an independent party. The options generally vest over four years, which is the same as the performance period. In no event are options exercisable more than ten years after the date of grant. | |||||||||||||||||||||||||||||||
In 2005, PMI’s stockholders approved the adoption of the 2005 Plan. On December 1, 2010, PMI’s stockholders approved the adoption of the Amended and Restated 2005 Stock Plan (as amended and restated, the “Plan”). Under the Plan, options to purchase up to 187,946 shares of common stock were reserved and may be granted to employees, directors, and consultants by the board of directors and stockholders to promote the success of PMI’s business. During 2011, the board of directors and stockholders increased the total number of options under the Plan by an additional 455,087 for a total of 135,396 available for grant. During 2012, the board of directors, either directly or through the compensation committee, and stockholders increased the total number of options under the Plan by an additional 170,000 for a total of 1,523,966, available for grant. During 2013, the board of directors, either directly or through the compensation committee, and stockholders increased the total number of options under the Plan by an additional 11,110,825 for a total of 12,634,791 available for grant. | |||||||||||||||||||||||||||||||
At December 31, 2013, there were 5,414,052 stock options available for grant under the Plan. The number of shares reflects a 10-for-1 reverse stock split effected by the Company on October 29, 2013. | |||||||||||||||||||||||||||||||
Option activity under the 2005 Plan is summarized as follows for the years below: | |||||||||||||||||||||||||||||||
The share amounts and share price reflect a 10-for-1 reverse stock split effected by the Company on October 29, 2013. | |||||||||||||||||||||||||||||||
Options | Weighted- | ||||||||||||||||||||||||||||||
Issued | Average | ||||||||||||||||||||||||||||||
and | Exercise | ||||||||||||||||||||||||||||||
Outstanding | Price | ||||||||||||||||||||||||||||||
Balance as of January 1, 2012 | 1,208,762 | $ | 2.08 | ||||||||||||||||||||||||||||
Options granted (weighted average fair value of $1.05) | 288,796 | 1.7 | |||||||||||||||||||||||||||||
Options exercised - vested | (13,389 | ) | 1.42 | ||||||||||||||||||||||||||||
Options exercised - nonvested | - | - | |||||||||||||||||||||||||||||
Options canceled | (310,353 | ) | 1.9 | ||||||||||||||||||||||||||||
Balance as of December 31, 2012 | 1,173,816 | $ | 2.03 | ||||||||||||||||||||||||||||
Balance as of January 1, 2013 | 1,173,816 | $ | 2.03 | ||||||||||||||||||||||||||||
Options granted (weighted average fair value of $0. 07) | 7,912,933 | 0.1 | |||||||||||||||||||||||||||||
Options exercised - vested | (828,496 | ) | 0.2 | ||||||||||||||||||||||||||||
Options exercised - nonvested | (6,499,463 | ) | 0.1 | ||||||||||||||||||||||||||||
Options canceled | (820,205 | ) | 1.77 | ||||||||||||||||||||||||||||
Balance as of December 31, 2013 | 938,585 | $ | 1.39 | ||||||||||||||||||||||||||||
Options outstanding and exercisable at December 31, 2013 | 575,258 | $ | 1.87 | ||||||||||||||||||||||||||||
The fair value of stock option awards for the years 2013 and 2012 was estimated at the date of grant using the Black-Scholes model with the following average assumptions: | |||||||||||||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||
Volatility of common stock | 73.3 | % | 73.3 | % | |||||||||||||||||||||||||||
Risk-free interest rate | 1.9 | % | 1.3 | % | |||||||||||||||||||||||||||
Expected life* | 5.8 years | 4.6 years | |||||||||||||||||||||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||||||||||||||||||
Weighted-average fair value of grants | $ | 0.07 | $ | 0.1 | |||||||||||||||||||||||||||
* For nonemployee stock option awards, the expected life is the contractual term of the award, which is generally ten years. | |||||||||||||||||||||||||||||||
The Black-Scholes model requires the input of highly subjective assumptions, including the expected stock price volatility. Because PMI's equity awards have characteristics significantly different from those of traded options, the changes in the subjective input assumptions can materially affect the fair value estimate. | |||||||||||||||||||||||||||||||
Other Information Regarding Stock Options | |||||||||||||||||||||||||||||||
Additional information regarding common stock options outstanding as of December 31, 2013 is as follows: | |||||||||||||||||||||||||||||||
Options Outstanding | Options Vested and Exercisable | ||||||||||||||||||||||||||||||
Exercise | Number | Weighted | Weighted Avg. | Intrinsic | Number | Weighted | Intrinsic | ||||||||||||||||||||||||
Prices | Outstanding | Avg. | Exercise Price | Value | Exercisable | Avg. | Value | ||||||||||||||||||||||||
Remaining | Exercise | ||||||||||||||||||||||||||||||
Life | Price | ||||||||||||||||||||||||||||||
$ | 0.1 | 288,689 | 9.62 | $ | 0.1 | $ | - | 57,721 | $ | 0.1 | $ | - | |||||||||||||||||||
1.2 | 171,181 | 7.71 | 1.2 | – | 126,007 | 1.2 | – | ||||||||||||||||||||||||
1.7 | 144,791 | 8.37 | 1.7 | – | 64,934 | 1.7 | – | ||||||||||||||||||||||||
2 | 300,074 | 6.56 | 2 | – | 292,746 | 2 | – | ||||||||||||||||||||||||
2.5 | 1,500 | 1.55 | 2.5 | – | 1,500 | 2.5 | – | ||||||||||||||||||||||||
5 | 11,000 | 2.67 | 5 | – | 11,000 | 5 | – | ||||||||||||||||||||||||
5.6 | 18,250 | 5.71 | 5.6 | – | 18,250 | 5.6 | – | ||||||||||||||||||||||||
19.4 | 3,100 | 5.04 | 19.4 | – | 3,100 | 19.4 | – | ||||||||||||||||||||||||
938,585 | 7.91 | $ | 1.39 | $ | – | 575,258 | $ | 1.36 | $ | – | |||||||||||||||||||||
The number of options reflects a 10-for-1 reverse stock split effected by the Company on October 29, 2013. | |||||||||||||||||||||||||||||||
The number of options outstanding, vested and expected to vest as of December 31, 2013 was 777,148 and the weighted-average remaining contractual life was 10.86 years. | |||||||||||||||||||||||||||||||
The intrinsic value is calculated as the difference between the value of PMI 's common stock at December 31, 2013, which was $0.01 per share, and the exercise price of the options. | |||||||||||||||||||||||||||||||
No compensation expense is recognized for unvested shares that are forfeited upon termination of service, and the stock-based compensation expense for the years ended December 31, 2013 and 2012 reflect the expenses that PMI expects to recognize after the consideration of estimated forfeitures. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes [Abstract] | ' | ||||||||
Income Taxes | ' | ||||||||
11. Income Taxes | |||||||||
PMI did not have any current or deferred federal or state income tax expense for the years ended December 31, 2013 and 2012. The income tax expense (benefit) differed from the amount computed by applying the U.S. federal income tax rate of 34% to pretax loss as a result of the following: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Federal tax at statutory rate | 34 | % | 34 | % | |||||
State tax at statutory rate (net of federal benefit) | 2 | % | 2 | % | |||||
Change in valuation allowance | (38 | )% | (36 | )% | |||||
Other | 2 | % | 0 | % | |||||
0 | % | 0 | % | ||||||
Temporary items that give rise to significant portions of deferred tax assets and liabilities (tax-effected) at December 31, 2013 and 2012 are as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Net operating loss carryforwards | $ | 39,872 | $ | 29,394 | |||||
Research & other credits | 660 | 527 | |||||||
Fixed assets | (23 | ) | 21 | ||||||
Accrued liabilities and other | 350 | 289 | |||||||
40,859 | 30,231 | ||||||||
Fair value of loans | (1,051 | ) | (618 | ) | |||||
Valuation allowance | (39,808 | ) | (29,613 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
The valuation allowance as of December 31, 2013, increased to ($39,808) from ($29,613) in the prior fiscal year, an increase of 34%. The net deferred tax asset of $39,808 at December 31, 2013 consists of a net current deferred tax asset of $188 and a net noncurrent deferred tax asset of $39,620. The net deferred tax asset of $29,613 at December 31, 2012 consists of a net current deferred tax asset of $116 and a net noncurrent deferred tax asset of $29,497. Under ASC 740, Accounting for Income Taxes, a valuation allowance must be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The amount of valuation allowance would be based upon management’s best estimate of PMI’s ability to realize the net deferred tax assets. A valuation allowance can subsequently be reversed when management believes that the assets are realizable on a more-likely-than-not basis. | |||||||||
PMI has determined that its net deferred tax asset did not satisfy the recognition criteria set forth in ASC 740 and, accordingly, established a valuation allowance for 100 percent of the net deferred tax asset. Realization of the deferred tax assets is dependent upon future earnings, if any, the amount and timing of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance of $39,808 and $29,613 for the years ended December 31, 2013 and 2012, respectively. | |||||||||
The Tax Reform Act of 1986 and similar California legislation impose substantial restrictions on the utilization of net operating losses and tax credits in the event of an “ownership change” of a corporation. Accordingly, PMI’s ability to utilize net operating losses and credit carryforwards may be limited in the future as the result of such an “ownership change.” | |||||||||
PMI has not performed a Section 382 analysis (which subjects the amount of pre-change NOLs and certain other pre-change tax attributes that can be utilized to an annual limitation). Use of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the ownership change provisions of U.S. tax law and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. | |||||||||
PMI files Federal and various state income tax returns. PMI has net operating loss carryforwards for both federal and state income tax purposes of approximately $101,798 and $92,109 respectively as of December 31, 2013, available to reduce future income subject to income taxes. The federal net operating loss carryforwards will begin to expire in 2025. The state net operating loss carryforwards will begin to expire in 2015. PMI also has federal and California research and development tax credits of approximately $445 and $466, respectively. The federal research credits will begin to expire in the year 2025, and the California research credits have no expiration date. The $674 capital loss incurred in 2007 for Federal and California has expired in 2012. | |||||||||
As of December 31, 2013, PMI’s federal and state tax returns for the years ended December 31, 2010 and December 31, 2009, respectively, through the current period are open to examination. In addition, all of the net operating losses and credits that may be used in future years are still subject to adjustment. | |||||||||
The following table summarizes the Company's activity related to its unrecognized tax benefits: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Balance at January 1, 2013 | $ | 186 | $ | - | |||||
Increase related to current year tax position | 33 | - | |||||||
Increase related to tax position of prior years | 8 | 186 | |||||||
Balance at December 31, 2013 | $ | 227 | $ | 186 | |||||
A total of $188 of the unrecognized tax benefits would affect PMI’s effective tax rate. PMI currently has a full valuation allowance against its U.S. net deferred tax assets which would impact the timing of the effective tax rate benefit should any of these uncertain tax positions be favorably settled in the future. | |||||||||
PMI's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2013, PMI has not accrued interest or penalties. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies [Abstract] | ' | ||||
Commitments and Contingencies | ' | ||||
12. Commitments and Contingencies | |||||
Future Minimum Lease Payments | |||||
PMI leases its corporate office and co-location facility under non-cancelable operating leases that expire in December 2014 and August 2014, respectively. | |||||
Future minimum rental payments under these leases as of December 31, 2013 are as follows: | |||||
Year ending December 31: | 2013 | ||||
2014 | $ | 502 | |||
2015 | - | ||||
Total future operating lease obligations | $ | 502 | |||
Rental expense under premises-operating lease arrangements was $633 and $532 for the years ended December 31, 2013 and 2012, respectively. | |||||
PMI amended and restated an agreement with WebBank, an FDIC-insured Utah-chartered industrial bank, under which all loans originated through the platform are made by WebBank under its bank charter. The arrangement allows for loans to be offered to borrowers at uniform nationwide terms. PMI is required to pay the greater of a monthly minimum fee or a fee calculated based on a certain percentage of monthly loan origination volume. | |||||
PMI has an agreement with a third party broker-dealer in which the third party agreed to operate and maintain the Note Trader Platform for the secondary trading of Notes. PMI is required to pay the third party broker-dealer an agreed upon monthly fee which equals the difference between the minimum monthly fee and the transaction fees collected by the third party provider during that month. | |||||
Securities Law Compliance | |||||
From inception through October 16, 2008, PMI sold approximately $178,000 of Borrower Loans to lender members through the old platform structure, whereby PMI assigned promissory notes directly to lender members. PMI did not register the offer and sale of the promissory notes corresponding to these loans under the Securities Act or under the registration or qualification provisions of any state securities laws. PMI believes that the question of whether or not the operation of the platform during this period constituted an offer or sale of “securities” involved a complicated factual and legal analysis and was uncertain. If the sales of promissory notes offered through the platform during this period were viewed as a securities offering, PMI would have failed to comply with the registration and qualification requirements of federal and state laws and lender members who hold these promissory notes may be entitled to rescission of unpaid principal, plus statutory interest. Generally, the federal statute of limitations for noncompliance with the requirement to register securities under the Securities Act is one year from the violation, although the statute of limitations period under various state laws may be for a longer period of time. | |||||
PMI’s decision to restructure the platform and cease sales of promissory notes offered through the platform effective October 16, 2008 limited this contingent liability to the period covering its activities prior to October 16, 2008. | |||||
On April 21, 2009, PMI and the North American Securities Administrators Association (“NASAA”) reached agreement on the terms of a model consent order between PMI and the states in which PMI offered loan notes for sale prior to November 2008. The consent order involves payment by PMI of up to an aggregate of $1,000 in penalties, which have been allocated among the states based on PMI’s promissory note sale transaction volume in each state prior to November 2008. A state that enters into a consent order receives its portion of the $1,000 in exchange for its agreement to terminate, or refrain from initiating, any investigation of PMI’s note sale activities prior to November 2008. Penalties are paid promptly after a state enters into a consent order. NASAA has recommended that each state enter into a consent order. However, no state is obliged to do so, and there is no deadline by which a state must make its decision. PMI is not required to pay any portion of the penalty to those states that do not elect to enter into a consent order. If a state does not enter into a consent order, it is free to pursue its own remedies against PMI, subject to any applicable statute of limitations. As of December 31, 2013, PMI has entered into consent orders with 34 states and has paid an aggregate of $466 in penalties to those states. | |||||
As of December 31, 2013 and 2012, PMI had accrued approximately $248 and $248, respectively, in connection with the contingent liability associated with the states that have not entered into consent orders, in accordance with ASC Topic 450, Contingencies. The methodology applied to estimate the accrual was to divide the $1,000 maximum fee pro-rata by state, using PMI’s note sales from inception through November 2008. A weighting was then applied by state to each state that has not entered into a consent order, assigning a likelihood that the penalty will be claimed. In estimating the probability of a claim being made by a state, PMI considered factors such as the standard terms of the consent orders; whether the state ever gave any indication of concern regarding the sale of promissory notes through the platform; the probability of a state electing not to enter into a consent order in order to pursue its own litigation against PMI; whether the penalty is sufficient to compensate a state for the cost of processing the settlement consent order; and finally the impact that current economic conditions have had on state governments. PMI will continue to evaluate this accrual and related assumptions as new information becomes known. | |||||
On November 26, 2008, plaintiffs filed a class action lawsuit against PMI and certain of its executive officers and directors in the Superior Court of California, County of San Francisco, California. The suit was brought on behalf of all promissory note purchasers on the platform from January 1, 2006 through October 14, 2008. The lawsuit alleged that PMI offered and sold unqualified and unregistered securities in violation of the California and federal securities laws. The lawsuit sought class certification, damages and the right of rescission against PMI and the other named defendants, as well as treble damages against PMI and the award of attorneys’ fees, experts’ fees and costs, and pre-judgment and post-judgment interest. | |||||
On July 19, 2013, solely to avoid the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, the parties to the class action litigation pending before the Superior Court, entered into a Stipulation and Agreement of Compromise, Settlement, and Release (the “Settlement”) setting forth an agreement to settle all claims related thereto. In connection with the Settlement, PMI agreed to pay the plaintiffs, and took the charge on the income statement, an aggregate amount of $10,000, payable according to the following schedule: (i) $2,000 within 10 days of entry of an order by the Court granting preliminary approval of the settlement (“Preliminary Approval”); (ii) $2,000 on the one-year anniversary of Preliminary Approval; (iii) $3,000 on the two-year anniversary of Preliminary Approval; and (iv) $3,000 on the three-year anniversary of Preliminary Approval. The settlement is subject to final approval by the Superior Court. Subject to satisfaction of the conditions set forth in the Settlement, the defendants will be released by the plaintiffs from all claims concerning or arising out of the offering of promissory notes on the platform from January 1, 2006 through October 14, 2008. | |||||
As a result of the Settlement, PMI recorded the Settlement in the condensed consolidated statement of operations and a reserve for class action settlement liability of $10,000 in the consolidated balance sheet as of December 31, 2013. | |||||
PMI’s insurance carrier with respect to the class action lawsuit, Greenwich Insurance Company (“Greenwich”), denied coverage. On August 21, 2009, PMI filed suit against Greenwich in the Superior Court of California, County of San Francisco, California. The lawsuit sought a declaration that PMI was entitled to coverage under its policy with Greenwich for losses arising out of the class action lawsuit as well as damages and the award of attorneys’ fees and pre- and post-judgment interest. | |||||
On January 26, 2011, the court issued a final statement of decision finding that Greenwich has a duty to defend the class action lawsuit, and requiring that Greenwich pay PMI's past and future defense costs in the class action suit up to $2,000. Greenwich subsequently made payments to PMI in the amount of $2,000 to reimburse PMI for the defense costs it had incurred in the class action suit. On October 22, 2012 Greenwich made an additional payment of $143 to PMI for pre-judgment interest. As a result, Greenwich has now satisfied its obligations with respect to PMI’s defense costs for the class action litigation. | |||||
On July 1, 2011, PMI and Greenwich entered into a Stipulated Order of Judgment pursuant to which PMI agreed to dismiss its remaining claims against Greenwich. On August 12, 2011, Greenwich filed a notice of appeal of the court's decision regarding Greenwich’s duty to defend up to $2,000. |
Related_Parties
Related Parties | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Related Parties [Abstract] | ' | ||||||||||||||||
Related Parties | ' | ||||||||||||||||
13. Related Parties | |||||||||||||||||
Since PMI’s inception, it has engaged in various transactions with its directors, executive officers and holders of more than 5% of its voting securities, and immediate family members and other affiliates of its directors, executive officers and 5% stockholders. Since January 1, 2009, PMI has engaged in financial transactions with an aggregate value of greater than $6,174 with its directors, executive officers and holders of more than 5% of its voting securities and other affiliates of its directors and executive officers. PMI believes that all of the transactions described below were made on terms no less favorable to PMI than could have been obtained from unaffiliated third parties. | |||||||||||||||||
PMI's executive officers, directors who are not executive officers and certain affiliates participate on PMI's lending platform by placing bids and purchasing Notes. The aggregate amount of the Notes and Borrower Loans purchased and the income earned by parties deemed to be affiliates and related parties of PMI Group as of December 31, 2013 and 2012 are summarized below: | |||||||||||||||||
Related Party | Aggregate Amount of | Income Earned on | |||||||||||||||
Notes and Borrower | Notes and Borrower | ||||||||||||||||
Loans | Loans | ||||||||||||||||
Purchased | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Executive officers and management | $ | 1,387 | $ | 139 | $ | 90 | $ | 7 | |||||||||
Directors | 622 | 3,996 | 255 | 334 | |||||||||||||
$ | 2,009 | $ | 4,135 | $ | 345 | $ | 341 | ||||||||||
The Notes and Borrower Loans were obtained on terms and conditions that were not more favorable than those obtained by other lenders. Of the total aggregate amount of Borrower Loans purchased since inception approximately $385 or 6% and $236 or 6% of principal has been charged off through December 31, 2013 and 2012, respectively. PMI has earned approximately $21 and $18 in servicing fee revenue related to these Notes and Borrower Loans for the years ended December 31, 2013 and 2012, respectively. |
Postretirement_Benefit_Plans
Postretirement Benefit Plans | 12 Months Ended |
Dec. 31, 2013 | |
Postretirement Benefit Plans [Abstract] | ' |
Postretirement Benefit Plans | ' |
14. Postretirement Benefit Plans | |
PMI has a 401(k) plan that covers all employees meeting certain eligibility requirements. The 401(k) plan is designed to provide tax-deferred retirement benefits in accordance with the provisions of Section 401(k) of the Internal Revenue Code. Eligible employees may defer up to 90% of eligible compensation up to the annual maximum as determined by the Internal Revenue Service. PMI’s contributions to the plan are discretionary. PMI has not made any contributions to the plan to date. |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
15. Subsequent Events | |
On March 10, 2014, the boards of PMI and Prosper Funding, respectively, appointed Aaron Vermut, who previously served as President of PMI and Prosper Funding, to the position of Chief Executive Officer of PMI and Prosper Funding. In connection with Aaron Vermut’s appointment as Chief Executive Officer of PMI and Prosper Funding, Stephen P. Vermut, who previously served as Chief Executive Officer of PMI and Prosper Funding, has been appointed by the boards of PMI and Prosper Funding, respectively, to the role of Executive Chairman of PMI and Prosper Funding. | |
In connection with the foregoing appointments, the boards of PMI and Prosper Funding, respectively, also appointed Ronald Suber to the role of President of PMI and Prosper Funding. Mr. Suber served as PMI’s Head of Global Institutional Sales and Prosper Funding’s Vice President prior to his appointment as President. | |
Schedule_I_Prosper_Funding_LLC
Schedule I, Prosper Funding LLC | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Schedule I, Prosper Funding LLC [Abstract] | ' | ||||||||||||||||
Schedule I, Prosper Funding LLC, A Development Stage Company | ' | ||||||||||||||||
Prosper Funding LLC | |||||||||||||||||
Consolidated Balance Sheets | |||||||||||||||||
(amounts in thousands) | |||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 5,789 | $ | 5 | |||||||||||||
Restricted cash | 12,299 | - | |||||||||||||||
Loans held for investment | 3,917 | - | |||||||||||||||
Borrower loans receivable at fair value | 226,238 | - | |||||||||||||||
Property and equipment, net | 1,980 | - | |||||||||||||||
Other assets | 14 | - | |||||||||||||||
Total Assets | $ | 250,237 | $ | 5 | |||||||||||||
Liabilities and Member's Equity | |||||||||||||||||
Accounts payable and accrued liabilities | $ | 3,712 | $ | - | |||||||||||||
Notes at fair value | 226,794 | - | |||||||||||||||
Repurchase and indemnification obligation | 32 | - | |||||||||||||||
Related party payable | 205 | - | |||||||||||||||
Total Liabilities | 230,743 | - | |||||||||||||||
Member's Equity | |||||||||||||||||
Member's equity | 16,076 | 210 | |||||||||||||||
Retained earnings (accumulated deficit) | 3,418 | (205 | ) | ||||||||||||||
Total Member's Equity | 19,494 | 5 | |||||||||||||||
Total Liabilities and Member's Equity | $ | 250,237 | $ | 5 | |||||||||||||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||||||||||||
Prosper Funding LLC | |||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||
(amounts in thousands) | |||||||||||||||||
For the Twelve Months Ended December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Revenues | |||||||||||||||||
Administration fee revenue | $ | 7,632 | $ | - | |||||||||||||
Interest income on borrower loans | 32,862 | - | |||||||||||||||
Interest expense on notes | (30,564 | ) | - | ||||||||||||||
Total Revenues | 9,930 | - | |||||||||||||||
Cost of Revenues | |||||||||||||||||
Cost of services | (1,270 | ) | - | ||||||||||||||
Provision for repurchase and indemnification obligation | (83 | ) | - | ||||||||||||||
Net Revenues | 8,577 | - | |||||||||||||||
Operating Expenses | |||||||||||||||||
Administration fee expense | 5,053 | - | |||||||||||||||
Depreciation and amortization | 538 | - | |||||||||||||||
Professional services | 26 | 114 | |||||||||||||||
Other operating expenses | 242 | 91 | |||||||||||||||
