LC 10-Q Quarterly Report June 30, 2011

LC 10-Q Quarter ended June 30, 2011

Exhibits

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

LENDINGCLUB CORP

10-Ks and 10-Qs

10-Q	Quarter ended Sept. 30, 2025
10-Q	Quarter ended June 30, 2025
10-Q	Quarter ended March 31, 2025
10-K	Fiscal year ended Dec. 31, 2024
10-Q	Quarter ended Sept. 30, 2024
10-Q	Quarter ended June 30, 2024
10-Q	Quarter ended March 31, 2024
10-K	Fiscal year ended Dec. 31, 2023
10-Q	Quarter ended Sept. 30, 2023
10-Q	Quarter ended June 30, 2023
10-Q	Quarter ended March 31, 2023
10-K	Fiscal year ended Dec. 31, 2022
10-Q	Quarter ended Sept. 30, 2022
10-Q	Quarter ended June 30, 2022
10-Q	Quarter ended March 31, 2022
10-K	Fiscal year ended Dec. 31, 2021
10-Q	Quarter ended Sept. 30, 2021
10-Q	Quarter ended June 30, 2021
10-Q	Quarter ended March 31, 2021
10-K	Fiscal year ended Dec. 31, 2020
10-Q	Quarter ended Sept. 30, 2020
10-Q	Quarter ended June 30, 2020
10-Q	Quarter ended March 31, 2020
10-K	Fiscal year ended Dec. 31, 2019
10-Q	Quarter ended Sept. 30, 2019
10-Q	Quarter ended June 30, 2019
10-Q	Quarter ended March 31, 2019
10-K	Fiscal year ended Dec. 31, 2018
10-Q	Quarter ended Sept. 30, 2018
10-Q	Quarter ended June 30, 2018
10-Q	Quarter ended March 31, 2018
10-K	Fiscal year ended Dec. 31, 2017
10-Q	Quarter ended Sept. 30, 2017
10-Q	Quarter ended June 30, 2017
10-Q	Quarter ended March 31, 2017
10-K	Fiscal year ended Dec. 31, 2016
10-Q	Quarter ended Sept. 30, 2016
10-Q	Quarter ended June 30, 2016
10-Q	Quarter ended March 31, 2016
10-K	Fiscal year ended Dec. 31, 2015
10-Q	Quarter ended Sept. 30, 2015
10-Q	Quarter ended June 30, 2015
10-Q	Quarter ended March 31, 2015
10-K	Fiscal year ended Dec. 31, 2014
10-Q	Quarter ended Sept. 30, 2014
10-Q	Quarter ended June 30, 2014
10-Q	Quarter ended March 31, 2014
10-K	Fiscal year ended Dec. 31, 2013
10-Q	Quarter ended Sept. 30, 2013
10-Q	Quarter ended June 30, 2013
10-Q	Quarter ended March 31, 2013
10-K	Fiscal year ended Dec. 31, 2012
10-Q	Quarter ended Sept. 30, 2012
10-Q	Quarter ended June 30, 2012
10-K	Fiscal year ended March 31, 2012
10-Q	Quarter ended Dec. 31, 2011
10-Q	Quarter ended Sept. 30, 2011
10-Q	Quarter ended June 30, 2011
10-K	Fiscal year ended March 31, 2011
10-Q	Quarter ended Dec. 31, 2010
10-Q	Quarter ended Sept. 30, 2010
10-Q	Quarter ended June 30, 2010
10-K	Fiscal year ended March 31, 2010
10-Q	Quarter ended Dec. 31, 2009

PROXIES

DEF 14A	Filed on June 3, 2025
DEF 14A	Filed on April 23, 2025
DEF 14A	Filed on June 11, 2024
DEF 14A	Filed on April 25, 2024
DEF 14A	Filed on April 27, 2023
DEF 14A	Filed on June 2, 2022
DEF 14A	Filed on April 19, 2022
DEF 14A	Filed on April 20, 2021
DEF 14A	Filed on April 14, 2020
DEF 14A	Filed on April 25, 2019
DEF 14A	Filed on April 17, 2018
DEF 14A	Filed on April 24, 2017
DEF 14A	Filed on April 26, 2016
DEF 14A	Filed on April 24, 2015

10-Q 1 c21482e10vq.htm FORM 10-Q Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 333-151827

LendingClub Corporation

(Exact name of registrant as specified in its charter)


Delaware		51-0605731
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

71 Stevenson, Suite 300
San Francisco, California		94105
(Address of principal executive offices)		(Zip Code)

(415) 632-5600
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of July 31, 2011, there were 8,712,073 shares of the registrant’s common stock outstanding.

LENDINGCLUB CORPORATION

TABLE OF CONTENTS

Contents


PART I. CONSOLIDATED FINANCIAL INFORMATION			2

Item 1. Consolidated Financial Statements			2

Consolidated Balance Sheets			2

Consolidated Statements of Operations			3

Consolidated Statements of Cash Flows			4

Notes to Consolidated Financial Statements			5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Consolidated Operation			20

Item 3. Quantitative and Qualitative Disclosures about Market Risk			33

Item 4. Controls and Procedures			33

PART II. OTHER INFORMATION			33

Item 1. Legal Proceedings			33

Item 1A. Risk Factors			33

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			34

Item 3. Defaults Upon Senior Securities			34

Item 5. Other Information			34

Item 6. Exhibits			34

SIGNATURES			35

EXHIBIT INDEX			36

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Quarterly Report on Form 10-Q regarding LendingClub borrower members, credit scoring, Fair Isaac Corporation (FICO) scores, our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:

	•		the status of borrower members, the ability of borrower members to repay member loans and the plans of borrower members;

	•		expected rates of return and interest rates;

	•		our ability to attract additional investors;

	•		the attractiveness of our lending platform;

	•		our financial performance;

	•		the availability and functionality of the trading platform;

	•		our ability to retain and hire competent employees and appropriately staff our operations;

	•		regulatory developments;

	•		our intellectual property; estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and

	•		changes in the regulatory environment.

We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. We have included important factors in the cautionary statements included in this Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from forward-looking statements contained in this report. In this Quarterly Report on Form 10-Q, we refer to the Member Payment Dependent Notes that we issue to investors as the “Notes,” and we refer to the corresponding member loans made to borrower members as “corresponding member loans” or “CM Loans.” Forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Quarterly Report on Form 10-Q completely and with the understanding that actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

LendingClub Corporation

Consolidated Balance Sheets


	June 30, 2011			March 31, 2011
	(Unaudited)			(Audited)

ASSETS

Cash and cash equivalents	$	9,600,097		$	13,335,657
Restricted cash		1,022,000			862,000
Member loans held for investment, net of allowance for loan losses		4,824,555			5,253,278
CM Loans held for investment, at fair value		183,117,757			149,971,989
Other receivables		354,083			109,337
Prepaid expenses and other assets		92,064			63,382
Property and equipment, net		327,660			214,991
Deposits		100,256			57,756

Total assets	$	199,438,472		$	169,868,390


LIABILITIES

Accounts payable	$	279,517		$	259,682
Accrued expenses		1,600,414			1,450,936
Notes, at fair value		182,949,757			149,777,817
Loans payable, net of debt discount		1,965,026			2,872,586

Total liabilities		186,794,714			154,361,021


Commitments and contingencies (see Note 13)

PREFERRED STOCK

Preferred Stock		52,850,391			52,850,391

Total preferred stock		52,850,391			52,850,391


STOCKHOLDERS’ DEFICIT

Common stock		87,121			85,716
Additional paid-in capital		4,267,575			4,025,914
Accumulated deficit		(44,561,329	)		(41,454,652	)

Total stockholders’ deficit		(40,206,633	)		(37,343,022	)

Total liabilities, preferred stock and stockholders’ deficit	$	199,438,472		$	169,868,390

The accompanying notes are an integral part of these consolidated financial statements.

LendingClub Corporation

Consolidated Statements of Operations

(Unaudited)


	Three Months Ended June 30,
	2011			2010

Revenues

Member loans

Interest income, net	$	193,923		$	233,145

Interest expense		(102,388	)		(295,516	)


Net interest income/(loss), member loans		91,535			(62,371	)

Provision for loan losses		(74,904	)		(182,014	)


Net interest income/(loss), member loans after provision for loan losses		16,631			(244,385	)


CM Loans and Notes

Interest income, CM Loans		7,435,335			3,029,542

Interest expense, Notes		(4,765,469	)		(1,779,431	)


Interest income, CM Loans and Notes		2,669,866			1,250,111


Fair valuation adjustments, CM Loans		(2,822,820	)		(1,664,305	)

Fair valuation adjustments, Notes		2,822,563			1,662,808


Fair valuation adjustments, net		(257	)		(1,497	)


Net interest income after fair valuation adjustments		2,686,240			1,004,229


Servicing fee revenue/(expense)		(587	)		5,841

Other revenue		99,873			95,158


Total income from operations		2,785,526			1,105,228


Operating expenses

Sales, marketing and customer service		3,857,839			2,298,366

Engineering		520,139			498,370

General and administrative		1,514,226			833,727


Total operating expenses		5,892,204			3,630,463


Loss before provision for income taxes		(3,106,678	)		(2,525,235	)

Provision for income taxes		—			—


Net loss	$	(3,106,678	)	$	(2,525,235	)


Net loss attributable to common stockholders	$	(3,106,678	)	$	(2,525,235	)


Basic and diluted net loss per share	$	(0.36	)	$	(0.30	)

Weighted-average shares of common stock used in computing basic and diluted net loss per share		8,611,959			8,558,261

The accompanying notes are an integral part of these consolidated financial statements.

LendingClub Corporation

Consolidated Statements of Cash Flows

(Unaudited)


	For the Three Months Ended June 30,
	2011			2010
Cash flows from operating activities
Net loss	$	(3,106,678	)	$	(2,525,235	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		27,062			18,900
Amortization of debt discounts		33,982			75,622
Fair valuation adjustments, net		257			1,497
Stock based compensation expense		241,661			63,348
Amortization of net deferred loan fees and costs		(1,119	)		36,273
Provision for loan losses		74,904			182,014
Changes in operating assets and liabilities
Other receivables		(151,106	)		(538,370	)
Deposits		(42,500	)		7,342
Prepaid expenses and other assets		(28,677	)		137,253
Accounts payable		(33,279	)		211,385
Accrued expenses		108,947			(139,123	)

Net cash used in operating activities		(2,876,546	)		(2,469,094	)


Cash flows from investing activities
Origination of member loans, net		(1,063,821	)		(981,443	)
Origination of CM Loans at fair value		(54,265,647	)		(28,619,475	)
Repayment of member loans originated		539,122			1,369,697
Repayment of CM Loans at fair value		19,176,697			6,589,223
Net change in restricted cash		(160,000	)		500,000
Purchase of property and equipment		(139,730	)		(14,655	)

Net cash used in investing activities		(35,913,379	)		(21,156,653	)


Cash flows from financing activities:
Proceeds from issuance of Notes at fair value		55,693,775			28,619,475
Payments on loans payable		(941,543	)		(1,518,713	)
Payments on Notes at fair value		(19,699,272	)		(6,605,776	)
Proceeds from issuance of Series C convertible preferred stock, net of issuance costs		—			24,387,945
Proceeds from issuance of common stock		1,405			7,898

Net cash provided by financing activities		35,054,365			44,890,829


Net increase (decrease) in cash and cash equivalents		(3,735,560	)		21,265,082

Cash and cash equivalents — beginning of period		13,335,657			2,572,174


Cash and cash equivalents — end of period	$	9,600,097		$	23,837,256


Supplemental disclosure of cash flow information:

Cash paid for interest	$	4,867,857		$	2,000,113


Supplemental disclosure of non-cash investing and financing activities:

Reclassification of member loans held for investment to CM Loans held at fair value	$	879,638		$	—

The accompanying notes are an integral part of these consolidated financial statements.

