svco-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-42043

Silvaco Group, Inc.

(Exact name of Registrant as specified in its charter)


Delaware	7372	27-1503712
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Silvaco Group, Inc.

4701 Patrick Henry Drive, Building #23

Santa Clara, CA 95054

(408) 567-1000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

SVCO

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of June 17, 2024 the registrant had 26,294,217 shares of common stock, $0.0001 par value per share, outstanding.

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TABLE OF CONTENTS


		Page
PART I.	Financial Information	1

Item 1.	Financial Statement s (unaud ited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Stockholders' Equity	4
	Condensed Consolidated Statements of Cashflows	5
	Notes to t he Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II.	Other Information	31

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	64

SI GNATURES

SILVACO GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands except share and par value amounts)


	March 31, 2024		December 31, 2023

ASSETS
Current assets:
Cash	$	5,739	$	4,421
Accounts receivable, net	5,562		4,006
Contract assets, net	9,240		8,749
Prepaid expenses and other current assets	1,748		2,549
Deferred transaction costs	1,943		1,163
Total current assets	24,232		20,888
Long-term assets:
Property and equipment, net	656		591
Operating lease right-of-use assets, net	2,157		1,963
Intangible assets, net	273		342
Goodwill	9,026		9,026
Long-term portion of contract assets, net	8,961		6,250


Other assets	2,057		1,825
Total long-term assets	23,130		19,997
Total assets	$	47,362	$	40,885
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	3,332	$	2,495
Accrued expenses and other current liabilities	9,945		10,255
Accrued income taxes	2,185		1,626
Deferred revenue, current	7,935		7,882
Operating lease liabilities, current	817		735

Related party line of credit	2,016		2,000

Total current liabilities	26,230		24,993
Long-term liabilities:
Deferred revenue, non-current	4,737		5,071
Operating lease liabilities, non-current	1,320		1,198
Long-term loan facility	4,283		—
Other long-term liabilities	197		221
Total liabilities	36,767		31,483
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.0001 par value; 25,000,000 shares authorized; 20,000,000 shares issued and outstanding	2		2
Retained earnings	12,770		11,392
Accumulated other comprehensive loss	(2,177)		(1,992)
Total stockholders' equity	10,595		9,402
Total liabilities and stockholders' equity	$	47,362	$	40,885

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SILVACO GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands except share and per share amounts)


	Three Months Ended March 31,
	2024		2023
Revenue:
Software license revenue	$	12,258	$	10,665
Maintenance and service	3,631		3,626
Total revenue	15,889		14,291
Cost of revenue	1,973		2,025
Gross profit	13,916		12,266
Operating expenses:
Research and development	3,616		3,375
Selling and marketing	3,312		2,805
General and administrative	4,600		4,553

Total operating expenses	11,528		10,733
Operating income	2,388		1,533



Interest and other expense, net	205		331
Income before income tax provision	2,183		1,202
Income tax provision	805		388
Net income	$	1,378	$	814
Earnings per share attributable to common stockholders:
Basic and diluted	$	0.07	$	0.04

Weighted average shares used in computing per share amounts:
Basic and diluted	20,000,000		20,000,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SILVACO GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)


	Three Months Ended March 31,
	2024		2023
Net income	$	1,378	$	814
Other comprehensive (loss) income:
Foreign currency translation adjustments	(185)		88
Comprehensive income	$	1,193	$	902

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SILVACO GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, in thousands except share amounts)


	Three Months Ended March 31, 2024
	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2023	20,000,000	$	2	$	11,392	$	(1,992)	$	9,402
Other comprehensive loss	—	—		—		(185)		(185)
Net income	—	—		1,378		—		1,378
Balance, March 31, 2024	20,000,000	$	2	$	12,770	$	(2,177)	$	10,595


	Three Months Ended March 31, 2023
	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2022	20,000,000	$	2	$	11,928	$	(1,907)	$	10,023
ASC 326 Transition Adjustment	—	—		(220)		—		(220)
Balance, January 1, 2023	20,000,000	2		11,708		(1,907)		9,803
Other comprehensive income	—	—		—		88		88
Net income	—	—		814		—		814
Balance, March 31, 2023	20,000,000	$	2	$	12,522	$	(1,819)	$	10,705