Total Operating Expenses | 5,859 | 205 | |||||||||||||||
Income (Loss) Before Other Income and Expenses | 2,718 | (205 | ) | ||||||||||||||
Other Income and Expenses | |||||||||||||||||
Change in fair value on borrower loans, loans held for investment and notes, net | 877 | - | |||||||||||||||
Other income | 28 | - | |||||||||||||||
Total Other Income and Expenses, net | 905 | - | |||||||||||||||
Income (Loss) Before Income Taxes | $ | 3,623 | $ | (205 | ) | ||||||||||||
Provision for income taxes | - | - | |||||||||||||||
Total Net Income (Loss) | $ | 3,623 | $ | (205 | ) | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||||||||||||
Prosper Funding LLC | |||||||||||||||||
Consolidated Statements of Member’s Equity | |||||||||||||||||
(amounts in thousands) | |||||||||||||||||
Member’s | Retained | Total | |||||||||||||||
Equity | Earnings | ||||||||||||||||
(Accumulated | |||||||||||||||||
Deficit) | |||||||||||||||||
Balance as of December 31, 2011 | $ | - | $ | - | $ | - | |||||||||||
Capital infusion from parent | 210 | - | 210 | ||||||||||||||
Net loss | - | (205 | ) | (205 | ) | ||||||||||||
Balance as of December 31, 2012 | $ | 210 | $ | (205 | ) | $ | 5 | ||||||||||
Transfer of assets from PMI | 5,865 | - | 5,865 | ||||||||||||||
Capital infusion from parent | 10,001 | - | 10,001 | ||||||||||||||
Net Income | - | 3,623 | 3,623 | ||||||||||||||
Balance as of December 31, 2013 | $ | 16,076 | $ | 3,418 | $ | 19,494 | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||||||||||||
Prosper Funding LLC | |||||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||
(amounts in thousands) | |||||||||||||||||
For the Twelve Months | |||||||||||||||||
Ended December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net income (loss) | $ | 3,623 | $ | (205 | ) | ||||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||||||||||
Change in fair value of notes | (5,734 | ) | - | ||||||||||||||
Change in fair value of borrower loans | 4,856 | - | |||||||||||||||
Depreciation and amortization | 538 | - | |||||||||||||||
Loan loss reserve | (9 | ) | - | ||||||||||||||
Change in fair value of loans held for investment | 1 | - | |||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Restricted cash | (8,155 | ) | - | ||||||||||||||
Other assets | (13 | ) | - | ||||||||||||||
Accounts payable and accrued liabilities | 2,933 | - | |||||||||||||||
Net related party payable | 205 | - | |||||||||||||||
Net cash used in operating activities | (1,755 | ) | (205 | ) | |||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Origination of borrower loans held at fair value | (331,353 | ) | - | ||||||||||||||
Repayment of borrower loans held at fair value | 99,313 | - | |||||||||||||||
Proceeds from sale of borrower loans held at fair value | 171,290 | - | |||||||||||||||
Purchases of property and equipment | (1,798 | ) | - | ||||||||||||||
Repayment of loans held for investment at fair value | 143 | - | |||||||||||||||
Origination of loans held for investment at fair value | (14,296 | ) | - | ||||||||||||||
Proceeds from sale of loans held for investment at fair value | 10,410 | - | |||||||||||||||
Net cash used in investing activities | (66,291 | ) | - | ||||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Proceeds from issuance of notes held at fair value | 159,921 | - | |||||||||||||||
Payment of notes held at fair value | (97,967 | ) | - | ||||||||||||||
Member’s equity capital infusion from parent | 10,001 | 210 | |||||||||||||||
Net cash included in transfer of assets from PMI | 1,875 | - | |||||||||||||||
Net cash provided by financing activities | 73,830 | 210 | |||||||||||||||
Net increase in cash and cash equivalents | 5,784 | 5 | |||||||||||||||
Cash and cash equivalents at beginning of the period | 5 | - | |||||||||||||||
Cash and cash equivalents at end of the period | $ | 5,789 | $ | 5 | |||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||
Restricted cash | $ | 4,144 | |||||||||||||||
Loans held for investment | 175 | ||||||||||||||||
Borrower loans at fair value | 170,343 | ||||||||||||||||
Property and equipment, net | 721 | ||||||||||||||||
Accrued liabilities | (779 | ) | |||||||||||||||
Notes at fair value | (170,573 | ||||||||||||||||
Loan repurchase and indemnification obligation | (41 | ) | |||||||||||||||
Non-cash transfer | 3,990 | ||||||||||||||||
Cash transferred | 1,875 | ||||||||||||||||
Total transfer of net non-cash assets from PMI | $ | 5,865 | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements. | |||||||||||||||||
Prosper Funding LLC | |||||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||||
1. Organization and Business | |||||||||||||||||
Prosper Funding LLC (“Prosper Funding”) was formed in the state of Delaware in February 2012 as a limited liability company with the sole equity member being Prosper Marketplace, Inc. (“PMI”). | |||||||||||||||||
Prosper Funding was formed by PMI to hold Borrower Loans and issue Notes through the platform. Although Prosper Funding is consolidated with PMI for accounting and tax purposes, Prosper Funding has been organized and is operated in a manner that is intended to minimize the likelihood that it would be substantively consolidated with PMI in a bankruptcy proceeding. Prosper Funding’s intention is to minimize the likelihood that its assets would be subject to claims by PMI’s creditors if PMI were to file for bankruptcy, as well as to minimize the likelihood that Prosper Funding will become subject to bankruptcy proceedings directly. Prosper Funding seeks to achieve this by placing certain restrictions on its activities and implementing certain formal procedures designed to expressly reinforce its status as a distinct corporate entity from PMI. In these notes to financial statements, the unsecured, consumer loans originated through the platform, which are referred to elsewhere in this Annual Report as “PMI Borrower Loans” and “Prosper Funding Borrower Loans”, are referred to collectively as “Borrower Loans”, and the borrower payment dependent notes issued through the platform, which are referred to elsewhere in this Annual Report as “PMI Notes” and “Prosper Funding Notes”, are referred to collectively as “Notes”. | |||||||||||||||||
On January 22, 2013, PMI entered into an Asset Transfer Agreement with Prosper Funding pursuant to which PMI transferred substantially all of its remaining assets to Prosper Funding, including (i) all outstanding Notes issued by PMI under the Indenture dated June 15, 2009 between PMI and Wells Fargo Bank, as trustee, (ii) all Borrower Loans held by PMI, (iii) all lender/borrower/group leader registration agreements related to the Notes or the Borrower Loans, and (iv) all documents and information related to the foregoing, effective February 1, 2013. | |||||||||||||||||
Prosper Funding commenced operations as of February 1, 2013 when PMI transferred ownership of the platform, including all of the rights related to the operation of the platform, to Prosper Funding. Since February 1, 2013, all Notes issued and sold through the platform are issued, sold and serviced by Prosper Funding. Pursuant to a Loan Account Program Agreement between PMI and WebBank, PMI manages the operation of the platform, as agent of WebBank, in connection with the submission of loan applications by potential borrowers, the making of related loans by WebBank and the funding of such loans by WebBank. Pursuant to an Administration Agreement between Prosper Funding and PMI, PMI manages all other aspects of the platform on behalf of Prosper Funding. | |||||||||||||||||
All loans requested and obtained through the platform are unsecured obligations of individual borrower members with a fixed interest rate and loan terms set at three or five years as of December 31, 2013. All loans made through the platform are funded by WebBank, an FDIC-insured, Utah chartered industrial bank. After funding a loan, WebBank sells the loan to Prosper Funding, without recourse to WebBank, in exchange for the principal amount of the loan. WebBank does not have any obligation to purchasers of the Notes. | |||||||||||||||||
Prosper Funding formed Prosper Asset Holdings LLC (“PAH”) in November 2013 as a limited liability company with the sole equity member being Prosper Funding. PAH was formed to purchase Borrower Loans from Prosper Funding and sell the Borrower Loans to third parties. | |||||||||||||||||
2. Significant Accounting Policies | |||||||||||||||||
Basis of Presentation | |||||||||||||||||
Prosper Funding’s consolidated financial statements include the accounts of Prosper Funding and its wholly-owned subsidiary PAH. All intercompany balances and transactions between Prosper Funding and PAH have been eliminated in consolidation. Prosper Funding's financial statements have been prepared in accordance with U.S generally accepted accounting principles (U.S. GAAP). | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates, judgments and assumptions include but are not limited to the following: valuation of borrower loans receivable and associated member payment dependent notes, valuation of servicing rights, and contingent liabilities. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. | |||||||||||||||||
Certain Risks and Concentrations | |||||||||||||||||
In the normal course of its business, Prosper Funding encounters two significant types of risk: credit and regulatory. Financial instruments that potentially subject Prosper Funding to significant concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. Prosper Funding places cash, cash equivalents and restricted cash with high-quality financial institutions and is exposed to credit risk in the event of default by these institutions to the extent the amount recorded on the balance sheet exceeds federally insured amounts. Prosper Funding also performs periodic evaluations of the relative credit standing of these financial institutions and has not sustained any credit losses from instruments held at these financial institutions. | |||||||||||||||||
To the extent that Borrower Loan payments are not made, servicing income will be reduced. A group of Notes corresponding to a particular Borrower Loan is wholly dependent on the repayment of such Borrower Loan. As a result, Prosper Funding does not bear the risk on such Borrower Loan. | |||||||||||||||||
Prosper Funding is subject to various regulatory requirements. The failure to appropriately identify and address these regulatory requirements could result in certain discretionary actions by regulators that could have a material effect on Prosper Funding's financial position and results of operations. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
Prosper Funding invests its excess cash primarily in highly liquid debt instruments of the U.S. government and its agencies. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents. Cash equivalents are recorded at cost, which approximates fair value. Such deposits periodically exceed amounts insured by the FDIC. Cash and cash equivalents include various unrestricted deposits with highly rated financial institutions in checking, money market and short-term certificate of deposit accounts. | |||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash consists primarily of cash deposits held as collateral as required for loan funding and servicing activities. | |||||||||||||||||
Borrower Loans and Notes | |||||||||||||||||
Prosper Funding has adopted the provisions of ASC Topic 825, Financial Instrument. ASC Topic 825 permits companies to choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. The fair value election, with respect to an item, may not be revoked once an election is made. In applying the provisions of ASC Topic 825, Prosper Funding records assets and liabilities measured using the fair value option in a way that separates these reported fair values from the carrying values of similar assets and liabilities measured with a different measurement attribute. Prosper Funding does not record a specific allowance account related to the Borrower Loans and Notes in which it has elected the fair value option, but rather estimate the fair value of the Borrower Loans and Notes using discounted cash flow methodologies adjusted for Prosper Funding’s historical payment, loss and recovery rates. An account is considered to be a loss, or charged-off, when it reaches more than 120 days past due. Prosper Funding has reported the aggregate fair value of the Borrower Loans and Notes as separate line items in the assets and liabilities sections of the accompanying balance sheets using the methods described in ASC Topic 820, Fair Value Measurements and Disclosures—See Fair Value Measurement. | |||||||||||||||||
Member Loans Sold Directly to Third Party Purchasers | |||||||||||||||||
For Borrower Loans sold to unrelated third party purchasers on a servicing retained basis, a gain or loss is recorded on the sale date. In order to calculate the gain or loss, Prosper Funding first determines whether the terms of the servicing arrangement with the purchaser results in a net servicing asset (i.e., when contractual/expected servicing revenues adequately compensate Prosper Funding) or a net servicing liability (i.e., when contractual/expected servicing revenues do not adequately compensate Prosper Funding). When contractual/expected servicing revenues do not adequately compensate Prosper Funding, a portion of the gross proceeds of the Borrower Loans sold on a servicing retained basis are allocated to the recording of a net servicing liability. Conversely, when contractual/expected servicing revenues provide more than adequate compensation to Prosper Funding, the excess servicing compensation is allocated to the gross proceeds of the Borrower Loans sold and results in the recording of a net servicing asset. | |||||||||||||||||
Prosper Funding estimates the fair value of the loan servicing asset or liability considering the contractual servicing fee revenue, adequate compensation for Prosper Funding’s servicing obligation, the current principal balances of the Borrower Loans and projected servicing revenues given projected defaults and prepayments (if significant) over the remaining lives of the Borrower Loans. | |||||||||||||||||
Loans held for investment | |||||||||||||||||
Loans held for investment are primarily comprised of loans held for short durations and are recorded at cost which approximates fair value. | |||||||||||||||||
Internal Use Software and Website Development | |||||||||||||||||
Prosper Funding accounts for internal use software costs, including website development costs, in accordance with ASC Topic 350-40, Internal Use Software and ASC Topic 350-50, Website Development Costs. In accordance with ASC Topic 350-40 and 350-50, the costs to develop software for the website and other internal uses are capitalized when management has authorized and committed project funding, preliminary development efforts are successfully completed, and it is probable that the project will be completed and the software will be used as intended. Capitalized software development costs primarily include software licenses acquired, fees paid to outside consultants, and salaries and payroll related costs for employees directly involved in the development efforts. | |||||||||||||||||
Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed. Costs incurred for upgrades and enhancements that are considered to be probable to result in additional functionality are capitalized. Capitalized costs are included in property and equipment and amortized to expense using the straight-line method over their expected lives. Prosper Funding evaluates its software assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset. | |||||||||||||||||
Repurchase and Indemnification Obligation | |||||||||||||||||
Prosper Funding is obligated to indemnify lenders and repurchase certain Notes and member loans sold directly to third party purchasers in the event of violation of applicable federal, state, or local lending laws, or verifiable identify theft. The loan indemnification and repurchase obligation is estimated based on historical experience. Prosper Funding accrues a provision for the repurchase and indemnification obligation when the Notes or member loans are issued. Indemnified or repurchased Notes and member loans associated with federal, state, or local lending laws, or verifiable identity thefts are written off at the time of repurchase or at the time an indemnification payment is made. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenue is recognized in accordance with ASC Topic 605, Revenue Recognition. Under ASC Topic 605, PMI recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the price of the services is fixed and determinable, and collectability is reasonably assured. | |||||||||||||||||
Administration Agreement License Fees | |||||||||||||||||
Prosper Funding primarily generates revenues through license fees it earns through an Administration Agreement with PMI. The Administration Agreement contains a license granted by Prosper Funding to PMI that entitles PMI to use the platform for and in relation to: (i) PMI’s performance of its duties and obligations under the Administration Agreement relating to corporate administration, loan platform services, loan and note servicing and marketing, and (ii) PMI’s performance of its duties and obligations to WebBank in relation to loan origination and funding. | |||||||||||||||||
Loan servicing fees | |||||||||||||||||
Loan servicing revenue includes monthly loan servicing fees and non-sufficient funds (“NSF”) fees. Loan servicing fees are accrued daily based on the current outstanding loan principal balance of the Borrower Loans but are not recognized until payment is received due to the uncertainty of collection of borrower loan payments. NSF fees are charged to borrowers on the first failed payment of each billing period. NSF fees are charged to the customer and collected and recognized immediately. | |||||||||||||||||
Interest income on Borrower Loans Receivable and Interest Expense on Notes | |||||||||||||||||
Prosper Funding recognizes interest income on Borrower Loans and interest expense on the corresponding Notes using the accrual method based on the stated interest rate to the extent that is believed it to be collectable. Below is a table which summarizes the gross interest income on Borrower Loans and expense on Notes for the twelve months ended December 31, 2013 and 2012. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Interest income on borrower loans | $ | 32,862 | $ | - | |||||||||||||
Interest expense on notes | (30,564 | ) | - | ||||||||||||||
Net interest income | $ | 2,298 | $ | - | |||||||||||||
Fair Value Measurement | |||||||||||||||||
Prosper Funding follows ASC Topic 820, Fair Value Measurements and Disclosures, which provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level within the hierarchy of information used in the valuation. ASC Topic 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. | |||||||||||||||||
ASC Topic 820 defines fair value in terms of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. | |||||||||||||||||
The price used to measure the fair value is not adjusted for transaction costs while the cost basis of certain financial instruments may include initial transaction costs. Under ASC Topic 820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset. The principal market is the market in which the reporting entity would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability under ASC Topic 820, it is assumed that the reporting entity has access to the market as of the measurement date. If no market for the asset exists or if the reporting entity does not have access to the principal market, the reporting entity should use a hypothetical market. | |||||||||||||||||
Under ASC Topic 820, assets and liabilities carried at fair value on the balance sheets are classified among three levels based on the observability of the inputs used to determine fair value: | |||||||||||||||||
Level 1 — The valuation is based on quoted prices in active markets for identical instruments. | |||||||||||||||||
Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |||||||||||||||||
Level 3 — The valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques, which incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation. | |||||||||||||||||
Fair value of financial instruments are determined based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of quoted prices and observable inputs and to minimize the use of unobservable inputs when measuring fair value. Various valuation techniques are utilized, depending on the nature of the financial instrument, including the use of market prices for identical or similar instruments, or discounted cash flow models. When possible, active and observable market data for identical or similar financial instruments are utilized. Alternatively, fair value is determined using assumptions that management believes a market participant would use in pricing the asset or liability. | |||||||||||||||||
Financial instruments consist principally of cash and cash equivalents, restricted cash, Borrower Loans receivable, accounts payable and accrued liabilities, and Notes. The estimated fair values of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their carrying values because of their short term nature. | |||||||||||||||||
The following tables present the assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012: | |||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Borrower loans receivable | $ | - | $ | - | $ | 226,238 | $ | 226,238 | |||||||||
Certificates of deposit and restricted cash | 11,028 | 1,271 | - | 12,299 | |||||||||||||
Loans held for investment | - | - | 3,917 | 3,917 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 226,794 | $ | 226,794 | |||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Short term investments | $ | - | $ | - | $ | - | $ | - | |||||||||
Certificates of deposit | - | - | - | - | |||||||||||||
Borrower loans receivable | - | - | - | - | |||||||||||||
Loans held for investment | - | - | - | - | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | - | $ | - | |||||||||
As observable market prices are not available for the Borrower Loans and Notes, or for similar assets and liabilities, Prosper Funding believes the Borrower Loans and Notes should be considered Level 3 financial instruments under ASC Topic 820. In a hypothetical transaction as of the measurement date, Prosper Funding believes that differences in the principal marketplace in which the Borrower Loans are originated and the principal marketplace in which Prosper Funding might offer those loans may result in differences between the originated amount of the Borrower Loans and their fair value as of the transaction date. For Borrower Loans, the fair value is estimated using discounted cash flow methodologies based upon valuation assumptions including prepayment speeds, roll rates, recovery rates and discount rates based on the perceived credit risk within each credit grade. | |||||||||||||||||
The obligation to pay principal and interest on any Note is equal to the loan payments, if any, that are received on the corresponding Borrower Loan, net of its 1.0% servicing fee. The fair value election for Borrower Loans and Notes allows both the assets and the related liabilities to receive similar accounting treatment for expected losses which is consistent with the subsequent cash flows to lender members that are dependent upon borrower payments. As such, the aggregate fair value of a group of Notes corresponding to a particular Borrower Loan is approximately equal to the fair value of that Borrower Loan, adjusted for the 1.0% servicing fee and the timing of borrower payments subsequently disbursed to such Note holders. Any unrealized gains or losses on the Borrower Loans and Notes for which the fair value option has been elected is recorded as a separate line item in the statement of operations. The effective interest rate associated with a group of Notes is less than the interest rate earned on the corresponding Borrower Loan due to the 1.0% servicing fee. See Note 6 for a roll-forward and further discussion of the significant assumptions used to value Borrower Loans and Notes. | |||||||||||||||||
The changes in Level 3 assets measured at fair value on a recurring basis are as follows: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Borrower | Notes | Loans | Total | ||||||||||||||
Loans | Held for | ||||||||||||||||
Investment | |||||||||||||||||
Balance at January 1, 2013 | $ | - | $ | - | $ | - | $ | - | |||||||||
Assets transferred on February 1, 2013 | 170,344 | (170,574 | ) | 175 | (55 | ) | |||||||||||
Originations | 331,353 | (159,921 | ) | 14,296 | 185,728 | ||||||||||||
Principal repayments and credit losses | (99,313 | ) | 97,967 | (143 | ) | (1,489 | ) | ||||||||||
Borrower loans sold to third parties | (171,290 | ) | (10,410 | ) | (181,700 | ) | |||||||||||
Change in fair value on borrower loans and notes | (4,856 | ) | 5,734 | - | 878 | ||||||||||||
Change in fair value of loans held for investment | - | - | (1 | ) | (1 | ) | |||||||||||
Balance at December 31, 2013 | $ | 226,238 | $ | (226,794 | ) | $ | 3,917 | $ | 3,361 | ||||||||
Quantitative information about Prosper Funding’s Level 3 fair value measurements of its borrower loans and notes as of December 31, 2013 is provided below. The table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to Prosper Funding’s fair value measurements. | |||||||||||||||||
Fair | Valuation Technique | Unobservable Inputs | |||||||||||||||
Assets and | Value as | ||||||||||||||||
Liabilities | of | ||||||||||||||||
December | |||||||||||||||||
31 | |||||||||||||||||
Borrower loans receivable at fair value | $ | 226,238 | Discounted Cashflow | Default rates and discount rates | |||||||||||||
Notes at fair value | $ | (226,794 | ) | Discounted Cashflow | Default rates and discount rates | ||||||||||||
3. Cash and Cash Equivalents | |||||||||||||||||
Cash and cash equivalents consist of the following: | |||||||||||||||||
December 31, | |||||||||||||||||
Cash and cash equivalents | 2013 | 2012 | |||||||||||||||
Cash in bank | $ | 5,789 | $ | 5 | |||||||||||||
Total cash and cash equivalents | $ | 5,789 | $ | 5 | |||||||||||||
4. Property and Equipment | |||||||||||||||||
Property and equipment consist of the following: | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Property and equipment: | |||||||||||||||||
Internal-use software | $ | 3,454 | $ | - | |||||||||||||
Property and equipment | 3,454 | - | |||||||||||||||
Less accumulated depreciation and amortization | (1,474 | ) | |||||||||||||||
Total property and equipment, net | $ | 1,980 | $ | - | |||||||||||||
Depreciation expense for 2013 and 2012 was $538 and $0, respectively. Prosper Funding capitalized internal-use software costs in the amount of $1,798 and $0 for the years ended December 31, 2013 and 2012, respectively. | |||||||||||||||||
5. Loans Held for Investment | |||||||||||||||||