LENDINGCLUB CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

The consolidated balance sheet as of June 30, 2011 and March 31, 2011, the consolidated statements of operations for the three months ended June 30, 2011 and 2010, respectively, and the consolidated statements of cash flows for the three months ended June 30, 2011 and 2010, respectively, have been prepared by LendingClub Corporation (“LendingClub”) (referred to herein as “we”, “our” “the company” and “us”) in conformity with U.S. generally accepted accounting principles for internal financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all necessary adjustments (which include only normal recurring adjustments) have been made for a fair presentation of the financial position, results of operations, and cash flows for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results for the full fiscal year.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended March 31, 2011.

2. Summary of Significant Accounting Policies

Consolidation Policies

The consolidated financial statements include the accounts of the Company and its subsidiary, LC Advisors, LLC, a California limited liability company (“LCA”) and LC Trust I, a Delaware business trust (“Trust”). The Company’s policy is to consolidate entities in which it directly or indirectly has a controlling financial interest. The Company considers for consolidation those entities in which it has an equity investment or ownership interest greater than 50% and has control over significant operating, financial and investing decisions.

LCA is wholly-owned by the Company. The Company consolidates LCA’s operations and all intercompany accounts have been eliminated. Additionally, although we only hold an immaterial interest in the Trust, the Company, as sponsor of the Trust, has substantive control and as a result has consolidated the Trust’s operations and all intercompany accounts have been eliminated.

Management Fees

LCA as general partner of two private investment funds receives management fees. The management fee is payable monthly, in arrears. The management fee ranges from 0.55% to 0.75% based upon a limited partner’s capital account balance as of the end of each month. This fee can be modified or waived at the discretion of the general partner.

Liquidity

We have incurred operating losses since our inception. For the three months ended June 30, 2011 and 2010, we incurred net losses of $3,106,678 and $2,525,235, respectively. For the three months ended June 30, 2011 and 2010, we had negative cash flows from operations of $2,876,546 and $2,469,094, respectively. Additionally, we have an accumulated deficit of $44,561,329 since inception and a stockholders’ deficit of $40,206,633, as of June 30, 2011.

Since our inception, we have financed our operations through debt and equity financing from various sources. We are dependent upon raising additional capital or seeking additional debt financing to fund our current operating plans. Failure to obtain sufficient debt and equity financing and, ultimately, to achieve profitable operations and positive cash flows from operations could adversely affect our ability to achieve our business objectives and continue as a going concern. Further, there can be no assurance as to the availability or terms upon which any required financing and capital might be available, if at all.

Subsequent to June 30, 2011, we issued 7,027,604 shares of Series D convertible preferred stock for aggregate cash consideration of approximately $25,000,000, see

Note 14 — Subsequent Events.

Use of estimates

The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires our management to make judgments and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Material estimates that are particularly susceptible to change in the near term relate to allowance for loan losses and fair value of CM Loans, Notes and loan servicing rights. Actual results may differ from these estimates.

Cash and cash equivalents

Cash and cash equivalents include various deposits with financial institutions in checking and short-term money market accounts. We consider all highly liquid investments with original maturity dates of three months or less to be cash equivalents.

Restricted cash

Restricted cash consisted primarily of funds held in escrow in certificates of deposit or money market accounts, at the banks associated with the loan facilities described in Note 6 — Loans Payable , and by our operating banks as security for transactions on our platform.

Member loans held for investment

From time to time, we fund member loans ourselves to ensure a sufficient level of funding for borrower members. The majority of funds for such loans were obtained through our borrowings under loan facilities with various entities (see Note 6 — Loans Payable ). For the three months ended June 30, 2011 and June 30, 2010, we had funded an aggregate total of $1,096,825 and $974,325, respectively, of member loans to borrower members. These member loans are classified as held for investment based on management’s intent and ability to hold such member loans for the foreseeable future or to maturity. Member loans held for investment are carried at amortized cost reduced by a valuation allowance for estimated credit losses incurred as of the balance sheet date. A member loan’s cost includes its unpaid principal balance net of unearned income, comprised of fees charged to borrower members, offset by incremental direct costs for loans originated by us. Unearned income is amortized ratably over the member loan’s contractual life using the effective interest method.

Allowance for loan losses

We may incur losses in connection with member loans we hold for investment if the borrower members fail to pay their monthly scheduled loan payments. The allowance for loan losses is a valuation allowance established as losses are estimated to have occurred at the balance sheet date through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed.

The allowance for loan losses is evaluated on a periodic basis by management, and represents an estimate of potential credit losses based on a variety of factors, including the composition and quality of the loan portfolio, loan specific information gathered through our collection efforts, delinquency levels, probable expected losses, current and historical charge-off and loss experience, current industry charge-off and loss experience, and general economic conditions. Determining the adequacy of the allowance for loan losses is subjective, complex and requires judgment by management about the effect of matters that are inherently uncertain, and actual losses may differ from our estimates.

Our estimate of the required allowance for loan losses is developed by estimating both the rate of default of the loans within each credit score band using the FICO credit scoring model, a loan’s collection status, the borrower’s FICO score at or near the evaluation date, and the amount of probable loss in the event of a borrower member default.

Impaired Loans

A member loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the original loan agreement. We make an initial assessment of whether a loan is impaired no later than the 90th day of delinquency of that loan. Our member loan portfolio is comprised primarily of small groups of homogeneous, unsecured loans made to borrower members, which loans are evaluated for impairment at least quarterly based on their payment status and information gathered through our collection efforts. Once a loan is deemed uncollectible, 100% of the net investment is charged-off, no later than the 150 ^th day of delinquency.

CM Loans and Notes held for investment at fair value

Starting October 13, 2008, our investors have had the opportunity to buy Notes issued by us. These Notes are special limited recourse obligations of LendingClub. Each series of Notes corresponds to a single corresponding member loan, or CM Loan, originated through our platform. In conjunction with this new operating structure effective as of October 13, 2008, for CM Loans and Notes, we adopted the provisions of FASB ASC 825-10 guidance on the fair value option for financial assets, which permits companies to choose to measure certain financial instruments and certain other items at fair value. The standard requires that estimated unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. We applied the fair value option to the Notes and CM Loans.

The aggregate fair value of the CM Loans and Notes are reported as separate line items in the assets and liabilities sections of our balance sheet using the methods and disclosures related to fair value accounting that are described in FASB ASC 820.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Changes in fair value of the CM Loans and Notes are recognized in earnings, and fees and costs associated with the origination or acquisition of CM Loans are recognized as incurred rather than deferred.

We determined the fair value of the CM Loans and Notes in accordance with the fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs, which generally requires significant management judgment, when measuring fair value. FASB ASC 820 establishes the following hierarchy for categorizing these inputs:


Level 1 —		Quoted market prices in active markets for identical assets or liabilities;


Level 2 —		Significant other observable inputs (e.g. quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs); and


Level 3 —		Significant unobservable inputs.

As observable market prices are not available for similar assets and liabilities, we believe the CM Loans and Notes should be considered Level 3 financial instruments. For CM Loans, the fair values are estimated using amortized cost adjusted for our expectation of both the rate of default of the CM Loans within each credit score band and the amount of loss in the event of default under those CM Loans. A reduction in the expected future cash flows from the CM Loans due to default and loss results in a reduction in their estimated fair values.

Our obligation to pay principal and interest on any Note is equal to the pro-rata portion of the CM Loan payments, if any, received on the related CM Loan, net of our 1.00% service charge. As such, any reduction in the expected future payments on a CM Loan due to default and loss, reduces the expected future payments on the related Note by a comparable amount, thereby reducing the fair value of the Note. The fair value of the Notes is approximately equal to the fair value of the CM Loans, adjusted for the 1.00% service charge. Unrealized gains or losses on the CM Loans and Notes are reported separately in earnings. The effective interest rate associated with a Note will be less than the interest rate earned on the related CM Loan due to the 1.00% service charge. For additional discussion on this topic, see

Note 5 — CM Loans and Notes Held at Fair Value .

Revenue recognition

Revenues primarily result from interest income and transaction fees earned on member loans originated through our online platform. Transaction fees include origination fees (borrower member paid) and servicing fees (investor member paid). Together we classify interest and fees earned on member loans as interest income (See Note 12 — Net Interest Income ).

Revenues related to member loan origination fees are recognized in accordance with FASB ASC 310-20 guidance on nonrefundable fees and other costs. The loan origination fee charged to each borrower member is determined by the credit grade of that borrower member’s loan and as of June 30, 2011 ranged from 2.00% to 5.00% of the aggregate member loan amount. The member loan origination fees are included in the annual percentage rate (“APR”) calculation provided to the borrower member and is subtracted from the gross loan proceeds prior to disbursement of the loan funds to the borrower member. A member loan is considered issued when we move funds on our platform from the investor members’ accounts to the borrower member’s account, following which we initiate an Automated Clearing House transaction to transfer funds from our platform accounts to the borrower member’s bank account.

Servicing fee revenue is recognized in accordance with FASB ASC 860 guidance on transfers and servicing of financial assets. Currently, a 1.00% service fee, based on any payments received, is charged to the investor at the time that we receive any payments from the borrower member. The service fee is deducted from any payments received on a member loan before the net amounts of those payments are allocated to the investors’ accounts.

Our treatment of interest and fee revenue is determined by the category that each member loan origination falls into, which are:

	•		Member Loans Funded Directly by Third Party Member — Member loans originated through our platform and sold to third party investor members until April 7, 2008.

	•		Member Loans Funded by Notes, known as CM Loans — CM Loans originated on or after October 13, 2008 and funded by Notes.

	•		Member Loans Funded by LendingClub — Member loans we funded ourselves, irrespective of when originated.

Member Loans Funded Directly by Third Party Members

These member loans are considered to have been sold to the investor members, whereby we assigned promissory notes directly to investor members. As such, we recognize only origination fee and servicing fee revenue on these member loans and do not provide an allowance for loan losses. We recognize a servicing asset and corresponding servicing liability as a result of this sale in accordance with FASB ASC 860, and amortize the asset into interest income as payments are received on the member loans.

Since the earnings process is deemed to be complete at the time these member loans were transferred to the investors, and because there is no recourse to us in the event of default by the borrower member, we recognized 100% of the origination fee as revenue at the time the member loan was transferred to the purchaser and included the fee in interest income.

Member Loans Funded by Notes, known as CM Loans

Investor members are no longer able to directly purchase member loans. Rather, as described above, each CM Loan is recorded as a note receivable funded by us, while Notes, which are special limited recourse obligations of LendingClub corresponding to those CM Loans, are recorded as Notes issued by us to investors. After we receive payments of principal and interest on the CM Loans, we in turn make principal and interest payments on the Notes, net of our servicing fee. These principal payments reduce the carrying value of both the CM Loans and Notes. If we do not receive a payment on the CM Loan, we are not obligated to and will not make any payments on the corresponding Notes. We account for the CM Loans and Notes at fair value.

We do not directly record servicing fee revenue from these CM Loans, but rather recognize interest income on our CM Loans related to these member loans based on the full amount of the loan payment at the stated interest rate to the borrower member without regard to the servicing fee. We then record interest expense on the corresponding Note based on the post-service fee payment we make to our investor members, which results in an interest expense on these Notes which is lower than that for the CM Loans. Origination fees on these CM Loans are recognized upon origination and included in interest income.

We include the estimated amount of unrealized gains or losses in earnings during the period attributable to changes in instrument-specific credit risk and as such, do not record a specific loan loss allowance related to CM Loans and Notes under the fair value option. We estimate the fair value of CM Loans and Notes by using amortized cost adjusted for our expectation of the rate of default of the CM Loans and Notes assuming zero recovery on the defaulted loans. At origination and at each reporting period, we recognize a fair valuation adjustment equal to our estimated defaults for the CM Loans and our estimated defaults on the Notes. As the CM Loans are amortizing at slightly higher interest rates than the Notes due to the impact of the servicing fee, the amount of fair valuation adjustment related to estimated defaults on the CM Loans will always be slightly higher than the estimated fair valuation adjustment from defaults on the Notes. Our fair valuation adjustment related to these CM Loans and Notes is further described in

Note 12— Net Interest Income .