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SILVACO GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net income	$	1,378	$	814
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	120		166

Gain on disposal of fixed assets	(10)		—
Provision for credit losses	222		21
Change in fair value of contingent consideration	(8)		265
Changes in operating assets and liabilities:
Accounts receivable	(1,844)		(3,718)
Contract assets	(3,679)		889
Prepaid and other current assets	788		(232)
Other assets	(274)		—
Accounts payable	877		513
Accrued expenses	(670)		(1,248)
Accrued income taxes	574		242
Deferred revenue	(21)		2,888
Other current liabilities	(49)		146
Other long-term liabilities	24		(245)
Net cash (used in) provided by operating activities	(2,572)		501
Cash flows from investing activities:

Purchases of property and equipment	(10)		(177)

Net cash used in investing activities	(10)		(177)
Cash flows from financing activities:
Proceeds from loan facility	4,250		—
Contingent consideration	(13)		(582)
Deferred transaction costs	(364)		—
Net cash provided by (used in) financing activities	3,873		(582)
Effect of exchange rate fluctuations on cash	27		75
Net increase (decrease) in cash	1,318		(183)
Cash, beginning of period	4,421		5,478
Cash, end of period	$	5,739	$	5,295

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SILVACO GROUP, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business

Silvaco Group, Inc. (“Silvaco,” and together with its subsidiaries, the “Company”) was incorporated as a Delaware corporation on November 18, 2009. The Company is a provider of technology computer aided design (“TCAD”) software, electronic data automation (“EDA”) software and semiconductor intellectual property (“SIP”). TCAD, EDA and SIP solutions enable semiconductor and photonics companies to increase productivity, accelerate their products’ time-to-market and reduce their development and manufacturing costs. The Company has decades of expertise developing the “technology behind the chip” and providing solutions that span from atoms to systems, starting with providing software for the atomic level simulation of semiconductor and photonics material for devices, to providing software and SIP for the design and analysis of circuits and system level solutions. The Company provides SIP for system-on-a-chip (“SoC”), integrated circuits (“ICs”) and SIP management tools to enable team collaborations on complex SoC designs. The Company’s customers include semiconductor manufacturers, original equipment manufacturers (“OEMs”) and design teams who deploy the Company’s solutions in production flows across the Company’s target markets, including display, power devices, automotive, memory, high performance computing (“HPC”), internet of things (“IoT”) and 5G/6G mobile markets.

Initial Public Offering

In May 2024, the Company completed its initial public offering (“IPO”), in which it issued and sold 6,000,000 shares of its common stock at the public offering price of $19.00 per share. The Company received gross proceeds of $114.0 million, with $106.0 million funded to the Company after deducting underwriting discounts and commissions. See Note 13, Subsequent Events, for further discussion.

2. Summary of Significant Accounting and Reporting Policies

Basis of presentation and consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") and include the accounts of Silvaco and all of the Company's wholly owned subsidiaries with operations in North America, Europe, Asia and South America. All intercompany transactions and balances have been eliminated upon consolidation.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted from these condensed consolidated financial statements, as permitted by Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with its audited consolidated financial statements for the year ended December 31, 2023 and the related notes thereto included in the Company’s final prospectus relating to the initial public offering, dated May 8, 2024 (the “Prospectus”), relating to the Registration Statement on Form S-1 (File No. 333-278666), as amended (“Registration Statement”), filed with the SEC on May 10, 2024, pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (“Securities Act”). The December 31, 2023 condensed consolidated balance sheet was derived from the audited consolidated financial statements as of that date. In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the condensed consolidated financial statements.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the Company’s operating results to be expected for the full fiscal year or any other future interim or annual period.

Revision of Prior Financial Statements

For the three months ended March 31, 2023, accrued expenses and general and administrative expenses were understated by $0.2 million in the Company’s condensed consolidated balance sheet and condensed consolidated statement of income, respectively, due to certain accruals for professional services rendered not being recorded.