During the year ended December 31, 2013, a total of $14,296 of Borrower Loans originated through the platform were held by Prosper Funding as Loans held for investment. During the year ended December 31, 2013, $10,410 of these Borrower Loans were sold to an unrelated third party. Loans held for investment on the consolidated balance sheets as of December 31, 2013 and 2012 was $3,917 and $0, respectively. When a Borrower Loan has been funded by Prosper Funding in whole, or in part, the portion of the borrower’s monthly loan payment that corresponds to the percentage of the Borrower Loan that was funded by Prosper Funding is retained. In these cases, interest income is recorded on such Borrower Loans. | |||||||||||||||||
The fair value of the Borrower Loans held for investment is estimated using discounted cash flow methodologies based upon a set of valuation assumptions similar to those of Borrower Loans, which are set forth in Note 2, as they have similar characteristics and Prosper Funding expects these loans to behave in a comparable manner. The valuation assumptions used to value these loans include prepayment rates, default rates and recovery rates derived from historical loan performance data and discount rates based on the credit grade applied to each loan. | |||||||||||||||||
The fair value adjustment on the Borrower Loans held for investment was $(1) and $0, which is included in earnings for the year ended December 31, 2013 and 2012, respectively. During the year ended December 31, 2013 Prosper Funding has received $143 in payments on these loans. During the year ended December 31, 2013, there was $14 in Borrower Loans held for investment that were charged-off. | |||||||||||||||||
6. Borrower Loans and Notes Held at Fair Value | |||||||||||||||||
The Company estimates the fair value of the Borrower Loans and Notes using discounted cash flow methodologies based upon a set of valuation assumptions. The primary assumptions used to value the Borrower Loans and Notes include default rates derived from historical performance and discount rates applied to each Prosper Rating tranche based on the perceived credit risk of each such Prosper Rating. If PMI does not receive payments on a Borrower Loan, PMI is not obligated to and does not make payments on the corresponding Notes. The aggregate fair value of a group of Notes corresponding to a particular Borrower Loan is approximately equal to the fair value of that Borrower Loan, adjusted for the 1.0% servicing fee and the timing of borrower payments subsequently disbursed to Note holders. The effective interest rate associated with the Notes is less than the interest rate earned on the corresponding Borrower Loan due to the 1.0% servicing fee. | |||||||||||||||||
Key economic assumptions and the sensitivity of the current fair value to immediate adverse changes in those assumptions at December 31, 2013 for Borrower Loans and Notes are presented in the following table: | |||||||||||||||||
Borrower Loans | Notes | ||||||||||||||||
Discount rate assumption: | 9.77 | %* | 9.77 | %* | |||||||||||||
Resulting fair value from: | |||||||||||||||||
100 basis point increase | $ | 222,989 | $ | 220,362 | |||||||||||||
200 basis point increase | 220,363 | 217,756 | |||||||||||||||
Resulting fair value from: | |||||||||||||||||
100 basis point decrease | $ | 228,465 | $ | 225,784 | |||||||||||||
200 basis point decrease | 231,282 | 228,560 | |||||||||||||||
Default rate assumption: | 7.2 | %* | 7.2 | %* | |||||||||||||
Resulting fair value from: | |||||||||||||||||
10% higher default rates | $ | 223,233 | $ | 220,620 | |||||||||||||
20% higher default rates | 220,039 | 217,439 | |||||||||||||||
Increase in fair value and income (loss) to earnings from: | |||||||||||||||||
10% lower default rates | $ | 228,151 | $ | 225,477 | |||||||||||||
20% lower default rates | 230,554 | 227,866 | |||||||||||||||
* Represents weighted average assumptions considering all Prosper Ratings. | |||||||||||||||||
The changes in fair value would directly impact the change in fair value on loans, loans held for investment and Notes in the consolidated statements of operations. | |||||||||||||||||
Due to the recent origination of the Borrower Loans and Notes, the change in fair value attributable to instrument-specific credit risk is immaterial. Of the Borrower Loans originated from July 13, 2009 to December 31, 2013, 332 loans were 90 days or more delinquent for an aggregate principal amount of $1,941 and a fair value of $175 as of December 31, 2013. | |||||||||||||||||
7. Repurchase and Indemnification Obligation | |||||||||||||||||
Changes in Prosper Funding’s repurchase and indemnification obligations are summarized below: | |||||||||||||||||
Years Ended December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Beginning of year balance: | $ | - | $ | - | |||||||||||||
Provision for repurchases and indemnifications | 41 | - | |||||||||||||||
Amounts repurchased and immediately charged off or charged off and indemnified (net of recoveries) | (9 | ) | - | ||||||||||||||
End of year balance: | $ | 32 | $ | - | |||||||||||||
For the years ended December 31, 2013 and 2012, the provision for repurchase and indemnification obligation was $83 and $0, respectively. | |||||||||||||||||
8. Income Taxes | |||||||||||||||||
Prosper Funding incurred no income tax provision for the year ended December 31, 2013 and 2012. Prosper Funding is a US disregarded entity and the income and loss is included in the return of its parent, PMI. Since PMI is in a loss position, not currently subject to income taxes, and has fully reserved its deferred tax asset, the net effective tax rate for Prosper Funding is 0%. | |||||||||||||||||
9. Subsequent Events | |||||||||||||||||
On March 10, 2014, the boards of PMI and Prosper Funding, respectively, appointed Aaron Vermut, who previously served as President of PMI and Prosper Funding, to the position of Chief Executive Officer of PMI and Prosper Funding. In connection with Aaron Vermut's appointment as Chief Executive Officer of PMI and Prosper Funding, Stephen P. Vermut, who previously served as Chief Executive Officer of PMI and Prosper Funding, has been appointed by the boards of PMI and Prosper Funding, respectively, to the role of Executive Chairman of PMI and Prosper Funding. | |||||||||||||||||
In connection with the foregoing appointments, the boards of PMI and Prosper Funding, respectively, also appointed Ronald Suber to the role of President of PMI and Prosper Funding. Mr. Suber served as PMI's Head of Global Institutional Sales and Prosper Funding's Vice President prior to his appointment as President. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Basis of Presentation | ' | ||||||||||||||||
Basis of Presentation | |||||||||||||||||
The accompanying consolidated financial statements include the accounts of PMI and its wholly owned subsidiary Prosper Funding. All intercompany balances and transactions between Prosper Funding and PMI have been eliminated in consolidation. PMI and Prosper Funding's financial statements have been prepared in accordance with U.S generally accepted accounting principles (U.S. GAAP). | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates, judgments and assumptions include but are not limited to the following: valuation of borrower loans receivable and associated member payment dependent notes, valuation of servicing rights, valuation allowance on deferred tax assets, valuation and amortization periods of intangible assets, repurchase and idemnification obligation, stock-based compensation expense, and contingent liabilities. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. | |||||||||||||||||
Certain Risks and Concentrations | ' | ||||||||||||||||
Certain Risks and Concentrations | |||||||||||||||||
In the normal course of its business, PMI encounters two significant types of risk: credit and regulatory. Financial instruments that potentially subject PMI to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and short term investments. PMI places cash, cash equivalents, restricted cash and short term investments with high-quality financial institutions and is exposed to credit risk in the event of default by these institutions to the extent the amount recorded on the balance sheet exceeds federally insured amounts. PMI performs periodic evaluations of the relative credit standing of these financial institutions and has not sustained any credit losses from instruments held at these financial institutions. | |||||||||||||||||
To the extent that Borrower Loan payments are not made, servicing income will be reduced. A group of Notes corresponding to a particular Borrower Loan is wholly dependent on the repayment of such Borrower Loan. As a result, PMI does not bear the risk on such Borrower Loan. | |||||||||||||||||
PMI is subject to various regulatory requirements. The failure to appropriately identify and address these regulatory requirements could result in certain discretionary actions by regulators that could have a material effect on PMI's consolidated financial position and results of operations (See Note 12—Commitments and Contingencies—Securities Law Compliance). | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
PMI invests its excess cash primarily in highly liquid debt instruments of the U.S. government and its agencies. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents. Cash equivalents are recorded at cost, which approximates fair value. Cash and cash equivalents include various unrestricted deposits with highly rated financial institutions in checking, money market and short-term certificate of deposit accounts. | |||||||||||||||||
Restricted Cash | ' | ||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash consists primarily of cash deposits held as collateral as required for loan funding and servicing activities. | |||||||||||||||||
Short Term Investments | ' | ||||||||||||||||
Short Term Investments | |||||||||||||||||
PMI's short term investments consists of highly liquid debt instruments of the U.S. government and its agencies with original maturity periods greater than three months and less than 12 months. PMI had no short term investments as of the year ended December 31, 2013. | |||||||||||||||||
Borrower Loans and Notes | ' | ||||||||||||||||
Borrower Loans and Notes | |||||||||||||||||
On July 13, 2009, PMI implemented the operating structure it employed through January 31, 2013 and began issuing Notes. That operating structure resulted in PMI purchasing loans from WebBank and holding the loans until maturity. PMI issued new securities, the Notes, to the winning lender members. PMI’s obligation to repay the Notes was conditioned upon the repayment of the associated Borrower Loan owned by PMI. As a result of those changes, PMI carried the Borrower Loans and the Notes on its balance sheet as assets and liabilities, respectively. In conjunction with that operating structure, PMI adopted the provisions of ASC Topic 825, Financial Instrument. ASC Topic 825 permits companies to choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. The fair value election, with respect to an item, may not be revoked once an election is made. | |||||||||||||||||
In applying the provisions of ASC Topic 825, PMI recorded assets and liabilities measured using the fair value option in a way that separates these reported fair values from the carrying values of similar assets and liabilities measured with a different measurement attribute. PMI does not record a specific allowance account related to the Borrower Loans and Notes in which PMI has elected the fair value option, but rather estimates the fair value of the Borrower Loans and Notes using discounted cash flow methodologies adjusted for PMI’s historical payment, loss and recovery rates. An account is considered to be a loss, or charged-off, when it reaches more than 120 days past due. PMI has reported the aggregate fair value of the Borrower Loans and Notes as separate line items in the assets and liabilities sections of the accompanying balance sheets using the methods described in ASC Topic 820, Fair Value Measurements and Disclosures—See Fair Value Measurement. | |||||||||||||||||
Member Loans Sold Directly to Third Party Purchasers | ' | ||||||||||||||||
Member Loans Sold Directly to Third Party Purchasers | |||||||||||||||||
For loans sold to unrelated third party purchasers on a servicing retained basis, a gain or loss is recorded on the sale date. In order to calculate the gain or loss, PMI first determines whether the terms of the servicing arrangement with the purchaser results in a net servicing asset (i.e., when contractual/expected servicing revenues adequately compensate PMI) or a net servicing liability (i.e., when contractual/expected servicing revenues do not adequately compensate PMI). When contractual/expected servicing revenues do not adequately compensate PMI, a portion of the gross proceeds of the loans sold on a servicing retained basis are allocated to the recording of a net servicing liability. Conversely, when contractual/expected servicing revenues provide more than adequate compensation to PMI, the excess servicing compensation is allocated to the gross proceeds of the loans sold and results in the recording of a net servicing asset. | |||||||||||||||||
PMI estimates the fair value of the loan servicing asset or liability considering the contractual servicing fee revenue, adequate compensation for PMI's servicing obligation, the current principal balances of the loans and projected servicing revenues given projected defaults and prepayments (if significant) over the remaining lives of the loans. At December 31, 2013, PMI recorded $144 as a servicing asset related to these loans, which is included in Borrower Loans Receivable at fair value on the consolidated balance sheets. | |||||||||||||||||
Loans held for investment | ' | ||||||||||||||||
Loans held for investment | |||||||||||||||||
Loans held for investment are primarily comprised of loans held for short durations and are recorded at cost which approximates fair value. | |||||||||||||||||
Property and Equipment | ' | ||||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment consists of computer equipment, office furniture and equipment, and software purchased or developed for internal use. Property and equipment are stated at cost, less accumulated depreciation and amortization. PMI capitalizes expenditures for replacements and betterments and recognizes as expenses amounts for maintenance and repairs as incurred. Depreciation and amortization commences once the asset is placed in service. Depreciation and amortization are computed using the straight-line method based upon estimated useful lives of the assets as follows: | |||||||||||||||||
Furniture and fixtures | 7 years | ||||||||||||||||
Office equipment | 5 years | ||||||||||||||||
Computers and equipment | 3 years | ||||||||||||||||
Leasehold improvements | 3 years | ||||||||||||||||
Software | 3 years | ||||||||||||||||
Earned Vacations | ' | ||||||||||||||||
Earned Vacations | |||||||||||||||||
The Company has a flexible vacation plan for its employees under which employees are entitled to take vacations for such periods of time that do not interfere with the orderly performance of their job responsibilities. Accordingly, no accrual for unpaid vacation pay has been included in the consolidated financial statements. | |||||||||||||||||
Internal Use Software and Website Development | ' | ||||||||||||||||
Internal Use Software and Website Development | |||||||||||||||||
PMI accounts for internal use software costs, including website development costs, in accordance with ASC Topic 350-40, Internal Use Software and ASC Topic 350-50, Website Development Costs. In accordance with ASC Topic 350-40 and 350-50, the costs to develop software for the website and other internal uses are capitalized when management has authorized and committed project funding, preliminary development efforts are successfully completed, and it is probable that the project will be completed and the software will be used as intended. Capitalized software development costs primarily include software licenses acquired, fees paid to outside consultants, and salaries and payroll related costs for employees directly involved in the development efforts. | |||||||||||||||||
Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed. Costs incurred for upgrades and enhancements that are considered to be probable to result in additional functionality are capitalized. Capitalized costs are included in property and equipment and amortized to expense using the straight-line method over their expected lives. PMI evaluates its software assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset. | |||||||||||||||||
Impairment of Long-Lived Assets Including Acquired Intangible Assets | ' | ||||||||||||||||
Impairment of Long-Lived Assets Including Acquired Intangible Assets | |||||||||||||||||
In accordance with ASC Topic 360, Property Plant and Equipment, PMI reviews property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying values of those assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying value of the asset to future net undiscounted cash flows that the assets are expected to generate. If an asset is considered to be impaired, the impairment to be recognized equals the amount by which the asset’s carrying value exceeds its fair value. Fair value is estimated using discounted net cash flows. | |||||||||||||||||
During 2013 management made the decision to discontinue the development of certain of its planned software development projects and to dispose of obsolete computer software and hardware. The assets PMI's capitalized in prior years were deemed to be impaired in accordance with ASC Topic 360, Property, Plant, and Equipment. An impairment charge for obsolete equipment of $62 is included in operating expenses in PMI's consolidated statement of operations for the year ended December 31, 2013. During 2012, no asset disposals resulted in a loss on impairment of fixed assets. | |||||||||||||||||
Repurchase and Indemnification Obligation | ' | ||||||||||||||||
Repurchase and Indemnification Obligation | |||||||||||||||||
PMI is obligated to indemnify lenders and repurchase certain Notes and member loans sold directly to third party purchasers in the event of violation of applicable federal, state, or local lending laws, or verifiable identify theft. The loan indemnification and repurchase obligation is estimated based on historical experience. PMI accrues a provision for the repurchase and indemnification obligation when the Notes or member loans are issued. Indemnified or repurchased Notes and member loans associated with federal, state, or local lending laws, or verifiable identity thefts are written off at the time of repurchase or at the time an indemnification payment is made. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenue is recognized in accordance with ASC Topic 605, Revenue Recognition. Under ASC Topic 605, PMI recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the price of the services is fixed and determinable, and collectability is reasonably assured. | |||||||||||||||||
Origination fees | |||||||||||||||||
The company earns an origination fee upon the successful closing of a loan. The borrower receives an amount equal to the loan amount net of the loan origination fee. The loan origination fee is determined by the term and credit grade of the loan, and ranges from 1.00% to 4.95% of the original principal amount. Since PMI accounts for borrower loans, loans held for investment and Notes at fair value, origination fees are not deferred but are recognized at origination of the loan, and direct costs to originate loans are recorded as expenses as incurred. | |||||||||||||||||
Loan servicing fees | |||||||||||||||||
Loan servicing revenue includes monthly loan servicing fees and non-sufficient funds (“NSF”) fees. Loan servicing fees are accrued daily based on the current outstanding loan principal balance of the Borrower Loans but are not recognized until payment is received due to the uncertainty of collection of borrower loan payments. NSF fees are charged to borrowers on the first failed payment of each billing period. NSF fees are charged to the customer and collected and recognized immediately. | |||||||||||||||||
Interest income on Borrower Loans Receivable and Interest Expense on Notes | |||||||||||||||||
PMI recognizes interest income on Borrower Loans and interest expense on the corresponding Notes using the accrual method based on the stated interest rate to the extent PMI believes it to be collectable. Below is a table which summarizes the gross interest income and expense for the twelve months ended December 31, 2013 and 2012. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Interest income on borrower loans | $ | 35,526 | $ | 23,101 | |||||||||||||
Interest expense on notes | (33,072 | ) | (21,889 | ) | |||||||||||||
Net interest income | $ | 2,454 | $ | 1,212 | |||||||||||||
Marketing and Advertising Expense | ' | ||||||||||||||||
Marketing and Advertising Expense | |||||||||||||||||
Under the provisions of ASC Topic 720, Other Expenses, the costs of advertising are expensed as incurred. Marketing and advertising costs were approximately $14,851 and $5,683 for the years ended December 31, 2013 and 2012, respectively. | |||||||||||||||||
Rebate and Promotional Expenses | ' | ||||||||||||||||
Rebate and Promotional Expenses | |||||||||||||||||
PMI accounts for rebates and promotions in accordance with ASC Topic 605, Revenue Recognition. From time to time PMI offers rebates and promotions to borrower and lender members. PMI records these rebates and promotions as an offset to revenue if a particular rebate or promotion is earned upon origination of the loan. PMI's rebate and promotions have in the past been in the form of cash back and other incentives paid to lender and borrower members. | |||||||||||||||||
Stock-Based Compensation | ' | ||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
PMI accounts for its stock-based compensation for employees using fair-value-based accounting in accordance with ASC Topic 718, Stock Compensation. ASC Topic 718 requires companies to estimate the fair value of stock-based awards on the date of grant using an option-pricing model. The stock-based compensation related to awards that are expected to vest is amortized using the straight line method over the vesting term of the stock-based award, which is generally four years. Expected forfeitures of unvested options are estimated at the time of grant and reduce the recognized stock-based compensation expense. PMI estimated its annual forfeiture rate to be 17.2% and 18.2% for the years ended December 31, 2013 and 2012, respectively. | |||||||||||||||||
PMI has granted options to purchase shares of common stock to nonemployees in exchange for services performed. PMI accounts for stock options and restricted stock issued to nonemployees in accordance with the provisions of ASC Topic 505-50, Equity-Based Payments to Non-Employees, which requires that equity awards be recorded at their fair value. Under ASC Topic 718 and 505-50, PMI uses the Black-Scholes model to estimate the fair value of options granted to nonemployees at each vesting date until performance is complete to determine the appropriate charge for the services provided. The volatility of PMI's common stock was based on comparative company volatility. | |||||||||||||||||
Total stock-based compensation expense for employees reflected in PMI's statements of operations for the years ended December 31, 2013 and 2012 is approximately $229 and $340, respectively. As of December 31, 2013, the unamortized stock-based compensation expense related to unvested stock-based awards was approximately $991, which will be recognized over the remaining weighted average vesting period of approximately 4.2 years. | |||||||||||||||||
Net Loss Per Share | ' | ||||||||||||||||
Net Loss Per Share | |||||||||||||||||
PMI computes net loss per share in accordance with ASC Topic 260 Earnings Per Share. Under ASC Topic 260, basic net loss per share is computed by dividing net loss per share available to common shareholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. At December 31, 2013, there were outstanding convertible preferred stock, warrants and options convertible into 27,274,068, 218,810 and 938,585 common shares, respectively, which may dilute future earnings per share. At December 31, 2012 there were outstanding convertible preferred stock, warrants and options convertible into 6,195,813, 260,987 and 1,173,816. Because PMI is reporting a net loss for the years ended December 31, 2013 and 2012, potentially dilutive securities are excluded from the computation of net loss per share, as their effect would be antidilutive. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
PMI uses the liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are based on the differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |||||||||||||||||
Under ASC Topic 740, Income Taxes, PMI's policy to include interest and penalties related to gross unrecognized tax benefits within PMI's provision for income taxes did not change. | |||||||||||||||||
Fair Value Measurement | ' | ||||||||||||||||
Fair Value Measurement | |||||||||||||||||
PMI adopted ASC Topic 820, Fair Value Measurements and Disclosures, on January 1, 2008. ASC Topic 820 provides a framework for measuring the fair value of assets and liabilities. ASC Topic 820 also provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level within the hierarchy of information used in the valuation. ASC Topic 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. | |||||||||||||||||
ASC Topic 820 defines fair value in terms of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. | |||||||||||||||||
The price used to measure the fair value is not adjusted for transaction costs while the cost basis of certain financial instruments may include initial transaction costs. Under ASC Topic 820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset. The principal market is the market in which the reporting entity would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability under ASC Topic 820, it is assumed that the reporting entity has access to the market as of the measurement date. If no market for the asset exists or if the reporting entity does not have access to the principal market, the reporting entity should use a hypothetical market. | |||||||||||||||||
Under ASC Topic 820, assets and liabilities carried at fair value on the balance sheets are classified among three levels based on the observability of the inputs used to determine fair value: | |||||||||||||||||
Level 1 — The valuation is based on quoted prices in active markets for identical instruments. | |||||||||||||||||
Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |||||||||||||||||
Level 3 — The valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques, which incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation. | |||||||||||||||||
Fair value of financial instruments are determined based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of quoted prices and observable inputs and to minimize the use of unobservable inputs when measuring fair value. Various valuation techniques are utilized, depending on the nature of the financial instrument, including the use of market prices for identical or similar instruments, or discounted cash flow models. When possible, active and observable market data for identical or similar financial instruments are utilized. Alternatively, fair value is determined using assumptions that management believes a market participant would use in pricing the asset or liability. | |||||||||||||||||
