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Warrants | 6 Months Ended
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Jun. 28, 2019
Equity [Abstract] |
Warrants Disclosure | WARRANTS On September 26, 2016, the Company granted a warrant to purchase shares of common stock (the “Warrant”) to Comcast pursuant to which Comcast may, subject to certain vesting provisions, purchase up to 7,816,162 shares of the Company’s common stock subject to adjustment in accordance with the terms of the Warrant, for a per share exercise price of $4.76. Comcast may exercise the Warrant for cash or on a net share basis. The Warrant expires on September 26, 2023 or the prior consummation of a change of control of the Company. Comcast’s right to purchase 781,617 shares vested as of the Warrant issuance date as an incentive to enter into the software license product supply agreement. Comcast’s right to purchase 1,172,425 shares vested as of July 31, 2018 upon the acceptance and completion of field trials. Comcast’s right to purchase an additional 781,617 shares will vest upon Comcast’s election for enterprise license pricing for the Company’s CableOS software products. Such pricing would obligate Comcast to make certain total payments to the Company over the term of the product supply agreement. Comcast’s rights to purchase additional shares in specified tranches vest when Comcast exceeds specified cumulative purchase amounts from the Company under the product supply agreement and, for certain tranches, such purchases are made within specified time periods. The Warrant is considered an incentive for Comcast to purchase certain of the Company’s products. Therefore, the value of the vested Warrant is recorded as an asset, which is recognized as a reduction in the Company’s net revenues in proportion to the pertinent sales to Comcast. The Warrant is considered indexed to the Company’s common stock and classified as stockholders’ equity based on its terms. Accordingly, the vested Warrant amounts are included in “Additional paid-in capital”. Prior to adoption of new accounting guidance on January 1, 2019, changes in fair value of the warrant shares were being marked to market until final vesting, and any adjustment as such was being recorded in revenue. The change in fair value together with vested warrant shares was being amortized to revenue using a ratio of revenue recognized from the customer in the period compared to total revenue expected from the customer. The value of the Warrant was recorded as a reduction in the Company’s net revenues to the extent such value did not exceed net revenues from pertinent sales to Comcast. In the first quarter of fiscal 2019, due to the adoption of Topic 718 as disclosed in Note 2, “Recent Accounting Pronouncements”, the fair value of unvested warrant shares is no longer required to be marked to market. As a result, the charge to revenue for warrant shares no longer includes the change in fair value of the warrant shares. In fiscal 2018, the fair value of the Warrant was determined using the Black-Scholes option pricing model. The assumptions utilized in the Black-Scholes model included the risk-free interest rate, expected volatility, and expected life in years. The risk-free interest rate was based on the U.S. Treasury yield curve rates with maturity terms similar to the expected life of the Warrant. Expected volatility was determined utilizing historical volatility over a period of time equal to the expected life of the Warrant. Expected life was equal to the remaining contractual term of the Warrant. The dividend yield was assumed to be zero since the Company had not historically declared dividends and did not have any plans to declare dividends in the future. During the three and six months ended June 28, 2019, the Company recorded $23 thousand and $48 thousand, respectively, as a reduction to net revenues in connection with amortization of the Warrant. During the three and six months ended June 29, 2018, the Company recorded $0.3 million and $0.4 million, respectively, as a reduction to net revenues in connection with amortization of the Warrant. On July 9, 2019, in connection with Comcast’s election of enterprise license pricing for the Company’s CableOS software, all of the remaining milestones and thresholds required to fulfill each of the vesting requirements of the Warrant were deemed satisfied and achieved or otherwise waived such that all Warrant shares were fully vested and exercisable as of July 1, 2019. Refer to Note 18, “Subsequent Event”, for more information.

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