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Author Topic: Prosper files 10-Q for Q-1, 2012  (Read 47289 times)

Urbi_et_Orbi

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https://www.prospers.org/forum/index.php?topic=37264.msg807090#msg807090

artjunkie

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #1 on: May 15, 2012, 06:44:20 pm »

P35

In February 2012, we formed Prosper Funding LLC, a Delaware limited liability company (“PFL”). We are the sole member of PFL and its accounts have been consolidated with the consolidated financial statements presented in this report. PFL has been organized and will be operated in a manner that is intended to minimize the likelihood that it will (i) become subject to bankruptcy proceedings or (ii) be substantively consolidated with the Company, and thus have its assets subject to claims by the Company’s creditors, in the event the Company becomes subject to a bankruptcy proceeding.
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bamalucky

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #2 on: May 15, 2012, 10:29:12 pm »

 :o :o
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Xenon481

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #3 on: May 15, 2012, 11:12:28 pm »

Q3 2011 - Loss before other income: $2,837,290
Q4 2011 - Loss before other income: $3,519,037
Q1 2012 - Loss before other income: $4,690,488

Q3 2011 Burn Rate: ~$0.9million per month
Q4 2011 Burn Rate: ~$1.2million per month
Q1 2012 Burn Rate: ~$1.6million per month

Prosper's burn rate appears to be growing at a geometric rate!! Their Q1 2012 Burn Rate is over 33% higher than their Q4 2011 Burn Rate!!

They are really stepping on the accelerator with regards to how fast they are throwing money out the window.

Prosper currently has Cash and Short Term Investments of ~$15million.

Quote
Our short term investments consist of United States Treasuries with maturity periods greater than three months and less than 12 months.

Assuming that their burn rate has reached a maximum and will never be higher than it currently is (contrary to all evidence), Prosper only has 9-10 months left (as of the end of March 2012) before they will require a new Venture Capital infusion to avoid Bankruptcy. With the static burn rate assumption, that puts Prosper potentially going BK around the end of January 2013. This is likely to be a best case scenario and yet is still 5 months sooner than the previous best case scenario pulled from their 2011 10-K filing.

Let's look at a harsh scenario where their burn rate continues the trend of the last 6 months and grows by ~33% each quarter (let's call that 10% per month for estimation's sake). In this more likely to be worst case scenario, Prosper only has 6-7 months left (as of the end of March 2012) before requiring new VC to avoid BK. That would be in the September/October 2012 time frame.

From this, if Prosper does not find a way to get another Venture Capital infusion and doesn't find a big bank to buy them out, my educated guess as to their BK date is likely sometime in Q4 of 2012.


Trying to see where Prosper has been increasing their spending to come up with all these additional $1.1million in losses for the quarter, I've found these areas:

- Salaries and Benefits were ~$0.5million higher than the previous quarter
- Marketing and Advertising cost was ~$0.5million higher than the previous quarter
- Professional Services cost was ~$0.5million higher (almost double!) than the previous quarter
- Facilities and Maintenance cost was ~$0.1million higher (over a 50% increase!) than the previous quarter
« Last Edit: May 15, 2012, 11:17:43 pm by Xenon481 »
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Xenon481

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #4 on: May 15, 2012, 11:18:53 pm »

Nominating this thread to The Lobby.

Mark12547

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #5 on: May 15, 2012, 11:35:49 pm »

Nominating this thread to The Lobby.

Second.
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God-Father

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #6 on: May 16, 2012, 12:04:15 am »

Quote
Operating Expenses


Compensation and benefits were $2.5 million for the three months ended March 31, 2012, an increase of $898.6 thousand or 58% as compared to $1.6 million for the three months ended March 31, 2011.  The increase for the three months ended March 31, 2012 was largely due to the Company steadily increasing its employee headcount in 2011 and in the first three months of 2012, which in turn resulted in increased payroll costs such as salary and wages, payroll taxes, healthcare, and accrued vacation.  In particular, we increased our headcount across our marketing and operations to respond to increased volume demands. We intend to continue to increase headcount as we grow our lender and borrower bases and carry out our business plan.


Marketing and advertising costs consist primarily of affiliate marketing, search engine marketing, online and offline campaigns, public relations and direct mail marketing.  Marketing and advertising costs were $1.3 million for the three months ended March 31, 2012, an increase of $756.5 thousand, as compared to $518.0 thousand for the three months ended March 31, 2011. This was primarily due to our increased emphasis on our affiliate network, brand marketing, and search engine and online marketing campaigns in order to drive borrower and lender volume.


Depreciation and amortization expense was $158.3 thousand for the three months ended March 31, 2012, an increase of 28% compared to the prior year period. This increase is mostly due to the capitalization of various internally developed software projects placed in service within the last year and in the current quarter, which in turn increased depreciation expense taken on those assets during the first three months of 2012.
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God-Father

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #7 on: May 16, 2012, 12:19:36 am »

1.    Organization and Business 

 
Prosper Funding LLC (“the Company”, “we”, “us”, “our”) was formed in the state of Delaware in February 2012 as a limited liability company with  the sole equity member being Prosper Marketplace, Inc., which we refer to as “PMI.” Prosper Funding LLC was formed by PMI to hold the borrower loans and issue the Notes, so that, in the event of PMI’s bankruptcy, the interests of Note holders in the borrower loans should be shielded from claims by PMI’s creditors.  Protecting our assets against PMI’s bankruptcy requires our being organized and operated in a manner (i) that minimizes the likelihood that we will become subject to bankruptcy proceedings, and (ii) that minimizes the likelihood that we would be substantively consolidated with PMI, and thus having our assets subject to claims by PMI’s creditors, if PMI files for bankruptcy.  We achieve this by placing certain restrictions on our activities and implementing certain formal procedures designed to expressly reinforce our status as a distinct corporate entity from PMI.