Financial instruments consist principally of cash and cash equivalents, restricted cash, short term investments, Borrower Loans receivable, accounts payable and accrued liabilities, Notes and long-term debt. The estimated fair values of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their carrying values because of their short term nature. | |||||||||||||||||
The following tables present the assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012: | |||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Borrower loans receivable | $ | - | $ | - | $ | 226,238 | $ | 226,238 | |||||||||
Certificates of deposit & restricted cash | 14,032 | 1,441 | - | 15,473 | |||||||||||||
Loans held for investment | - | - | 3,917 | 3,917 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 226,794 | $ | 226,794 | |||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Short term investments | $ | 1,000 | $ | - | $ | - | $ | 1,000 | |||||||||
Certificates of deposit & restricted cash | 4,331 | 1,618 | - | 5,949 | |||||||||||||
Borrower loans receivable | - | - | 166,900 | 166,900 | |||||||||||||
Loans held for investment | - | - | 175 | 175 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 167,478 | $ | 167,478 | |||||||||
Short term investments consist of United States Treasuries with maturity periods greater than three months and less than 12 months. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PMI has the ability to access. PMI classifies United States Treasuries as Level 1 assets. PMI intends to hold these investments until maturity. | |||||||||||||||||
As observable market prices are not available for the Borrower Loans and Notes, or for similar assets and liabilities, PMI believes the Borrower Loans and Notes should be considered Level 3 financial instruments under ASC Topic 820. In a hypothetical transaction as of the measurement date, PMI believes that differences in the principal marketplace in which the Borrower Loans are originated and the principal marketplace in which PMI might offer those loans may result in differences between the originated amount of the loans and their fair value as of the transaction date. For Borrower Loans, the fair value is estimated using discounted cash flow methodologies based upon valuation assumptions including prepayment speeds, roll rates, recovery rates and discount rates based on the perceived credit risk within each credit grade. | |||||||||||||||||
The obligation to pay principal and interest on any group of Notes is equal to the loan payments, if any, that are received on the corresponding Borrower Loan, net of its 1.0% servicing fee. The fair value election for Notes and Borrower Loans allows both the assets and the related liabilities to receive similar accounting treatment for expected losses which is consistent with the subsequent cash flows to lenders that are dependent upon borrower payments. As such, the fair value of a group of Notes is approximately equal to the fair value of the corresponding Borrower Loan, adjusted for the 1.0% servicing fee and the timing of borrower payments subsequently disbursed to such Note holders. Any unrealized gains or losses on the Borrower Loans and Notes for which the fair value option has been elected is recorded as a separate line item in the statement of operations. The effective interest rate associated with a group of Notes is less than the interest rate earned on the corresponding Borrower Loan due to the 1.0% servicing fee. See Note 6 for a roll-forward and further discussion of the significant assumptions used to value Borrower Loans and Notes. | |||||||||||||||||
Servicing rights related to Borrower Loans originated prior to October 16, 2008 do not trade in an active open market with readily observable prices. Although sales of servicing assets do occur, the nature and character of the assets underlying those transactions are not similar to those held by PMI and, therefore, the precise terms and conditions typically seen in the marketplace would likely not be available to PMI. Accordingly, management determined the fair value of its servicing rights using a discounted cash flow model to project future expected cash flows based upon a set of valuation assumptions PMI believes market participants would use for similar rights. The primary assumptions PMI uses for valuing its servicing asset include default rates, estimated servicing income, cost to service, profit margin, and discount rate. | |||||||||||||||||
PMI reviewed these assumptions to ensure they were consistent with market conditions. Inaccurate assumptions in valuing the servicing rights could affect PMI's results of operations. Due to the nature of the valuation inputs, servicing assets are classified as Level 3. The change in the fair-value of servicing rights is included in cost of services in the statement of operations. Servicing rights decreased to zero as loans originated prior to October 16, 2008 had fully matured or charged off as of December 31, 2013. | |||||||||||||||||
The changes in Level 3 assets measured at fair value on a recurring basis are as follows: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Borrower | Notes | Loans | Total | ||||||||||||||
Loans | Held for | ||||||||||||||||
Investment | |||||||||||||||||
Balance at January 1, 2012 | $ | 75,764 | $ | (76,160 | ) | $ | 137 | $ | (259 | ) | |||||||
Originations | 153,175 | (153,175 | ) | 182 | 182 | ||||||||||||
Principal repayments | (66,840 | ) | 65,690 | (133 | ) | (1,283 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | 4,801 | (3,833 | ) | - | 968 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (11 | ) | (11 | ) | |||||||||||
Balance at December 31, 2012 | $ | 166,900 | $ | (167,478 | ) | $ | 175 | $ | (403 | ) | |||||||
Originations | 341,176 | (169,742 | ) | 14,296 | 185,730 | ||||||||||||
Principal repayments and credit losses | (105,692 | ) | 104,692 | (143 | ) | (1,143 | ) | ||||||||||
Borrower Loans sold to third parties | (171,290 | ) | - | (10,410 | ) | (181,700 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | (4,856 | ) | 5,734 | - | 878 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (1 | ) | (1 | ) | |||||||||||
Balance at December 31, 2013 | $ | 226,238 | $ | (226,794 | ) | $ | 3,917 | $ | 3,361 | ||||||||
The changes in fair value would directly impact the change in fair value on Borrower Loans, loans held for investment and Notes in the consolidated statements of operations. | |||||||||||||||||
Quantitative information about PMI's Level 3 fair value measurements of its Borrower Loans and Notes as of December 31, 2013 is provided below. The table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to PMI's fair value measurements. | |||||||||||||||||
Assets and Liabilities | Fair | Valuation | Unobservable Inputs | ||||||||||||||
Value as of | Technique | ||||||||||||||||
31-Dec | |||||||||||||||||
Borrower loans receivable at fair value | $ | 226,238 | Discounted Cashflow | Default rates and discount rates | |||||||||||||
Notes at fair value | $ | (226,794 | ) | Discounted Cashflow | Default rates and discount rates |
Schedule_I_Prosper_Funding_LLC1
Schedule I, Prosper Funding LLC (Policies) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Basis of Presentation | ' | ||||||||||||||||
Basis of Presentation | |||||||||||||||||
The accompanying consolidated financial statements include the accounts of PMI and its wholly owned subsidiary Prosper Funding. All intercompany balances and transactions between Prosper Funding and PMI have been eliminated in consolidation. PMI and Prosper Funding's financial statements have been prepared in accordance with U.S generally accepted accounting principles (U.S. GAAP). | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates, judgments and assumptions include but are not limited to the following: valuation of borrower loans receivable and associated member payment dependent notes, valuation of servicing rights, valuation allowance on deferred tax assets, valuation and amortization periods of intangible assets, repurchase and idemnification obligation, stock-based compensation expense, and contingent liabilities. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. | |||||||||||||||||
Certain Risks and Concentrations | ' | ||||||||||||||||
Certain Risks and Concentrations | |||||||||||||||||
In the normal course of its business, PMI encounters two significant types of risk: credit and regulatory. Financial instruments that potentially subject PMI to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and short term investments. PMI places cash, cash equivalents, restricted cash and short term investments with high-quality financial institutions and is exposed to credit risk in the event of default by these institutions to the extent the amount recorded on the balance sheet exceeds federally insured amounts. PMI performs periodic evaluations of the relative credit standing of these financial institutions and has not sustained any credit losses from instruments held at these financial institutions. | |||||||||||||||||
To the extent that Borrower Loan payments are not made, servicing income will be reduced. A group of Notes corresponding to a particular Borrower Loan is wholly dependent on the repayment of such Borrower Loan. As a result, PMI does not bear the risk on such Borrower Loan. | |||||||||||||||||
PMI is subject to various regulatory requirements. The failure to appropriately identify and address these regulatory requirements could result in certain discretionary actions by regulators that could have a material effect on PMI's consolidated financial position and results of operations (See Note 12—Commitments and Contingencies—Securities Law Compliance). | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
PMI invests its excess cash primarily in highly liquid debt instruments of the U.S. government and its agencies. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents. Cash equivalents are recorded at cost, which approximates fair value. Cash and cash equivalents include various unrestricted deposits with highly rated financial institutions in checking, money market and short-term certificate of deposit accounts. | |||||||||||||||||
Restricted Cash | ' | ||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash consists primarily of cash deposits held as collateral as required for loan funding and servicing activities. | |||||||||||||||||
Member Loans Sold Directly to Third Party Purchasers [Policy Text Block] | ' | ||||||||||||||||
Member Loans Sold Directly to Third Party Purchasers | |||||||||||||||||
For loans sold to unrelated third party purchasers on a servicing retained basis, a gain or loss is recorded on the sale date. In order to calculate the gain or loss, PMI first determines whether the terms of the servicing arrangement with the purchaser results in a net servicing asset (i.e., when contractual/expected servicing revenues adequately compensate PMI) or a net servicing liability (i.e., when contractual/expected servicing revenues do not adequately compensate PMI). When contractual/expected servicing revenues do not adequately compensate PMI, a portion of the gross proceeds of the loans sold on a servicing retained basis are allocated to the recording of a net servicing liability. Conversely, when contractual/expected servicing revenues provide more than adequate compensation to PMI, the excess servicing compensation is allocated to the gross proceeds of the loans sold and results in the recording of a net servicing asset. | |||||||||||||||||
PMI estimates the fair value of the loan servicing asset or liability considering the contractual servicing fee revenue, adequate compensation for PMI's servicing obligation, the current principal balances of the loans and projected servicing revenues given projected defaults and prepayments (if significant) over the remaining lives of the loans. At December 31, 2013, PMI recorded $144 as a servicing asset related to these loans, which is included in Borrower Loans Receivable at fair value on the consolidated balance sheets. | |||||||||||||||||
Loans held for investment | ' | ||||||||||||||||
Loans held for investment | |||||||||||||||||
Loans held for investment are primarily comprised of loans held for short durations and are recorded at cost which approximates fair value. | |||||||||||||||||
Internal Use Software and Website Development | ' | ||||||||||||||||
Internal Use Software and Website Development | |||||||||||||||||
PMI accounts for internal use software costs, including website development costs, in accordance with ASC Topic 350-40, Internal Use Software and ASC Topic 350-50, Website Development Costs. In accordance with ASC Topic 350-40 and 350-50, the costs to develop software for the website and other internal uses are capitalized when management has authorized and committed project funding, preliminary development efforts are successfully completed, and it is probable that the project will be completed and the software will be used as intended. Capitalized software development costs primarily include software licenses acquired, fees paid to outside consultants, and salaries and payroll related costs for employees directly involved in the development efforts. | |||||||||||||||||
Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed. Costs incurred for upgrades and enhancements that are considered to be probable to result in additional functionality are capitalized. Capitalized costs are included in property and equipment and amortized to expense using the straight-line method over their expected lives. PMI evaluates its software assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset. | |||||||||||||||||
Repurchase and Indemnification Obligation | ' | ||||||||||||||||
Repurchase and Indemnification Obligation | |||||||||||||||||
PMI is obligated to indemnify lenders and repurchase certain Notes and member loans sold directly to third party purchasers in the event of violation of applicable federal, state, or local lending laws, or verifiable identify theft. The loan indemnification and repurchase obligation is estimated based on historical experience. PMI accrues a provision for the repurchase and indemnification obligation when the Notes or member loans are issued. Indemnified or repurchased Notes and member loans associated with federal, state, or local lending laws, or verifiable identity thefts are written off at the time of repurchase or at the time an indemnification payment is made. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenue is recognized in accordance with ASC Topic 605, Revenue Recognition. Under ASC Topic 605, PMI recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the price of the services is fixed and determinable, and collectability is reasonably assured. | |||||||||||||||||
Origination fees | |||||||||||||||||
The company earns an origination fee upon the successful closing of a loan. The borrower receives an amount equal to the loan amount net of the loan origination fee. The loan origination fee is determined by the term and credit grade of the loan, and ranges from 1.00% to 4.95% of the original principal amount. Since PMI accounts for borrower loans, loans held for investment and Notes at fair value, origination fees are not deferred but are recognized at origination of the loan, and direct costs to originate loans are recorded as expenses as incurred. | |||||||||||||||||
Loan servicing fees | |||||||||||||||||
Loan servicing revenue includes monthly loan servicing fees and non-sufficient funds (“NSF”) fees. Loan servicing fees are accrued daily based on the current outstanding loan principal balance of the Borrower Loans but are not recognized until payment is received due to the uncertainty of collection of borrower loan payments. NSF fees are charged to borrowers on the first failed payment of each billing period. NSF fees are charged to the customer and collected and recognized immediately. | |||||||||||||||||
Interest income on Borrower Loans Receivable and Interest Expense on Notes | |||||||||||||||||
PMI recognizes interest income on Borrower Loans and interest expense on the corresponding Notes using the accrual method based on the stated interest rate to the extent PMI believes it to be collectable. Below is a table which summarizes the gross interest income and expense for the twelve months ended December 31, 2013 and 2012. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Interest income on borrower loans | $ | 35,526 | $ | 23,101 | |||||||||||||
Interest expense on notes | (33,072 | ) | (21,889 | ) | |||||||||||||
Net interest income | $ | 2,454 | $ | 1,212 | |||||||||||||
Fair Value Measurement | ' | ||||||||||||||||
Fair Value Measurement | |||||||||||||||||
PMI adopted ASC Topic 820, Fair Value Measurements and Disclosures, on January 1, 2008. ASC Topic 820 provides a framework for measuring the fair value of assets and liabilities. ASC Topic 820 also provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level within the hierarchy of information used in the valuation. ASC Topic 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. | |||||||||||||||||
ASC Topic 820 defines fair value in terms of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. | |||||||||||||||||
The price used to measure the fair value is not adjusted for transaction costs while the cost basis of certain financial instruments may include initial transaction costs. Under ASC Topic 820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset. The principal market is the market in which the reporting entity would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability under ASC Topic 820, it is assumed that the reporting entity has access to the market as of the measurement date. If no market for the asset exists or if the reporting entity does not have access to the principal market, the reporting entity should use a hypothetical market. | |||||||||||||||||
Under ASC Topic 820, assets and liabilities carried at fair value on the balance sheets are classified among three levels based on the observability of the inputs used to determine fair value: | |||||||||||||||||
Level 1 — The valuation is based on quoted prices in active markets for identical instruments. | |||||||||||||||||
Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |||||||||||||||||
Level 3 — The valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques, which incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation. | |||||||||||||||||
Fair value of financial instruments are determined based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of quoted prices and observable inputs and to minimize the use of unobservable inputs when measuring fair value. Various valuation techniques are utilized, depending on the nature of the financial instrument, including the use of market prices for identical or similar instruments, or discounted cash flow models. When possible, active and observable market data for identical or similar financial instruments are utilized. Alternatively, fair value is determined using assumptions that management believes a market participant would use in pricing the asset or liability. | |||||||||||||||||
Financial instruments consist principally of cash and cash equivalents, restricted cash, short term investments, Borrower Loans receivable, accounts payable and accrued liabilities, Notes and long-term debt. The estimated fair values of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their carrying values because of their short term nature. | |||||||||||||||||
The following tables present the assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012: | |||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Borrower loans receivable | $ | - | $ | - | $ | 226,238 | $ | 226,238 | |||||||||
Certificates of deposit & restricted cash | 14,032 | 1,441 | - | 15,473 | |||||||||||||
Loans held for investment | - | - | 3,917 | 3,917 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 226,794 | $ | 226,794 | |||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Short term investments | $ | 1,000 | $ | - | $ | - | $ | 1,000 | |||||||||
Certificates of deposit & restricted cash | 4,331 | 1,618 | - | 5,949 | |||||||||||||
Borrower loans receivable | - | - | 166,900 | 166,900 | |||||||||||||
Loans held for investment | - | - | 175 | 175 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 167,478 | $ | 167,478 | |||||||||
Short term investments consist of United States Treasuries with maturity periods greater than three months and less than 12 months. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PMI has the ability to access. PMI classifies United States Treasuries as Level 1 assets. PMI intends to hold these investments until maturity. | |||||||||||||||||
As observable market prices are not available for the Borrower Loans and Notes, or for similar assets and liabilities, PMI believes the Borrower Loans and Notes should be considered Level 3 financial instruments under ASC Topic 820. In a hypothetical transaction as of the measurement date, PMI believes that differences in the principal marketplace in which the Borrower Loans are originated and the principal marketplace in which PMI might offer those loans may result in differences between the originated amount of the loans and their fair value as of the transaction date. For Borrower Loans, the fair value is estimated using discounted cash flow methodologies based upon valuation assumptions including prepayment speeds, roll rates, recovery rates and discount rates based on the perceived credit risk within each credit grade. | |||||||||||||||||
The obligation to pay principal and interest on any group of Notes is equal to the loan payments, if any, that are received on the corresponding Borrower Loan, net of its 1.0% servicing fee. The fair value election for Notes and Borrower Loans allows both the assets and the related liabilities to receive similar accounting treatment for expected losses which is consistent with the subsequent cash flows to lenders that are dependent upon borrower payments. As such, the fair value of a group of Notes is approximately equal to the fair value of the corresponding Borrower Loan, adjusted for the 1.0% servicing fee and the timing of borrower payments subsequently disbursed to such Note holders. Any unrealized gains or losses on the Borrower Loans and Notes for which the fair value option has been elected is recorded as a separate line item in the statement of operations. The effective interest rate associated with a group of Notes is less than the interest rate earned on the corresponding Borrower Loan due to the 1.0% servicing fee. See Note 6 for a roll-forward and further discussion of the significant assumptions used to value Borrower Loans and Notes. | |||||||||||||||||
Servicing rights related to Borrower Loans originated prior to October 16, 2008 do not trade in an active open market with readily observable prices. Although sales of servicing assets do occur, the nature and character of the assets underlying those transactions are not similar to those held by PMI and, therefore, the precise terms and conditions typically seen in the marketplace would likely not be available to PMI. Accordingly, management determined the fair value of its servicing rights using a discounted cash flow model to project future expected cash flows based upon a set of valuation assumptions PMI believes market participants would use for similar rights. The primary assumptions PMI uses for valuing its servicing asset include default rates, estimated servicing income, cost to service, profit margin, and discount rate. | |||||||||||||||||
PMI reviewed these assumptions to ensure they were consistent with market conditions. Inaccurate assumptions in valuing the servicing rights could affect PMI's results of operations. Due to the nature of the valuation inputs, servicing assets are classified as Level 3. The change in the fair-value of servicing rights is included in cost of services in the statement of operations. Servicing rights decreased to zero as loans originated prior to October 16, 2008 had fully matured or charged off as of December 31, 2013. | |||||||||||||||||
The changes in Level 3 assets measured at fair value on a recurring basis are as follows: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Borrower | Notes | Loans | Total | ||||||||||||||
Loans | Held for | ||||||||||||||||
Investment | |||||||||||||||||
Balance at January 1, 2012 | $ | 75,764 | $ | (76,160 | ) | $ | 137 | $ | (259 | ) | |||||||
Originations | 153,175 | (153,175 | ) | 182 | 182 | ||||||||||||
Principal repayments | (66,840 | ) | 65,690 | (133 | ) | (1,283 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | 4,801 | (3,833 | ) | - | 968 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (11 | ) | (11 | ) | |||||||||||
Balance at December 31, 2012 | $ | 166,900 | $ | (167,478 | ) | $ | 175 | $ | (403 | ) | |||||||
Originations | 341,176 | (169,742 | ) | 14,296 | 185,730 | ||||||||||||
Principal repayments and credit losses | (105,692 | ) | 104,692 | (143 | ) | (1,143 | ) | ||||||||||
Borrower Loans sold to third parties | (171,290 | ) | - | (10,410 | ) | (181,700 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | (4,856 | ) | 5,734 | - | 878 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (1 | ) | (1 | ) | |||||||||||
Balance at December 31, 2013 | $ | 226,238 | $ | (226,794 | ) | $ | 3,917 | $ | 3,361 | ||||||||
The changes in fair value would directly impact the change in fair value on Borrower Loans, loans held for investment and Notes in the consolidated statements of operations. | |||||||||||||||||
Quantitative information about PMI's Level 3 fair value measurements of its Borrower Loans and Notes as of December 31, 2013 is provided below. The table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to PMI's fair value measurements. | |||||||||||||||||
Assets and Liabilities | Fair | Valuation | Unobservable Inputs | ||||||||||||||
Value as of | Technique | ||||||||||||||||
31-Dec | |||||||||||||||||
Borrower loans receivable at fair value | $ | 226,238 | Discounted Cashflow | Default rates and discount rates | |||||||||||||
Notes at fair value | $ | (226,794 | ) | Discounted Cashflow | Default rates and discount rates | ||||||||||||
Prosper Funding LLC [Member] | ' | ||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Basis of Presentation | ' | ||||||||||||||||
Basis of Presentation | |||||||||||||||||
Prosper Funding’s consolidated financial statements include the accounts of Prosper Funding and its wholly-owned subsidiary PAH. All intercompany balances and transactions between Prosper Funding and PAH have been eliminated in consolidation. Prosper Funding's financial statements have been prepared in accordance with U.S generally accepted accounting principles (U.S. GAAP). | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates, judgments and assumptions include but are not limited to the following: valuation of borrower loans receivable and associated member payment dependent notes, valuation of servicing rights, and contingent liabilities. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. | |||||||||||||||||