Member Loans Funded by LendingClub

When a member loan has been funded in whole, or in part, by us, we retain the portion of the borrower member’s monthly loan payment that corresponds to the percentage of the member loan that we have funded. In these cases, we record interest income on these member loans.

Origination fees from member loans funded by us are offset by our direct loan origination costs. The net amount is initially deferred and subsequently amortized ratably over the term of the member loan as an adjustment to yield, and is reported in the accompanying statements of operations as interest income.

Concentrations of credit risk

Financial instruments that potentially subject us to significant concentrations of credit risk, consist principally of cash, cash equivalents, restricted cash, member loans, and CM Loans. We hold our cash, cash equivalents and restricted cash in accounts at various financial institutions. We are exposed to credit risk in the event of default by these institutions to the extent the amount recorded on the balance sheet periodically exceeds the FDIC insured amounts. We perform credit evaluations of our borrower members’ financial condition and do not allow borrower members to have more than two member loans outstanding at any one time. We do not require collateral for member loans, but we maintain allowances for potential credit losses, as described above. Potential credit risk to LendingClub from CM Loans is mitigated by the corresponding Notes.

Stock-based compensation

All share-based payments made to employees, including grants of employee stock options, restricted stock and employee stock purchase rights, are recognized in the consolidated financial statements based on their respective grant date fair values. The benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow.

The fair value of share-based payment is estimated on the date of grant using an option-pricing model. We have estimated the fair value of each award as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model considers, among other factors, the expected life of the award, the expected volatility of our stock price and expected future dividends, if any.

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Stock-based compensation expense is recorded net of estimated forfeitures, such that expense is recorded only for those stock-based awards that are expected to vest.

Share-based awards issued to non-employees are accounted for in accordance with provisions of ASC 505-50, Equity-Based Payments to Non-Employees , which requires that equity awards be recorded at their fair value. We use the Black-Scholes model to estimate the value of options granted to non-employees at each vesting date to determine the appropriate charge to stock-based compensation. The volatility of common stock was based on comparative company volatility.

Reclassification of Prior Quarter Amounts

Certain prior quarter amounts for loan servicing rights, deferred revenue, fair value adjustments for CM Loans and fair value adjustments for Notes have been reclassified to conform to the current period’s presentation. The fair value of loan servicing rights was combined with prepaid expenses and other assets. Deferred revenue was combined with the carrying value of member loans. The fair value adjustments for CM Loans were reclassified out of interest income on CM Loans and the fair value adjustments for Notes were reclassified out of interest expense on Notes to be reported separately on the Consolidated Statements of Operations. These reclassifications had no impact on previously reported results of consolidated operations or consolidated stockholders’ equity.

New accounting pronouncements

In July 2010, the FASB issued Standards Update (ASU) No. 2010-20, Receivables (Topic 310): Disclosure about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The ASU requires further disaggregated disclosures that improve financial statement users’ understanding of: 1) the nature of an entity’s credit risk associated with its financing receivables, and 2) the entity’s assessment of that risk in estimating its allowance for credit losses as well as changes in the allowance and the reasons for those changes. For public entities, the new and amended disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. For nonpublic entities, the disclosures are effective for annual reporting periods ending on or after December 15, 2011. Since we only file consolidated financial statements with the SEC and do not meet any of the conditions listed below, we are considered a nonpublic entity with respect to determination of the effective date of ASU 2010-20:

	•		Its debt or equity securities, including securities quoted only locally or regionally, trade in a public market either on stock exchange (domestic or foreign) or in an over-the-counter market.

	•		It is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets).

	•		It files with a regulatory agency in preparation for the sale of any class of debt or equity securities in a public market.

	•		It is controlled by an entity covered by any of the preceding criteria.

Thus, we are required to adopt the provisions of ASU 2010-20 for the first annual reporting period ending on or after December 15, 2011. The adoption of this standard is not expected to have a material effect on the Company’s result of consolidated operations or financial position but it will require expansion of the Company’s future disclosures.

In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring . The ASU clarifies which loan modifications constitute troubled debt restructurings. It is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring (“TDR”), both for purposes of recording an impairment loss and for disclosure of a TDR. In evaluating whether a restructuring constitutes a TDR, a creditor must separately conclude that both of the following exist: ( a ) the restructuring constitutes a concession; and ( b ) the debtor is experiencing financial difficulties. The amendments to ASU Topic 310, Receivables , clarify the guidance on a creditor’s evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. ASU No. 2011-02 is effective for interim and annual periods beginning on or after December 15, 2012, and applies retrospectively to restructurings occurring on or after the beginning of the fiscal year of adoption. This guidance is not expected to have a material effect on our identification of troubled debt restructurings or disclosures.

The FASB has issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU represents the converged guidance of the FASB and the IASB (the “Boards”) on fair value measurement. The collective efforts of the Boards and their staffs, reflected in ASU 2011-04, have resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term “fair value.” The Boards have concluded the common requirements will result in greater comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The amendments to the Codification in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The impact of adoption of this ASU is not expected to have a material effect on the Company’s consolidated financial statements.

3. Net Loss Attributable to Common Stockholders

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. 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 convertible preferred stock (on an as-converted basis) is deemed to be anti-dilutive, and, therefore is excluded from the computation of basic net loss per share.

The following table details the computation of the basic and diluted net loss per share:


	Three Months Ended June 30,
	2011			2010
Net loss attributable to common stockholders	$	(3,106,678	)	$	(2,525,235	)


Weighted-average common shares outstanding, basic and diluted		8,611,959			8,558,261
Net loss per common share:

Basic and diluted	$	(0.36	)	$	(0.30	)

4. Member Loans

The outstanding balance of those member loans funded by us and held for investment are as follows:


	June 30, 2011			March 31, 2011
Member loans	$	5,277,737		$	5,746,644
Deferred origination costs/(revenue), net		(194,831	)		(163,481	)

Net loans		5,082,906			5,583,163
Allowance for loan losses		(258,351	)		(329,885	)

Member loans, net	$	4,824,555			5,253,278


Ratio of allowance for loan losses to net loans		5.1	%		5.9	%

An analysis of the allowance for loan losses follows:


	Three Months Ended
	June 30, 2011			June 30, 2010
Balance at beginning of period	$	329,885		$	781,758
Charge offs		(146,438	)		(210,712	)
Provision for loan losses		74,904			182,014

Balance at end of period	$	258,351		$	753,060

We believe that the fair value of our member loans held for investment is equivalent to their carrying value.

As of June 30, 2011, we had identified and fully reserved $15,453 on 11 loans. Our aggregate allowance for loan losses was $258,351 at June 30, 2011, while as of March 31, 2011, we had identified and fully reserved $26,297 on 14 loans, and our aggregate allowance for loan losses was $329,885. For the three months ended June 30, 2011, we charged off a total of 47 loans with an aggregate principal balance of $146,438. For the three months ended June 30, 2010, we charged off a total of 48 loans with an aggregate principal balance of $210,712.

At June 30, 2011, we had 41 Member loans representing $86,226 of outstanding Member loan principal and $46,783 of Member loan fair value which were greater than 90 days delinquent. At March 31, 2011, we had 43 Member loans representing $118,171 of outstanding Member loan principal and $51,486 of Member loan fair value which were greater than 90 days delinquent.

At June 30, 2011, we had 17 Member loans representing $29,685 of outstanding Member loan principal and $4,128 of Member Loan fair value which were on nonaccrual status. At March 31, 2011, we had 16 Member Loans representing $36,615 of outstanding Member Loan principal and $2,513 of Member Loan fair value which were on nonaccrual status.

5. CM Loans and Notes at Fair Value

At June 30, 2011 and March 31, 2011, we had the following assets and liabilities measured at fair value on a recurring basis:


	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Fair Value
June 30, 2011
Assets:

CM Loans	$	—	$	—	$	183,117,757	$	183,117,757

Liabilities:

Notes	$	—	$	—	$	182,949,757	$	182,949,757

March 31, 2011
Assets:

CM Loans	$	—	$	—	$	149,971,989	$	149,971,989

Liabilities:

Notes	$	—	$	—	$	149,777,817	$	149,777,817

Both observable and unobservable inputs may be used to determine the fair value of positions that we have classified within the Level 3 category. As a result, the realized and unrealized gains and losses for assets and liabilities within the Level 3 category presented in the tables below may include changes in fair value that were attributable to both observable and unobservable inputs. The following table presents additional information about Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended June 30, 2011:


	CM Loans			Notes
Fair value at March 31, 2011	$	149,971,989		$	149,777,817
Originations		54,265,647			55,693,775
Reclassification of member loans held for investment		879,638			—
Principal repayments		(19,176,697	)		(19,699,272	)

Carrying value before period-end fair value adjustments		185,940,577			185,772,320
Fair valuation adjustments, included in earnings		(2,822,820	)		(2,822,563	)

Fair value at June 30, 2011	$	183,117,757		$	182,949,757

The majority of fair valuation adjustments included in earnings are attributable to changes in instrument-specific credit risk. All fair valuation adjustments were related to Level 3 instruments held at June 30, 2011. A specific loan that is deemed to have a higher probability of default than previously estimated lowers the expected future cash flows of the CM Loan over its remaining life, which reduces its estimated fair value. Because the payments to holders of Notes directly reflect the payments received on CM Loans, a reduction of the expected future payments on CM Loans reduces the estimated fair values of the related Notes. The net change in fair values of CM Loans and Notes for the three months ended June 30, 2011, attributable to instrument-specific credit risk was a net loss of $257, which was included in earnings. The net change in fair values of CM Loans and Notes for the three months ended June 30, 2010, attributable to instrument-specific credit risk was a net loss of $1,497, which was included in earnings.

At June 30, 2011, we had 191 CM Loans representing $1,424,726 of outstanding CM Loan principal, $675,040 of CM Loan fair value, and $673,321 of Notes principal fair value which were greater than 90 days delinquent. At March 31, 2011, we had 186 CM Loans representing $1,461,924 of outstanding CM Loan principal, $552,373 of CM Loan fair value and $550,866 of Notes principal fair value which were greater than 90 days delinquent.

At June 30, 2011, we had 58 CM Loans representing $465,718 of outstanding CM Loan principal, $44,502 of CM Loan fair value, and $44,405 of Notes principal fair value which were on nonaccrual status. At March 31, 2011, we had 69 CM Loans representing $550,652 of outstanding CM Loan principal, $26,735 of CM Loan fair value and $26,669 of Notes principal fair value which were on nonaccrual status.

6. Loans Payable

Loans payable consist of the following:


	June 30, 2011			March 31, 2011

Growth capital term loan	$	904,174		$	1,166,268
Unamortized discount on growth capital term loan		(28,682	)		(38,189	)
Financing term loan		914,688			1,214,482
Unamortized discount on financing term loan		(29,523	)		(39,792	)
Private placement notes		210,777			590,432
Unamortized discount on notes payable		(6,408	)		(20,615	)

Total loans payable, net of debt discount	$	1,965,026		$	2,872,586

At June 30, 2011, future maturities due on all loans payable were as follows:


Year ending June 30,
2012	$	1,660,144
2013		369,495

		2,029,639
Less amount representing debt discount		(64,613	)

Total loans payable	$	1,965,026

Growth capital term loan

In October 2007, we entered into a loan and security agreement with Silicon Valley Bank, or SVB, that allowed for borrowings of up to $3,000,000 for working capital needs. In October 2008, we amended the agreement to increase available borrowings to $4,000,000 at a fixed interest rate of 8.5% per annum. Effective August 3, 2009, we amended and restated the growth capital term loan as further described in this footnote below.

Financing term loan — February 2008

In February 2008, we entered into a loan and security agreement with Gold Hill Venture Lending 03, LP, or Gold Hill, that provided for financing of up to $5,000,000 to be lent out to borrower members funded by us. The interest rate is fixed at 10.0% per annum. Effective August 3, 2009, we amended and restated the financing term loan as further described in this footnote below.

