Foreign Currency Contracts |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Foreign Currency Contracts [Abstract] | |
| FOREIGN CURRENCY CONTRACTS | NOTE 8 – FOREIGN CURRENCY CONTRACTS
The Company has an obligation to make periodic royalty payments from its sale of products incorporating technology that has been licensed from NLS. Because these payments will be made in EUR the Company is exposed to cash flow variability resulting from changes in USD/EUR exchange rates. Therefore, during September 2025, the Company entered into several foreign currency forward and foreign currency collar contracts that are intended to hedge its exposure to changes in the USD/EUR exchange rates on or about the dates certain of the Company’s forecasted royalty payments will be made.
The foreign currency forward and collar contracts are derivative instruments that must be accounted for at fair value. Each reporting period, the change in the fair value of each contract is recognized as a gain or loss classified as a component of Other income (expense) within the Company’s consolidated statements of operations.
At June 30, 2026 a foreign currency forward contract to purchase EUR 201,298 remained outstanding. This contract will settle on August 14, 2026. The fair value of this foreign currency forward contract was a liability of $12,613 at June 30, 2026.
At June 30, 2026 foreign currency collar contracts with a notional amount of EUR 2,541,529 remained outstanding. These contracts will settle at various dates between November 2026 and November 2027. The fair value of the foreign currency collar contracts was a liability of $68,261 at June 30, 2026.
The fair value measurements of the foreign currency collar contracts are classified within Level 2 of the fair value hierarchy. The fair value of the collars is estimated using a foreign currency option valuation model based on Black-Scholes principles. Significant inputs to the model include spot foreign currency exchange rates, interest rates, foreign currency forward points and implied foreign currency volatilities, which are derived principally from observable market data obtained from third-party market-data sources. |