Certain Risks and Concentrations | ' | ||||||||||||||||
Certain Risks and Concentrations | |||||||||||||||||
In the normal course of its business, Prosper Funding encounters two significant types of risk: credit and regulatory. Financial instruments that potentially subject Prosper Funding to significant concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. Prosper Funding places cash, cash equivalents and restricted cash with high-quality financial institutions and is exposed to credit risk in the event of default by these institutions to the extent the amount recorded on the balance sheet exceeds federally insured amounts. Prosper Funding also performs periodic evaluations of the relative credit standing of these financial institutions and has not sustained any credit losses from instruments held at these financial institutions. | |||||||||||||||||
To the extent that Borrower Loan payments are not made, servicing income will be reduced. A group of Notes corresponding to a particular Borrower Loan is wholly dependent on the repayment of such Borrower Loan. As a result, Prosper Funding does not bear the risk on such Borrower Loan. | |||||||||||||||||
Prosper Funding is subject to various regulatory requirements. The failure to appropriately identify and address these regulatory requirements could result in certain discretionary actions by regulators that could have a material effect on Prosper Funding's financial position and results of operations. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
Prosper Funding invests its excess cash primarily in highly liquid debt instruments of the U.S. government and its agencies. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents. Cash equivalents are recorded at cost, which approximates fair value. Such deposits periodically exceed amounts insured by the FDIC. Cash and cash equivalents include various unrestricted deposits with highly rated financial institutions in checking, money market and short-term certificate of deposit accounts. | |||||||||||||||||
Restricted Cash | ' | ||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash consists primarily of cash deposits held as collateral as required for loan funding and servicing activities. | |||||||||||||||||
Borrower Loans and Notes | ' | ||||||||||||||||
Borrower Loans and Notes | |||||||||||||||||
Prosper Funding has adopted the provisions of ASC Topic 825, Financial Instrument. ASC Topic 825 permits companies to choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. The fair value election, with respect to an item, may not be revoked once an election is made. In applying the provisions of ASC Topic 825, Prosper Funding records assets and liabilities measured using the fair value option in a way that separates these reported fair values from the carrying values of similar assets and liabilities measured with a different measurement attribute. Prosper Funding does not record a specific allowance account related to the Borrower Loans and Notes in which it has elected the fair value option, but rather estimate the fair value of the Borrower Loans and Notes using discounted cash flow methodologies adjusted for Prosper Funding’s historical payment, loss and recovery rates. An account is considered to be a loss, or charged-off, when it reaches more than 120 days past due. Prosper Funding has reported the aggregate fair value of the Borrower Loans and Notes as separate line items in the assets and liabilities sections of the accompanying balance sheets using the methods described in ASC Topic 820, Fair Value Measurements and Disclosures—See Fair Value Measurement. | |||||||||||||||||
Member Loans Sold Directly to Third Party Purchasers [Policy Text Block] | ' | ||||||||||||||||
Member Loans Sold Directly to Third Party Purchasers | |||||||||||||||||
For Borrower Loans sold to unrelated third party purchasers on a servicing retained basis, a gain or loss is recorded on the sale date. In order to calculate the gain or loss, Prosper Funding first determines whether the terms of the servicing arrangement with the purchaser results in a net servicing asset (i.e., when contractual/expected servicing revenues adequately compensate Prosper Funding) or a net servicing liability (i.e., when contractual/expected servicing revenues do not adequately compensate Prosper Funding). When contractual/expected servicing revenues do not adequately compensate Prosper Funding, a portion of the gross proceeds of the Borrower Loans sold on a servicing retained basis are allocated to the recording of a net servicing liability. Conversely, when contractual/expected servicing revenues provide more than adequate compensation to Prosper Funding, the excess servicing compensation is allocated to the gross proceeds of the Borrower Loans sold and results in the recording of a net servicing asset. | |||||||||||||||||
Prosper Funding estimates the fair value of the loan servicing asset or liability considering the contractual servicing fee revenue, adequate compensation for Prosper Funding’s servicing obligation, the current principal balances of the Borrower Loans and projected servicing revenues given projected defaults and prepayments (if significant) over the remaining lives of the Borrower Loans. | |||||||||||||||||
Loans held for investment | ' | ||||||||||||||||
Loans held for investment | |||||||||||||||||
Loans held for investment are primarily comprised of loans held for short durations and are recorded at cost which approximates fair value. | |||||||||||||||||
Internal Use Software and Website Development | ' | ||||||||||||||||
Internal Use Software and Website Development | |||||||||||||||||
Prosper Funding accounts for internal use software costs, including website development costs, in accordance with ASC Topic 350-40, Internal Use Software and ASC Topic 350-50, Website Development Costs. In accordance with ASC Topic 350-40 and 350-50, the costs to develop software for the website and other internal uses are capitalized when management has authorized and committed project funding, preliminary development efforts are successfully completed, and it is probable that the project will be completed and the software will be used as intended. Capitalized software development costs primarily include software licenses acquired, fees paid to outside consultants, and salaries and payroll related costs for employees directly involved in the development efforts. | |||||||||||||||||
Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed. Costs incurred for upgrades and enhancements that are considered to be probable to result in additional functionality are capitalized. Capitalized costs are included in property and equipment and amortized to expense using the straight-line method over their expected lives. Prosper Funding evaluates its software assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset. | |||||||||||||||||
Repurchase and Indemnification Obligation | ' | ||||||||||||||||
Repurchase and Indemnification Obligation | |||||||||||||||||
Prosper Funding is obligated to indemnify lenders and repurchase certain Notes and member loans sold directly to third party purchasers in the event of violation of applicable federal, state, or local lending laws, or verifiable identify theft. The loan indemnification and repurchase obligation is estimated based on historical experience. Prosper Funding accrues a provision for the repurchase and indemnification obligation when the Notes or member loans are issued. Indemnified or repurchased Notes and member loans associated with federal, state, or local lending laws, or verifiable identity thefts are written off at the time of repurchase or at the time an indemnification payment is made. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenue is recognized in accordance with ASC Topic 605, Revenue Recognition. Under ASC Topic 605, PMI recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the price of the services is fixed and determinable, and collectability is reasonably assured. | |||||||||||||||||
Administration Agreement License Fees | |||||||||||||||||
Prosper Funding primarily generates revenues through license fees it earns through an Administration Agreement with PMI. The Administration Agreement contains a license granted by Prosper Funding to PMI that entitles PMI to use the platform for and in relation to: (i) PMI’s performance of its duties and obligations under the Administration Agreement relating to corporate administration, loan platform services, loan and note servicing and marketing, and (ii) PMI’s performance of its duties and obligations to WebBank in relation to loan origination and funding. | |||||||||||||||||
Loan servicing fees | |||||||||||||||||
Loan servicing revenue includes monthly loan servicing fees and non-sufficient funds (“NSF”) fees. Loan servicing fees are accrued daily based on the current outstanding loan principal balance of the Borrower Loans but are not recognized until payment is received due to the uncertainty of collection of borrower loan payments. NSF fees are charged to borrowers on the first failed payment of each billing period. NSF fees are charged to the customer and collected and recognized immediately. | |||||||||||||||||
Interest income on Borrower Loans Receivable and Interest Expense on Notes | |||||||||||||||||
Prosper Funding recognizes interest income on Borrower Loans and interest expense on the corresponding Notes using the accrual method based on the stated interest rate to the extent that is believed it to be collectable. Below is a table which summarizes the gross interest income on Borrower Loans and expense on Notes for the twelve months ended December 31, 2013 and 2012. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Interest income on borrower loans | $ | 32,862 | $ | - | |||||||||||||
Interest expense on notes | (30,564 | ) | - | ||||||||||||||
Net interest income | $ | 2,298 | $ | - | |||||||||||||
Fair Value Measurement | ' | ||||||||||||||||
Fair Value Measurement | |||||||||||||||||
Prosper Funding follows ASC Topic 820, Fair Value Measurements and Disclosures, which provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level within the hierarchy of information used in the valuation. ASC Topic 820 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. | |||||||||||||||||
ASC Topic 820 defines fair value in terms of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. | |||||||||||||||||
The price used to measure the fair value is not adjusted for transaction costs while the cost basis of certain financial instruments may include initial transaction costs. Under ASC Topic 820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset. The principal market is the market in which the reporting entity would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability under ASC Topic 820, it is assumed that the reporting entity has access to the market as of the measurement date. If no market for the asset exists or if the reporting entity does not have access to the principal market, the reporting entity should use a hypothetical market. | |||||||||||||||||
Under ASC Topic 820, assets and liabilities carried at fair value on the balance sheets are classified among three levels based on the observability of the inputs used to determine fair value: | |||||||||||||||||
Level 1 — The valuation is based on quoted prices in active markets for identical instruments. | |||||||||||||||||
Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |||||||||||||||||
Level 3 — The valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques, which incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation. | |||||||||||||||||
Fair value of financial instruments are determined based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of quoted prices and observable inputs and to minimize the use of unobservable inputs when measuring fair value. Various valuation techniques are utilized, depending on the nature of the financial instrument, including the use of market prices for identical or similar instruments, or discounted cash flow models. When possible, active and observable market data for identical or similar financial instruments are utilized. Alternatively, fair value is determined using assumptions that management believes a market participant would use in pricing the asset or liability. | |||||||||||||||||
Financial instruments consist principally of cash and cash equivalents, restricted cash, Borrower Loans receivable, accounts payable and accrued liabilities, and Notes. The estimated fair values of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their carrying values because of their short term nature. | |||||||||||||||||
The following tables present the assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012: | |||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Borrower loans receivable | $ | - | $ | - | $ | 226,238 | $ | 226,238 | |||||||||
Certificates of deposit and restricted cash | 11,028 | 1,271 | - | 12,299 | |||||||||||||
Loans held for investment | - | - | 3,917 | 3,917 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 226,794 | $ | 226,794 | |||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Short term investments | $ | - | $ | - | $ | - | $ | - | |||||||||
Certificates of deposit | - | - | - | - | |||||||||||||
Borrower loans receivable | - | - | - | - | |||||||||||||
Loans held for investment | - | - | - | - | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | - | $ | - | |||||||||
As observable market prices are not available for the Borrower Loans and Notes, or for similar assets and liabilities, Prosper Funding believes the Borrower Loans and Notes should be considered Level 3 financial instruments under ASC Topic 820. In a hypothetical transaction as of the measurement date, Prosper Funding believes that differences in the principal marketplace in which the Borrower Loans are originated and the principal marketplace in which Prosper Funding might offer those loans may result in differences between the originated amount of the Borrower Loans and their fair value as of the transaction date. For Borrower Loans, the fair value is estimated using discounted cash flow methodologies based upon valuation assumptions including prepayment speeds, roll rates, recovery rates and discount rates based on the perceived credit risk within each credit grade. | |||||||||||||||||
The obligation to pay principal and interest on any Note is equal to the loan payments, if any, that are received on the corresponding Borrower Loan, net of its 1.0% servicing fee. The fair value election for Borrower Loans and Notes allows both the assets and the related liabilities to receive similar accounting treatment for expected losses which is consistent with the subsequent cash flows to lender members that are dependent upon borrower payments. As such, the aggregate fair value of a group of Notes corresponding to a particular Borrower Loan is approximately equal to the fair value of that Borrower Loan, adjusted for the 1.0% servicing fee and the timing of borrower payments subsequently disbursed to such Note holders. Any unrealized gains or losses on the Borrower Loans and Notes for which the fair value option has been elected is recorded as a separate line item in the statement of operations. The effective interest rate associated with a group of Notes is less than the interest rate earned on the corresponding Borrower Loan due to the 1.0% servicing fee. See Note 6 for a roll-forward and further discussion of the significant assumptions used to value Borrower Loans and Notes. | |||||||||||||||||
The changes in Level 3 assets measured at fair value on a recurring basis are as follows: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Borrower | Notes | Loans | Total | ||||||||||||||
Loans | Held for | ||||||||||||||||
Investment | |||||||||||||||||
Balance at January 1, 2013 | $ | - | $ | - | $ | - | $ | - | |||||||||
Assets transferred on February 1, 2013 | 170,344 | (170,574 | ) | 175 | (55 | ) | |||||||||||
Originations | 331,353 | (159,921 | ) | 14,296 | 185,728 | ||||||||||||
Principal repayments and credit losses | (99,313 | ) | 97,967 | (143 | ) | (1,489 | ) | ||||||||||
Borrower loans sold to third parties | (171,290 | ) | (10,410 | ) | (181,700 | ) | |||||||||||
Change in fair value on borrower loans and notes | (4,856 | ) | 5,734 | - | 878 | ||||||||||||
Change in fair value of loans held for investment | - | - | (1 | ) | (1 | ) | |||||||||||
Balance at December 31, 2013 | $ | 226,238 | $ | (226,794 | ) | $ | 3,917 | $ | 3,361 | ||||||||
Quantitative information about Prosper Funding’s Level 3 fair value measurements of its borrower loans and notes as of December 31, 2013 is provided below. The table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to Prosper Funding’s fair value measurements. | |||||||||||||||||
Fair | Valuation Technique | Unobservable Inputs | |||||||||||||||
Assets and | Value as | ||||||||||||||||
Liabilities | of | ||||||||||||||||
December | |||||||||||||||||
31 | |||||||||||||||||
Borrower loans receivable at fair value | $ | 226,238 | Discounted Cashflow | Default rates and discount rates | |||||||||||||
Notes at fair value | $ | (226,794 | ) | Discounted Cashflow | Default rates and discount rates |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||||||||||
Estimated useful lives of assets | ' | ||||||||||||||||
Depreciation and amortization are computed using the straight-line method based upon estimated useful lives of the assets as follows: | |||||||||||||||||
Furniture and fixtures | 7 years | ||||||||||||||||
Office equipment | 5 years | ||||||||||||||||
Computers and equipment | 3 years | ||||||||||||||||
Leasehold improvements | 3 years | ||||||||||||||||
Software | 3 years | ||||||||||||||||
Summary of gross interest income and expense | ' | ||||||||||||||||
Below is a table which summarizes the gross interest income and expense for the twelve months ended December 31, 2013 and 2012. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Interest income on borrower loans | $ | 35,526 | $ | 23,101 | |||||||||||||
Interest expense on notes | (33,072 | ) | (21,889 | ) | |||||||||||||
Net interest income | $ | 2,454 | $ | 1,212 | |||||||||||||
Assets and liabilities measured at fair value | ' | ||||||||||||||||
The following tables present the assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012: | |||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Borrower loans receivable | $ | - | $ | - | $ | 226,238 | $ | 226,238 | |||||||||
Certificates of deposit & restricted cash | 14,032 | 1,441 | - | 15,473 | |||||||||||||
Loans held for investment | - | - | 3,917 | 3,917 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 226,794 | $ | 226,794 | |||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Short term investments | $ | 1,000 | $ | - | $ | - | $ | 1,000 | |||||||||
Certificates of deposit & restricted cash | 4,331 | 1,618 | - | 5,949 | |||||||||||||
Borrower loans receivable | - | - | 166,900 | 166,900 | |||||||||||||
Loans held for investment | - | - | 175 | 175 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 167,478 | $ | 167,478 | |||||||||
Changes in Level 3 assets measured at fair value on a recurring basis | ' | ||||||||||||||||
The changes in Level 3 assets measured at fair value on a recurring basis are as follows: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Borrower | Notes | Loans | Total | ||||||||||||||
Loans | Held for | ||||||||||||||||
Investment | |||||||||||||||||
Balance at January 1, 2012 | $ | 75,764 | $ | (76,160 | ) | $ | 137 | $ | (259 | ) | |||||||
Originations | 153,175 | (153,175 | ) | 182 | 182 | ||||||||||||
Principal repayments | (66,840 | ) | 65,690 | (133 | ) | (1,283 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | 4,801 | (3,833 | ) | - | 968 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (11 | ) | (11 | ) | |||||||||||
Balance at December 31, 2012 | $ | 166,900 | $ | (167,478 | ) | $ | 175 | $ | (403 | ) | |||||||
Originations | 341,176 | (169,742 | ) | 14,296 | 185,730 | ||||||||||||
Principal repayments and credit losses | (105,692 | ) | 104,692 | (143 | ) | (1,143 | ) | ||||||||||
Borrower Loans sold to third parties | (171,290 | ) | - | (10,410 | ) | (181,700 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | (4,856 | ) | 5,734 | - | 878 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (1 | ) | (1 | ) | |||||||||||
Balance at December 31, 2013 | $ | 226,238 | $ | (226,794 | ) | $ | 3,917 | $ | 3,361 | ||||||||
Summary of fair value measurement, valuation technique | ' | ||||||||||||||||
Quantitative information about PMI's Level 3 fair value measurements of its Borrower Loans and Notes as of December 31, 2013 is provided below. The table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to PMI's fair value measurements. | |||||||||||||||||
Assets and Liabilities | Fair | Valuation | Unobservable Inputs | ||||||||||||||
Value as of | Technique | ||||||||||||||||
31-Dec | |||||||||||||||||
Borrower loans receivable at fair value | $ | 226,238 | Discounted Cashflow | Default rates and discount rates | |||||||||||||
Notes at fair value | $ | (226,794 | ) | Discounted Cashflow | Default rates and discount rates |
Cash_and_Cash_Equivalents_and_1
Cash and Cash Equivalents and Short Term Investments (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Cash and Cash Equivalents and Short Term Investments [Abstract] | ' | ||||||||
Cash and cash equivalents and short term investments | ' | ||||||||
Cash and cash equivalents and short term investments consist of the following: | |||||||||
December 31, | |||||||||
Cash and cash equivalents and short term investments | 2013 | 2012 | |||||||
Cash | $ | 18,339 | $ | 2,300 | |||||
Restricted cash | 15,473 | 5,949 | |||||||
Short term investments | - | 1,000 | |||||||
Total cash and cash equivalents and short term investments | $ | 33,812 | $ | 9,249 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property and Equipment [Abstract] | ' | ||||||||
Property and equipment | ' | ||||||||
Property and equipment consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Property and equipment: | |||||||||
Computer equipment | $ | 2,115 | $ | 1,630 | |||||
Internal-use software | 3,454 | 1,656 | |||||||
Purchased software | 375 | 369 | |||||||
Office equipment and furniture | 39 | 125 | |||||||
Leasehold improvements | - | 41 | |||||||
Assets not yet placed in service | 651 | 134 | |||||||
Property and equipment | 6,634 | 3,955 | |||||||
Less accumulated depreciation and amortization | (3,238 | ) | (2,425 | ) | |||||
Total property and equipment, net | $ | 3,396 | $ | 1,530 |
Borrower_Loans_and_Notes_Held_1
Borrower Loans and Notes Held at Fair Value (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Borrower Loans and Notes Held at Fair Value [Abstract] | ' | ||||||||
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions | ' | ||||||||
Key economic assumptions and the sensitivity of the current fair value to immediate adverse changes in those assumptions at December 31, 2013 for Borrower Loans and Notes are presented in the following table: | |||||||||
Borrower Loans | Notes | ||||||||
Discount rate assumption: | 9.77 | %* | 9.77 | %* | |||||
Resulting fair value from: | |||||||||
100 basis point increase | $ | 222,989 | $ | 220,362 | |||||
200 basis point increase | 220,363 | 217,756 | |||||||
Resulting fair value from: | |||||||||
100 basis point decrease | $ | 228,465 | $ | 225,784 | |||||
200 basis point decrease | 231,282 | 228,560 | |||||||
Default rate assumption: | 7.2 | %* | 7.2 | %* | |||||
Resulting fair value from: | |||||||||
10% higher default rates | $ | 223,233 | $ | 220,620 | |||||
20% higher default rates | 220,039 | 217,439 | |||||||
Increase in fair value and income (loss) to earnings from: | |||||||||
10% lower default rates | $ | 228,151 | $ | 225,477 | |||||
20% lower default rates | 230,554 | 227,866 | |||||||
* Represents weighted average assumptions considering all Prosper Ratings. |
Repurchase_and_Indemnification1
Repurchase and Indemnification Obligation (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Repurchase and Indemnification Obligation [Abstract] | ' | ||||||||
Summarized changes in the repurchase obligation | ' | ||||||||
Changes in repurchase and indemnification obligations are summarized below: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Beginning of year balance: | $ | 41 | $ | 22 | |||||
Provision for repurchases and indemnifications | 67 | 19 | |||||||
Amounts repurchased and immediately charged off or charged off and indemnified (net of recoveries) | (76 | ) | - | ||||||
End of year balance: | $ | 32 | $ | 41 |
Net_Loss_Per_Share_Tables
Net Loss Per Share (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Net Loss Per Share [Abstract] | ' | ||||||||
Basic and diluted loss per share | ' | ||||||||
Basic and diluted net loss per share was calculated as follows: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Numerator: | |||||||||
Net loss | $ | (27,181 | ) | $ | (16,110 | ) | |||
Denominator: | |||||||||
Weighted average shares used in computing basic and diluted net loss per share | 6,567,201 | 2,925,611 | |||||||
Basic and diluted net loss per share | $ | (4.14 | ) | $ | (5.51 | ) | |||
Dilutive shares excluded from the diluted net loss per share calculation | ' | ||||||||
Due to losses attributable to PMI's common shareholders for each of the periods below, the following potentially dilutive shares are excluded from the diluted net loss per share calculation because they were anti-dilutive under the treasury stock method, in accordance with ASC Topic 260: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Excluded securities: | (shares) | (shares) | |||||||
Convertible preferred stock issued and outstanding | 27,274,068 | 6,195,813 | |||||||
Stock options issued and outstanding | 938,585 | 1,173,817 | |||||||
Unvested stock options exercised | 6,499,463 | - | |||||||
Warrants issued and outstanding | 218,810 | 260,987 | |||||||
Total common stock equivalents excluded from diluted net loss per common share computation | 34,930,926 | 7,630,617 |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Stockholders' Equity [Abstract] | ' | ||||||||||||||||
Convertible Preferred Stock | ' | ||||||||||||||||
In September 2013, PMI issued and sold 8,288,734 shares of new Series B (“new Series B”) preferred stock in a private placement at a purchase price of $3.02 per share for approximately $24,880, net of issuance costs. | |||||||||||||||||
Convertible Preferred Stock | Par Value | Authorized, | Balance | Liquidation | |||||||||||||
Issued and | December | Preference | |||||||||||||||
Outstanding | 31, 2013 | ||||||||||||||||
shares as of | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | |||||||||||||||||
New Series A | 0.01 | 13,868,152 | 139 | $ | 20,000 | ||||||||||||
Series A-1 | 0.01 | 5,117,182 | 51 | 51,172 | |||||||||||||
New Series B | 0.01 | 8,288,734 | 83 | 25,000 | |||||||||||||
27,274,068 | $ | 273 | $ | 96,172 | |||||||||||||
Stock_Option_Plan_and_Compensa1
Stock Option Plan and Compensation (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||