We will operate a peer-to-peer online credit platform, which we refer to as the “platform,” that will enable the Company’s borrower members to borrow money and lender members to purchase Borrower Payment Dependent Notes (“Notes”), issued by us, the proceeds of which facilitate the funding of the loans (“Borrower Loans”) made to borrower members.  PMI developed the platform and owns the proprietary technology that makes operation of the platform possible.   We have entered into a Servicing Agreement pursuant to which PMI has licensed to us the right to operate the platform (the “Servicing Agreement”).


We have not commenced operations as of the date of this balance sheet.  Currently PMI operates the platform facilitating the origination of loans by WebBank through the platform and issues and sells notes corresponding to those loans which are held by PMI.  Upon commencement of our operations we will facilitate the lending and borrowing activities and act as an agent to the lender members by maintaining the online marketplace licensed to us by PMI.


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Xenon481

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #8 on: May 16, 2012, 12:29:47 am »

1.    Organization and Business 

 
Prosper Funding LLC (“the Company”, “we”, “us”, “our”) was formed in the state of Delaware in February 2012 as a limited liability company with  the sole equity member being Prosper Marketplace, Inc., which we refer to as “PMI.” Prosper Funding LLC was formed by PMI to hold the borrower loans and issue the Notes, so that, in the event of PMI’s bankruptcy, the interests of Note holders in the borrower loans should be shielded from claims by PMI’s creditors.  Protecting our assets against PMI’s bankruptcy requires our being organized and operated in a manner (i) that minimizes the likelihood that we will become subject to bankruptcy proceedings, and (ii) that minimizes the likelihood that we would be substantively consolidated with PMI, and thus having our assets subject to claims by PMI’s creditors, if PMI files for bankruptcy.  We achieve this by placing certain restrictions on our activities and implementing certain formal procedures designed to expressly reinforce our status as a distinct corporate entity from PMI.


We will operate a peer-to-peer online credit platform, which we refer to as the “platform,” that will enable the Company’s borrower members to borrow money and lender members to purchase Borrower Payment Dependent Notes (“Notes”), issued by us, the proceeds of which facilitate the funding of the loans (“Borrower Loans”) made to borrower members.  PMI developed the platform and owns the proprietary technology that makes operation of the platform possible.   We have entered into a Servicing Agreement pursuant to which PMI has licensed to us the right to operate the platform (the “Servicing Agreement”).


We have not commenced operations as of the date of this balance sheet.  Currently PMI operates the platform facilitating the origination of loans by WebBank through the platform and issues and sells notes corresponding to those loans which are held by PMI.  Upon commencement of our operations we will facilitate the lending and borrowing activities and act as an agent to the lender members by maintaining the online marketplace licensed to us by PMI.


To me, this sounds like an admission by Prosper that all notes owned by PMI directly are likely to be claimable by PMI's creditors during a PMI BK.

xraider

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #9 on: May 16, 2012, 07:53:07 am »

So Prosper has taken steps in response to bankruptcy counsel's advice and is about to pull the plug, likely in part to avoid paying the initial investors in the class action.

Class counsel should be alerted to this and should commence discovery into the new entity asap.  I have some nice cases and argument I've recently gathered on non-traditional successor-in-interest liability which may be of interest.   :ninja:
« Last Edit: May 16, 2012, 07:54:42 am by xraider »
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Staneslav

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #10 on: May 16, 2012, 08:34:16 am »

a
« Last Edit: November 29, 2017, 12:51:58 pm by Staneslav »
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xraider

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #11 on: May 16, 2012, 09:06:57 am »

That's the obvious goal.  There are a few ways around it.  Most of the California case law has been about whether a successor corporation is liable for the torts of another, usually in the products liability setting.  In the last two months, I needed to research and brief the liability of a corporation for the financial or contractual misdeeds of its predecessor.  Not a whole lot of law on the topic but if the circumstances are right, yes, the successor will be liable for the financial wrongdoings of the predecessor. 

ONE of the following must be met:  (1) express or implied agreement by the purchaser to assume liability; (2) a transaction that amounts to a consolidation or merger of the two entities; (3) mere continuation of the selling corporation by purchasing corporation; OR (4) a fraudulent transaction entered into in an attempt to escape liability from debts. 

Evidence of common ownership/shareholders/officers/directors/employees will support #3.

In other words, if it's the same company in a different coat, Prosper 2 will be liable for the financial malfeasance of Prosper 1. 

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Ray Kremer

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #12 on: May 16, 2012, 09:33:29 am »

The more I hear, the less I want to reinvest money in Prosper once my current batch of notes mature. I've already more than broken even, so I've been successful while riding Prosper into its crash, but I don't want to be on board when the crash actually happens.
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ira01

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #13 on: May 16, 2012, 10:12:56 am »

So Prosper has taken steps in response to bankruptcy counsel's advice and is about to pull the plug, likely in part to avoid paying the initial investors in the class action.

Class counsel should be alerted to this and should commence discovery into the new entity asap.  I have some nice cases and argument I've recently gathered on non-traditional successor-in-interest liability which may be of interest.   :ninja:

Can they legally shield assets with this new entity?

It appears that is the goal.  Whether it will work for new loans actually issued by the new entity is anyone's guess.  But I can't imagine that it would work for any prior loans -- which means ALL loans so far, since the new entity hasn't commenced operation yet, at least as of the date of the filing. 
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Staneslav

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Re: Prosper files 10-Q for Q-1, 2012
« Reply #14 on: May 16, 2012, 10:42:44 am »

a
« Last Edit: November 29, 2017, 12:51:43 pm by Staneslav »
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