Term loan — May 2009

On May 18, 2009, we entered into another loan and security agreement, the May 2009 term loan, with SVB and Gold Hill as co-lenders, and amended the growth capital term loan and financing term loan to accommodate the new borrowing with a fixed interest rate of 10.0% per annum. Effective August 3, 2009, we amended and restated the financing term loan as further described in this footnote below.

Amended and restated term loan — August 2009

Effective August 3, 2009, we consolidated the May 2009 term loan, the growth capital term loan and the financing term loan into two loan agreements by executing an amended and restated growth capital term loan and an amended and restated financing term loan. As a result of the consolidation, borrowings under the May 2009 term loan were split equally between and consolidated under the amended and restated growth capital term loan and the amended and restated financing term loan. The terms of these two amended and restated agreements are substantially the same as those of the three prior agreements, including that the borrowings continue to be secured by a blanket lien on substantially all of our assets, except for our intellectual property rights, certain deposit accounts, and payments we receive on the CM Loans. Additionally, the amended and restated agreements continue to require that Lending Club maintain combined certificates of deposit in the amount of $700,000 as collateral until repayment. Further, under the amended and restated agreements, we agreed to maintain the same minimum collateral ratio as established in the May 2009 term loan. At June 30, 2011, we do not have any remaining capacity under these agreements as we have fully drawn down the entire $13,000,000 of combined availability under the amended and restated growth capital term loan and an amended and restated financing term loan. As of June 30, 2011, our outstanding principal balance under these agreements totaled $1,818,862.

Amortization of debt discounts

The amortization of debt discounts for the above loans is as follows:

In connection with the growth capital term loan and its subsequent amendments, we issued fully exercisable warrants to purchase 164,320 shares of Series A convertible preferred stock at an exercise price of $1.065 per share, for which we recorded debt discounts of $105,913. Amortization of the debt discounts recorded for this loan, as amended, was $9,507 and $16,529 for the three months ended June 30, 2011 and 2010, respectively, and were recorded as interest expense.

In connection with the financing term loan agreement, we issued fully exercisable warrants to purchase an aggregate of 328,637 shares of Series A convertible preferred stock at a price of $1.065 per share and recorded total debt discounts of $277,962. Amortization of the debt discounts recorded for this loan were $10,269 and $30,866 for the three months ended June 30, 2011 and 2010, respectively, and was recorded as interest expense.

In connection with the May 2009 term loan facility, we issued fully exercisable warrant to purchase 187,090 shares of Series B convertible preferred stock with an exercise price of $0.7483 per share and recorded total debt discounts of $184,860. Amortization of these debt discounts is included in the amortization of debt discounts presented above for the growth capital term loan and the financing term loan.

Private placement notes

During the year ended March 31, 2009, we entered into a series of loan and security agreements with accredited investors providing for loans evidenced by notes payable totaling $4,707,964. Each private placement note is repayable over three years and bears interest at the rate of 12% per annum. In June and July 2009, we issued an additional $200,000 of private placement notes which bear interest at the rate of 8% per annum. The balance of the private placement notes at June 30, 2011 and March 31, 2011 is $210,777 and $590,432, respectively. We are using the proceeds of these private placement notes to fund member loans. In connection with origination of these private placement notes, we issued fully exercisable warrants to purchase an aggregate of 514,817 shares of Series A convertible preferred stock (see

Note 8 — Preferred Stock ). Upon issuance of the warrants, we recorded a debt discount of $329,271, and amortization of the debt discount was recorded as interest expense of $14,207 and $27,439 for the three months ended June 30, 2011 and 2010, respectively.

7. Related Party Transactions

Of the private placement notes described in

Note 6 — Loans Payable , $450,000 of original principal was invested by related parties on terms identical to those given to the other private placement note investors. At June 30, 2011 and March 31, 2011, the outstanding principal balance of these notes was $0 and $51,108, respectively.

The Company paid to Camelot Financial Capital Management (whose President is Simon Williams, a member of our Board) during the three months ended June 30, 2011 and 2010, $15,000 and $21,323, respectively, for consulting services that they provided to the Company.

Our affiliates, including our executive officers, directors and 5% stockholders, also have funded portions of loan requests from time to time in the past, and may do so in the future. For the three months ended June 30, 2011, these affiliates had funded $67,175 of new loan requests and their outstanding principal balance was $710,457 as of June 30, 2011. For the three months ended June 30, 2010, these affiliates had funded $456,875 of new loan requests and their outstanding principal balance was $589,935 as of June 30, 2010.

As of June 30, 2011, the Company had a receivable balance due from an affiliated fund of $48,950.

8. Preferred Stock

Convertible preferred stock

In April 2010, we filed an Amended and Restated Certificate of Incorporation with the State of Delaware, which increased the total number of shares which we are authorized to issue from 83,600,000 shares to 117,116,801 shares, 68,000,000 of which are designated as common stock, 17,006,275 of which are designated as Series A Preferred Stock, 16,410,526 of which are designated as Series B Preferred Stock, and 15,700,000 of which are designated as Series C Preferred Stock.

A complete description of the rights, preferences, privileges and restrictions of our common stock and the Series A, Series B, and Series C convertible preferred stock is included in the Amended and Restated Certificate of Incorporation, as amended. The outstanding shares of convertible preferred stock are not redeemable. None of our convertible preferred stock is considered permanent equity based on the guidance of SEC Accounting Series Release No. 268, “Presentation in Consolidated Financial Statements of Redeemable Preferred Stocks.” The significant terms of outstanding Series A, Series B, and Series C convertible preferred stock are as follows:

Conversion — Each share of convertible preferred stock is convertible, at the option of the holder, initially, into one share of common stock (subject to adjustments for events of dilution). Each share of convertible preferred stock will each automatically be converted upon the earlier of (i) the closing of an underwritten public offering of our common stock with aggregate gross proceeds that are at least $30,000,000 or (ii) the consent of the holders of a 65% majority of outstanding shares of convertible preferred stock, voting together as a single class, on an as-converted to common stock basis. The Company’s preferred stock agreements contain certain anti-dilution provisions, whereby if the Company issues additional shares of capital stock for an effective price lower than the conversion price for a series of preferred stock immediately prior to such issue, then the existing conversion price of such series of preferred stock will be reduced. The Company determined that while its convertible preferred stock contains certain anti-dilution features, the conversion feature embedded within its convertible preferred stock does not require bifurcation under the guidance of FASB ASC 815, Derivatives and Hedging Activities .

Liquidation preference — Upon any liquidation, winding up or dissolution of us, whether voluntary or involuntary (a “ Liquidation Event ”), before any distribution or payment shall be made to the holders of any common stock, the holders of convertible preferred stock shall, on a pari passu basis, be entitled to receive by reason of their ownership of such stock, an amount per share of Series A convertible preferred stock equal to $1.065 (as adjusted for stock splits, recapitalizations and the like) plus all declared and unpaid dividends (the “ Series A Preferred Liquidation Preference ”), an amount per share of Series B convertible preferred stock equal to $0.7483 (as adjusted for stock splits, recapitalizations and the like) plus all declared and unpaid dividends (the “ Series B Preferred Liquidation Preference ”) and an amount per share of Series C convertible preferred stock equal to $1.5677 (as adjusted for stock splits, recapitalizations and the like). However, if upon any such Liquidation Event, the assets of ours shall be insufficient to make payment in full to all holders of convertible preferred stock of their respective liquidation preferences, then the entire assets of ours legally available for distribution shall be distributed with equal priority between the holders based upon the amounts such series was to receive. Any excess assets, after payment in full of the liquidation preferences to the convertible preferred stockholders, are then allocated to the holders of common and preferred stockholders, pro-rata, on an as-if-converted to common stock basis.

Dividends — If and when declared by the Board of Directors, the holders of Series A, Series B, and Series C convertible preferred stock, on a pari passu basis, will be entitled to receive non-cumulative dividends at a rate of 6% per annum in preference to any dividends on common stock (subject to adjustment for certain events). The holders of Series A, Series B, and Series C convertible preferred stock are also entitled to receive with common stockholders, on an as-if-converted basis, any additional dividends issued by us.

Voting rights — Generally, preferred stockholders have one vote for each share of common stock that would be issuable upon conversion of preferred stock. Voting as a separate class, and on an as-if-converted to common stock basis, the Series A convertible preferred stockholders are entitled to elect two members of the Board of Directors and the holders of Series B convertible preferred stockholders are entitled to elect one member of the Board of Directors. The Series C convertible preferred stockholders are not entitled to elect a member of the Board of Directors. The holders of common stock, voting as a separate class, are entitled to elect one member of the Board of Directors. The remaining directors are elected by the preferred stockholders and common stockholders voting together as a single class on an as-if-converted to common stock basis.

9. Stockholders’ Deficit

Common stock

As of June 30, 2011, we have shares of common stock authorized and available for future issuance as follows:


Convertible preferred stock, Series A			15,740,285

Convertible preferred stock, Series B			16,036,346

Convertible preferred stock, Series C			15,621,609

Options to purchase common stock			6,878,672

Options available for future issuance			1,917,033

Convertible preferred Series A stock warrants			1,265,990

Convertible preferred Series B stock warrants			374,180

Common stock warrants			259,482


Total common stock reserved for future issuance			58,093,597

During the three months ended June 30, 2011, we issued 140,500 shares of common stock in exchange for proceeds of $38,810 upon the exercise of employee stock options. No warrants were exercised for the three months ended June 30, 2011. During the three months ended June 30, 2010, we issued 29,250 shares of common stock in exchange for proceeds of $7,898 upon the exercise of employee stock options. No warrants were exercised for the three months ended June 30, 2010.

In April 2011, we recorded fully exercisable warrants to purchase 155,482 shares of common stock at $1.5677 per share. The warrants may be exercised at any time on or before February 2021. The fair value of these warrants was estimated to be $19,086 using the Black-Scholes option pricing model with the following assumptions: a volatility of 46.31%, a contractual life of 10 years, no dividend yield and a risk-free interest rate of 3.49%.

10. Stock-Based Compensation

Under our 2007 Stock Incentive Plan, or the Option Plan, we may grant options to purchase shares of common stock to employees, executives, directors and consultants at exercise prices not less than the fair market value at date of grant for incentive stock options and not less than 85% of the fair market value at the date of grant for non-statutory options. An aggregate of 9,261,778 shares have been authorized for issuance under the Option Plan. These options generally expire ten years from the date of grant and generally vest 25% twelve months from the date of grant, and ratably over the next 12 quarters thereafter.

There was no grant of stock options for the three months ended June 30, 2011. We used the Black-Scholes option pricing model for estimating the fair value of stock options granted with the following assumptions for the three months ended June 30, 2010.


	Three Months Ended
	June, 30 2010
Expected dividend yield		0	%
Expected volatility		46.65	%
Risk-free interest rates		2.45	%
Expected life	6.08 years

We have elected to use the calculated-value method under FASB ASC 718 to calculate the volatility assumption for the three months ended June 30, 2011 and 2010. The expected life represents the period of time that stock options are expected to be outstanding, giving consideration to the contractual terms of the awards, vesting schedules, and expectations of future exercise patterns and post-vesting employee termination behavior. Given our limited operating history, the simplified method was applied to calculate the expected term. The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant. We have paid no cash dividends and do not anticipate paying any cash dividends in the foreseeable future and therefore used an expected dividend yield of zero in our option-pricing models.

Options activity under the Option Plan is summarized as follows:


	Options Issued and Outstanding
	Options Issued			Weighted Average
	and Outstanding			Exercise Price
Balances at March 31, 2011		7,534,974		$	0.35
Options Granted		—			—
Options Exercised		(140,500	)		0.28
Options Cancelled		(515,802	)		0.39

Balances at June 30, 2011		6,878,672		$	0.35

Options outstanding and exercisable at June 30, 2011 were 2,421,916 at a weighted average exercise price of $0.30.