Stock Option Plan and Compensation [Abstract] | ' | ||||||||||||||||||||||||||||||
Summarized option activity under option plan | ' | ||||||||||||||||||||||||||||||
The share amounts and share price reflect a 10-for-1 reverse stock split effected by the Company on October 29, 2013. | |||||||||||||||||||||||||||||||
Options | Weighted- | ||||||||||||||||||||||||||||||
Issued | Average | ||||||||||||||||||||||||||||||
and | Exercise | ||||||||||||||||||||||||||||||
Outstanding | Price | ||||||||||||||||||||||||||||||
Balance as of January 1, 2012 | 1,208,762 | $ | 2.08 | ||||||||||||||||||||||||||||
Options granted (weighted average fair value of $1.05) | 288,796 | 1.7 | |||||||||||||||||||||||||||||
Options exercised - vested | (13,389 | ) | 1.42 | ||||||||||||||||||||||||||||
Options exercised - nonvested | - | - | |||||||||||||||||||||||||||||
Options canceled | (310,353 | ) | 1.9 | ||||||||||||||||||||||||||||
Balance as of December 31, 2012 | 1,173,816 | $ | 2.03 | ||||||||||||||||||||||||||||
Balance as of January 1, 2013 | 1,173,816 | $ | 2.03 | ||||||||||||||||||||||||||||
Options granted (weighted average fair value of $0. 07) | 7,912,933 | 0.1 | |||||||||||||||||||||||||||||
Options exercised - vested | (828,496 | ) | 0.2 | ||||||||||||||||||||||||||||
Options exercised - nonvested | (6,499,463 | ) | 0.1 | ||||||||||||||||||||||||||||
Options canceled | (820,205 | ) | 1.77 | ||||||||||||||||||||||||||||
Balance as of December 31, 2013 | 938,585 | $ | 1.39 | ||||||||||||||||||||||||||||
Options outstanding and exercisable at December 31, 2013 | 575,258 | $ | 1.87 | ||||||||||||||||||||||||||||
Fair value of stock option awards | ' | ||||||||||||||||||||||||||||||
The fair value of stock option awards for the years 2013 and 2012 was estimated at the date of grant using the Black-Scholes model with the following average assumptions: | |||||||||||||||||||||||||||||||
Years Ended December 31, | |||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||
Volatility of common stock | 73.3 | % | 73.3 | % | |||||||||||||||||||||||||||
Risk-free interest rate | 1.9 | % | 1.3 | % | |||||||||||||||||||||||||||
Expected life* | 5.8 years | 4.6 years | |||||||||||||||||||||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||||||||||||||||||
Weighted-average fair value of grants | $ | 0.07 | $ | 0.1 | |||||||||||||||||||||||||||
* For nonemployee stock option awards, the expected life is the contractual term of the award, which is generally ten years. | |||||||||||||||||||||||||||||||
Additional information regarding common stock options outstanding | ' | ||||||||||||||||||||||||||||||
Additional information regarding common stock options outstanding as of December 31, 2013 is as follows: | |||||||||||||||||||||||||||||||
Options Outstanding | Options Vested and Exercisable | ||||||||||||||||||||||||||||||
Exercise | Number | Weighted | Weighted Avg. | Intrinsic | Number | Weighted | Intrinsic | ||||||||||||||||||||||||
Prices | Outstanding | Avg. | Exercise Price | Value | Exercisable | Avg. | Value | ||||||||||||||||||||||||
Remaining | Exercise | ||||||||||||||||||||||||||||||
Life | Price | ||||||||||||||||||||||||||||||
$ | 0.1 | 288,689 | 9.62 | $ | 0.1 | $ | - | 57,721 | $ | 0.1 | $ | - | |||||||||||||||||||
1.2 | 171,181 | 7.71 | 1.2 | – | 126,007 | 1.2 | – | ||||||||||||||||||||||||
1.7 | 144,791 | 8.37 | 1.7 | – | 64,934 | 1.7 | – | ||||||||||||||||||||||||
2 | 300,074 | 6.56 | 2 | – | 292,746 | 2 | – | ||||||||||||||||||||||||
2.5 | 1,500 | 1.55 | 2.5 | – | 1,500 | 2.5 | – | ||||||||||||||||||||||||
5 | 11,000 | 2.67 | 5 | – | 11,000 | 5 | – | ||||||||||||||||||||||||
5.6 | 18,250 | 5.71 | 5.6 | – | 18,250 | 5.6 | – | ||||||||||||||||||||||||
19.4 | 3,100 | 5.04 | 19.4 | – | 3,100 | 19.4 | – | ||||||||||||||||||||||||
938,585 | 7.91 | $ | 1.39 | $ | – | 575,258 | $ | 1.36 | $ | – |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes [Abstract] | ' | ||||||||
Effective income tax reconciliation | ' | ||||||||
PMI did not have any current or deferred federal or state income tax expense for the years ended December 31, 2013 and 2012. The income tax expense (benefit) differed from the amount computed by applying the U.S. federal income tax rate of 34% to pretax loss as a result of the following: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Federal tax at statutory rate | 34 | % | 34 | % | |||||
State tax at statutory rate (net of federal benefit) | 2 | % | 2 | % | |||||
Change in valuation allowance | (38 | )% | (36 | )% | |||||
Other | 2 | % | 0 | % | |||||
0 | % | 0 | % | ||||||
Deferred tax assets and liabilities | ' | ||||||||
Temporary items that give rise to significant portions of deferred tax assets and liabilities (tax-effected) at December 31, 2013 and 2012 are as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Net operating loss carryforwards | $ | 39,872 | $ | 29,394 | |||||
Research & other credits | 660 | 527 | |||||||
Fixed assets | (23 | ) | 21 | ||||||
Accrued liabilities and other | 350 | 289 | |||||||
40,859 | 30,231 | ||||||||
Fair value of loans | (1,051 | ) | (618 | ) | |||||
Valuation allowance | (39,808 | ) | (29,613 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
Unrecognized tax benefits | ' | ||||||||
The following table summarizes the Company's activity related to its unrecognized tax benefits: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Balance at January 1, 2013 | $ | 186 | $ | - | |||||
Increase related to current year tax position | 33 | - | |||||||
Increase related to tax position of prior years | 8 | 186 | |||||||
Balance at December 31, 2013 | $ | 227 | $ | 186 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies [Abstract] | ' | ||||
Future minimum rental payments | ' | ||||
Future minimum rental payments under these leases as of December 31, 2013 are as follows: | |||||
Year ending December 31: | 2013 | ||||
2014 | $ | 502 | |||
2015 | - | ||||
Total future operating lease obligations | $ | 502 |
Related_Parties_Tables
Related Parties (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Related Parties [Abstract] | ' | ||||||||||||||||
Aggregate amount of loans purchased and the income earned | ' | ||||||||||||||||
The aggregate amount of the Notes and Borrower Loans purchased and the income earned by parties deemed to be affiliates and related parties of PMI Group as of December 31, 2013 and 2012 are summarized below: | |||||||||||||||||
Related Party | Aggregate Amount of | Income Earned on | |||||||||||||||
Notes and Borrower | Notes and Borrower | ||||||||||||||||
Loans | Loans | ||||||||||||||||
Purchased | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Executive officers and management | $ | 1,387 | $ | 139 | $ | 90 | $ | 7 | |||||||||
Directors | 622 | 3,996 | 255 | 334 | |||||||||||||
$ | 2,009 | $ | 4,135 | $ | 345 | $ | 341 |
Schedule_I_Prosper_Funding_LLC2
Schedule I, Prosper Funding LLC (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Condensed Financial Statements, Captions [Line Items] | ' | ||||||||||||||||
Summary of gross interest income and expense | ' | ||||||||||||||||
Below is a table which summarizes the gross interest income and expense for the twelve months ended December 31, 2013 and 2012. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Interest income on borrower loans | $ | 35,526 | $ | 23,101 | |||||||||||||
Interest expense on notes | (33,072 | ) | (21,889 | ) | |||||||||||||
Net interest income | $ | 2,454 | $ | 1,212 | |||||||||||||
Assets and liabilities measured at fair value | ' | ||||||||||||||||
The following tables present the assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012: | |||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Borrower loans receivable | $ | - | $ | - | $ | 226,238 | $ | 226,238 | |||||||||
Certificates of deposit & restricted cash | 14,032 | 1,441 | - | 15,473 | |||||||||||||
Loans held for investment | - | - | 3,917 | 3,917 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 226,794 | $ | 226,794 | |||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Short term investments | $ | 1,000 | $ | - | $ | - | $ | 1,000 | |||||||||
Certificates of deposit & restricted cash | 4,331 | 1,618 | - | 5,949 | |||||||||||||
Borrower loans receivable | - | - | 166,900 | 166,900 | |||||||||||||
Loans held for investment | - | - | 175 | 175 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 167,478 | $ | 167,478 | |||||||||
Changes in Level 3 assets measured at fair value on a recurring basis | ' | ||||||||||||||||
The changes in Level 3 assets measured at fair value on a recurring basis are as follows: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Borrower | Notes | Loans | Total | ||||||||||||||
Loans | Held for | ||||||||||||||||
Investment | |||||||||||||||||
Balance at January 1, 2012 | $ | 75,764 | $ | (76,160 | ) | $ | 137 | $ | (259 | ) | |||||||
Originations | 153,175 | (153,175 | ) | 182 | 182 | ||||||||||||
Principal repayments | (66,840 | ) | 65,690 | (133 | ) | (1,283 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | 4,801 | (3,833 | ) | - | 968 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (11 | ) | (11 | ) | |||||||||||
Balance at December 31, 2012 | $ | 166,900 | $ | (167,478 | ) | $ | 175 | $ | (403 | ) | |||||||
Originations | 341,176 | (169,742 | ) | 14,296 | 185,730 | ||||||||||||
Principal repayments and credit losses | (105,692 | ) | 104,692 | (143 | ) | (1,143 | ) | ||||||||||
Borrower Loans sold to third parties | (171,290 | ) | - | (10,410 | ) | (181,700 | ) | ||||||||||
Change in fair value on Borrower Loans and Notes | (4,856 | ) | 5,734 | - | 878 | ||||||||||||
Change in fair value of Loans held for investment | - | - | (1 | ) | (1 | ) | |||||||||||
Balance at December 31, 2013 | $ | 226,238 | $ | (226,794 | ) | $ | 3,917 | $ | 3,361 | ||||||||
Summary of fair value measurement, valuation technique | ' | ||||||||||||||||
Quantitative information about PMI's Level 3 fair value measurements of its Borrower Loans and Notes as of December 31, 2013 is provided below. The table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to PMI's fair value measurements. | |||||||||||||||||
Assets and Liabilities | Fair | Valuation | Unobservable Inputs | ||||||||||||||
Value as of | Technique | ||||||||||||||||
31-Dec | |||||||||||||||||
Borrower loans receivable at fair value | $ | 226,238 | Discounted Cashflow | Default rates and discount rates | |||||||||||||
Notes at fair value | $ | (226,794 | ) | Discounted Cashflow | Default rates and discount rates | ||||||||||||
Cash and cash equivalents and short term investments | ' | ||||||||||||||||
Cash and cash equivalents and short term investments consist of the following: | |||||||||||||||||
December 31, | |||||||||||||||||
Cash and cash equivalents and short term investments | 2013 | 2012 | |||||||||||||||
Cash | $ | 18,339 | $ | 2,300 | |||||||||||||
Restricted cash | 15,473 | 5,949 | |||||||||||||||
Short term investments | - | 1,000 | |||||||||||||||
Total cash and cash equivalents and short term investments | $ | 33,812 | $ | 9,249 | |||||||||||||
Property and equipment | ' | ||||||||||||||||
Property and equipment consist of the following: | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Property and equipment: | |||||||||||||||||
Computer equipment | $ | 2,115 | $ | 1,630 | |||||||||||||
Internal-use software | 3,454 | 1,656 | |||||||||||||||
Purchased software | 375 | 369 | |||||||||||||||
Office equipment and furniture | 39 | 125 | |||||||||||||||
Leasehold improvements | - | 41 | |||||||||||||||
Assets not yet placed in service | 651 | 134 | |||||||||||||||
Property and equipment | 6,634 | 3,955 | |||||||||||||||
Less accumulated depreciation and amortization | (3,238 | ) | (2,425 | ) | |||||||||||||
Total property and equipment, net | $ | 3,396 | $ | 1,530 | |||||||||||||
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions | ' | ||||||||||||||||
Key economic assumptions and the sensitivity of the current fair value to immediate adverse changes in those assumptions at December 31, 2013 for Borrower Loans and Notes are presented in the following table: | |||||||||||||||||
Borrower Loans | Notes | ||||||||||||||||
Discount rate assumption: | 9.77 | %* | 9.77 | %* | |||||||||||||
Resulting fair value from: | |||||||||||||||||
100 basis point increase | $ | 222,989 | $ | 220,362 | |||||||||||||
200 basis point increase | 220,363 | 217,756 | |||||||||||||||
Resulting fair value from: | |||||||||||||||||
100 basis point decrease | $ | 228,465 | $ | 225,784 | |||||||||||||
200 basis point decrease | 231,282 | 228,560 | |||||||||||||||
Default rate assumption: | 7.2 | %* | 7.2 | %* | |||||||||||||
Resulting fair value from: | |||||||||||||||||
10% higher default rates | $ | 223,233 | $ | 220,620 | |||||||||||||
20% higher default rates | 220,039 | 217,439 | |||||||||||||||
Increase in fair value and income (loss) to earnings from: | |||||||||||||||||
10% lower default rates | $ | 228,151 | $ | 225,477 | |||||||||||||
20% lower default rates | 230,554 | 227,866 | |||||||||||||||
* Represents weighted average assumptions considering all Prosper Ratings. | |||||||||||||||||
Summarized changes in the repurchase obligation | ' | ||||||||||||||||
Changes in repurchase and indemnification obligations are summarized below: | |||||||||||||||||
Years Ended December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Beginning of year balance: | $ | 41 | $ | 22 | |||||||||||||
Provision for repurchases and indemnifications | 67 | 19 | |||||||||||||||
Amounts repurchased and immediately charged off or charged off and indemnified (net of recoveries) | (76 | ) | - | ||||||||||||||
End of year balance: | $ | 32 | $ | 41 | |||||||||||||
Prosper Funding LLC [Member] | ' | ||||||||||||||||
Condensed Financial Statements, Captions [Line Items] | ' | ||||||||||||||||
Summary of gross interest income and expense | ' | ||||||||||||||||
Below is a table which summarizes the gross interest income on Borrower Loans and expense on Notes for the twelve months ended December 31, 2013 and 2012. | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Interest income on borrower loans | $ | 32,862 | $ | - | |||||||||||||
Interest expense on notes | (30,564 | ) | - | ||||||||||||||
Net interest income | $ | 2,298 | $ | - | |||||||||||||
Assets and liabilities measured at fair value | ' | ||||||||||||||||
The following tables present the assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012: | |||||||||||||||||
31-Dec-13 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Borrower loans receivable | $ | - | $ | - | $ | 226,238 | $ | 226,238 | |||||||||
Certificates of deposit and restricted cash | 11,028 | 1,271 | - | 12,299 | |||||||||||||
Loans held for investment | - | - | 3,917 | 3,917 | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | 226,794 | $ | 226,794 | |||||||||
31-Dec-12 | Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
Inputs | Inputs | Inputs | |||||||||||||||
Assets | |||||||||||||||||
Short term investments | $ | - | $ | - | $ | - | $ | - | |||||||||
Certificates of deposit | - | - | - | - | |||||||||||||
Borrower loans receivable | - | - | - | - | |||||||||||||
Loans held for investment | - | - | - | - | |||||||||||||
Liabilities | |||||||||||||||||
Notes | $ | - | $ | - | $ | - | $ | - | |||||||||
Changes in Level 3 assets measured at fair value on a recurring basis | ' | ||||||||||||||||
The changes in Level 3 assets measured at fair value on a recurring basis are as follows: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Borrower | Notes | Loans | Total | ||||||||||||||
Loans | Held for | ||||||||||||||||
Investment | |||||||||||||||||
Balance at January 1, 2013 | $ | - | $ | - | $ | - | $ | - | |||||||||
Assets transferred on February 1, 2013 | 170,344 | (170,574 | ) | 175 | (55 | ) | |||||||||||
Originations | 331,353 | (159,921 | ) | 14,296 | 185,728 | ||||||||||||
Principal repayments and credit losses | (99,313 | ) | 97,967 | (143 | ) | (1,489 | ) | ||||||||||
Borrower loans sold to third parties | (171,290 | ) | (10,410 | ) | (181,700 | ) | |||||||||||
Change in fair value on borrower loans and notes | (4,856 | ) | 5,734 | - | 878 | ||||||||||||
Change in fair value of loans held for investment | - | - | (1 | ) | (1 | ) | |||||||||||
Balance at December 31, 2013 | $ | 226,238 | $ | (226,794 | ) | $ | 3,917 | $ | 3,361 | ||||||||
Summary of fair value measurement, valuation technique | ' | ||||||||||||||||
Quantitative information about Prosper Funding’s Level 3 fair value measurements of its borrower loans and notes as of December 31, 2013 is provided below. The table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to Prosper Funding’s fair value measurements. | |||||||||||||||||
Fair | Valuation Technique | Unobservable Inputs | |||||||||||||||
Assets and | Value as | ||||||||||||||||
Liabilities | of | ||||||||||||||||
December | |||||||||||||||||
31 | |||||||||||||||||
Borrower loans receivable at fair value | $ | 226,238 | Discounted Cashflow | Default rates and discount rates | |||||||||||||
Notes at fair value | $ | (226,794 | ) | Discounted Cashflow | Default rates and discount rates | ||||||||||||
Cash and cash equivalents and short term investments | ' | ||||||||||||||||
Cash and cash equivalents consist of the following: | |||||||||||||||||
December 31, | |||||||||||||||||
Cash and cash equivalents | 2013 | 2012 | |||||||||||||||
Cash in bank | $ | 5,789 | $ | 5 | |||||||||||||
Total cash and cash equivalents | $ | 5,789 | $ | 5 | |||||||||||||
Property and equipment | ' | ||||||||||||||||
Property and equipment consist of the following: | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Property and equipment: | |||||||||||||||||
Internal-use software | $ | 3,454 | $ | - | |||||||||||||
Property and equipment | 3,454 | - | |||||||||||||||
Less accumulated depreciation and amortization | (1,474 | ) | |||||||||||||||
Total property and equipment, net | $ | 1,980 | $ | - | |||||||||||||
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions | ' | ||||||||||||||||
Key economic assumptions and the sensitivity of the current fair value to immediate adverse changes in those assumptions at December 31, 2013 for Borrower Loans and Notes are presented in the following table: | |||||||||||||||||
Borrower Loans | Notes | ||||||||||||||||
Discount rate assumption: | 9.77 | %* | 9.77 | %* | |||||||||||||
Resulting fair value from: | |||||||||||||||||
100 basis point increase | $ | 222,989 | $ | 220,362 | |||||||||||||
200 basis point increase | 220,363 | 217,756 | |||||||||||||||
Resulting fair value from: | |||||||||||||||||
100 basis point decrease | $ | 228,465 | $ | 225,784 | |||||||||||||
200 basis point decrease | 231,282 | 228,560 | |||||||||||||||
Default rate assumption: | 7.2 | %* | 7.2 | %* | |||||||||||||
Resulting fair value from: | |||||||||||||||||
10% higher default rates | $ | 223,233 | $ | 220,620 | |||||||||||||
20% higher default rates | 220,039 | 217,439 | |||||||||||||||
Increase in fair value and income (loss) to earnings from: | |||||||||||||||||
10% lower default rates | $ | 228,151 | $ | 225,477 | |||||||||||||
20% lower default rates | 230,554 | 227,866 | |||||||||||||||
* Represents weighted average assumptions considering all Prosper Ratings. | |||||||||||||||||
Summarized changes in the repurchase obligation | ' | ||||||||||||||||
Changes in Prosper Funding’s repurchase and indemnification obligations are summarized below: | |||||||||||||||||
Years Ended December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Beginning of year balance: | $ | - | $ | - | |||||||||||||
Provision for repurchases and indemnifications | 41 | - | |||||||||||||||
Amounts repurchased and immediately charged off or charged off and indemnified (net of recoveries) | (9 | ) | - | ||||||||||||||
End of year balance: | $ | 32 | $ | - | |||||||||||||
Organization_and_Business_Deta
Organization and Business (Details) (USD $) | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 15, 2013 | Jan. 31, 2013 | Jan. 15, 2013 | Sep. 23, 2013 |
Series A Preferred Stock [Member] | Series A Preferred Stock [Member] | Series A1 Preferred Stock [Member] | Series B Preferred Stock [Member] | |||
Organization and Business [Abstract] | ' | ' | ' | ' | ' | ' |
Loan listings, minimum | $2 | ' | ' | ' | ' | ' |
Loan listings, maximum | 35 | ' | ' | ' | ' | ' |
Loan term, description | 'three or five years | ' | ' | ' | ' | ' |
Accumulated deficit | 104,080 | 76,899 | ' | ' | ' | ' |
Cash and cash equivalents and short term investments | 18,339 | ' | ' | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' |
Shares issued (in shares) | ' | ' | 13,868,152 | 13,868,152 | 5,117,182 | 8,288,734 |
Proceeds from issuance of preferred stock | $45,000 | $0 | ' | $19,844 | $19,841 | $24,930 |
Purchase price (in dollars per share) | ' | ' | $1.44 | ' | $0.01 | $3.02 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | ||
Risk | ||||
Certain Risks and Concentrations [Abstract] | ' | ' | ||
Number of significant types of risks | 2 | ' | ||
Cash and Cash Equivalents [Abstract] | ' | ' | ||
Cash and cash equivalents, maximum | '3 months | ' | ||
Short Term Investments [Abstract] | ' | ' | ||
Highly liquid debt instruments maturity period, minimum | '3 months | ' | ||
Highly liquid debt instruments maturity period, maximum | '12 months | ' | ||
Borrower Loans and Notes [Abstract] | ' | ' | ||
Maximum number of days past due an account is considered to be a loss, or charged off | '120 days | ' | ||
Member Loans Sold Directly to Third Party Purchasers [Abstract] | ' | ' | ||
Servicing assets | $144 | ' | ||
Impairment of Long-Lived Assets Including Acquired Intangible Assets [Abstract] | ' | ' | ||
Impairment charges | 62 | 0 | ||
Net Interest income on Borrower Loans Receivable and Payment Dependent Notes [Abstract] | ' | ' | ||
Interest Income on Borrower Loans | 35,526 | 23,101 | ||
Interest Expense on Notes | -33,072 | -21,889 | ||
Net Interest Income | 2,454 | 1,212 | ||
Marketing and Advertising Expense [Abstract] | ' | ' | ||
Advertising costs | 14,851 | 5,683 | ||
Stock-Based Compensation [Abstract] | ' | ' | ||
Vesting period of the award | '4 years | ' | ||
Estimated annual forfeiture rate (in hundredths) | 17.20% | 18.20% | ||
Fair value of stock option awards [Abstract] | ' | ' | ||
Volatility of common stock (in hundredths) | 73.30% | 73.30% | ||
Risk-free interest rate (in hundredths) | 1.90% | 1.30% | ||
Expected life | '5 years 9 months 18 days | [1] | '4 years 7 months 6 days | [1] |
Dividend yield (in hundredths) | 0.00% | 0.00% | ||
Weighted-average fair value of grants (in dollars per share) | $0.07 | $0.10 | ||
Contractual term | '10 years | ' | ||
Stock-based compensation expense | 229 | 340 | ||
Unamortized expense related to unvested stock-based awards | 991 | ' | ||
Remaining weighted average vesting period | '4 years 2 months 12 days | ' | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ||
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | 34,930,926 | 7,630,617 | ||
Assets | ' | ' | ||
Short Term Investments | ' | 1,000 | ||
Borrower Loans receivable | 226,238 | 166,900 | ||
Certificates of Deposit & Restricted Cash | 15,473 | 5,949 | ||
Borrower Loans held for investment | 3,917 | 175 | ||
Liabilities | ' | ' | ||
Notes | 226,794 | 167,478 | ||
Servicing fee (in hundredths) | 1.00% | ' | ||
Level 1 Inputs [Member] | ' | ' | ||
Assets | ' | ' | ||
Short Term Investments | ' | 1,000 | ||
Borrower Loans receivable | 0 | 0 | ||
Certificates of Deposit & Restricted Cash | 14,033 | 4,331 | ||
Borrower Loans held for investment | 0 | 0 | ||
Liabilities | ' | ' | ||
Notes | 0 | 0 | ||
Level 2 Inputs [Member] | ' | ' | ||
Assets | ' | ' | ||
Short Term Investments | ' | 0 | ||
Borrower Loans receivable | 0 | 0 | ||
Certificates of Deposit & Restricted Cash | 1,441 | 1,618 | ||
Borrower Loans held for investment | 0 | 0 | ||
Liabilities | ' | ' | ||
Notes | 0 | 0 | ||
Level 3 Inputs [Member] | ' | ' | ||
Assets | ' | ' | ||
Short Term Investments | ' | 0 | ||
Borrower Loans receivable | 226,238 | 166,900 | ||
Certificates of Deposit & Restricted Cash | 0 | 0 | ||
Borrower Loans held for investment | 3,917 | 175 | ||
Liabilities | ' | ' | ||
Notes | $226,794 | $167,478 | ||
Convertible Preferred Stock [Member] | ' | ' | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ||
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | 27,274,068 | 6,195,813 | ||
Stock Options [Member] | ' | ' | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ||
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | 938,585 | 1,173,817 | ||
Warrants [Member] | ' | ' | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ||
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | ' | 261 | ||
Furniture and fixtures [Member] | ' | ' | ||
Property, Plant and Equipment [Line Items] | ' | ' | ||
Property and equipment, estimated useful life | '7 years | ' | ||
Office equipment [Member] | ' | ' | ||
Property, Plant and Equipment [Line Items] | ' | ' | ||
Property and equipment, estimated useful life | '5 years | ' | ||
Computers and equipment [Member] | ' | ' | ||
Property, Plant and Equipment [Line Items] | ' | ' | ||
Property and equipment, estimated useful life | '3 years | ' | ||
Leasehold improvements [Member] | ' | ' | ||
Property, Plant and Equipment [Line Items] | ' | ' | ||
Property and equipment, estimated useful life | '3 years | ' | ||
Software [Member] | ' | ' | ||
Property, Plant and Equipment [Line Items] | ' | ' | ||
Property and equipment, estimated useful life | '3 years | ' | ||
[1] | For nonemployee stock option awards, the expected life is the contractual term of the award, which is generally ten years. |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies, Assets Level 3 Reconciliation (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Total | ($403) | ($260) |
Originations, Total | 185,730 | 182 |
Principal repayments and credit losses, Total | -1,143 | -1,283 |
Loans sold to third parties, Total | -181,700 | ' |
Change in fair value on borrower loans and Payment Dependent Notes, Total | 878 | 969 |
Change in fair value of loans held for investment, Total | -1 | -11 |
Ending balance, Total | 3,361 | -403 |
Notes [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Liabilities | -167,478 | -76,160 |
Originations, Liabilities | -169,742 | -153,175 |
Principal repayments and credit losses, Liabilities | 104,692 | 65,690 |
Loans sold to third parties, Liabilities | 0 | ' |
Change in fair value on borrower loans and Payment Dependent Notes, Liabilities | 5,734 | -3,833 |
Change in fair value of loans held for investment, Liability | 0 | 0 |
Ending balance, Liabilities | -226,794 | -167,478 |
Borrower Loans [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Assets | 166,900 | 75,763 |
Originations, Assets | 341,176 | 153,175 |
Principal repayments and credit losses, Assets | -105,692 | -66,840 |
Loans sold to third parties | -171,290 | ' |
Change in fair value on Borrower Loans and Notes, Assets | -4,856 | 4,802 |
Change in fair value of loans held for investment, Asset | 0 | 0 |
Ending balance, Assets | 226,238 | 166,900 |
Loans Held for Investment [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Assets | 175 | 137 |
Originations, Assets | 14,296 | 182 |
Principal repayments and credit losses, Assets | -143 | -133 |
Loans sold to third parties | -10,410 | ' |
