Debt and Financing Obligations

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Debt and Financing Obligations

Debt and Financing Obligations

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 December 31, 2023, the principal balance of the 2022 Credit Line was $2.0 million. In May 2024, the outstanding balance under the 2022 Credit Line was repaid in full, and the 2022 Credit Line was terminated. The Company did not recognize any gain or loss on the extinguishment of the 2022 Credit Line.

In December 2023, the Company entered into a loan facility with East West Bank (the “East West Bank Loan”) which had a maturity date of December 14, 2025 and provided 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 six months ended June 30, 2024 and repaid the $4.3 million in full in May 2024. Accordingly, the Company recognized a loss on debt extinguishment of $0.1 million during the three and six months ended June 30, 2024. The Company additionally recorded interest expense of $0.1 million and $0.2 million during the three and six months ended June 30, 2024, respectively, with respect to the East West Bank Loan. In May 2024, the East West Bank Loan was terminated.

On April 11, 2024, the Company amended its license agreement with NXP, pursuant to which the Company financed the purchase of licensed IP and recorded an associated vendor financing obligation, which has a balance of $4.8 million as of June 30, 2024. The Company determined that the vendor financing obligation had an imputed interest rate of 9%, which is reflective of its borrowing rate with similar terms to that of the license agreement, and recognized interest expense of $0.1 million for the three and six months ended June 30, 2024. The Company’s vendor financing obligation is comprised of the following payments as of June 30, 2024:

For the year ending December 31,	Amount
	(in thousands)
Remainder of 2024	$	600
2025	1,500
2026	1,200
2027	1,200
2028	1,200
Total undiscounted cash flows	$	5,700
Less: Imputed interest	913
Present value of vendor financing obligation	$	4,787
Vendor financing obligation, current	2,049
Vendor financing obligation, non-current	$	2,738

On April 16, 2024, the Company entered into a note purchase agreement with Micron Technology Inc. (“Micron”), which has been and is a customer of the Company, pursuant to which the Company issued to Micron a senior subordinated convertible promissory note in the principal amount of $5.0 million (the “Micron Note”). The Micron Note was contractually subordinated to the East West Bank Loan through a subordination agreement with East West Bank, but was senior to all of our other existing debt and was senior to any new future debt incurred (other than any undrawn amount available under the East West Bank Loan while it was outstanding). The Micron Note accrued interest at a rate of 8% per annum, with principal and interest due upon maturity three years after the date of issuance. Upon the consummation of the IPO, the Micron Note was mandatorily convertible into a number of shares equal to the outstanding principal amount and accrued interest divided by a conversion price equal to (a) the price of the Company’s common stock issued in the initial public offering, times (b) 0.90. The Company determined that the feature that allowed for settlement of the Micron Note into a variable number of shares required bifurcation as a derivative liability and should be initially measured at fair value. The Company recorded a derivative liability of $0.5 million and a corresponding debt discount of $0.5 million on the issuance date.

On May 13, 2024, the Micron Note was converted into 294,217 shares of the Company’s common stock in connection with the consummation of the IPO. The shares issued pursuant to the Micron Note have been registered for resale under the Securities Act. Upon the settlement of the Micron Note, the derivative liability was settled and the Company remeasured it to its fair value and recorded a loss on derivative remeasurement of $28,000 during the three and six months ended June 30, 2024, which was recorded in interest and other expense, net on the Company’s condensed consolidated statements of income (loss). As a result, the fair value of the shares issued of $5.6 million was recognized in additional paid-in capital and the Company settled the debt, inclusive of the derivative liability, and recognized a loss on debt extinguishment of $0.7 million during the three and six months ended June 30, 2024.