A summary by exercise price of outstanding options, vested options, and options vested and expected to vest at June 30, 2011, is as follows:


				Weighted Average
Exercise Price and				Remaining Contractual				Number of Options
Weighted Average		Number of Options		Life of Outstanding		Number of Options		Vested and Expected to
Exercise Price		Outstanding		Options (Years)		Vested		Vest
$	0.23		1,118,000		8.05		551,499		1,091,111
$	0.27		1,368,250		6.41		1,202,980		1,364,321
$	0.41		4,392,422		9.25		667,437		4,156,546

A summary by outstanding options, vested options and options vested and expected to vest at June 30, 2011, is as follows:


			Weighted Average
			Remaining
	Number of		Contractual Life		Weighted Average
	Options		(Years)		Exercise Price
Options Outstanding		6,878,672		8.49	$	0.35

Vested Options		2,421,916		7.42	$	0.30

Options Vested and Expected to Vest		6,611,978		8.46	$	0.35

No income tax benefit has been recognized relating to stock-based compensation expense and no tax benefits have been realized from exercised stock options.

For the three months ended June 30, 2011, we didn’t grant any stock options to purchase any shares of common stock. For the three months ended June 30, 2010, we granted stock options to purchase 2,535,000 of common stock with a weighted average grant date fair value of $0.20 per share. As of June 30, 2011, total unrecognized compensation cost was $832,735.

11. Income Taxes

As part of the process of preparing our financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves determining our income tax expense or benefit together with calculating the deferred income tax expense or benefit related to temporary differences resulting from differing treatment of items, such as deferred revenue or deductibility of certain intangible assets, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the accompanying balance sheet. We must then assess the likelihood that the deferred tax assets will be recovered through the generation of future taxable income.

As of June 30, 2011, we continued to have a full valuation allowance against our net deferred tax assets. We believe it is more likely than not that all of our deferred tax assets will not be realized. For the three months ended June 30, 2011, we were in a loss position. We did not have any foreign operations and therefore did not record any tax provisions during the period.

We file income tax returns in the U.S. federal jurisdiction, California, Connecticut and Indiana jurisdictions. Our tax years for 2006 and forward are subject to examination by the U.S., California, Connecticut and Indiana tax authorities as the statutes of limitation remain open.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We did not have any material changes in unrecognized tax benefits and associated accrued interest or penalties during the three months ended June 30, 2011 and 2010.

12. Net Interest Income

Revenues primarily result from interest income, transaction fees and adjustments to fair value. Transaction fees include origination fees (borrower member paid) and investor service charges (investor paid). Interest income is accrued and recorded in the accompanying statements of operations as collected. We classify interest and fees earned on our member loans together as interest income on these consolidated financial statements.

The following table summarizes net interest income (expense) as follows:


	Three Months Ended June 30,
	2011		2010

Interest income:
Member loans funded by LendingClub	$	188,152	$	226,828
CM Loans Funded by Notes
Interest and fees earned on CM Loans		7,435,335		3,029,542

Cash and cash equivalents		5,771		6,317

Total interest income	$	7,629,258	$	3,262,687


Interest expense:
Notes
Interest and fees expensed on Notes	$	4,765,469	$	1,779,431

Loans payable		68,406		220,682
Amortization of debt discount on Loan		33,982		74,834

Total interest expense	$	4,867,857	$	2,074,947

A reconciliation of the table above to our Consolidated Statements of Operations is as follows:


Per table above:
Total interest income	$	7,629,258		$	3,262,687
Total interest expense		(4,867,857	)		(2,074,947	)

	$	2,761,401		$	1,187,740


Per Consolidated Statements of Operations:
Net interest income (loss), Member loans	$	91,535		$	(62,371	)
Net interest income (loss), CM Loans and Notes, fair value		2,669,866			1,250,111
Fair value adjustments, net		(257	)		(1,497	)

	$	2,761,144		$	1,186,243

13. Commitments and Contingencies

Operating leases

In April 2011, we entered into a sublease agreement for approximately 18,200 square feet of space in San Francisco, CA for our corporate headquarters, including our principal administrative, marketing, technical support and engineering functions. The sublease has a term of 6 years and began on May 1, 2011. We can terminate the sublease upon 9 months’ notice prior to the third anniversary of the sublease. The average annual rent for our new corporate headquarters is approximately $42,000 and we pledged $200,000 as a security deposit.

Effective June 1, 2010, we entered into a 12 month lease for approximately 238 square feet in Fairfield, Connecticut for use by our EVP, Corporate Development. This lease may be extended for an additional 12 month lease term if the landlord is notified no later than 60 days prior to the leases’ expiration. On July 14, 2010, we entered into a month-to-month lease agreement for the lease of 250 square feet for a New York City office. We terminated this lease and office in October 2010. On August 8, 2010, we entered into a twelve month lease agreement for the lease of approximately 400 square feet for a second New York office. Notice was given on this lease in May 12, 2011 and will be terminated as of August 12, 2011.

Facilities rental expense for the three months ended June 30, 2011 and 2010 was $139,624 and $43,430, respectively.

14. Subsequent Events

On July 28, 2011, we issued 7,027,604 shares of Series D convertible preferred stock for aggregate cash consideration of approximately $25,000,000. The shares are convertible into shares of our common stock, par value $0.01 per share, on a one-for-one basis, as adjusted from time to time pursuant to the anti-dilution provisions of the LendingClub certificate of incorporation.

In connection with the sale of Series D Preferred Stock, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the State of Delaware, which increased the total number of shares which we are authorized to issue from 117,116,801 shares to 137,471,535 shares, 80,000,000 of which are designated as common stock, 17,006,275 of which are designated as Series A Preferred Stock, 16,410,526 of which are designated as Series B Preferred Stock, 15,621,609 of which are designated as Series C Preferred Stock, and 8,433,125 of which are designated as Series D convertible preferred stock. Also, in connection with the issuance and sale of the Series D convertible preferred stock, we increased the number of shares of our common stock authorized for issuance pursuant to its 2007 Stock Incentive Plan to 12,355,625 shares.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Consolidated Operations

In addition to historical information, this quarterly report contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the following “Management’s Discussion and Analysis of Financial Condition and Results of Consolidated Operations” as well as in Part II Item 1A “Risk Factors.” Actual results could differ materially. Important factors that could cause actual results to differ materially include, but are not limited to; the level of demand for our products and services; the intensity of competition; our ability to effectively expand and improve internal infrastructure; and adverse financial, customer and employee consequences that might result to us if litigation were to be initiated and resolved in an adverse manner to us. For a more detailed discussion of the risks relating to our business, readers should refer to Part II Item 1A found later in this report entitled “Risk Factors,” as well as the “Risk Factors” section of the prospectus for the Notes dated July 29, 2011 and filed with the SEC, as may be amended or supplemented from time to time. Readers are cautioned not to place undue reliance on the forward-looking statements, including statements regarding our expectations, beliefs, intentions or strategies regarding the future, which speak only as of the date of this quarterly report. We assume no obligation to update these forward-looking statements.

Overview

We are an online financial platform. We allow qualified borrower members to obtain loans (which we refer to as “member loans”) with interest rates that they find attractive. Since October 13, 2008, investors have had the opportunity to purchase Member Payment Dependent Notes (which we refer to as the “Notes”) issued by us, with each series of Notes corresponding to an individual member loan originated on our platform (which we refer to as “CM Loans”). The Notes are dependent for payment on CM Loans and offer interest rates and credit characteristics that the investors find attractive. From the launch of our platform in May 2007 until April 7, 2008, we did not offer Notes on our platform. Instead, our platform allowed investor members to purchase assignments of unsecured member loans directly. Since November 2007, we have also funded portions of certain member loans ourselves with the intent and ability to hold these loans for the foreseeable future or to maturity.

All member loans are unsecured obligations of individual borrower members with fixed interest rates and three-year or five-year maturities. The member loans are posted on our website, funded by WebBank, an FDIC-insured, state-chartered industrial bank organized under the laws of the state of Utah, at closing and immediately assigned to us after closing. As a part of operating our lending platform, we verify the identity of members, obtain borrower members’ credit characteristics from consumer reporting agencies such as TransUnion, Experian or Equifax and screen borrower members for eligibility to participate in the platform and facilitate the posting of member loans. We also provide servicing for the member loans on an ongoing basis.

We were incorporated in Delaware in October 2006, and in May 2007, began operations as an application on Facebook.com. In August 2007, we conducted a venture capital financing round and expanded our operations with the launch of our public website, www.lendingclub.com. As of June 30, 2011, the lending platform has facilitated 30,042 member loans since our launch in May 2007.

We have been operating since December 2007 pursuant to an agreement with WebBank. WebBank serves as the lender for all member loans originated through our platform. Our agreement with WebBank has enabled us to make our platform available to borrower members on a uniform basis nationwide, except that as of May 1, 2011, we do not currently offer member loans in Idaho, Iowa, Indiana, Maine, Mississippi, Nebraska, North Dakota and Tennessee. We pay WebBank a monthly service fee based on the amount of loan proceeds disbursed by WebBank in each month, subject to a minimum monthly fee.

We have a limited operating history and have incurred net losses since our inception. Our net loss was $3,106,678 for the three months ended June 30, 2011. We earn revenues from processing fees charged to members, primarily a borrower member origination fee and an investor service charge. We also earn interest income on member loans that we fund ourselves. At this stage of our development, we have funded our operations primarily with proceeds from our venture capital financings, our credit facilities and debt and equity issuances, which are described under “Liquidity and Capital Resources.” We also relied on our credit facilities and debt issuances to borrow funds, which we used to fund member loans ourselves. Our borrowing capacity under our credit facilities is zero. Over time, we expect that the number of borrower and investor members and the volume of member loans originated through our platform will increase, and that we will generate increased revenue from borrower origination fees and investor service charges.

Our operating plan allows for a continuation of the current strategy of raising capital through debt and equity financings to finance our operations until we reach profitability and become cash-flow positive, which we do not expect to occur within the next twelve months. Our operating plan calls for significant investments in sales, website development, security, loan scoring, loan processing and marketing before we reach profitability.

From inception of the Company through June 30, 2011, we have raised $54,035,115 through equity financings. Our last equity financing was on July 28, 2011 and we raised approximately $25,000,000 from the sale of 7,027,604 shares of our Series D convertible preferred stock.

Significant Accounting Policies and Estimates

The preparation of our consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions, and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We believe that the judgments, assumptions and estimates upon which we rely are reasonable based upon information available to us at the time that these judgments, assumptions and estimates are made. However, any differences between these judgments, assumptions and estimates and actual results could have a material impact on our statement of operations and financial condition. The accounting policies which are more fully described in Note 2 to our consolidated financial statements reflect our most significant judgments, assumptions and estimates and which we believe are critical in understanding and evaluating our reported financial results include: (1) revenue recognition; (2) fair value; (3) allowance for loan losses; and (4) share-based compensation.

Results of Operations

Revenues

Our business model consists primarily of charging transaction fees to both borrower members and investor members for the loans originated through our lending platform. During the three months ended June 30, 2011 and 2010, we originated $56,063,700 and $29,593,800 of loans, respectively, on our lending platform, an increase of 89%. Upon issuance of the loan, the borrower member pays a fee to us for providing the services of arranging the member loan and the investor member pays a fee to us for managing the payments on the member loans and maintaining account portfolios. We also generate revenue from interest earned on member loans we invest in directly.