Change in fair value on Borrower Loans and Notes, Assets | 0 | 0 |
Change in fair value of loans held for investment, Asset | -1 | -11 |
Ending balance, Assets | $3,917 | $175 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies, Fair Value Measurements, Recurring and Nonrecurring Valuations (Details) (Fair Value, Measurements, Recurring [Member], Level 3 Inputs [Member], USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Notes [Member] | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' |
Borrower notes at fair value | ($226,794) |
Valuation Techniques, Discounted Cash Flow | 'Discounted Cashflow |
Fair Value Measurements, Unobservable Inputs | 'Default rates and discount rates |
Borrower Loans [Member] | ' |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ' |
Borrower loans receivable at fair value | $226,238 |
Valuation Techniques, Discounted Cash Flow | 'Discounted Cashflow |
Fair Value Measurements, Unobservable Inputs | 'Default rates and discount rates |
Cash_and_Cash_Equivalents_and_2
Cash and Cash Equivalents and Short Term Investments (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Cash and cash equivalents and short term investments [Abstract] | ' | ' |
Cash | $18,339 | $2,300 |
Restricted Cash | 15,473 | 5,949 |
Short term investments | 0 | 1,000 |
Total cash and cash equivalents and short term investments | $33,812 | $9,249 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | $6,635 | $3,955 |
Less accumulated depreciation and amortization | -3,238 | -2,425 |
Total property and equipment, net | 3,396 | 1,530 |
Depreciation expense | 961 | 679 |
Capitalized internal-use software costs | 1,797 | 530 |
Computers equipment [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | 2,116 | 1,630 |
Internal-use software [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | 3,454 | 1,656 |
Purchased software [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | 375 | 369 |
Office equipment and furniture [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | 39 | 125 |
Leasehold improvements [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | 0 | 41 |
Assets not yet placed in service [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | $651 | $134 |
Loans_Held_for_Investment_Deta
Loans Held for Investment (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Loans Held for Investment [Abstract] | ' | ' |
PMI Borrower loans originated | $14,296 | ' |
Proceeds from sale of loans held-for-investment to third party | 10,410 | ' |
Loans held for investment | 3,917 | 175 |
Adjustment in fair value of loans held for investment | 1 | -11 |
Repayment of Loans held for investment at fair value | 143 | ' |
Loans receivable held for investment, charge offs | $14 | ' |
Borrower_Loans_and_Notes_Held_2
Borrower Loans and Notes Held at Fair Value, Fair Value Assumptions, Borrower Loans (Details) (Borrower Loans [Member], USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Discount rate assumption [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Discount rate assumption (in hundredths) | 9.77% | [1] |
Discount rate assumption [Member] | 100 Basis Point Increase [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Borrower loans | 222,989 | |
Discount rate assumption [Member] | 200 Basis Point Increase [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Borrower loans | 220,363 | |
Discount rate assumption [Member] | 100 Basis Point Decrease [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Borrower loans | 228,465 | |
Discount rate assumption [Member] | 200 Basis Point Decrease [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Borrower loans | 231,282 | |
Default rate assumption [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Default rate assumption (in hundredths) | 7.20% | [1] |
Default rate assumption [Member] | 10% Higher [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Borrower loans | 223,233 | |
Default rate assumption [Member] | 20% Higher [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Borrower loans | 220,039 | |
Default rate assumption [Member] | 10% Lower [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Borrower loans | 228,151 | |
Default rate assumption [Member] | 20% Lower [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Borrower loans | 230,554 | |
[1] | Represents weighted average assumptions considering all Prosper Ratings. |
Borrower_Loans_and_Notes_Held_3
Borrower Loans and Notes Held at Fair Value, Fair Value Assumptions, Notes (Details) (Notes [Member], USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Discount rate assumption [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Discount rate assumption (in hundredths) | 9.77% | [1] |
Discount rate assumption [Member] | 100 Basis Point Increase [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 220,362 | |
Discount rate assumption [Member] | 200 Basis Point Increase [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 217,756 | |
Discount rate assumption [Member] | 100 Basis Point Decrease [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 225,784 | |
Discount rate assumption [Member] | 200 Basis Point Decrease [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 228,560 | |
Default rate assumption [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Default rate assumption (in hundredths) | 7.20% | [1] |
Default rate assumption [Member] | 10% Higher [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 220,620 | |
Default rate assumption [Member] | 20% Higher [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 217,439 | |
Default rate assumption [Member] | 10% Lower [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 225,477 | |
Default rate assumption [Member] | 20% Lower [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 227,866 | |
[1] | Represents weighted average assumptions considering all Prosper Ratings. |
Borrower_Loans_and_Notes_Held_4
Borrower Loans and Notes Held at Fair Value, Fair Value Measurements Using Significant Unobservable Inputs (Details) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Loan | |
Borrower Loans and Notes Held at Fair Value [Abstract] | ' |
Servicing fee as percentage of outstanding principal balance of borrower loan (in hundredths) | 1.00% |
Number of Loans 90 Days or More Delinquent | 332 |
Minimum number of days for which loans originated were delinquent | '90 days |
Aggregate principal amount of loans originated | $1,941,439 |
Fair value of loans originated | $174,620 |
Repurchase_and_Indemnification2
Repurchase and Indemnification Obligation (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Repurchase and Indemnification Obligation [Abstract] | ' | ' |
Beginning of year balance | $41 | $22 |
Provision for repurchases and indemnifications | 67 | 19 |
Notes repurchased and immediately charged off or charged off and indemnified (net of recoveries) | -76 | 0 |
End of year balance | 32 | 41 |
Provision for repurchases and indemnification obligation | $118 | $26 |
Net_Loss_Per_Share_Details
Net Loss Per Share (Details) (USD $) | 2 Months Ended | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
Numerator [Abstract] | ' | ' | ' |
Net loss | ' | ($27,181) | ($16,110) |
Denominator [Abstract] | ' | ' | ' |
Weighted average shares used in computing basic and diluted net loss per share (in shares) | ' | 6,567,201 | 2,925,611 |
Basic and diluted net loss per share (in dollars per share) | ' | ($4.14) | ($5.51) |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' |
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | ' | 34,930,926 | 7,630,617 |
Reverse stock split, shares issued (in shares) | 1 | ' | ' |
Reverse stock split, shares converted (in shares) | 10 | ' | ' |
Convertible preferred stock issued and outstanding [Member] | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' |
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | ' | 27,274,068 | 6,195,813 |
Stock options issued and outstanding [Member] | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' |
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | ' | 938,585 | 1,173,817 |
Unvested Stock Options Exercised [Member] | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' |
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | ' | 6,499,463 | 0 |
Warrants issued and outstanding [Member] | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' |
Total common stock equivalents excluded from diluted net loss per common share computation (in shares) | ' | 218,810 | 260,987 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 2 Months Ended | 12 Months Ended | 2 Months Ended | 2 Months Ended | 0 Months Ended | 1 Months Ended | 2 Months Ended | 0 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 2 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Oct. 29, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Oct. 29, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Jan. 15, 2013 | Jan. 31, 2013 | Dec. 31, 2013 | Oct. 29, 2013 | Sep. 23, 2013 | Dec. 31, 2013 | Oct. 29, 2013 | Jan. 31, 2013 | Dec. 31, 2013 | Sep. 23, 2013 | Jan. 31, 2013 | Dec. 31, 2013 | Jan. 15, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 29, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | |
Preferred Stock [Member] | Preferred Stock [Member] | Series A '13 Convertible Preferred Stock [Member] | Series A-1 '13 Convertible Preferred Stock [Member] | Series A-1 Preferred Stock [Member] | Series A-1 Preferred Stock [Member] | Series B '13 Convertible Preferred Stock [Member] | Series A and B '13 Convertible Preferred Stock [Member] | Series A Preferred Stock [Member] | Series A Preferred Stock [Member] | Series A Preferred Stock [Member] | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series A 1 Convertible Preferred Stock [Member] | Series A 1 Convertible Preferred Stock [Member] | Series A 1 [Member] | Series A 1 [Member] | Series A 1 [Member] | Series A 1 [Member] | Series D Preferred Stock [Member] | Series E Preferred Stock [Member] | Series F Preferred Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock Warrant [Member] | Common Stock Warrant [Member] | ||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,868,152 | 13,868,152 | ' | ' | 8,288,734 | ' | ' | 5,117,182 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible preferred stock, price per share (in dollars per share) | ' | ' | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | $1.44 | ' | ' | $3.02 | ' | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from issuance of preferred stock | ' | $45,000,000 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $19,844,000 | ' | ' | $24,930,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Converted ratio from preferred stock to common stock | 1 | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock convertible ratio if preferred stock did not participate | 10 | 10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reverse stock split, shares issued (in shares) | 1 | ' | ' | 1 | ' | ' | ' | 1 | ' | ' | ' | ' | ' | 1 | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' |
Reverse stock split, shares converted (in shares) | 10 | ' | ' | 10 | ' | ' | ' | 10 | ' | ' | ' | ' | ' | 10 | ' | ' | 10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10 | ' | ' | ' | ' | ' |
Convertible Preferred Stock [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 | ' | ' | $0.01 | $0.01 | ' | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible preferred stock, Balance | 0 | 0 | 72,000 | ' | ' | 139,000 | 51,000 | ' | ' | 83,000 | 273,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized (in shares) | 7,195,813 | 7,195,813 | 7,195,813 | ' | 27,274,068 | 13,868,152 | 5,117,182 | ' | 5,117,182 | 8,288,734 | 27,274,068 | ' | ' | ' | 13,868,152 | ' | ' | 8,288,734 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 41,487,465 | ' | ' |
Convertible preferred stock, shares issued (in shares) | 7,195,813 | 7,195,813 | 7,195,813 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible preferred stock, shares outstanding (in shares) | 7,195,813 | 7,195,813 | 7,195,813 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible preferred stock, liquidation preference | 51,172 | 51,172 | 0 | ' | ' | 20,000,000 | 51,172,000 | ' | ' | 25,000,000 | 96,172,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock, Value, Issued | 0 | 0 | 72,000 | ' | ' | 139,000 | 51,000 | ' | ' | 83,000 | 273,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, annual dividend rate (in hundredths) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | 8.00% | 8.00% | ' | ' | ' | ' | ' | ' |
Conversion [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion of old preferred stock into common stock | 1 | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liquidation preference per share (in dollars per share) | ' | ' | ' | ' | ' | $1.44 | ' | ' | ' | $3.02 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Value prior to closing of underwritten initial public offering | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | ' | ' | ' | ' | ' | 200,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate proceeds to the entity before deducting underwriters commissions and expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40,000,000 | ' | ' | ' | ' | ' | 40,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of holders of preferred stock required to request for conversion, minimum (in hundredths) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 60.00% | ' | ' | ' | ' | 14.00% | 70.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion ratio of preferred stock into prosper common stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | 1 | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liquidation Rights [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount per share receivable pursuant to liquidation (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized (in shares) | 41,487,465 | 41,487,465 | 8,263,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,288,734 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 68,761,533 | 41,487,465,000 | 41,487,465 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.01 | $0.01 |
Common stock, shares issued (in shares) | 13,720,214 | 13,720,214 | 300,674 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,406,539 | 13,799,063 |
Common stock, shares outstanding (in shares) | 13,720,214 | 13,720,214 | 300,674 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,406,539 | 13,799,063 |
Common Stock Issued upon Exercise of Stock Options [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise of stock options (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,327,959 | 13,388 | ' | ' | ' |
Cash proceeds from exercise of options | ' | 210,000 | 19,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 864,000 | 19,000 | ' | ' | ' |
Exercise of nonvested stock options (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,499,463 | 0 | ' | ' | ' |
Stock repurchase upon termination of employment (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,509 | 0 | ' | ' | ' |
Stock repurchase upon termination of employment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $41,000 | $0 | ' | ' | ' |
Common Stock Issued upon Exercise of Stock Warrants [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise of common stock warrants (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 820 | 0 | ' | ' | ' |
Exercise of common stock warrants (in dollars per share) | $0.01 | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock_Option_Plan_and_Compensa2
Stock Option Plan and Compensation (Details) (USD $) | 2 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2005 |
0.10 [Member] | 1.20 [Member] | 1.70 [Member] | 2.00 [Member] | 2.50 [Member] | 5.00 [Member] | 5.60 [Member] | 19.40 [Member] | Incentive Stock Options [Member] | Non-statutory Stock Options [Member] | 2005 Stock Option Plan [Member] | 2005 Stock Option Plan [Member] | 2005 Stock Option Plan [Member] | 2005 Stock Option Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of entity common stock held by stockholders on option grant date, minimum (in hundredths) | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price as percentage of fair value of entity common stock if stockholders hold minimum 10% of entity stock, minimum (in hundredths) | ' | 110.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting period of the options | ' | '4 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options exercisable, maximum period | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price as percentage of fair value of entity's common stock on grant date, minimum (in hundredths) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | 85.00% | ' | ' | ' | ' |
Number of options made available in pool (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12,634,791 | 1,523,966 | 135,396 | 187,946 |
Additional number of options made available in pool (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,110,825 | 170,000 | 455,087 | ' |
Shares available for grant under the plan | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,414,052 | ' | ' | ' |
Reverse stock split, shares issued (in shares) | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reverse stock split, shares converted (in shares) | 10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options Issued and Outstanding [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Beginning balance (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,173,816 | 1,208,762 | ' | ' |
Options granted (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,912,933 | 288,796 | ' | ' |
Options exercised - vested (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -828,496 | -13,389 | ' | ' |
Options exercised - nonvested (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -6,499,463 | 0 | ' | ' |
Options canceled (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -820,205 | -310,353 | ' | ' |
Ending balance (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 938,585 | 1,173,816 | 1,208,762 | ' |
Options outstanding and exercisable (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 575,258 | ' | ' | ' |
Weighted-Average Exercise Price [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Beginning balance (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2.03 | $2.08 | ' | ' |
Options granted (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.10 | $1.70 | ' | ' |
Options exercised - vested (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.20 | $1.42 | ' | ' |
Options exercised - nonvested (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.10 | $0 | ' | ' |
Options canceled (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1.77 | $1.90 | ' | ' |
Ending balance (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1.39 | $2.03 | $2.08 | ' |
Options outstanding and exercisable (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1.87 | ' | ' | ' |
Weighted average fair value (in dollars per share) | $1.05 | $1.05 | $0.07 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options Outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise Prices | ' | ' | ' | $0.10 | $1.20 | $1.70 | $2 | $2.50 | $5 | $5.60 | $19.40 | ' | ' | ' | ' | ' | ' |
Number Outstanding (in shares) | 938,585 | 938,585 | ' | 288,689 | 171,181 | 144,791 | 300,074 | 1,500 | 11,000 | 18,250 | 3,100 | ' | ' | ' | ' | ' | ' |
Weighted Avg. Remaining Life | ' | '7 years 10 months 28 days | ' | '9 years 7 months 13 days | '7 years 8 months 16 days | '8 years 4 months 13 days | '6 years 6 months 22 days | '1 year 6 months 18 days | '2 years 8 months 1 day | '5 years 8 months 16 days | '5 years 0 months 14 days | ' | ' | ' | ' | ' | ' |
Weighted Avg. Exercise Price (in dollars per share) | $1.39 | $1.39 | ' | $0.10 | $1.20 | $1.70 | $2 | $2.50 | $5 | $5.60 | $19.40 | ' | ' | ' | ' | ' | ' |
Intrinsic Value | $0 | $0 | ' | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ' | ' | ' | ' | ' | ' |
Options Exercisable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number Exercisable (in shares) | 575,258 | 575,258 | ' | 57,721 | 126,007 | 64,934 | 292,746 | 1,500 | 11,000 | 18,250 | 3,100 | ' | ' | ' | ' | ' | ' |
Weighted Avg. Exercise Price (in dollars per share) | $1.36 | $1.36 | ' | $0.10 | $1.20 | $1.70 | $2 | $2.50 | $5 | $5.60 | $19.40 | ' | ' | ' | ' | ' | ' |
Intrinsic Value | $0 | $0 | ' | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ' | ' | ' | ' | ' | ' |
Common stock value (in dollars per share) | $0.01 | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options outstanding vested and expected to vest (in shares) | 777,148 | 777,148 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options outstanding vested and expected to vest, weighted-average contractual life | ' | '10 years 10 months 10 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Effective income tax rate reconciliation [Abstract] | ' | ' |
Federal tax at statutory rate (in hundredths) | 34.00% | 34.00% |
State tax at statutory rate (net of federal benefit) (in hundredths) | 2.00% | 2.00% |
Change in valuation allowance (in hundredths) | -38.00% | -36.00% |
Other (in hundredths) | 2.00% | 0.00% |
Total (in hundredths) | 0.00% | 0.00% |
Deferred tax assets and liabilities [Abstract] | ' | ' |
Net operating loss carryforwards | $39,872,000 | $29,394,000 |
Research & other credit | 660,000 | 527,000 |
Fixed assets | -23,000 | 21,000 |
Accrued liabilities and other | 350,000 | 289,000 |
Total | 40,859,000 | 30,231,000 |
Fair Value of Loans | -1,051,000 | -618,000 |
Deferred Tax Assets Liabilities Gross | 39,808,000 | 29,613,000 |
Valuation allowance | -39,808,000 | -29,613,000 |
Net deferred tax asset | 0 | 0 |
Valuation allowance percentage change (in hundredths) | 34.00% | ' |
Net current deferred tax asset | 188,000 | 116,000 |
Net noncurrent deferred tax asset | 39,620,000 | 29,497,000 |
Valuation allowance as percentage of net deferred tax asset (in hundredths) | 100.00% | ' |
Unrecognized tax benefits [Roll Forward] | ' | ' |
Beginning balance | 186,000 | 0 |
Increase related to current year tax position | 33,000 | 0 |
Increase/(decrease) related to tax position of prior years | 8,000 | 186,000 |
Ending balance | 227,000 | 186,000 |
Unrecognized tax benefits that would affect effective tax rate | 188,000 | ' |
Federal [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss | 101,798,000 | ' |
Operating loss carryforwards, expiration period | '2025 | ' |
Tax Credit Carryforward [Line Items] | ' | ' |
Tax credit carryforward, expiration period | '2025 | ' |
Other Tax Carryforward [Line Items] | ' | ' |
Tax year subject to examination | '2009 | ' |
Federal [Member] | Capital Loss Carryforward [Member] | ' | ' |
Other Tax Carryforward [Line Items] | ' | ' |
Capital loss carryforwards | 674,000 | ' |
Capital loss carryforwards, expiration period | '2012 | ' |
Federal [Member] | Research Tax Credit Carryforward [Member] | ' | ' |
Tax Credit Carryforward [Line Items] | ' | ' |
Research and development tax credits | 445,000 | ' |
State [Member] | ' | ' |
Operating Loss Carryforwards [Line Items] | ' | ' |
Net operating loss | 92,109,000 | ' |
Operating loss carryforwards, expiration period | '2015 | ' |
California [Member] | ' | ' |
Other Tax Carryforward [Line Items] | ' | ' |
Tax year subject to examination | '2009 | ' |
California [Member] | Capital Loss Carryforward [Member] | ' | ' |
Other Tax Carryforward [Line Items] | ' | ' |
Capital loss carryforwards | 674,000,000 | ' |
Capital loss carryforwards, expiration period | '2012 | ' |
California [Member] | Research Tax Credit Carryforward [Member] | ' | ' |
Tax Credit Carryforward [Line Items] | ' | ' |
Research and development tax credits | $466,000 | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 22, 2012 | Nov. 30, 2008 | Oct. 16, 2008 |
Installment | |||||
State | |||||
Years ended December 31 [Abstract] | ' | ' | ' | ' | ' |
2014 | $502 | ' | ' | ' | ' |
2015 | 0 | ' | ' | ' | ' |
Total future operating lease obligations | 502 | ' | ' | ' | ' |
Rental expense under premises-operating lease arrangements | 633 | 532 | ' | ' | ' |
Securities Law Compliance [Abstract] | ' | ' | ' | ' | ' |
Amount of loans sold to lender members | ' | ' | ' | ' | 178,000 |
Statute of limitations for noncompliance to register securities | 'The federal statute of limitations for noncompliance with the requirement to register securities under the Securities Act is one year from the violation, although the statute of limitations period under various state laws may be for a longer period of time. | ' | ' | ' | ' |
Aggregate amount of payment for penalties | ' | ' | ' | 1,000 | ' |
Number of states with which company entered into consent order | 34 | ' | ' | ' | ' |
Aggregate amount paid by entity for penalties to states | 466 | ' | ' | ' | ' |
Accrued contingent liability associated with states not entered into consent orders | 248 | 248 | ' | ' | ' |
Past and future defense costs received from Greenwich | ' | 2,000 | ' | ' | ' |
Pre-judgment interest amount received | ' | ' | 143 | ' | ' |
Claims filed, appeal to resend court findings against Greenwhich | 2,000 | ' | ' | ' | ' |
Number of annual installments paid to plaintiffs | 4 | ' | ' | ' | ' |
Settlement installment due in 2013 | 2,000 | ' | ' | ' | ' |
Settlement installment due in 2014 | 2,000 | ' | ' | ' | ' |
Settlement installment due in 2015 | 3,000 | ' | ' | ' | ' |
Settlement installment due in 2016 | 3,000 | ' | ' | ' | ' |
Legal settlement liability | $10,000 | $0 | ' | ' | ' |
Related_Parties_Details
Related Parties (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Related Parties [Abstract] | ' | ' |
Minimum percentage of voting securities considered for related parties (in hundredths) | 5.00% | ' |
Minimum amount of transaction with related parties | $6,174 | ' |
Aggregate amount of PMI Notes and loans purchased and the income earned [Abstract] | ' | ' |
Aggregate Amount of PMI Notes and Loans Purchased | 0 | 0 |
Income Earned on PMI Notes and Loans | 0 | 0 |
Aggregate amount of notes purchased, amount charge off | 385 | 236 |
Aggregate amount of notes purchased, percentage charge off (in hundredths) | 6.00% | 6.00% |
Servicing fees revenue earned by entity | 21 | 18 |
Executive Officers & Management [Member] | ' | ' |
Aggregate amount of PMI Notes and loans purchased and the income earned [Abstract] | ' | ' |
Aggregate Amount of PMI Notes and Loans Purchased | 1,387 | 139 |
Income Earned on PMI Notes and Loans | 90 | 7 |
Directors [Member] | ' | ' |
Aggregate amount of PMI Notes and loans purchased and the income earned [Abstract] | ' | ' |
Aggregate Amount of PMI Notes and Loans Purchased | 622 | 3,996 |
Income Earned on PMI Notes and Loans | $255 | $334 |
Postretirement_Benefit_Plans_D
Postretirement Benefit Plans (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Postretirement Benefit Plans [Abstract] | ' |
Deferred compensation arrangement with eligible employees, percentage (in hundredths) | 90.00% |
Schedule_I_Prosper_Funding_LLC3
Schedule I, Prosper Funding LLC, Consolidated Balance Sheet (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | |||
ASSETS | ' | ' | ' |
Cash and cash equivalents | $18,339 | $2,300 | $9,216 |
Restricted Cash | 15,473 | 5,949 | ' |
Loans held for investment | 3,917 | 175 | ' |
Borrower loans receivable at fair value | 226,238 | 166,900 | ' |
