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[Urbi_et_Orbi]

Here is a link to the new 10-K, filed yesterday.

http://www.sec.gov/Archives/edgar/data/1416265/000114036113013123/form10k.htm

Wondering how Renton is going to spin this as a sign of a bright future?

[xraider]

Scary.  The default charts look low.  Gotta love the admission that 2011 notes are the worst-performing, to date.  I wonder what will happen as 2012 and 2013 mature?

New lenders, beware.  Prosper doesn't seem to be learning from its past mistakes.  Our new friend with his claimed 30% ROI looks to be heading for a world of hurt. 

[Fred93]

Page F-3...
Net loss per share 2011 = ($2.32)
Net loss per share 2012 = ($5.51)

Ugh.

[Xenon481]

Q2 2009 - Loss before other income: $2,617,400
Q3 2009 - Loss before other income: $2,289,092
Q4 2009 - Loss before other income: $2,868,908
Q1 2010 - Loss before other income: $2,747,524
Q2 2010 - Loss before other income: $2,787,434
Q3 2010 - Loss before other income: $2,404,217
Q4 2010 - Loss before other income: $2,566,804
Q1 2011 - Loss before other income: $3,097,283
Q2 2011 - Loss before other income: $2,837,560
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
Q2 2012 - Loss before other income: $3,545,603
Q3 2012 - Loss before other income: $4,448,773
Q4 2012 - Loss before other income: $4,764,596

Another record quarter for losses. Further and further away from profitability.

The average quarterly burn rate for 2012 was $4,362,365 which is ~43% higher than 2011's average quarterly burn rate.

At the end of 2012, Prosper had $2,300,073 in "Cash and cash equivalents" (cash and treasuries). In January 2013, they received another round of VC funding of ~$20m, so that puts Prosper at essentially $22.3million in known cash reserves.

- If 2012 Q4's burn rate was to hold constant, then Prosper would need another VC infusion in ~14 months from the end of 2012 (~Feb 2014).
- If 2013's average burn rate holds closer in line with 2012's average burn rate, then Prosper would need another VC infusion in ~15 months from the end of 2012 (~Mar 2014).
- If 2013's average burn rate is 20% higher than 2012's, then it is just ~13 months (~Jan 2014).
- If 2013's average burn rate is 30% higher than 2012's, then ~12 months (~Dec 2013).
- 40% higher average would be ~11 months.


- Prosper spent an average of ~$861k/month on salaries and benefits.
- Prosper spent an average of ~$474k/month on marketing. 30% of which was spent in Q4.
- Prosper spent an average of ~$276k/month on "Professional Services" which is primarily legal fees for the Class Action.
- Prosper spent an average of ~$110k/month on rebates and promotions.
- Prosper spent an average of ~$102k/month on facilities and maintenance.

[TotoMMB]

And just think, this is during a period of "good times". We all saw what happened in 2008. When the market and/or general feeling goes south, people have no problems not repaying loans. So, if something were to happen this year or next (or ever), I expect to see defaults rise. Even now, nearly 4% of 2012 loans have already been written off. That's $4.5M that's probably not coming back. Another 4% ($4.2M) are presently late.

[alexpkeaton]

It sure seems like they're burning through a lot of money for the size of company they are. Maybe they're trying to be like Groupon where the larger they grow the more money they lose?

[MidasMulligan]

Depressing. It would be interesting to know what was told to the investors in the offering to gain their support. What do they expect to change? It is a bit like the kind of investment I once borrowed from Prosper to make.

[NewHorizon]

What do they expect to change?

We see that the Board has changed.  So that's something. 
And then I think more will be revealed in the next few months.

Still, reversing the trend shown in the above posts looks awfully daunting.

But it seems to me, as evidenced by this last round of funding, that as long as people exist who believe that re-inventing Prosper (again and again?) can turn things around, people will be willing to throw money at it.

[MidasMulligan]

As each round loses its shirt in the next dilution, reinventors start to lose faith. And the dilutions must happen annually?

[TekLentine]

I have money invested in Prosper and love the platform because of the truly exceptional returns I am getting; however, I am holding off increasing my stake (beyond reinvesting my returns) because of Prosper's cash flow.

They are hemorrhaging money at an alarming rate. After 5 years of business, Prosper does not even make enough gross profit to cover payroll! Add this to the fact that loan origination growth is leveling out, and it becomes glaringly obvious that they MUST take drastic actions to make the company profitable.