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The Company has determined that such errors are immaterial and has increased accrued expenses and other current liabilities and general and administrative expenses to correct these immaterial errors.

Emerging growth company status

The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies.

The Company will remain an emerging growth company until the earliest of (i) the last day of the first fiscal year (a) following the fifth anniversary of the completion of the Company’s initial public offering (“IPO”), (b) in which the Company’s total annual gross revenue is at least $1.2 billion, or (c) when the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th and (ii) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the amounts of revenue and expenses during the reported periods. The Company’s most significant estimates relate to revenue recognition. Other estimates include, but are not limited to, accounts receivable allowances, stock-based compensation, valuation of goodwill and other intangible assets, contingent consideration, uncertain tax positions and income taxes. Actual results could differ from those estimates.

Stock split

On April 29, 2024, the Company effected a 1-for-2 reverse split of its common stock. Upon the effectiveness of the reverse stock split, (i) every two shares of outstanding common stock was combined into a single share of common stock, (ii) the number of shares of common stock to be granted upon the vesting of each outstanding restricted stock unit (“RSU”) was proportionally decreased on a 2-for-1 basis, and (iii) the fair value of each outstanding RSU was proportionately increased on a 1-for-2 basis. All of the outstanding common stock share numbers, RSUs, RSU fair values and per share amounts have been adjusted, on a retroactive basis, to reflect this 1-for-2 reverse stock split for all periods presented. The par value per share and authorized number of shares of common stock were not adjusted as a result of the reverse stock split.

Concentrations of credit risk

As of March 31, 2024, none of the Company’s customers represented more than 10% of the Company’s accounts receivable. As of December 31, 2023, two customers represented 20% and 15% of the Company’s accounts receivable.

During the three months ended March 31, 2024 one customer represented 11% of the Company’s total revenue. None of the Company’s customers represented more than 10% of the Company’s total revenue for the three months ended March 31, 2023.

In addition to the concentration of credit risk with respect to trade receivables, the Company's cash on deposit with financial institutions is also exposed to concentration risk. The Company's cash on deposit with financial institutions are insured through various public and private bank deposit insurance programs, foreign and domestic; however, a significant portion of cash balances held as of March 31, 2024 and December 31, 2023 exceeded insured limits.

As of March 31, 2024, $3.0 million, or 52%, of the Company’s cash was maintained with one financial institution, where the Company’s current deposits are in excess of federally insured limits. Past macroeconomic conditions have resulted in the actual or perceived financial distress of many financial institutions, including the failures of Silicon Valley Bank, Signature Bank, First Republic Bank and the UBS takeover of Credit Suisse. If the financial institutions with whom the Company does business were to be placed into receivership, the Company may be unable to access the cash it has on deposit with such institutions. If the Company is unable to access its cash as needed, the Company’s financial position and ability to operate its business could be adversely affected.

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Allowance for credit losses

The Company assesses its ability to collect outstanding receivables and contract assets and provides customer-specific allowances, allowances for credit losses for the portion of receivables and contract assets that are estimated to be uncollectible. Allowances for credit losses are based on historical collection experience and expected credit losses, customer specific financial condition, current economic trends in the customer's industry and geographic region, changes in customer demand and the overall economic climate in the market the Company serves. Provisions for the allowance for expected credit losses attributable to bad debt are recorded as general and administrative expenses. Account balances deemed uncollectible are written off, net of actual recoveries. If circumstances related to specific customers or the market the Company serves change, the Company’s estimate of the recoverability of its accounts receivable and contract assets could be further adjusted. The Company does not have any material account receivable or contract asset balances that are past due and has not written off any significant balances in its portfolio against the allowance for credit losses for the periods presented. The Company’s provision for credit losses was $0.2 million and $21,000 for the three months ended March 31, 2024 and 2023, respectively. The Company’s allowance for expected credit losses on accounts receivable and contract assets, in the aggregate, was $0.8 million and $0.5 million as of March 31, 2024 and December 31, 2023, respectively.