	Three Months Ended June 30,
	2011		2010
Interest income:
Member loans	$	188,152	$	226,828
CM Loans
Interest and fees earned on CM Loans		7,435,335		3,029,542

Cash and cash equivalents		5,771		6,317

Total interest income	$	7,629,258	$	3,262,687


Interest expense:
Notes

Interest and fees expensed on Notes	$	4,765,469	$	1,779,431

Loans payable		68,406		220,682
Amortization of debt discount on Loan		33,982		74,834

Total interest expense	$	4,867,857	$	2,074,907

Interest Income

The following table presents our quarterly interest income sources in both absolute dollars and as a percentage of interest income (in thousands):


	For the Quarters Ended
Interest	September 30,				December 31,				March 31,				June 30,
Income	2009				2009				2010				2010
Source	$		%		$		%		$		%		$		%
Borrower origination fees and interest earned on member loans		371		49		329		31		272		22		227		15
Borrower origination fees and interest earned on CM Loans, net of interest expense on the related Notes		374		50		743		69		991		78		1,250		85
Interest earned on cash and investments		4		1		3		—		4		—		6		—

Total Interest Income		749		100		1,075		100		1,267		100		1,482		100


	For the Quarters Ended
Interest	September 30,				December 31,				March 31,				June 30,
Income	2010				2010				2011				2011
Source	$		%		$		%		$		%		$		%
Borrower origination fees and interest earned on member loans		224		12		188		10		165		7		188		7
Borrower origination fees and interest earned on CM Loans, net of interest expense on the related Notes.		1,632		87		1,604		89		2,189		93		2,670		93
Interest earned on cash and investments		10		1		10		1		6		—		6		—

Total Interest Income		1,866		100		1,802		100		2,360		100		2,864		100

Borrower Origination Fees

Our borrower members pay a one-time fee to us for arranging a member loan. This fee is determined by the loan grade of the member loan.

Beginning January 7, 2011, our origination fees for three year loans changed, and ranged from 2.00% to 5.00% of the aggregate principal amount of the member loan, as set forth below:


Loan
Grade	A1-A2			A3-A5			B			C			D			E			F			G
Fee		2.00	%		3.00	%		4.00	%		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%

Beginning January 7, 2011, our origination fees for five year loans changed, and ranged from 3.00% to 5.00% of the aggregate principal amount of the member loan, as set forth below:


Loan
Grade	A			B			C			D			E			F			G
Fee		3.00	%		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%

The borrower origination fee is included in the APR calculation provided to the borrower member and is deducted from the gross loan proceeds prior to disbursement of funds to the borrower member. We do not receive an origination fee if a member loan request does not close.

Borrower Origination Fees Earned on Member Loans Funded by LendingClub

We compute borrower origination fees for member loans that we fund ourselves by subtracting the average costs of originating a member loan from the aggregate fee charged to the borrower member for the member loan. We initially defer this net amount and subsequently amortize the balance over the servicing period of the member loan, which is currently 36 and 60 months for each funded member loan.

Interest Earned on Member Loans Funded by LendingClub

Between April 7, 2008 and October 13, 2008, while we sought to register the offering of the Notes, we funded the platform ourselves and generated interest income through investment in member loans funded by LendingClub. Subsequent to the effectiveness of our registration statement related to our Notes, we have continued to periodically fund some of these member loans. However, as we have increased our marketing and awareness efforts, the ratio of member loans funded by LendingClub to CM Loans that we originated each quarter has diminished. As such, during the three months ended June 30, 2011, we funded $1,096,825 of member loans, and investors funded $54,966,875, while during the three months ended June 30, 2010, we funded $974,325 of member loans while investors funded $28,619,475.

When payments are received on member loans funded by LendingClub, the interest portion paid by our borrower members and the amortization of the origination fees, net of costs of origination, are recorded as interest income. Interest rates on these member loans, excluding amortization of net origination fees, range from 5.42% to 23.59% per annum as of June 30, 2011. During the three months ended June 30, 2011 and 2010, we recorded interest income on the member loans we funded of $188,152 and $226,828, respectively.

Borrower Origination Fees and Interest Earned on CM Loans Net of Interest Expense on the Related Notes

Beginning October 13, 2008, we began recording interest income, including borrower origination fees, from CM Loans and corresponding interest expense from the Notes. Interest income from the CM Loans includes origination fees on these member loans which are recognized in the period originated. During the three months ended June 30, 2011 and 2010, we recorded interest income from CM Loans of $7,435,335 and $3,029,542 including $2,443,944 and $1,144,957 of origination fees, respectively. Conversely, for the Notes, we recorded interest expense of $4,765,469 and $1,779,431, respectively, for the three months ended June 30, 2011 and 2010. Over time, we expect that interest revenues and expenses related to CM Loans and Notes will increase as we grow our platform.

Interest Earned on Cash and Investments

Interest income from cash and cash equivalents is recorded as it is earned. For the three months ended June 30, 2011, we recorded $5,771 of interest income earned on cash and cash equivalents. Comparatively, for the three months ended June 30, 2010, we recorded $6,317 in interest income earned on cash and cash equivalents. The differences in interest income are a function of the balances of cash on hand and the low interest rate climate during the relevant periods. We do not expect interest income from cash and cash equivalents to be a significant part of our future revenue.

Interest Expense on Notes Payable

Interest expense, other than that described above with regard to Notes, consists primarily of cash and non-cash interest on loans payable. For the three months ended June 30, 2011 and 2010, we paid cash interest of $68,406 and $220,682, respectively, for interest due on our loans payable. For the three months ended June 30, 2011 and 2010, we also recorded $33,982 and $74,834, respectively, for non-cash interest expense related to debt discounts due to warrants on our loans payable.

As we have no additional availability under our various loan payable agreements, we expect interest expense on our loans payable to decrease over the next year as we repay these loans.

Provision for Loan Losses

The allowance for loan losses, which management evaluates on a periodic basis, represents an estimate of potential credit losses inherent in our portfolio of member loans that we funded ourselves, in whole or in part, and hold for investment and is based on a variety of factors, including the composition and quality of the loan portfolio, loan specific information gathered through our collection efforts, delinquency levels, probable expected losses, current and historical charge-off and loss experience, current industry charge-off and loss experience, and general economic conditions. Determining the adequacy of the allowance for loan losses is subjective, complex, and requires judgment by management about the effect of matters that are inherently uncertain (see Note 2 — Significant Accounting Policies, Allowance for loan losses ). Moreover, in light of our limited operating history, we do not yet have significant historical experience unique to our own base of borrowers and underwriting criteria with which to help estimate expected losses on our portfolio. For the three months ended June 30, 2011, we recorded a provision for loan losses of $74,904 against member loans funded by us. Comparatively, for the three months ended June 30, 2010, we recorded a provision for loan losses of $182,014 against our member loans funded by us.

Amortization of loan servicing rights

We charge investor members an ongoing service fee in respect of member loans and Notes that they have purchased through our platform. The service fee offsets the costs we incur in servicing member loans, including managing payments from borrower members, payments to investor members and maintaining account portfolios. This service fee is equal to 1.00% of all amounts paid by us to an investor member in respect of a member loan, excluding certain fees retained by investors or us. The service fee is deducted from any payments on a member loan before the net amounts of those payments are allocated to the investor members’ LendingClub accounts.

For member loans purchased by third parties prior to the registration of our Notes, we recognized a servicing asset and corresponding servicing liability in accordance with FASB ASC 860. We then amortize the servicing fee asset into income as payments are received on these member loans (see

Note 2 — Summary of Significant Accounting Policies, Revenue recognition, Third party purchased member loans). During the three months ended June 30, 2011 and 2010, we recognized $(587) and $5,841, respectively of such income. Because following the registration of the Notes, investor members no longer directly purchase member loans, the amount of income from amortization of loan servicing rights will continue to diminish until the underlying member loans are fully discharged.

Operating Expenses:


	Three Months Ended
	June 30,
	2011		2010		% change
Sales, marketing and customer service	$	3,857,839	$	2,298,366		68	%
Engineering		520,139		498,370		4	%
General and administrative		1,514,226		833,727		82	%

Total operating expenses	$	5,892,204	$	3,630,463

Sales, Marketing and Customer Service Expense

Sales, marketing and customer service expense consists primarily of salaries, benefits and stock-based compensation expense related to sales, marketing, customer service, credit and collections personnel, costs of marketing campaigns and costs of borrower acquisitions such as credit scoring and screening. Sales, marketing and customer service expenses for the three months ended June 30, 2011 and 2010, were $3,857,839 and $2,298,366, respectively, an increase of approximately 68%. The increases in spending during the three months ended June 30, 2011 relative to the same period prior year primarily occurred in three areas: increases in personnel related expense, increases in platform related spending such as customer credit scoring and platform hosting costs, and increases in spending on marketing programs to attract borrowers and increase investment activity on the platform. Spending in all three of these areas were lower for most of the three months ended June 30, 2010.

Engineering Expense

Engineering expense consists primarily of salaries, benefits and stock-based compensation expense of engineering personnel, and the cost of subcontractors who work on the development and maintenance of our platform and software enhancements that run our platform. Engineering expenses for the three months ended June 30, 2011 and 2010, were $520,139 and $498,370, respectively, an increase of 4%. The increase for the three months ended June 30, 2011 versus the same period prior year was primarily due to increased contract labor and expensed equipment costs. We expect these expenses to continue to increase as we grow our business.

General and Administrative Expense

General and administrative expense consists primarily of salaries, benefits and stock-based compensation expense related to general and administrative personnel, professional fees primarily related to legal and accounting fees, facilities expenses and the related overhead, and expenses related to platform fraud prevention and remediation. General and administrative expenses for the three months ended June 30, 2011 and 2010, were $1,514,226 and $833,727, respectively, an increase of approximately 82%. The increase was primarily the result of higher expenses for personnel, facilities costs, licenses, permit and fees, and bank service charges. These costs were partially offset, however, by a drop in outside legal expenses as we relied more heavily on in-house legal counsel in 2011 as compared to 2010 as well as a reduction in borrower fraud expenses. We expect that general and administrative expenses will decrease as a percentage of overall operating expenses as we grow our sales efforts in greater proportion than our general and administrative expenses.

Liquidity and Capital Resources


	Three Months Ended June 30,
Cash flows from:	2011			2010			Change
Operating Activities	$	(2,876,546	)	$	(2,469,094	)	$	(374,447	)

Investing Activities		(35,913,3794	)		(21,156,653	)		(14,7789,731	)
Add back/(subtract):
Origination of CM Loans, fair value		54,265,647			28,619,475			25,646,172
Repayment of CM Loans, fair value		(19,176,697	)		(6,589,223	)		(12,587,474	)


Investing Activities after removing activity related to CM Loans, fair value		(824,429	)		873,599			(1,731,033	)

Financing Activities		35,054,365			44,890,829			(9,836,464	)
Add back/(subtract):
Origination of Notes, fair value		(55,693,775	)		(28,619,475	)		(27,074,300	)
Repayment of Notes, fair value		19,699,272			6,605,776			13,093,496


Financing Activities after removing activity related to Notes, fair value	$	940,138		$	22,877,130		$	(23,817,268	)

Net cash used in operating activities increased to $2,876,546 in the three months ended June 30, 2011, from $2,469,094 in the three months ended June 30, 2010. Non-cash charges that most significantly offset our net loss of $3,106,678 in the three months ended June 30, 2011 were: $74,904 of allowances for loan losses on member loans, $33,982 of amortization of debt discounts and $241,661 of stock based compensation expense. Similarly, non-cash charges that most significantly offset our net loss of $2,525,235 in the three months ended June 30, 2010 were: $182,014 of allowances for loan losses on member loans, $36.273 of amortization of net deferred loan fees and costs, $75,622 of amortization of debt discounts and $63,348 of stock based compensation expense.

Net cash used in investing activities for the three months ended June 30, 2011 and 2010, were $35,913,3794 and $21,156,653, respectively. However, after removing activity related to the Notes, which activity was mostly offset by corresponding activity related to the CM Loans reflected in our cash flow from financing activities, the remaining amounts used for financing activities in the three months ended June 30, 2011 and 2010, were $824,4304 and $873,599 of cash used, respectively. These remaining amounts in both periods were primarily activities related to borrower repayments of our member loans and changes in restricted cash.

We have incurred losses since our inception and we expect we will continue to incur losses for the foreseeable future as we grow our platform. We require cash to meet our operating expenses and for capital expenditures and principal and interest payments on our debt, as well as to continue to fund member loans on the platform we will hold for investment. To date, we have funded our cash requirements with proceeds from our debt issuances and the sale of equity securities. At June 30, 2011 and 2010, we had $1,022,000 and $862,000, respectively, in unrestricted cash and cash equivalents. We primarily invest our cash in short-term interest bearing money market funds.

