But as you said, if you don't back out you could end up going bankrupt in two months. Don't let a sinking ship drown you.

I have been at a failed startup, ignored the warning signs, and "stuck with it" to the very end, to the very last day when they cut everyone. The smart people saw the signs and had already exited. They all landed softly, and may of them stepped up in their careers. Leaving was the best thing they could have done.

I hope you are formulating options.

Not being honest is more embarrassing! Embrace failure, and learn...