Foreign currencies

The financial statements of Silvaco's international subsidiaries with local functional currencies are translated to U.S. dollars upon consolidation. Assets and liabilities are translated at the effective exchange rate on the balance sheet date. Results of operations are translated at average exchange rates, which approximate rates in effect when the underlying transactions occur. For the three months ended March 31, 2024 and 2023, the Company recorded foreign currency translation adjustments of $(0.2) million and $0.1 million, respectively, within accumulated other comprehensive loss.

Certain sales and intercompany transactions are denominated in foreign currencies. These transactions are recorded in functional currency at the appropriate exchange rate on the transaction date. Monetary assets and liabilities denominated in a currency other than the Company's functional currency or its subsidiaries' functional currencies are remeasured at the effective exchange rate on the balance sheet date. Gains and losses resulting from foreign exchange transactions are included in interest and other expense, net. The Company recorded net foreign exchange transaction losses of $0.1 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively.

Accumulated other comprehensive loss

Accumulated other comprehensive loss is composed entirely of foreign currency translation adjustments.

Earnings per share (EPS)

Basic EPS is computed based on the weighted average number of shares of common stock outstanding. Diluted EPS is computed based on the weighted average number of common shares outstanding increased by dilutive common stock equivalents, attributable to RSU grants.

The following outstanding securities for the three months ended March 31, 2024 and 2023 were excluded from the computation of diluted earnings per share because the issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied as of March 31, 2024. See Note 8, Restricted Stock Units for additional information.


	March 31,
	2024	2023
RSU Grants	4,302,178	3,047,234

Recently adopted accounting pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU simplifies accounting for convertible instruments by removing major separation

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models required under current GAAP. The Company adopted this standard on January 1, 2024 and the adoption did not impact the condensed consolidated financial statements.

Accounting guidance issued and not yet adopted

In November 2023, the FASB issued Accounting Standards Update ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an interim and annual basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the guidance on the condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on the condensed consolidated financial statements and related disclosures.

3. Revenue

The Company's revenue is derived principally from contracts which promise to deliver combinations of software licensing and related maintenance and services, which are accounted for as separate performance obligations with differing revenue recognition patterns. The transaction price is allocated to each distinct performance obligation based on the relative standalone selling price. Software license revenue consists of the Company’s software sold under a software license. Revenue related to stand-alone software applications are generally recognized upon shipment and delivery of license keys. For certain arrangements revenue is recognized based on usage or ratably over the term of the arrangement. Maintenance and service revenue consists of both maintenance revenues and professional services revenues which is recognized based on usage or ratably over the term of the arrangement. Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a contract asset when revenue is recognized prior to invoicing, an accounts receivable upon invoicing or deferred revenue when invoicing precedes revenue recognition.

Customer contracts

The Company accounts for a contract with a customer when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights and payment terms can be identified, the contract has commercial substance, and it is probable the Company will collect substantially all of the consideration it is entitled to. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised software or providing service to a customer.

For multi-year software licenses, the Company generally invoices customers annually at the beginning of each annual coverage period.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2024, approximately $29.1 million of revenue is expected to be recognized from remaining performance obligations. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes both deferred revenue and backlog. The Company's backlog represents installment billings for periods beyond the current billing cycle. The Company expects to recognize revenue on approximately 49% of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

Deferred Revenue

Deferred revenue is comprised mainly of unearned revenue related to maintenance and service on software licenses and pending software license deliveries. Maintenance and service revenue is recognized ratably over the coverage period. Software license revenue is recognized upfront upon delivery of the licensed software. Deferred revenue also includes contracts for professional services to be performed in the future which are recognized as revenue when the company delivers the related service pursuant to the terms of the customer arrangement.

During the three months ended March 31, 2024, the Company recognized revenue of $2.3 million that was included in the total deferred revenue balance at December 31, 2023. All other activity in deferred revenue is due to the

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timing of invoices in relation to the timing of revenue during the three months ending March 31, 2024 as described above.

