Q3 2011 - Loss before other income: $2,837,290
Q4 2011 - Loss before other income: $3,519,037
Q1 2012 - Loss before other income: $4,690,488Q3 2011 Burn Rate: ~$0.9million per month
Q4 2011 Burn Rate: ~$1.2million per month
Q1 2012 Burn Rate: ~$1.6million per monthProsper'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.
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