Property and equipment, net | 3,396 | 1,530 | ' |
Total Assets | 268,289 | 178,322 | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' | ' |
Notes at fair value | 226,794 | 167,478 | ' |
Note repurchase and indemnification obligation | 32 | 41 | 22 |
Total Liabilities | 244,172 | 172,285 | ' |
Member's Equity | ' | ' | ' |
Retained earnings (accumulated deficit) | -104,080 | -76,899 | ' |
Total Member's equity | 24,117 | 6,037 | 21,730 |
Total Liabilities and Member's Equity | 268,289 | 178,322 | ' |
Prosper Funding LLC [Member] | ' | ' | ' |
ASSETS | ' | ' | ' |
Cash and cash equivalents | 5,789 | 5 | 0 |
Restricted Cash | 12,299 | 0 | ' |
Loans held for investment | 3,917 | 0 | ' |
Borrower loans receivable at fair value | 226,238 | 0 | ' |
Property and equipment, net | 1,980 | 0 | ' |
Other Assets | 14 | 0 | ' |
Total Assets | 250,237 | 5 | ' |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' | ' |
Accounts payable and accrued liabilities | 3,712 | 0 | ' |
Notes at fair value | 226,794 | 0 | ' |
Note repurchase and indemnification obligation | 32 | 0 | 0 |
Related party payable | 205 | 0 | ' |
Total Liabilities | 230,743 | 0 | ' |
Member's Equity | ' | ' | ' |
Members Equity | 16,076 | 210 | ' |
Retained earnings (accumulated deficit) | 3,418 | -205 | ' |
Total Member's equity | 19,494 | 5 | 0 |
Total Liabilities and Member's Equity | $250,237 | $5 | ' |
Schedule_I_Prosper_Funding_LLC4
Schedule I, Prosper Funding LLC, Consolidated Statement of Operations (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Revenues | ' | ' | ' |
Interest Income on Borrower Loans | $35,526 | $23,101 | ' |
Total Revenues | 17,391 | 6,808 | ' |
Cost of Revenues | ' | ' | ' |
Cost of services | -2,056 | -1,421 | ' |
Provision for repurchase indemnification obligation | -118 | -26 | ' |
Net Revenues | 15,217 | 5,361 | ' |
Operating expenses | ' | ' | ' |
Depreciation and amortization | 961 | 679 | ' |
Professional services | 1,979 | 3,307 | ' |
Other operating expenses | 1,733 | 1,580 | ' |
Total Operating Expenses | 44,429 | 22,811 | ' |
Income (Loss) Before Other Income and Expenses | -29,212 | -17,450 | ' |
Other Income and Expenses | ' | ' | ' |
Change in fair value on borrower loans, loans held for investment and notes, net | 877 | 957 | ' |
Other Income | 1,151 | 369 | ' |
Total Other Income and Expenses, net | 2,031 | 1,340 | ' |
Loss (loss) Before Income Taxes | -27,181 | -16,110 | ' |
Provision for income taxes | 0 | 0 | ' |
Total Net Income (loss) | -27,181 | -16,110 | ' |
Prosper Funding LLC [Member] | ' | ' | ' |
Revenues | ' | ' | ' |
Administration Fee Revenue | 7,632 | 0 | ' |
Interest Income on Borrower Loans | 32,862 | 0 | ' |
Interest Expense on Notes | -30,564 | 0 | ' |
Total Revenues | 9,930 | 0 | ' |
Cost of Revenues | ' | ' | ' |
Cost of services | -1,270 | 0 | ' |
Provision for repurchase indemnification obligation | -83 | 0 | ' |
Net Revenues | 8,577 | 0 | ' |
Operating expenses | ' | ' | ' |
Administration fee expense | 5,053 | 0 | ' |
Depreciation and amortization | 538 | 0 | 0 |
Professional services | 26 | 114 | ' |
Other operating expenses | 242 | 91 | ' |
Total Operating Expenses | 5,859 | 205 | ' |
Income (Loss) Before Other Income and Expenses | 2,718 | -205 | ' |
Other Income and Expenses | ' | ' | ' |
Change in fair value on borrower loans, loans held for investment and notes, net | 877 | 0 | ' |
Other Income | 28 | 0 | ' |
Total Other Income and Expenses, net | 905 | 0 | ' |
Loss (loss) Before Income Taxes | 3,623 | -205 | ' |
Provision for income taxes | 0 | 0 | ' |
Total Net Income (loss) | $3,623 | ($205) | ($205) |
Schedule_I_Prosper_Funding_LLC5
Schedule I, Prosper Funding LLC, Consolidated Statements of Member's Equity (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Consolidated Statements of Member's Equity [Abstract] | ' | ' | ' |
Balance | $6,037 | $21,730 | ' |
Net Income (loss) | -27,181 | -16,110 | ' |
Balance | 24,117 | 6,037 | ' |
Retained Earnings (Accumulated Deficit) [Member] | ' | ' | ' |
Consolidated Statements of Member's Equity [Abstract] | ' | ' | ' |
Balance | -76,899 | -60,789 | ' |
Net Income (loss) | -27,181 | -16,110 | ' |
Balance | -104,080 | -76,899 | ' |
Prosper Funding LLC [Member] | ' | ' | ' |
Consolidated Statements of Member's Equity [Abstract] | ' | ' | ' |
Balance | 5 | 0 | ' |
Transfer of assets from PMI | 5,865 | ' | ' |
Capital infusion from parent | 10,001 | 210 | ' |
Net Income (loss) | 3,623 | -205 | -205 |
Balance | 19,494 | 5 | 0 |
Prosper Funding LLC [Member] | Member's Equity [Member] | ' | ' | ' |
Consolidated Statements of Member's Equity [Abstract] | ' | ' | ' |
Balance | 210 | 0 | ' |
Transfer of assets from PMI | 5,865 | ' | ' |
Capital infusion from parent | 10,001 | 210 | ' |
Net Income (loss) | 0 | 0 | ' |
Balance | 16,076 | 210 | ' |
Prosper Funding LLC [Member] | Retained Earnings (Accumulated Deficit) [Member] | ' | ' | ' |
Consolidated Statements of Member's Equity [Abstract] | ' | ' | ' |
Balance | -205 | 0 | ' |
Transfer of assets from PMI | 0 | ' | ' |
Capital infusion from parent | 0 | 0 | ' |
Net Income (loss) | 3,623 | -205 | ' |
Balance | $3,418 | ($205) | ' |
Schedule_I_Prosper_Funding_LLC6
Schedule I, Prosper Funding LLC, Consolidated Statement of Cash Flows (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash flows from Operating Activities: | ' | ' | ' |
Net Income (loss) | ($27,181) | ($16,110) | ' |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' | ' |
Change in fair value of Notes | -5,734 | 3,833 | ' |
Change in fair value of Borrower Loans | 4,856 | -4,801 | ' |
Depreciation and amortization | 961 | 679 | ' |
Loan loss reserve | -9 | 19 | ' |
Change in fair value of Loans held for investment | 1 | 11 | ' |
Changes in operating assets and liabilities: | ' | ' | ' |
Restricted cash | -9,524 | -1,585 | ' |
Accounts payable and accrued liabilities | 1,971 | 1,615 | ' |
Net cash used in operating activities | -24,826 | -16,162 | ' |
Cash Flows from Investing Activities: | ' | ' | ' |
Origination of Borrower Loans held at fair value | -341,176 | -153,175 | ' |
Repayment of Borrower Loans held at fair value | 105,692 | 66,840 | ' |
Proceeds from sale of borrower loans held at fair value | 171,290 | 0 | ' |
Purchases of property and equipment | -2,889 | -872 | ' |
Repayment of Loans held for investment at fair value | 143 | 133 | ' |
Origination of Loans held for investment at fair value | -14,296 | -182 | ' |
Proceeds from sale of loans held for investment at fair value | 10,410 | ' | ' |
Net cash used in investing activities | -69,826 | -78,258 | ' |
Cash Flows from Financing Activities: | ' | ' | ' |
Proceeds from issuance of Notes held at fair value | 169,742 | 153,175 | ' |
Payment of Notes held at fair value | -104,692 | -65,690 | ' |
Net cash provided by financing activities | 110,691 | 87,504 | ' |
Net increase in cash and cash equivalents | 16,039 | -6,916 | ' |
Cash and cash equivalents at beginning of the year | 2,300 | 9,216 | ' |
Cash and cash equivalents at end of the year | 18,339 | 2,300 | ' |
Prosper Funding LLC [Member] | ' | ' | ' |
Cash flows from Operating Activities: | ' | ' | ' |
Net Income (loss) | 3,623 | -205 | -205 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' | ' |
Change in fair value of Notes | -5,734 | ' | 0 |
Change in fair value of Borrower Loans | 4,856 | ' | 0 |
Depreciation and amortization | 538 | 0 | 0 |
Loan loss reserve | -9 | ' | 0 |
Change in fair value of Loans held for investment | 1 | ' | 0 |
Changes in operating assets and liabilities: | ' | ' | ' |
Restricted cash | -8,155 | ' | 0 |
Other assets | -13 | ' | 0 |
Accounts payable and accrued liabilities | 2,933 | ' | 0 |
Net related party payable | 205 | ' | 0 |
Net cash used in operating activities | -1,755 | ' | -205 |
Cash Flows from Investing Activities: | ' | ' | ' |
Origination of Borrower Loans held at fair value | -331,353 | ' | 0 |
Repayment of Borrower Loans held at fair value | 99,313 | ' | 0 |
Proceeds from sale of borrower loans held at fair value | 171,290 | ' | 0 |
Purchases of property and equipment | -1,798 | ' | 0 |
Repayment of Loans held for investment at fair value | 143 | ' | 0 |
Origination of Loans held for investment at fair value | -14,296 | ' | 0 |
Proceeds from sale of loans held for investment at fair value | 10,410 | ' | 0 |
Net cash used in investing activities | -66,291 | ' | 0 |
Cash Flows from Financing Activities: | ' | ' | ' |
Proceeds from issuance of Notes held at fair value | 159,921 | ' | 0 |
Payment of Notes held at fair value | -97,967 | ' | 0 |
Members' Equity capital infusion from parent | 10,001 | ' | 210 |
Net cash included in transfer of assets from PMI | 1,875 | ' | 0 |
Net cash provided by financing activities | 73,830 | ' | 210 |
Net increase in cash and cash equivalents | 5,784 | ' | 5 |
Cash and cash equivalents at beginning of the year | 5 | 0 | ' |
Cash and cash equivalents at end of the year | 5,789 | 5 | 0 |
Supplemental disclosure of cash flow information: | ' | ' | ' |
Restricted cash | 4,144 | 0 | ' |
Loans held for investment | 175 | 0 | ' |
Borrower loans at fair value | 170,343 | 0 | ' |
Property and equipment, net | 721 | 0 | ' |
Accrued liabilities | -779 | 0 | ' |
Notes at fair value | -170,573 | 0 | ' |
Loan repurchase obligation | -41 | 0 | ' |
Non-cash transfer | 3,990 | 0 | ' |
Cash transferred | 1,875 | 0 | ' |
Transfer Of Assets Net Acquired | $5,865 | $0 | ' |
Schedule_I_Prosper_Funding_LLC7
Schedule I, Prosper Funding LLC, Notes to Financial Statements (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Risk | |||
Organization and Business [Abstract] | ' | ' | ' |
Loan term, description | 'three or five years | ' | ' |
Certain Risks and Concentrations [Abstract] | ' | ' | ' |
Number of significant types of risks | 2 | ' | ' |
Interest Income on Borrower Loans Receivable and Interest Expense on Notes [Abstract] | ' | ' | ' |
Interest Income on Borrower Loans | $35,526 | $23,101 | ' |
Net Interest Income | 2,454 | 1,212 | ' |
Cash and Cash Equivalents and Short Term Investments [Abstract] | ' | ' | ' |
Cash in bank | 18,339 | 2,300 | ' |
Total cash and cash equivalents | 18,339 | 2,300 | 9,216 |
Prosper Funding LLC [Member] | ' | ' | ' |
Organization and Business [Abstract] | ' | ' | ' |
Loan term, description | 'three or five years | ' | ' |
Certain Risks and Concentrations [Abstract] | ' | ' | ' |
Number of significant types of risks | 2 | ' | ' |
Loans Servicing Fee [Abstract] | ' | ' | ' |
Funding's service fee (in hundredths) | 1.00% | ' | ' |
Interest Income on Borrower Loans Receivable and Interest Expense on Notes [Abstract] | ' | ' | ' |
Interest Income on Borrower Loans | 32,862 | 0 | ' |
Interest Expense on Notes | -30,564 | 0 | ' |
Net Interest Income | 2,298 | 0 | ' |
Cash and Cash Equivalents and Short Term Investments [Abstract] | ' | ' | ' |
Cash in bank | 5,789 | 5 | ' |
Total cash and cash equivalents | $5,789 | $5 | $0 |
Schedule_I_Prosper_Funding_LLC8
Schedule I, Prosper Funding LLC, Fair Value Measurement (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Assets [Abstract] | ' | ' |
Short Term Investments | ' | $1,000 |
Borrower Loans receivable | 226,238 | 166,900 |
Borrower Loans held for investment | 3,917 | 175 |
Liabilities | ' | ' |
Notes | 226,794 | 167,478 |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Total | -403 | -260 |
Originations, Total | 185,730 | 182 |
Principal repayments and credit losses, Total | -1,143 | -1,283 |
Loans sold to third parties, Total | -181,700 | ' |
Change in fair value on Borrower Loans and Notes, Total | 878 | 969 |
Change in fair value of loans held for investment, Total | -1 | -11 |
Ending balance, Total | 3,361 | -403 |
Notes [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Liabilities | -167,478 | -76,160 |
Originations, Liabilities | -169,742 | -153,175 |
Principal repayments and credit losses, Liabilities | 104,692 | 65,690 |
Change in fair value on Borrower Loans and Notes, Liabilities | -5,734 | 3,833 |
Change in fair value of loans held for investment, Liability | 0 | 0 |
Ending balance, Liabilities | -226,794 | -167,478 |
Borrower Loans [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Assets | 166,900 | 75,763 |
Originations | 341,176 | 153,175 |
Principal repayments and credit losses, Assets | -105,692 | -66,840 |
Loans sold to third parties | -171,290 | ' |
Change in fair value on Borrower Loans and Notes, Assets | -4,856 | 4,802 |
Change in fair value of loans held for investment, Asset | 0 | 0 |
Ending balance, Assets | 226,238 | 166,900 |
Loans Held for Investment [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Assets | 175 | 137 |
Originations | 14,296 | 182 |
Principal repayments and credit losses, Assets | -143 | -133 |
Loans sold to third parties | -10,410 | ' |
Change in fair value on Borrower Loans and Notes, Assets | 0 | 0 |
Change in fair value of loans held for investment, Asset | -1 | -11 |
Ending balance, Assets | 3,917 | 175 |
Level 1 Inputs [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Short Term Investments | ' | 1,000 |
Borrower Loans receivable | 0 | 0 |
Borrower Loans held for investment | 0 | 0 |
Liabilities | ' | ' |
Notes | 0 | 0 |
Level 2 Inputs [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Short Term Investments | ' | 0 |
Borrower Loans receivable | 0 | 0 |
Borrower Loans held for investment | 0 | 0 |
Liabilities | ' | ' |
Notes | 0 | 0 |
Level 3 Inputs [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Short Term Investments | ' | 0 |
Borrower Loans receivable | 226,238 | 166,900 |
Borrower Loans held for investment | 3,917 | 175 |
Liabilities | ' | ' |
Notes | 226,794 | 167,478 |
Recurring [Member] | Level 3 Inputs [Member] | Notes [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Borrower notes at fair value | -226,794 | ' |
Valuation Techniques, Discounted Cash Flow | 'Discounted Cashflow | ' |
Fair Value Measurements, Unobservable Inputs | 'Default rates and discount rates | ' |
Recurring [Member] | Level 3 Inputs [Member] | Borrower Loans [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Borrower loans receivable at fair value | 226,238 | ' |
Valuation Techniques, Discounted Cash Flow | 'Discounted Cashflow | ' |
Fair Value Measurements, Unobservable Inputs | 'Default rates and discount rates | ' |
Prosper Funding LLC [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Short Term Investments | ' | 0 |
Certificates of Deposit and restricted cash | 12,299 | 0 |
Borrower Loans receivable | 226,238 | 0 |
Borrower Loans held for investment | 3,917 | 0 |
Liabilities | ' | ' |
Notes | 226,794 | 0 |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Total | 0 | ' |
Assets transferred, Total | -55 | ' |
Originations, Total | 185,728 | ' |
Principal repayments and credit losses, Total | -1,489 | ' |
Loans sold to third parties, Total | -181,700 | ' |
Change in fair value on Borrower Loans and Notes, Total | 878 | ' |
Change in fair value of loans held for investment, Total | -1 | ' |
Ending balance, Total | 3,361 | ' |
Prosper Funding LLC [Member] | Notes [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Liabilities | 0 | ' |
Transfers | -170,574 | ' |
Originations, Liabilities | -159,921 | ' |
Principal repayments and credit losses, Liabilities | 97,967 | ' |
Change in fair value on Borrower Loans and Notes, Liabilities | 5,734 | ' |
Change in fair value of loans held for investment, Liability | 0 | ' |
Ending balance, Liabilities | -226,794 | ' |
Prosper Funding LLC [Member] | Borrower Loans [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Assets | 0 | ' |
Assets transferred | 170,344 | ' |
Originations | 331,353 | ' |
Principal repayments and credit losses, Assets | -99,313 | ' |
Loans sold to third parties | -171,290 | ' |
Change in fair value on Borrower Loans and Notes, Assets | -4,856 | ' |
Change in fair value of loans held for investment, Asset | 0 | ' |
Ending balance, Assets | 226,238 | ' |
Prosper Funding LLC [Member] | Loans Held for Investment [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Beginning balance, Assets | 0 | ' |
Assets transferred | 175 | ' |
Originations | 14,296 | ' |
Principal repayments and credit losses, Assets | -143 | ' |
Loans sold to third parties | -10,410 | ' |
Change in fair value on Borrower Loans and Notes, Assets | 0 | ' |
Change in fair value of loans held for investment, Asset | -1 | ' |
Ending balance, Assets | 3,917 | ' |
Prosper Funding LLC [Member] | Level 1 Inputs [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Short Term Investments | ' | 0 |
Certificates of Deposit and restricted cash | 11,028 | 0 |
Borrower Loans receivable | 0 | 0 |
Borrower Loans held for investment | 0 | 0 |
Liabilities | ' | ' |
Notes | 0 | 0 |
Prosper Funding LLC [Member] | Level 2 Inputs [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Short Term Investments | ' | 0 |
Certificates of Deposit and restricted cash | 1,271 | 0 |
Borrower Loans receivable | 0 | 0 |
Borrower Loans held for investment | 0 | 0 |
Liabilities | ' | ' |
Notes | 0 | 0 |
Prosper Funding LLC [Member] | Level 3 Inputs [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Short Term Investments | ' | 0 |
Certificates of Deposit and restricted cash | 0 | 0 |
Borrower Loans receivable | 226,238 | 0 |
Borrower Loans held for investment | 3,917 | 0 |
Liabilities | ' | ' |
Notes | 226,794 | 0 |
Prosper Funding LLC [Member] | Recurring [Member] | Level 3 Inputs [Member] | Notes [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Borrower notes at fair value | -226,794 | ' |
Valuation Techniques, Discounted Cash Flow | 'Discounted Cashflow | ' |
Fair Value Measurements, Unobservable Inputs | 'Default rates and discount rates | ' |
Prosper Funding LLC [Member] | Recurring [Member] | Level 3 Inputs [Member] | Borrower Loans [Member] | ' | ' |
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract] | ' | ' |
Borrower loans receivable at fair value | $226,238 | ' |
Valuation Techniques, Discounted Cash Flow | 'Discounted Cashflow | ' |
Fair Value Measurements, Unobservable Inputs | 'Default rates and discount rates | ' |
Schedule_I_Prosper_Funding_LLC9
Schedule I, Prosper Funding LLC, Property and Equipment (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | $6,635 | $3,955 |
Less accumulated depreciation and amortization | -3,238 | -2,425 |
Total property and equipment, net | 3,396 | 1,530 |
Depreciation expense | 961 | 679 |
Capitalized internal-use software costs | 1,797 | 530 |
Prosper Funding LLC [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | 3,454 | 0 |
Less accumulated depreciation and amortization | -1,474 | ' |
Total property and equipment, net | 1,980 | 0 |
Depreciation expense | 538 | 0 |
Capitalized internal-use software costs | 1,798 | 0 |
Internal-use software [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | 3,454 | 1,656 |
Internal-use software [Member] | Prosper Funding LLC [Member] | ' | ' |
Property and equipment [Abstract] | ' | ' |
Property and equipment, Gross | $3,454 | $0 |
Recovered_Sheet1
Schedule I, Prosper Funding LLC, Loans Held for Investment (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Loans Held for Investment [Abstract] | ' | ' | ' |
PMI Borrower loans originated | $14,296 | ' | ' |
Proceeds from sale of loans held-for-investment to third party | 10,410 | ' | ' |
Loans held for investment | 3,917 | 175 | ' |
Repayment of Loans held for investment at fair value | 143 | ' | ' |
Loans receivable held for investment, charge offs | 14 | ' | ' |
Prosper Funding LLC [Member] | ' | ' | ' |
Loans Held for Investment [Abstract] | ' | ' | ' |
PMI Borrower loans originated | 14,296 | ' | ' |
Proceeds from sale of loans held-for-investment to third party | 10,410 | ' | 0 |
Loans held for investment | 3,917 | 0 | ' |
Adjustment in fair value of Loans held for investment | -1 | 0 | ' |
Repayment of Loans held for investment at fair value | 143 | ' | ' |
Loans receivable held for investment, charge offs | 14 | ' | ' |
Loans Held for Investment [Member] | ' | ' | ' |
Loans Held for Investment [Abstract] | ' | ' | ' |
Adjustment in fair value of Loans held for investment | ($1) | ($11) | ' |
Recovered_Sheet2
Schedule I, Prosper Funding LLC, Borrower Loans and Notes Held at Fair Value (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Loan | ||
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Servicing fee as percentage of outstanding principal balance of borrower loan (in hundredths) | 1.00% | |
Number of loans originated | 332 | |
Minimum number of days for which loans originated were delinquent | '90 days | |
Aggregate principal amount of loans originated | $1,941,439 | |
Fair value of loans originated | 174,620 | |
Discount rate assumption [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Discount rate assumption (in hundredths) | 9.77% | [1] |
Discount rate assumption [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Discount rate assumption (in hundredths) | 9.77% | [1] |
Discount rate assumption [Member] | 100 Basis Point Increase [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 220,362 | |
Discount rate assumption [Member] | 100 Basis Point Increase [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 222,989 | |
Discount rate assumption [Member] | 200 Basis Point Increase [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 217,756 | |
Discount rate assumption [Member] | 200 Basis Point Increase [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 220,363 | |
Discount rate assumption [Member] | 100 Basis Point Decrease [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 225,784 | |
Discount rate assumption [Member] | 100 Basis Point Decrease [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 228,465 | |
Discount rate assumption [Member] | 200 Basis Point Decrease [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 228,560 | |
Discount rate assumption [Member] | 200 Basis Point Decrease [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 231,282 | |
Default rate assumption [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Default rate assumption (in hundredths) | 7.20% | [1] |
Default rate assumption [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Default rate assumption (in hundredths) | 7.20% | [1] |
Default rate assumption [Member] | 10% Higher [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 220,620 | |
Default rate assumption [Member] | 10% Higher [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 223,233 | |
Default rate assumption [Member] | 20% Higher [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 217,439 | |
Default rate assumption [Member] | 20% Higher [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 220,039 | |
Default rate assumption [Member] | 10% Lower [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 225,477 | |
Default rate assumption [Member] | 10% Lower [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 228,151 | |
Default rate assumption [Member] | 20% Lower [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 227,866 | |
Default rate assumption [Member] | 20% Lower [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 230,554 | |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Discount rate assumption (in hundredths) | 9.77% | [1] |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Discount rate assumption (in hundredths) | 9.77% | [1] |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | 100 Basis Point Increase [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 220,362 | |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | 100 Basis Point Increase [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 222,989 | |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | 200 Basis Point Increase [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 217,756 | |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | 200 Basis Point Increase [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 220,363 | |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | 100 Basis Point Decrease [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 225,784 | |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | 100 Basis Point Decrease [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 228,465 | |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | 200 Basis Point Decrease [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 228,560 | |
Prosper Funding LLC [Member] | Discount rate assumption [Member] | 200 Basis Point Decrease [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 231,282 | |
Prosper Funding LLC [Member] | Default rate assumption [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Default rate assumption (in hundredths) | 7.20% | [1] |
Prosper Funding LLC [Member] | Default rate assumption [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Default rate assumption (in hundredths) | 7.20% | [1] |
Prosper Funding LLC [Member] | Default rate assumption [Member] | 10% Higher [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 220,620 | |
Prosper Funding LLC [Member] | Default rate assumption [Member] | 10% Higher [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 223,233 | |
Prosper Funding LLC [Member] | Default rate assumption [Member] | 20% Higher [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 217,439 | |
Prosper Funding LLC [Member] | Default rate assumption [Member] | 20% Higher [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 220,039 | |
Prosper Funding LLC [Member] | Default rate assumption [Member] | 10% Lower [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 225,477 | |
Prosper Funding LLC [Member] | Default rate assumption [Member] | 10% Lower [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | 228,151 | |
Prosper Funding LLC [Member] | Default rate assumption [Member] | 20% Lower [Member] | Notes [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Notes | 227,866 | |
Prosper Funding LLC [Member] | Default rate assumption [Member] | 20% Lower [Member] | Borrower Loans [Member] | ' | |
Key economic assumptions and sensitivity of current fair value to immediate adverse changes in those assumptions [Abstract] | ' | |
Borrower loans | $230,554 | |
[1] | Represents weighted average assumptions considering all Prosper Ratings. |
Recovered_Sheet3
Schedule I, Prosper Funding LLC, Repurchase and Indemnification Obligation (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Repurchase and Indemnification Obligation [Abstract] | ' | ' |
Beginning of year balance | $41 | $22 |
Provision for repurchases and indemnifications | 67 | 19 |
Notes repurchased and immediately charged off or charged off and indemnified (net of recoveries) | -76 | 0 |
End of year balance | 32 | 41 |
Prosper Funding LLC [Member] | ' | ' |
Repurchase and Indemnification Obligation [Abstract] | ' | ' |
Beginning of year balance | 0 | 0 |
Provision for repurchases and indemnifications | 41 | 0 |
Notes repurchased and immediately charged off or charged off and indemnified (net of recoveries) | -9 | 0 |
End of year balance | 32 | 0 |
Provision for Loan Losses | $83 | $0 |
Recovered_Sheet4
Schedule I, Prosper Funding LLC, Income Taxes (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income tax reconciliation [Abstract] | ' | ' |
Net effective tax rate (in hundredths) | 0.00% | 0.00% |
Prosper Funding LLC [Member] | ' | ' |
Income tax reconciliation [Abstract] | ' | ' |
Net effective tax rate (in hundredths) | 0.00% | 0.00% |