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EXCEL - IDEA: XBRL DOCUMENT - Raptor Pharmaceutical CorpFinancial_Report.xls
10-Q - FORM 10-Q - Raptor Pharmaceutical Corpd270609d10q.htm
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EX-32.1 - CERTIFICATION OF CHRISTOPHER M. STARR, PH.D. AND KIM R. TSUCHIMOTO - Raptor Pharmaceutical Corpd270609dex321.htm
EX-31.2 - CERTIFICATION OF KIM R. TSUCHIMOTO, CHIEF FINANCIAL OFFICER - Raptor Pharmaceutical Corpd270609dex312.htm
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EX-31.1 - CERTIFICATION OF CHRISTOPHER M. STARR, PH.D., CHIEF EXECUTIVE OFFICER - Raptor Pharmaceutical Corpd270609dex311.htm
v2.4.0.6
Fair Value Measurement
3 Months Ended
Nov. 30, 2011
Fair Value Measurement [Abstract]  
Fair Value Measurement

(5) FAIR VALUE MEASUREMENT

The Company uses a fair-value approach to value certain assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company uses a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity's own assumptions (unobservable inputs). The hierarchy consists of three levels:

 

   

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

 

   

Level two — Inputs other than level one inputs that are either directly or indirectly observable; and

 

   

Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. Assets and liabilities measured at fair value on a recurring basis at August 31, 2011 and 2010 are summarized as follows:

 

November 30, 2011 November 30, 2011 November 30, 2011 November 30, 2011

Assets

   Level 1      Level 2      Level 3      November 30, 2011  

Fair value of cash equivalents

   $ 24,408,710       $ —         $ —         $ 24,408,710   

Restricted cash

     —           113,336         —           113,336   

Short-term investments

     30,018,461         —           —           30,018,461   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 54,427,171       $ 113,336      $ —         $ 54,540,507   
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

                           

Fair value of common stock warrants

   $ —         $ —         $ 25,367,694       $ 25,367,694   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —         $ —         $ 25,367,694       $ 25,367,694   
  

 

 

    

 

 

    

 

 

    

 

 

 

Assets

   Level 1      Level 2      Level 3      August 31, 2011  

Fair value of cash equivalents

   $ 13,855,813       $ —         $ —         $ 13,855,813   

Restricted cash

     —           114,468         —           114,468   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 13,855,813       $ 114,468       $ —         $ 13,970,281   
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

                           

Fair value of common stock warrants

   $ —         $ —         $ 23,575,294       $ 23,575,294   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —         $ —         $ 23,575,294       $ 23,575,294   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash equivalents represent the fair value of the Company's investment in four money markets and two short-term bond funds as of November 30, 2011 and two money market accounts as of August 31, 2011.

 

Marked-to-Market

The common stock warrants issued in the Company's August 2010 private placement and the Company's December 2009 equity financing are classified as liabilities under ASC 480 and are, therefore, re-measured using the Black-Scholes option valuation model at the end of every reporting period with the change in value reported in the Company's condensed consolidated statements of comprehensive loss.

For the years ended August 31, 2011 and 2010, and for the cumulative period from September 8, 2005 (inception) to August 31, 2011, as a result of the marking-to-market of the warrant liability at quarter-end and the day prior to the exercise of warrants subject to warrant liability accounting, the Company recorded losses of $16.3 million, $5.9 million and $22.2 million, respectively, in the line item adjustment to fair value of common stock warrants in its consolidated statements of comprehensive loss. See Note 9 for further discussion on the calculation of the fair value of the warrant liability. Below is the activity of the warrant liabilities:

 

$25.4 $25.4
     Three month periods ended
November 30,
 
     2011     2010  

Fair value of December 2009 direct offering warrants (including placement agent warrants) at beginning of the fiscal years

   $ 5.9      $ 5.8   

December 2009 direct offering warrants exercised during the three month periods ended November 30

     (0.3     —     

Adjustment to mark to market common stock warrants for the three month periods ended November 30

     1.1        2.3   
  

 

 

   

 

 

 

December 2009 direct offering common stock warrant liability at fair value at November 30

     6.7        8.1   
  

 

 

   

 

 

 

Fair value of August 2010 private placement warrants (including broker warrants) at beginning of the fiscal years

     17.7        9.9   

August 2010 private placement warrants exercised during the three month periods ended November 30

     (2.0     —     

Adjustment to mark to market common stock warrants for the three month periods ended November 30

     3.0        3.5   
  

 

 

   

 

 

 

August 2010 private placement common stock warrant liability at fair value at November 30

     18.7        13.4   
  

 

 

   

 

 

 

Total warrant liability at November 30, 2011 and 2010

   $ 25.4      $ 21.5