We do not have any committed external source of funds. To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our cash needs through public or private equity offerings or debt financings. Additional equity or debt financing may not be available on acceptable terms, if at all.

Assets Under Management

In October 2010, we formed a subsidiary, LC Advisors, LLC, a California limited liability company (“LCA”), which is wholly-owned by LendingClub. LCA has registered with the SEC as an investment advisor and also acts as the general partner to two private investment funds for accredited investors with differing investment strategies. In connection with the funds, LendingClub formed a Delaware business trust as a bankruptcy remote entity to hold assets of the funds. LCA commenced operations after January 1, 2011.

We started offering the funds in March 2011 through a private placement. As of June 30, 2011, the funds had approximately $9.5 million in assets with $3.0 million in escrow, which was contributed to the funds on July 1, 2011, LCA earns a management fee paid by the limited partners of the funds, which is based on the amount of assets of each fund.

Summary of Changes in Assets Under Management

The table below presents our summary of changes in assets under management for LCA.


	Three Months
	Ended
	June 30, 2011
Balance — beginning of period	$	804,278
Net flows		8,636,287
Appreciation (Depreciation)		55,245

Balance — end of period	$	9,495,810

Income Taxes

We incurred no tax provision for the three months ended June 30, 2011 and 2010. Given our history of operating losses, it is difficult to accurately forecast how results will be affected by the realization, if any, of net operating loss carry forwards.

Financial Accounting Standards Board Accounting Standards Codification Topic 740, “ Income Taxes ,” provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Based upon the weight of available evidence, which includes our historical operating performance and the reported cumulative net losses in all prior years, we have provided a full valuation allowance against our net deferred tax assets.

Variable Interest Entities

The determination of whether or not to consolidate a special purpose entity under U.S. GAAP requires a significant amount of judgment concerning the degree of control over an entity by its holders of the special purpose entity. To make these judgments, management has conducted and analyzed, on a case by case basis, of the relationship of the holders of the variable interests to each other, the design of the entity, the expected operations of the entity, which holder of variable interest is most closed associated to the entity and which holder of variable interest is the primary beneficiary required to consolidate the entity. Upon the occurrence of such events, such as redemptions by all unaffiliated investors in any fund and modifications to fund organization documents and investment management agreements, management reviews and reconsiders its previous conclusion regarding the status of an entity as a variable interest entity. Upon the adoption of amended accounting guidance applicable to variable interest entities on January 1, 2010, management reconsiders whether we are deemed to be a variable interest entity primary beneficiary who consolidates such entity. As of June 30, 2011, the Company didn’t have any Variable Interest Entities.

Additional Information about the LendingClub Platform

Historical Information about Our Borrower Members and Outstanding Loans:

In regards to the following historical information, prior performance is no guarantee of future results or outcomes.

For purposes of the following information and tables, we have excluded from the data all previously issued loans that would not meet the current credit policy.

As of June 30, 2011, we had facilitated member loans with an average original principal amount of approximately $10,000 and an aggregate original principal amount of $280,648,475. Out of 27,291 facilitated member loans, 3,580 member loans with an aggregate original principal amount of $33,589,075, or 11.97% had fully paid. Including loans which were fully paid, 25,007 loans representing $255,858,875 of outstanding principal balance at June 30, 2011 had been through at least one billing cycle.

Of the $255,858,875 of original principal balance at June 30, 2011 that had been through at least one billing cycle, $6,353,487 of outstanding principal balance less interest and fees received, or 2.48%, was either in default or has charged off. The defaulted or charged off loans were comprised of 893 member loans, of which 645 loans representing $4,468,032 in outstanding principal balance less interest and fees received, were defaults and charge offs due to delinquency, while the remaining 248 loans were loans in which the borrower member filed for a Chapter 7 bankruptcy seeking liquidation. A member loan is considered defaulted when at least one payment is more than 120 days late.

Of remaining loans that had been through at least one billing cycle as of June 30, 2011, $166,214,148 of principal remained outstanding of which 97.71% was current, 0.20% was 16 to 30 days late, 1.25% was between 31 and 120 days late and 0.84% were on a performing payment plan. During the three months ended June 30, 2011, of the 16,477 member loans which were not delinquent prior to the start of the quarter, 446 member loans became delinquent for some amount of time during the quarter, excluding those that entered the 0 — 15 day grace period. Of those loans which became delinquent for more than 15 days during the quarter, we charged late fees totaling $3,620 on 146 loans and received late fees of $517 on 26 loans.

The following table presents aggregated information about borrower members and their loans for the period from May 24, 2007 to June 30, 2011, grouped by the loan grade assigned by us:


Loan	Number of		Average			Average Annual			Average Total
Grade	Borrowers		Interest Rate			Percentage Rate			Funded Commitment
A1		481		5.77	%		7.07	%	$	5,806
A2		909		6.37	%		7.62	%		6,167
A3		1,315		7.11	%		8.53	%		7,140
A4		1,904		7.62	%		9.11	%		8,167
A5		2,081		8.12	%		9.50	%		8,964
B1		1,217		10.04	%		12.52	%		9,326
B2		1,404		10.43	%		12.90	%		9,972
B3		1,870		10.76	%		13.23	%		10,862
B4		1,775		11.15	%		13.55	%		10,502
B5		1,899		11.52	%		13.96	%		10,709
C1		1,475		12.65	%		15.37	%		10,179
C2		1,393		13.08	%		15.85	%		10,365
C3		1,160		13.43	%		16.16	%		10,002
C4		929		13.69	%		16.44	%		10,065
C5		881		14.11	%		16.90	%		9,687
D1		686		14.44	%		17.55	%		10,424
D2		953		14.91	%		17.72	%		10,870
D3		828		15.29	%		18.06	%		11,362
D4		684		15.67	%		18.41	%		12,549
D5		613		16.10	%		18.84	%		12,895
E1		538		16.43	%		19.13	%		12,734
E2		439		16.80	%		19.41	%		13,342
E3		383		17.19	%		19.80	%		13,630
E4		299		17.59	%		20.14	%		14,788
E5		261		17.99	%		20.63	%		15,639
F1		213		18.41	%		21.00	%		15,612
F2		177		18.72	%		21.28	%		15,676
F3		111		19.13	%		21.72	%		15,852
F4		108		19.60	%		22.26	%		15,384
F5		80		20.07	%		22.76	%		18,400
G1		67		20.33	%		23.04	%		18,712
G2		61		20.58	%		23.24	%		18,840
G3		34		20.87	%		23.45	%		19,154
G4		38		21.18	%		23.84	%		19,243
G5		25		21.50	%		24.24	%	$	18,532

Total		27,291		11.85	%		14.18	%	$	10,284

The following table presents aggregated information for the period from May 24, 2007 to June 30, 2011, self-reported by borrower members at the time of their loan applications, grouped by the loan grade assigned by us. We do not independently verify this information:


	Percentage of
	Borrowers Stating
Loan	They Own Their			Average Annual		Average Debt to
Grade	Own Homes			Gross Income		Income Ratio (1)
A1		69.65	%	$	63,959		10.00	%
A2		65.90	%		66,102		10.73	%
A3		61.67	%		69,684		11.07	%
A4		55.78	%		65,475		11.79	%
A5		55.84	%		69,695		12.09	%
B1		50.94	%		66,288		12.22	%
B2		48.79	%		70,352		12.53	%
B3		51.98	%		71,946		13.07	%
B4		51.77	%		69,460		13.30	%
B5		50.18	%		66,448		13.42	%
C1		47.73	%		71,633		13.31	%
C2		45.94	%		66,726		13.42	%
C3		48.10	%		66,302		13.33	%
C4		46.50	%		67,022		14.01	%
C5		43.25	%		67,541		13.71	%
D1		40.52	%		65,087		13.50	%
D2		45.12	%		70,910		13.72	%
D3		47.83	%		68,127		13.83	%
D4		44.59	%		71,540		13.61	%
D5		48.94	%		70,357		13.48	%
E1		46.10	%		70,530		13.72	%
E2		48.97	%		74,126		14.05	%
E3		45.69	%		72,073		13.53	%
E4		52.84	%		77,081		13.51	%
E5		54.79	%		90,530		14.02	%
F1		52.58	%		81,451		13.74	%
F2		53.11	%		80,739		13.97	%
F3		47.75	%		80,609		14.34	%
F4		53.70	%		78,087		14.27	%
F5		61.25	%		85,174		13.61	%
G1		59.70	%		76,705		13.27	%
G2		60.66	%		88,011		14.83	%
G3		52.94	%		89,785		15.65	%
G4		60.53	%		104,254		12.74	%
G5		44.00	%	$	109,208		13.53	%

Total		51.21	%	$	69,418		12.90	%


¹		Average debt to income ratio, excluding mortgage debt, calculated by us based on (i) the debt reported by a consumer reporting agency, and (ii) the income reported by the borrower member.

The following table presents aggregated information for the period from May 24, 2007 to June 30, 2011, reported by a consumer reporting agency about our borrower members at the time of their loan applications, grouped by the loan grade assigned by us. As used in this table, “Delinquencies in the Last Two Years” means the number of 30+ days past-due incidences of delinquency in the borrower member’s credit file for the past two years. We do not independently verify this information. All figures other than loan grade are agency reported:


							Average		Average			Average		Average		Average Months
	Average		Average Open		Average Total		Revolving		Revolving Line			Inquiries in the		Delinquencies in		Since Last
Loan Grade	FICO		Credit Lines		Credit Lines		Credit Balance		Utilization			Last Six Months		the Last Two Years		Delinquency
A1		780		9		25	$	8,484		18.24	%		—		0		35
A2		771		10		25		8,918		18.96	%		1		0		36
A3		762		9		24		10,236		23.83	%		1		0		36
A4		750		9		23		11,641		30.44	%		1		0		40
A5		744		9		23		12,645		33.84	%		1		0		39
B1		736		9		22		11,823		38.50	%		1		0		35
B2		732		9		21		12,788		40.99	%		1		0		37
B3		727		9		22		13,979		43.93	%		1		0		36
B4		720		9		22		14,125		45.63	%		1		0		36
B5		714		9		21		13,755		49.95	%		1		0		36
C1		707		9		21		13,533		53.65	%		1		0		35
C2		703		9		21		13,077		55.66	%		1		0		37
C3		699		9		21		13,376		54.04	%		1		0		36
C4		695		9		21		13,879		57.52	%		1		0		35
C5		690		9		20		13,299		59.17	%		1		0		32
D1		684		9		20		13,272		61.64	%		1		0		33
D2		689		9		21		13,450		60.55	%		1		0		34
D3		688		9		21		14,290		61.33	%		1		0		32
D4		689		9		21		14,081		63.06	%		1		0		37
D5		689		9		21		14,940		62.66	%		1		0		35
E1		685		9		20		13,443		64.60	%		1		0		36
E2		685		9		21		15,169		67.41	%		1		0		36
E3		682		9		21		15,655		68.63	%		1		0		31
E4		682		9		22		16,567		67.97	%		1		0		33
E5		681		10		23		17,653		68.87	%		1		0		33
F1		680		10		23		17,542		66.49	%		1		0		35
F2		677		9		22		18,031		72.13	%		1		0		33
F3		677		10		24		15,055		71.35	%		1		0		32
F4		673		9		23		13,848		71.96	%		1		0		32
F5		675		10		23		17,937		71.44	%		1		0		33
G1		672		10		23		17,027		67.19	%		1		1		26
G2		672		9		21		23,082		78.12	%		1		0		34
G3		669		9		23		16,626		80.96	%		1		1		25
G4		672		11		25		23,139		75.05	%		1		0		32
G5		671		13		27		24,836		75.95	%		1		0		36

Total		717		9		22	$	13,200		47.59	%		1		0		35

The following table presents additional aggregated information for the period from May 24, 2007 to June 30, 2011, about delinquencies, default and borrower paid off loans, grouped by the loan grade assigned by us. The default and delinquency information presented in the table includes data only for member loans that had been through at least one billing cycle as of June 30, 2011. With respect to late member loans, the following table shows the entire amount of the principal remaining due, not just that particular payment. The third and fifth columns show the late member loan amounts as a percentage of member loans that have been through at least one billing cycle. Member loans are placed on nonaccrual status and considered as defaulted when they become 120 days late. The data presented in the table below comes from a set of member loans that have been outstanding, on average, for approximately twelve months.