4. Leases

The Company’s headquarters are located in Santa Clara, California, where the Company has an operating lease covering its corporate office expiring in March of 2025. The Company also has operating leases in Duluth, Georgia, and abroad, in Japan, France, China, the United Kingdom, Taiwan, Singapore, and Korea, among other countries. The expiration dates for these operating leases range from 2024 through 2029. As of March 31, 2024 and December 31, 2023, the Company’s operating lease right-of-use assets and operating lease liabilities were as follows:


	March 31,		December 31,
	2024		2023
	(in thousands)
Operating lease right-of-use assets, net	$	2,157	$	1,963
Operating lease liabilities, current	817		735
Operating lease liabilities, non-current	$	1,320	$	1,198

The components of operating lease cost during the periods presented were as follows:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
Operating lease cost	$	230	$	256
Variable lease cost(1)	60		24
Total operating lease cost	$	290	$	280

(1)Variable lease cost includes common area maintenance, utilities, security, insurance and property taxes.

Additional information related to the Company’s operating leases for the three months ended March 31, 2024 and 2023 was as follows:


	Three Months Ended March 31,
	2024			2023
	(in thousands)
Cash paid for operating lease liabilities	$	222		$	256
Right-of-use assets obtained in exchange for lease obligations	$	567		$	—
Weighted average remaining lease term (in years)	3.85			4.47
Weighted average discount rate	3.83		%	4.13		%

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As of March 31, 2024 maturities of operating lease liabilities were as follows:


Year Ending December 31,	Amount
	(in thousands)
Remainder of 2024	$	622
2025	652
2026	382
2027	219
2028	194
Thereafter	194
Total lease payments	$	2,263
Less: imputed interest	(126)
Total operating lease liabilities	$	2,137
Current portion of lease liability	$	817
Non-current portion of lease liability	$	1,320

The Company recorded rent expense of $0.3 million during each of the three months ended March 31, 2024 and 2023.

5. Goodwill and Intangible Assets

There were no changes in goodwill during the three months ended March 31, 2024 and 2023.

As of March 31, 2024 intangible assets were classified as follows:


		March 31, 2024
Intangible assets:	Weighted Average Amortization Period (in years)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
		(in thousands)
Developed technology	5	$	800	$	(547)	$	253
Customer relationships	5	90		(77)		13
Non-compete agreements	5	20		(13)		7
Total intangible assets		$	910	$	(637)	$	273


		December 31, 2023
Intangible assets:	Weighted Average Amortization Period (in years)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
		(in thousands)
Developed technology	5	$	2,660	$	(2,367)	$	293
Customer relationships	5	2,416		(2,374)		42
Non-compete agreements	5	179		(172)		7
Total intangible assets		$	5,255	$	(4,913)	$	342

Amortization expense for intangible assets was $0.1 million during each of the three months ended March 31, 2024 and 2023.

As of January 1, 2024, the Company removed the carrying value of $4.3 million of fully amortized intangible assets which at time of removal had nil net book value.

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As of March 31, 2024, estimated future amortization expense for the intangible assets reflected above was as follows:


Year Ending December 31,
	Amount
	(in thousands)
Remainder of 2024	$	136
2025	137

Total net carrying value of intangible assets	$	273

6. Related Parties

The Company has a commercial lease agreement with Kipee International, Inc., a related party controlled by Katherine Ngai-Pesic, who is the Company's founding principal stockholder and chairperson of the Board of Directors, for Silvaco's corporate office in Santa Clara, California. In connection with this lease arrangement, the Company recorded rent expense of $0.1 million during each of the three months ended March 31, 2023 and 2024, respectively. The Company's right-of-use asset and operating lease liability under this three year arrangement, which commenced on May 1, 2022 and expires on March 31, 2025, is $0.2 million as of March 31, 2024.

The Company has two international office leases with New Horizons (Cambridge) LTD (“NHC”) and New Horizons France (“NHF”) in Cambridgeshire, England and Grenoble, France, respectively. NHC and NHF are real estate entities owned and controlled by Ms. Ngai-Pesic. In connection with these lease arrangements, the Company recorded rent expense of $0.1 million during each of the three months ended March 31, 2024 and 2023. The Company's right-of-use asset and operating lease liability under the NHC lease, which expires on December 31, 2029, is $1.0 million as of March 31, 2024. The Company's right-of-use asset and operating lease liability under the NHF lease, which expires on April 30, 2026, is $0.1 million as of March 31, 2024.