It appears that the executive management of the company recognizes the risk of bankruptcy. The formation of Prosper Funding LLC is a brilliant structure that provides significant protection for investors in the event of Prosper Marketplace Inc's bankruptcy. The Prosper platform is now the sole property of Prosper Funding LLC, and as a separate entity from PMI, their assets are not subject to the claims of PMI's creditors. This means that if Prosper Marketplace Inc goes bankrupt, its creditors cannot go after the tangible and non-tangible assets necessary to service investor's notes.

Prosper Funding LLC does not have the expenses and overhead that PMI does, and therefore does not suffer from the cash flow problems of Prosper Marketplace Inc. As likely as bankruptcy is for Prosper Marketplace Inc, it is even more unlikely that Prosper Funding LLC will enter bankruptcy.

When Prosper Marketplace Inc goes bankrupt (probably by the end of 2014) a third party that has already been identified will take over the servicing of existing notes and collection of unpaid balances. Investors will no doubt go through a period of uncertainty, but in the end there is a high likelihood that they will have their money paid back to them with interest. This is why I am staying invested in Prosper and enjoying the high-yield ride.

On a final note, as an investor, I have no idea how Prosper is convincing venture capitalists to pump millions into their sinking ship. Maybe they have some angle that is more compelling than I know, but based on their financial statements, I wouldn't touch their stock with a ten-foot pole.

[ira01]

It appears that the executive management of the company recognizes the risk of bankruptcy. The formation of Prosper Funding LLC is a brilliant structure that provides significant protection for investors in the event of Prosper Marketplace Inc's bankruptcy. The Prosper platform is now the sole property of Prosper Funding LLC, and as a separate entity from PMI, their assets are not subject to the claims of PMI's creditors. This means that if Prosper Marketplace Inc goes bankrupt, its creditors cannot go after the tangible and non-tangible assets necessary to service investor's notes.

Prosper Funding LLC does not have the expenses and overhead that PMI does, and therefore does not suffer from the cash flow problems of Prosper Marketplace Inc. As likely as bankruptcy is for Prosper Marketplace Inc, it is even more unlikely that Prosper Funding LLC will enter bankruptcy.

If believing that makes you sleep better, that's fine.  But I really doubt that this transparent ploy will survive court review.  It seems to me to clearly be a fraudulent conveyance -- a transfer made with the intent to hinder or defraud creditors. 

[TJGbank]

Did this thread originate in the Lobby?

[cubbiesnextyr]

Did this thread originate in the Lobby?

No.

http://www.prospers.org/forum/empty-t29263.0.html

[havastat]

It appears that the executive management of the company recognizes the risk of bankruptcy. The formation of Prosper Funding LLC is a brilliant structure that provides significant protection for investors in the event of Prosper Marketplace Inc's bankruptcy. The Prosper platform is now the sole property of Prosper Funding LLC, and as a separate entity from PMI, their assets are not subject to the claims of PMI's creditors. This means that if Prosper Marketplace Inc goes bankrupt, its creditors cannot go after the tangible and non-tangible assets necessary to service investor's notes.

Prosper Funding LLC does not have the expenses and overhead that PMI does, and therefore does not suffer from the cash flow problems of Prosper Marketplace Inc. As likely as bankruptcy is for Prosper Marketplace Inc, it is even more unlikely that Prosper Funding LLC will enter bankruptcy.

If believing that makes you sleep better, that's fine.  But I really doubt that this transparent ploy will survive court review.  It seems to me to clearly be a fraudulent conveyance -- a transfer made with the intent to hinder or defraud creditors. 

What about transactions made after Prosper Funding LLC was set up, i.e. from here on?

[ira01]

It appears that the executive management of the company recognizes the risk of bankruptcy. The formation of Prosper Funding LLC is a brilliant structure that provides significant protection for investors in the event of Prosper Marketplace Inc's bankruptcy. The Prosper platform is now the sole property of Prosper Funding LLC, and as a separate entity from PMI, their assets are not subject to the claims of PMI's creditors. This means that if Prosper Marketplace Inc goes bankrupt, its creditors cannot go after the tangible and non-tangible assets necessary to service investor's notes.

Prosper Funding LLC does not have the expenses and overhead that PMI does, and therefore does not suffer from the cash flow problems of Prosper Marketplace Inc. As likely as bankruptcy is for Prosper Marketplace Inc, it is even more unlikely that Prosper Funding LLC will enter bankruptcy.

If believing that makes you sleep better, that's fine.  But I really doubt that this transparent ploy will survive court review.  It seems to me to clearly be a fraudulent conveyance -- a transfer made with the intent to hinder or defraud creditors. 

What about transactions made after Prosper Funding LLC was set up, i.e. from here on?

Those are on much more solid footing.