Because of our limited operating history, the data in the following table regarding loss experience may not be representative of the loss experience that will develop over time as additional member loans are originated through our platform and the member loans already originated through our platform have longer payment histories.


																											Total
																Number of									Number		Origination
																Loans excl		Number of							of All		Amount for
Loan	16-30 Days		16-30 Days			31+ Days		31+ Days			Charged-Off		Charged-Off			Issued /		Loans Fully		Fully Paid		Fully Paid			Issued		All Issued		% Default/
Grade	Late ($)		Late (%)			Late ($)		Late (%)			/ Default ($)		/ Default (%)			Fully Paid		Paid		($)		(%)			Loans		Loans		Charged-Off
A1	$	3,795		0.22	%	$	0		0.00	%	$	27,946		1.26	%		345		44	$	128,100		4.59	%		481	$	2,792,875		1.00	%
A2		2,771		0.08	%		12,615		0.35	%		9,220		0.19	%		688		124		534,450		9.53	%		909		5,605,925		0.16	%
A3		15,951		0.29	%		21,816		0.40	%		49,906		0.58	%		992		211		1,303,925		13.89	%		1,315		9,389,075		0.53	%
A4		—		0.00	%		53,517		0.56	%		51,096		0.36	%		1,483		261		1,934,425		12.44	%		1,904		15,550,375		0.33	%
A5		33,672		0.31	%		58,990		0.54	%		199,737		1.12	%		1,655		317		2,697,150		14.46	%		2,081		18,653,250		1.07	%
B1		11,465		0.18	%		44,336		0.69	%		218,909		2.09	%		919		200		1,758,150		15.49	%		1,217		11,350,075		1.93	%
B2		156		0.00	%		26,767		0.35	%		328,566		2.53	%		1,065		228		2,426,575		17.33	%		1,404		14,000,975		2.35	%
B3		8,440		0.07	%		109,720		0.92	%		462,834		2.54	%		1,438		238		2,899,550		14.28	%		1,870		20,311,175		2.28	%
B4		52,396		0.46	%		115,499		1.01	%		373,433		2.16	%		1,413		219		2,272,875		12.19	%		1,775		18,640,850		2.00	%
B5		—		0.00	%		105,764		0.84	%		456,607		2.46	%		1,510		241		2,254,825		11.09	%		1,899		20,336,500		2.25	%
C1		12,352		0.14	%		163,750		1.85	%		341,354		2.54	%		1,115		220		1,961,375		13.06	%		1,475		15,013,650		2.27	%
C2		20,790		0.23	%		112,289		1.26	%		337,050		2.57	%		1,112		176		1,714,750		11.88	%		1,393		14,438,600		2.33	%
C3		24,162		0.35	%		112,415		1.62	%		324,774		3.00	%		920		168		1,553,350		13.39	%		1,160		11,602,450		2.80	%
C4		18,549		0.35	%		40,742		0.77	%		293,426		3.36	%		729		148		1,393,150		14.90	%		929		9,350,275		3.14	%
C5		11,699		0.24	%		100,642		2.07	%		353,298		4.58	%		682		127		1,148,600		13.46	%		881		8,533,850		4.14	%
D1		9,777		0.25	%		63,839		1.62	%		380,725		5.79	%		535		96		1,071,550		14.99	%		686		7,150,675		5.32	%
D2		24,206		0.38	%		96,098		1.50	%		267,953		2.87	%		760		108		1,217,425		11.75	%		953		10,359,250		2.59	%
D3		—		0.00	%		147,100		2.47	%		322,685		3.71	%		662		98		1,078,575		11.47	%		828		9,407,500		3.43	%
D4		2,800		0.05	%		39,174		0.69	%		311,619		4.04	%		560		67		690,650		8.05	%		684		8,583,475		3.63	%
D5		25,716		0.47	%		114,963		2.09	%		202,112		2.80	%		504		62		643,700		8.14	%		613		7,904,450		2.56	%
E1		4,573		0.10	%		114,117		2.43	%		164,064		2.63	%		446		49		596,975		8.71	%		538		6,850,900		2.39	%
E2		—		0.00	%		96,032		2.33	%		142,628		2.66	%		361		42		508,725		8.69	%		439		5,857,350		2.44	%
E3		—		0.00	%		52,311		1.40	%		137,063		2.91	%		324		27		338,775		6.49	%		383		5,220,150		2.63	%
E4		—		0.00	%		17,936		0.57	%		164,810		4.10	%		242		33		447,125		10.11	%		299		4,421,475		3.73	%
E5		—		0.00	%		37,784		1.32	%		116,182		3.26	%		212		21		271,425		6.65	%		261		4,081,725		2.85	%
F1		20,024		0.83	%		53,687		2.22	%		25,306		0.87	%		168		19		216,000		6.50	%		213		3,325,250		0.76	%
F2		—		0.00	%		24,328		1.22	%		73,428		3.01	%		146		14		184,925		6.66	%		177		2,774,725		2.65	%
F3		13,425		1.06	%		12,770		1.01	%		23,740		1.52	%		98		4		92,000		5.23	%		111		1,759,525		1.35	%
F4		—		0.00	%		7,000		0.61	%		53,176		3.77	%		85		7		85,900		5.17	%		108		1,661,425		3.20	%
F5		13,418		1.21	%		17,368		1.56	%		35,162		2.80	%		64		3		36,800		2.50	%		80		1,471,975		2.39	%
G1		—		0.00	%		25,422		3.18	%		20,076		1.98	%		51		5		95,000		7.58	%		67		1,253,725		1.60	%
G2		—		0.00	%		29,037		3.06	%		12,908		1.22	%		55		1		9,600		0.84	%		61		1,149,225		1.12	%
G3		—		0.00	%		—		0.00	%		26,384		4.36	%		32		—		—		0.00	%		34		651,250		4.05	%
G4		—		0.00	%		13,485		2.23	%		—		0.00	%		35		—		—		0.00	%		38		731,225		0.00	%
G5	$	0		0.00	%	$	31,230		9.14	%	$	45,312		10.94	%		21		2	$	22,675		4.89	%		25	$	463,300		9.78	%

Total	$	330,136		0.19	%	$	2,072,543		1.20	%	$	6,353,487		2.48	%		21,427		3,580	$	33,589,075		11.97	%		27,291	$	280,648,475		2.26	%

The following table presents aggregated information for the period from May 24, 2007 to June 30, 2011 on the results of our collection efforts for all corresponding member loans that became more than 30 days past due at any time, grouped by credit grade. For purposes of this analysis, we have excluded the 20 loans that we repurchased due to identity fraud.


											Aggregate
							Gross Amount				Principle Balance
							Collected on		Number of Loans		of Loans Charged-		Gross Amount
Loan	Number of Loans		Total Origination		Aggregate Amount		Accounts Sent to		Charged-Off Due		Off Due to		Recovered on Loans
Grade	In Collection (1)		Amount (1)		Sent to Collections (1)		Collections (2)		to Delinquency (3)		Delinquency (3)		Charged-Off (4)
A		212	$	1,390,125	$	169,946	$	72,963		50	$	235,104	$	9,823
B		484		4,806,950		684,576		296,350		158		1,104,949		17,793
C		517		4,526,325		735,619		333,029		185		1,102,764		16,606
D		361		3,787,775		669,924		288,116		150		1,069,298		19,417
E		158		2,050,750		335,222		134,573		61		572,842		2,800
F		48		729,175		158,120		72,907		16		141,408		9,640
G		21	$	318,275	$	49,271	$	20,402		7	$	83,308	$	0

Total		1,801	$	17,609,375	$	2,802,678	$	1,218,340		627	$	4,309,673	$	76,080


1)		Represents accounts 31 to 120 days past due.

2)		Represents the gross amounts collected on corresponding member loans while such accounts were in collection during the 31-120 days past-due period. This amount does not represent payments received after an account has been sent to collection, cured and returned to current status. Of this amount, investors received $1,206,157 (99%). The remainder was fees to us of $12,183 (1%). The amounts retained by us are reflected as loan servicing fees in our consolidated financial statements.


3)		Represents accounts that have been delinquent for 120 days at which time the account is charged-off. Any money recovered after 120 days is no longer included as amounts collected on accounts sent to collection. As of this quarter, a total of 627 loans have been charged off due to delinquency, of which 3 were on a payment plan as of June 30, 2011.

4)		Represents the gross amounts we received on charged-off accounts after the accounts were charged-off—e.g., a dollar received on an account after 120 days past due.


Item 3.		Quantitative and Qualitative Disclosures about Market Risk

Not applicable for smaller reporting companies.


Item 4.		Controls and Procedures

We establish and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal year covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer, have concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.		Legal Proceedings

There were no material changes to report.


Item 1A.		Risk Factors

The discussion in this Quarterly Report on Form 10-Q should be read together with the risk factors contained in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2011 and the prospectus for the Notes dated July 29, 2011. These risk factors describe various risks and uncertainties. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. In addition, these risks could have a material adverse effect on the value of the Notes you purchase and could cause you to lose all or part of your initial purchase price or future principal and interest payments you expect to receive.

In addition, you should consider the following:

We have incurred net losses in the past and expect to incur net losses in the future. If we become insolvent or bankrupt, you may lose your investment.

We have incurred net losses in the past and we expect to incur net losses in the future. As of June 30, 2011, our accumulated deficit was $44.6 million and our total stockholders’ deficit was $40.2 million. Our net loss for the three months ended June 30, 2011 and 2010, was $3,106,678 and $2,525,235, respectively. We have not been profitable since our inception, and we may not become profitable. In addition, we expect our operating expenses to increase in the future as we expand our operations. If our operating expenses exceed our expectations, our financial performance could be adversely affected. If our revenue does not grow to offset these increased expenses, we may never become profitable. In future periods, we may not have any revenue growth, or our revenue could decline. Our failure to become profitable could impair the operations of our platform by limiting our access to working capital to operate the platform. If we were to become insolvent or bankrupt, an event of default would occur under the terms of the Notes, and you may lose your investment.


Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

On October 13, 2008, we commenced a public offering of up to $600,000,000 in principal amount of the Notes pursuant to the Registration Statement (Registration Statement No. 333-151827). The offering is a continuous offering and remains ongoing. The Registration Statement was declared effective by the SEC on October 10, 2008. From October 13, 2008 to June 30, 2011, we sold $278,558,125 in principal amount of Notes at 100% of their principal amount. The Notes were offered only through our website, and there were no underwriters or underwriting discounts. In connection with the offering, we incurred estimated expenses of approximately $4,632,965, none of which were paid by us to our directors, officers, persons owning 10% or more of any class of our equity securities or affiliates. As set forth in the prospectus for the offering, we are using the proceeds of each series of Notes to fund a corresponding member loan (CM Loan) through the LendingClub platform designated by the lender members purchasing such series of Notes. None of the proceeds from the Notes are paid by us to our directors, officers, persons owning 10% or more of any class of our equity securities or affiliates.


Item 3.		Defaults Upon Senior Securities

None.


Item 5.		Other Information

None.


Item 6.		Exhibits

See Exhibit Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


LendingClub Corporation
By:	/s/ Renaud Laplanche
	Name:	Renaud Laplanche
	Title:	Chief Executive Officer (principal executive officer)

By:	/s/ Carrie Dolan
	Name:	Carrie Dolan
	Title:	Chief Financial Officer (principal financial officer and principal accounting officer)

Dated: August 15, 2011

EXHIBIT INDEX


Exhibit No.			Description
31.1			Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2			Certification of Chief Financial Officer, Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1			Certification of Chief Executive Officer and Chief Financial Officer, Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

TABLE OF CONTENTS

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company þ

(Do not check if a smaller reporting company)