On June 13, 2022, Silvaco entered into a $4.0 million line of credit with Ms. Ngai-Pesic (the “2022 Credit Line”). In connection with this line of credit, the Company recorded interest expense of $0.1 million and $44,000 during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the principal balance of this line of credit was $2.0 million. See Note 7, Debt, and No te 13, Subsequent Events, for further discussion.

In February of 2012, Gu-Guide LP, a real estate entity controlled by Ms. Ngai-Pesic, Bank of the West and Silvaco Group, Inc., as guarantor, entered into a loan agreement pursuant to which Bank of the West agreed to lend Gu-Guide LP certain amounts of money (the “Loan”). The Loan is secured by a building representing a total of 9,000 square feet located at 4701 Patrick Henry Drive, Santa Clara, California 95054. In the event that the proceeds from the foreclosure of the foregoing collateral are insufficient to repay the outstanding amounts under the Loan, Silvaco Group Inc. has guaranteed the repayment of the outstanding amounts under the Loan. As of March 31, 2024, $0.8 million is outstanding under the Loan which matures on August 1, 2024.

A member of the Company’s board of directors also serves as chairman of the board for one of Silvaco’s customers. During the three months ended March 31, 2024, the Company recorded $0.5 million in software revenue from this customer. As of March 31, 2024, the balance of the Company’s accounts receivable and contract assets with this customer was $0.2 million and $0.3 million, respectively.

7. Debt

On June 13, 2022, Silvaco entered into the 2022 Credit Line which bears interest at a rate of prime plus 1% per annum. As of March 31, 2024 and December 31, 2023, the principal balance of the 2022 Credit Line was $2.0 million. Subsequent to the Company’s IPO on May 13, 2024, the 2022 Credit Line was repaid in full and is set to expire on June 13, 2024. See N ote 13 for further discussion.

In December 2023, the Company entered into a loan facility with East West Bank (the “East West Bank Loan”) which has a maturity date of December 14, 2025 and provides for borrowings of up to $5.0 million bearing interest at a per annum rate equal to one half of one percent (0.5%) above the greater of (i) the prime rate or (ii) four and one half percent (4.5%). The Company drew $4.3 million on the East West Bank Loan during the three months ended March 31, 2024. The balance on the East West Bank Loan as of March 31, 2024 was $4.3 million, and the Company was in compliance with all covenants. During the three months ended March 31, 2024, the Company

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recorded interest expense of $0.1 million on the East West Bank Loan. Subsequent to the Company’s IPO, on May 13, 2024, the East West Bank Loan was repaid in full and terminated. See Note 13 for further discussion.

8. Restricted Stock Units

On March 18, 2024, the number of shares of common stock reserved for issuance of RSU under the Company’s 2014 Stock Incentive Plan (the “2014 Plan”) was increased to 4.6 million and the term of the 2014 Plan was extended to March 18, 2034. The RSUs generally have two vesting requirements, a time and service-based requirement (the “Time-Based Requirement”) and a liquidity event requirement (the “Liquidity Event Requirement”). The Liquidity Event Requirement will be satisfied as to any then-outstanding RSUs on the first to occur of: (1) a change in control event (as defined in the award agreement) or (2) the first sale of common stock pursuant to an underwritten IPO, in either case, within 10 years of the grant date. The Time-Based Requirement generally requires four years for full vesting of the grants, with 25% vesting after one year and quarterly vesting over the subsequent three years. Certain grants have had modified time-based vesting requirements, including certain grants that have been issued with the Time-Based Requirement satisfied on the grant date.

On April 26, 2024, in connection with the Company’s IPO, our board of directors approved and adopted, subject to stockholder approval, the 2024 Stock Incentive Plan (“2024 Plan”), and our stockholders approved the 2024 Plan on April 29, 2024. The 2024 Plan became effective on May 8, 2024 and supersedes our 2014 Plan.

The following table summarizes the Company's RSU activity for the three months ended March 31, 2024:

Weighted Average

Restricted Stock Units

SEC Form 10-Q filed by Silvaco Group Inc.